As you probably know, the new iPhone 5s is hitting the shelves, with a hefty price tag of $650. Of course, you can pay less than the full retail price of the phone if you enroll in a new contract, but you will still end up paying a significant amount of money toward the phone, as most companies are selling it for $199 with a new 2-year contract. With all the commercials, hype, and new features, it can be extremely tempting to rush into this new purchase. But, you need to be very careful. Don’t let the new iPhone stand in the way of any important financial goals you are trying to achieve, and don’t let it dig you into a deeper financial hole. Instead, use our tips below to find iPhone alternatives and other creative strategies to save on the cost of smartphones.
Why does it matter?
We can’t stress enough the importance of this financial decision. Something as simple as the phone you choose to purchase can have serious consequences for your financial future? Want proof? Take a look at how long certain iphone plans will cost you over time:
As you can see, that is a lot of money over a two-year period. A savvy consumer will think about ways to reduce the costs, including iPhone alternatives, and we are going to cover some of these strategies.
Keep the phone you already have
Your best bet might be to keep the phone you already have. By postponing your upgrade you can save money and wait for the price to lower some. Also, if you are in a contract, you won’t have to worry about paying extra fees for cancelling early. For most companies, the early termination fee can be rather expensive. At AT&T for example, you will pay $325 minus $10 for each month you have paid for service. Even if you have been under contract for one year, you still have to pay $205 in cancellation fees. In general—not a good idea.
The one exception to this might be if you have a recent smartphone model that you can sell for a high price. This way, the profit you make from selling your phone can be used to pay off your early termination fees and pay for the new phone.
Trade-in sites are paying between $325 and $350 for a used iPhone 5. Even the iPhone 4 models sell for about $150 on these sites. But you can make even more money by selling to an individual. Many people on tech websites have reported selling used their used iPhone 5 for over $500!
[Read more: Tips on how to sell your iPhone]
Let’s take an average of these two figures, say $400, and look at how much you can save with the “trade in and switch carriers” strategy. You sell your iPhone 5 for $400 and then cancel your AT&T contract after only one-year of service. So, you have to pay $205, leaving you with $195. You then buy the new iPhone with a new carrier for $199, which in essence only costs you $4. There’s a winning strategy! This won’t work for everyone, though, and depends on your carrier and particular situation.
Buy an older model
If you don’t have a nice smartphone yet, that doesn’t mean you have to settle for the pricey iPhone. There are much cheaper options out there. Take a look at how these older models can save you some money compared to their new counterparts.
You can also look at buying used older models, but just be sure to examine each phone carefully.
[Read more: Tips for buying a used smartphone]
Drop the contract
You will save the most money by choosing a cell phone and plan that don’t have a contract. That’s because there are some great prepaid deals on the market right now, and you keep your flexibility as a consumer. In other words, you aren’t constrained by a contract.
What you don’t get with this option are two important things—the newest technology and cheap phones.
With a traditional smartphone plan, you get to pay a low price for the phone when you start a new contract, and some of this cost is built into your monthly installments. When you don’t have a contract, you have to pay the retail price of the phone up front (in most cases). And, prepaid plans tend to exclude the nicest, high-ends phones. So if you aren’t careful, you can end up paying high-dollar for low-tech!
But these plans work great for budget-savvy consumers, those struggling to pay off debt and get back on their feet, and those who just don’t care that much about having the newest and flashiest gadgets. Let’s take a look at some of the best deals out there in the prepaid market:
As you can see, you have lots of options to avoid paying a high price for the new iPhone. Depending on your financial situation, you can get creative to snag the phone at a good price, or you might be better off using a much cheaper alternative. If you choose the latter option, you will have more money to save for your financial goals and will put yourself on a path to a healthy financial future.
Are you buying the iPhone 5s? Or do you know any other iPhone alternatives? Let us know in the comments below!