As the song from Napoleon Dynamite goes, “Yes, I love technology. But not as much as [money], you see.” And, pursuing the latest and greatest tech is one of the easiest ways to burn through cash. That’s why I try to be strategic about what I buy and how I buy it. In this particular case, I’m looking at buying a 2014 Moto X phone. Currently, I sport a Samsung Galaxy S III. There’s nothing wrong with the S3, but for various reasons, I’ve decided to upgrade. As far as service providers go, I’m with AT&T and have no plans to change (they have the best signal in my neighborhood). So, the question is, how do I make the purchase?
Well, AT&T has three options:
1. Two year contract
This is the old standby that most people choose. With this option I would pay $99 up-front, a one-time $40 activation fee, and $60 every month for the 300MB Shared Value Plan (I really don’t use much data).
2. AT&T Next
This is AT&T’s newest option. If I went this route, I would pay nothing up-front and as little as $18.24 per month on the 30 month installment plan. This is basically AT&T loaning you the money for your phone and you paying them back in 20, 24, or 30 monthly installments. After 12, 18, or 24 months you’re free to upgrade your phone and start a new installment plan. If you cancel your service, you still owe the remainder of your payments.
3. No annual contract
This option is also known as the BYOD (Bring Your Own Device) option. If you pay full price for your phone up front, which in this case AT&T sells the Moto X for $547, you’ll only pay $45 per month for your service. You actually save $15 per month. This is the simplest option.
So, let’s summarize the options we have here:
|Monthly Service Charge||$60||$45||$45|
|Monthly device payment||$0||$18.24||$0|
|commitment||2 years||2 years||None|
|Total Cost After 2 years||$1579||$1517.76||$1627|
Based on the total cost after two years, it looks like the winner is Next, although I’m not a big installment guy. But, hold everything! If I go out to Motorola’s site, I see the same exact phone for $399. Suddenly, the BYOD option is looking better – a total cost of only $1479 after two years. Now take another $50 off that price because it just so happens that Motorola is having a one-day-only sale that brings the price down to $349. So that takes my total cost down to $1429. That’s a savings of almost $90! Plus I own the phone out-right. No loans, no contracts, and I walk away paying less for the $350 version of the phone than I would’ve for the $100 version.
The lesson here is, look at all your options and add up your total cost before just blindly settling for the lowest up-front cost.
Have you upgraded your phone recently? How did you buy yours?