We’re all friends here, so let me just cut to the chase. Paying a monthly charge to insure your cellular device is a waste of money. Leasing your cellular device is a rip-off. And, financing to pay for your cellular device is just fiscally off-the-charts irresponsible.
Now, you can take that information for what it’s worth and go on about your business, or you can keep reading as I elaborate on the above three points.
CELL PHONE INSURANCE IS A WASTE OF MONEY. Yes, cell phones break. They break easily and often. At the same time, however, there are about as many cell phone repair shops around, now, as there are nail salons, so the market is completely saturated with quick ways to get your phone fixed when something happens. Cell phone repair shops cost money, money you may or may not always have laying around when you need a new screen or other random, fragile cell phone part. However, when you pay your cell phone provider a monthly rate for cell phone insurance, you have that payment plus you still have a deductible when (not really “if”) your phones needs repair.
As an example from my own life to put this cell phone insurance into perspective as the crock it really is:
My cell phone provider charges $7/month for coverage. (This doesn’t even include the taxes on that amount, and don’t even get me started on all of the taxes and fees that cell phone providers are able to get away with charging on top of everything else…) $7/mo equals $84/yr for the insurance. When I drop my phone face-down on the tile floor and (duh) it shatters into a beautiful snowflake of glass shards, my insurance coverage requires a $100 deductible payment AND I have to send my phone off to the repair place they specify so not only am I out $184, but I am also without my phone for a week or more. Based on several times of paying for this exact repair, I know that my cell phones usually cost $100-125 for a new screen and the repair. So, I am out time and money on a simple repair.
With the above example in mind, now consider that on my cell phone plan, I don’t just have one phone. I’m a mom. I have kids, each with their own phone. If I paid for insurance coverage for everyone’s phone on my plan, I would be paying an extra $420 a year just for this insurance that I’ve just established doesn’t really insure anything. What if you put that “insurance” money in a tin can at the back of a kitchen cabinet, instead…now THAT would be an insurance policy that would actually be helpful next time your phone gets broken!
Although broken screens are the most common cell phone repair, there are certainly plenty of other issues that can come up with your cellular device that may be a bit more costly and may make you think about justifying the cost of the insurance. I’m here to de-bunk those, as well. When a cell phone is damaged beyond the point that a $150 fix and a couple of hours at a cell phone repair shop will get you back up and running, the next best solution is one of the two following options:
- Always have a back-up. It may be ugly and outdated, but we all have cell phones that we used in the past and then upgraded beyond. They’re in the back of our sock drawer, or thrown into a junk pile on a desk, but they’re there. Keep up with at least one workable backup option, complete with it’s charging cord and any accessories you still have for that phone. Then, if you get in a bind and can’t afford to fix your fancy upgrade, at least you have a back-up phone to switch back to if need be.
- Hit up Ebay. I am a huge fan of eBay for buying cell phones! This is especially true when a phone gets destroyed beyond fixing (I do have kids, after all), and I don’t want to throw a bunch of money at the problem. I usually shoot for finding a gently used or manufacturer refurbished phone and have not been disappointed in many times of going this route both for phone fixes and upgrades. You get exactly the phone you want AND have the flexibility to compare prices and options that you may not have through your cell phone provider. *Just be sure that the phone you purchase is compatible with your provider, but that is as simple as putting your provider’s name in the search and go from there.
Opt out of the insurance and make a better plan. It pays for itself immediately…no matter how fancy your taste in phones may be!
LEASING A CELL PHONE IS A COMPLETE RIP-OFF. I don’t know if this is an option available across all cell phone providers, or just the one I use, but as soon as I saw the phone-leasing option, I thought, PLEASE tell me no one in their right mind would ever fall for this trick! 5, 10, 15, 25, 30 dollars per month to borrow a phone. Seriously? One of the great things about cell phones is that when you upgrade beyond them, you can keep the “old” phone as a back-up OR get on eBay (or other selling option) and get some money for it! If you lease your phone, you pay and pay and pay out, then have nothing to show for your payments when the terms are up. Don’t fall into this trap. It’s a complete rip-off!
BUYING A CELL PHONE ON CREDIT IS ABOUT AS FISCALLY IRRESPONSIBLE AS THEY COME! Financing is for big-ticket items. Houses. Sometimes cars. Building big businesses into bigger businesses. NOT…I repeat NOT…for buying the latest and greatest iPhone. If you need a $700 cell phone, you need to find a way to save your money and purchase it outright. If you cannot afford a $700 cell phone, then buying one on credit is not going to do you any fiscal favors, no matter how you want to justify it. Seriously, people, insisting on purchasing an already tremendously overpriced item AND pay finance charges on top of the sticker price. Do you even realize what you’re doing. Would you ever say to your cell phone sales person, “Yes, I really want this phone. I know the pricetag says it’s $700, but I am actually going to pay you $850 PLUS TAX for it. Sound good?” That, my friends, is what you are doing when you buy a cell phone on credit.
All this being said, always remember that as soon as you activate a new cell phone, the next, latest, and greatest version is about to be released. The market is moving so fast and keeping up costs BIG BUCKS. None of us needs the newest phone every time it comes out. If YOU can afford it, more power to you…enjoy not having anything more important to spend your money on. (eh, hem…world hunger…global warming…education in America…) If you cannot afford the latest upgrade every time, no one will think any less of you (and if they do, that’s a whole other topic for a whole other time).
Pay for what you can afford, and spend your hard-earned money wisely so that your money is working for you, rather than you always having to work ridiculously hard and have nothing but bad credit and debt to show for your efforts.
Until next time, my friends…
Make it a great day,