Will the New iPhone 8 and iPhone X Be Worth the Investment? (Nope.)

A few days ago, I was reading the news when I stumbled on an article I found both interesting… and appalling. CNBC explained that the new iPhone models would likely be more expensive than ever because of their pricier components.

But, how expensive?

The new iPhone 8, available for pre-order beginning this Friday, Sept. 15th, will start at $699 for the base model with 64 GB of memory. The 256 GB version costs $849. The larger iPhone 8 Plus, meanwhile, will cost $799 (64 GB) and $949 (256 GB).

But wait, it gets better: Apple just announced a special-edition, 10th anniversary iPhone X to be released in November. That one starts at a thousand bucks (well, $999), and extra memory can ratchet the price up to $1,149.

For a phone.

While that in itself is absolutely outrageous, it was CNBC’s commentary on the price that made me angry. Apparently, consumers needn’t worry about the cost of their new device.

Why? Because they can just finance it! “The price shouldn’t worry most consumers, though,” the author said. “Wireless carriers are adept at hiding sky-high prices in monthly device installment plans that are easier to swallow. Apple also finances its phones, allowing customers to pay off the full cost of a device over a year or more.”

This explains so much about the American psyche and why we constantly struggle with money. This finance-anything mindset is the reason the average indebted family had more than $16,000 in credit card debt this year, and the average new car loan is up over $30,000.

Heaven forbid any of us get in the habit of saving for what we want. Just roll it into a monthly payment plan and drain your bank account slowly instead. We do it with cars, clothes, electronics, and furniture… so why not our phones, too?

Related: Five Tactics for Getting a Better Cell Phone Deal

Why a $1,000 Phone Isn’t Worth the Investment

Obviously, I’m being facetious. I am sick and tired of companies hawking overpriced wares accompanied with clever payment plans that obfuscate the real cost. But I am even more tired of Americans falling for it over and over again, hook, line, and sinker.

And no, I’m not talking about your mortgage or your student loans, either. Most of us have to borrow money to purchase a home, and for many of us, student loans were essential to get through college.

I’m talking about the “extra” stuff in life. The $1,000 phones, the leather sectional sofas financed for 24 months, the flat-screen televisions on a payment plan, and of course the new vehicles with monthly payments of $500 or more spread out over 60 or even 72 months (or even longer).

The common denominator with all of these items is that they all depreciate quickly. Furniture, clothing, electronics, and cars are worth increasingly less each year after you buy them until – poof – they’re finally worth nothing. And that’s usually right about the time you pay them off.

And, don’t fool yourself into thinking a new iPhone will be any different. Sure, you can sell a two-year-old phone on Flipsy or eBay for a couple hundred bucks once you’re ready to upgrade, but the money you pay will mostly disappear into thin air.

An iPhone is not an investment, nor is it meant to be. Even worse, buying a new iPhone could actually keep you from building real wealth.

Related: Appreciation vs. Depreciation: A Powerful Insight for Your Spending Choices

How Much Could Your New iPhone Really Cost You?

If you’re on the fence between upgrading your phone or riding it out with the old one a little longer, you should think long and hard about financing your decision (or paying the $699 to $1,149 outright).

Not only will your phone be worth considerably less than you paid for it in a few short years, but you could miss out on the opportunity to build wealth – especially if you’re in habit of financing new phones over and over again for years.

Let’s take a look at how that math might work out. While the iPhone 8 and iPhone X aren’t available for purchase just yet, pricing and financing options are available on Apple’s website.

When it’s available in November, an iPhone X will start at $999, or $41.62 per month for 24 months. (While I’ll reiterate that it’s patently outrageous to pay this much for a phone, at least the 0% financing means you’re not paying interest on it to boot.)

Now let’s assume you keep that phone for two years, then resell it and upgrade to to the latest version, and repeat the upgrade cycle four more times. We’ll also assume — generously, given past experience — that new top iPhone models hold that $999 price for the next 10 years.

You’ve scored a new iPhone every two years for 10 years at this point, all while making a steady monthly payment on your phones of around $41.62. Also remember, that is on top of the amount you’re paying for actual cell service. This is just for the device itself.

An iPhone can fetch an average of about 30% of its original value on the resale market after two years, so if you’re methodical about selling your old phones (instead of passing them on to family members or leaving them to rot in an old drawer), each phone will cost you about $700 net after all is said and done, or $29 a month. Over 10 years, that means you’d pay a whopping $3,500 for five different cell phones.

Think that’s not a big deal?

Well, now let’s imagine you chose a different path. Instead of upgrading your cell phone every two years, you stuck with older, cheaper models instead. Each time your phone died or broke, you bought a cheap, unlocked model from any carrier for around $100. Your phones never had the best or newest technology, but you survived. Better yet, you invested your excess phone budget instead.

Here’s the long-term financial impact that choice could make:

If you invested that $29 a month for 10 years instead of shelling it out for new phones, and it earned a 7% return, you’d have $4,808 — and an old cell phone. That’s a combo I’d be happy to have in my purse.
Even if you stopped investing after 10 years, and simply left that money sitting in your account for another 20 years, your decade of using old phones would be worth $18,605 to you in retirement.
And what if you kept investing that $29 a month for all 30 years, getting by on cheap, used phones the whole time (you know: the ones with the standard-definition holograms instead of the new HD models)? You’d be looking at an extra $32,872 three decades from now.

This is what can happen when you let your money work for you instead of purposely letting it work against you. By investing your money, you can put the power of compound interest on your side. But if you spend it on depreciating assets like new iPhones instead, it will disappear.

The Bottom Line

The new iPhones are coming, and they’re more expensive than ever. But the message we’re trying to get across here isn’t really about this year’s iPhone models or how much they cost – it’s about what you give up when you choose to finance luxuries instead of saving for the future that’s coming whether you like it or not.

These particular phones might be all the rage right now, but there will surely be an iPhone XX if we wait long enough. Only you can decide whether to mortgage your future to get your hands on the latest technology – or whether to save for the future instead.

Holly Johnson is an award-winning personal finance writer and the author of Zero Down Your Debt. Johnson shares her obsession with frugality, budgeting, and travel at ClubThrifty.com.

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