The value of a new car drops thousands of money the instant it leaves the dealership lot. During the first year of ownership, that shiny new ride will drop 20 percent off it’s value, and nearly a third by the end of the second year. This exceptional rate of depreciation is exactly why the financially savvy look to buy a used vehicle, as a great vehicle with a lot of life left can be had at a huge discount.
Cell phones follow the exact same model, because consumers pay a premium for the latest and greatest technology. The definition of what is the latest and greatest changes rapidly, though. Today’s technological marvel is merely tomorrow’s middle of the road phone. In fact, everything changes so fast many of us don’t fully utilize the capabilities of the phone that we carry around each day. For example, I had a Galaxy S4 and after a year I shelled out extra cash to upgrade to the S5. I could barely tell the difference to be honest. I suspect there are many people out there that have the same customer experience as I did.
I decided to do a little research to find out just how much I could save buying a used cell phone that is at least one generation behind the latest and greatest. I searched Craigslist for the two leading flagship smart phones: The Apple iPhone and the Samsung Galaxy.
Latest Model: Galaxy S6
Retail Price From Mobile Service Carriers: $695
Option 1: Galaxy S5
Average CraigsList Price: $325
Option 2: Galaxy S4
Average CraigsList Price: $220
Latest Model: iPhone 6 (16GB)
Retail Price From Mobile Service Carriers Price: $650
Option 1: iPhone 5S (16GB)
Average Craigslist Price: $212
Option 2: iPhone 4S (16GB)
Average Craigslist Price: $124
Buying a Galaxy that is one generation behind will cut the cost of your phone in half when compared to the latest model. For the iPhone, you can get the last generation for less than a third of the cost of a new iPhone 6. That’s a savings of $438! There are undoubtedly those reading this who can easily list the options and features we’d be missing out on if we purchased the previous generation phone, but there are many of us who couldn’t care less about them because we are content to just check our email, update our Facebook status, and call our spouses on our way home from work.
So how much can you save really?
Times have changed. The economy is good, and many people are again asking whether $438 a year is really that big of a deal. Sure, that $36 or so a month on the surface doesn’t seem like much, but the phone is hardly the only culprit for most people. Add in the $60 for a rarely used cable TV subscription, $200 for not spending the time to refinance, another $100 for not periodically getting a better deal on all the insurances and other monthly services you already pay for, and the total can add up.
Look. I’m not saving that you shouldn’t buy a phone. I have a iPhone 6 myself. All I’m saying is to run the numbers, get off your butt and do what you already know will save you money and you won’t need to complain in a few decades why a couple of your friends can afford to fly everywhere after retirement all the time. Because guess what? You get to join them