Will you be ordering the new iPhoneS or C ?

I have never borrowed money in my life. I lived very frugally before I had money. As a result I had no credit history at the time when I decided I wanted a cell phone to carry in the car for emergencies. AT&T and other carriers refused to sell me a phone because I had no credit history. The fact that I have paid my utility bills on time all my life did not go on my credit history! So the stinking phone companies would not sell me a phone.

Finally I stumbled on Verizon, which sold me a phone based on the fact that no credit history meant I had never defaulted on a debt.

It is a perverted system that considers you a bad risk for a telephone, even though you've paid your phone bills on time for a lifetime (I was about 50 at the time) just because you have always lived within your means!

I am opposed to capital punishment for people, but there are companies that I think should be executed: Dissolve the corporation and sell its assets. Companies that use a person's credit history to make non-credit-related decisions about their reliability, and credit-reporting companies that give bad ratings to people who have never failed to pay a bill, just because they don't spend money they do not have, are among them.

Living within your means, and therefore having no credit history, should not be a social stigma.

(P.S. After being unable to rent a car once, because I had a debit card rather than a credit card, I ended up getting a credit card. I pay my bill in full every month. So I suppose I now have a credit history. I sent away for it once, but couldn't actually decipher it, so I don't know, or care, what my credit rating is, since I have no intention of ever borrowing money.)

 

Huh, I thought I addressed those two arguments in a couple of posts. Once again though:

These comparos are for the AT&T network, with an attempt to include taxes and fees set at 20% for contract and 0% for off-contract. Corporate discounts (~ 15% on service charges) are not included but may be available to some contract customers

Costs:
Unlimited voice/messages/2.5 - 3.0 GB LTE HS data
-- Contract $135 - $150 a month, $35 activation fee, $199 + tax for iPhone: $3658 for two years
-- Off-contract $50 a month, $650 - 700 for iPhone: $1850 - $1900 for two years

Limited 450 voice/~200 messages/300 MB LTE
--Contract ~ $72 a month, $199 + tax for iPhone: $1943 for two years
-- Off-contract $30 a month, $650 - 700 for iPhone: $1370-1420 for two years.

 

JMD is suggesting that his social circles deride people using off-contracts plans by stereotyping them as people who do so because they *cannot* pass AT&T muster for a contract due to poor credit behavior, rather than out of choice.

In the old days off-contract implied inferior service and phones but that is no longer the case, so choosing a contract today mostly implies convenience, laziness or ignorance -- or living beyond one's means.* JMD may be an exception, since his choice is influenced by a company perk.
<<shrug>>

It is by choice for me, no doubt for you, and any other person who simply wants to save money. I really could not care less about conforming to, let alone paying for, silly social stereotypes. Actually, I am delighted to laugh all the way to the bank.

*I must also mention the irony that the presumed 'upper crust' are the ones picking a contract to avoid the upfront cost of buying the iPhone outright. That kind of suggests that the contract players are the ones with finances in a poor state, living by monthly payments, rather than the reverse, doesn't it ?

Only in America could a group that lives in life-long debt consider itself financially superior to those who avoid financing and contracts to save money and avoid indebtedness. LOL!

 

Last word, directed to small business owners:
Off-contract is wonderful. E.g.,

I'll buy the iPhone for $650 in OR,
and pay $42 a month for the 'unlimited' plan as defined in post #363
At tax time I'll deduct the entire amount as a company expense, thereby gaining a 45% discount.
After two years I will have spent $912* dollars before I sell the iPhone and repeat.

*In my specific case, I take advantage of my good credit to obtain cards that rebate me ~ 15 - 20% of my purchases. So my net total cost for two years of phone + service before I sell the iPhone and repeat the cycle is in the range of $620 - $670.

If you can show me a contract that is cheaper, I am all ears.

 

Borrowing to put a shiny consumer toy in your pocket is foolish.

I'm sure you are right that people with poor credit who want a cell phone must choose pre-paid. It is equally true that people with good credit but who are living on monthly payments (that is, lack financial reserves and are spending beyond their means) and want a new phone must choose a financed contract. Fwiw, I don't mind standing in line with the social outcasts of either stripe -- because I do not. I handle it all over the internet.

We should be able to agree that neither group are paragons of financial responsibility to admire. Which brings us back to a simpler and much more useful question: How to spend less money on a chosen cell phone and service ?

I've added what I know. You ?

 

If is the operative word here. I think it more likely your $800 investment is worth $300 in two years.

I am familiar with opportunity cost, I assure you. As a reasonably savvy investor I do not take on investment risk I do not have in savings I am able to lose and stay solvent, in my home, able to continue my lifestyle.

And frankly, it is a fool's errand to gamble that the difference is cost between a contract and off-contract phone can be made up by investment of the opportunity cost. Unless your name is Bernie M, but then bigger problems are on the horizon. Think about it a second: The unlimited contract player has spent about $250 on day #1, and then spends some $140 a month. The off-contract player spends $650 on day one, and then $42 a month. The opportunity costs cross after
250 + 140x = 650 + 42x
x = 5 months.

Do you *really* think prudent investment is going to recoup ~ $2000+ dollars from investing less than $250 (averaged) in 5 months ?? I realize you service plan is different -- I leave the exercise in your capable hands.

I liked your argument that you have a contract plan because of a company perk. The other arguments are really not rational or persuasive. In my opinion only, naturally.

 

No crystal ball here, but I do know rolling 10 and 20 year historical risk/returns for the past 100 years of the US stock market. For every well timed (for now) investment in Tesla there are *thousands* of investors who thought they were smarter than a low risk, low cost Vanguard fund. A lot of them were right ... for a while.

As an individual stock investor, sometimes you will do well and other times do poorly. If you are banking on much over 4-5% per annum real appreciation over time, I worry for you.

 

Not true when you correct for their habit of dumping poor performers from the index. Needless to say, the investors do not have the same privilege.

Coming back (somewhat) to this thread, nothing prevents you from investing your monthly subscription savings. Look at this simple SS I just made. You can set the

Monthly interest rate (mpr)
Off contract monthly charge (OFF_SC)
Contract monthly service charge (Contract_SC)

And watch the graph.

 

I hope not
All the data and formulae are there to look at.

Perhaps not obvious, I added in opportunity cost at whatever appreciation rate you care to hope for.

 

• Work
• Frugal, conservation driven Lifestyle
• Healthy Lifestyle
• Conservative Investing

My wife will tell you that I shut off the lights all the !!!&%'!! time. Since we own a new Prius and I am posting in the new iPhone thread, it is a fair guess we are not homeless.

 

Ah NO. Leaving the AC broken was my motivation to learn how to control the climate in my home with more natural means. When you cannot push a button, you have to use your noodle. And sometimes add in some sweat, but that is all good. Tomorrow I'll start the job of installing my remaining two windows still sitting in the garage. It will take a week, but what are vacations for ?

As for the cell plan, if you know of a way for me to spend less money than I do now for equivalent phone and service, please tell.