In the midst of debating if I should switch cell phone providers I noticed that the companies that offer cheaper monthly plans would require you to spend more to buy a new phone. However, the companies that have a more expensive monthly plan had cheaper deals to get the phone itself. In many ways it almost turns out the same financially. In this scenario, which plan would you opt for?
As an example, in one place the monthly plan would be $95 for the service and $100 for the phone. 80 X 12 = $1140/year plus the $100 for the phone is $1240. For the other company you would be paying about $40 a month for the service and about $750 for the phone. 40 X 12 = $480/year plus the $750 would be $1230. Service quality aside, would you prefer to go with the option that requires you to pay more upfront or to have the higher monthly fees?
Funny enough, in this case I would usually prefer the higher cost upfront. Financially speaking, it makes managing finance easier I feel. At the same time, I find it forces me to be frugal again right away since I just spent a lot of money and would then feel the need to replenish the funds faster to make up for it. There is the argument where you could invest that money instead so it’s better to go with the high monthly route. But I feel in these cases the extra cash you would have for investments is too small where I would rather have less total monthly bills to worry about.
This way too, for people that often irresponsibly spend saved money meant for specific bills it will be less of burden if such a thing was to happen. Again for me though, it’s just about trying to keep monthly bills in general as low as possible to enable better financial habits.