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Jul 16
The True Cost of an iPhone? Try $17,670 – News & Analysis – Insight & Advice – AAPL – AAPL
A $599 iPhone comes with a minimum service plan of $60 a month for two years. Outlay: $2,039.
But if it’s not a work expense, a customer in, say, the 25% tax bracket actually had to earn $2,720 to pay the bill.
Sound bad? It’s even worse.
Take an iPhone customer who’s 30 years old and is not maxing out contributions to his or her 401(k) retirement plan (few are).
In that case, the $2,720 could have been invested tax free. Earning a pretty reasonable 5.5% after inflation over the next 35 years, it would have grown to … $17,670.
I’m sorry I had to quote so much of it, but I couldn’t just explain the silliness of the argument. You had to see it to truly believe it. Next week: Why that pack of gum you bought last week cost you $20 at retirement!
(Via Daring Fireball.)
Jul 16, 2007 @ 07:56:26
And– and if you took all that money and bought lottery tickets and went to Vegas, why, you could be a multi-gazillionaire!
I agree, it’s a very stupid argument.
Jul 16, 2007 @ 09:22:25
On one hand, I agree that it’s an extremely stupid argument. On the other hand, it is a great example of how needless consumerism can impede true happiness. FYI, is true happiness A) having a iPhone from age 31-34, or B) not having to bag groceries at age 71 to pay for one’s geriatric prescriptions?
Jul 16, 2007 @ 14:22:56
I think the core idea is worth considering, but there’s a problem I have with the math. Presumably, a given person buying an iPhone isn’t upgrading from not having a cell phone at all. If an iPhone customer had instead stayed with his old plan, he still likely would have paid $40 a month for two years, for a total output of $960. Slightly under half the $2039 figure.
So it’s not so much a huge new budget expense, as it is a doubling of an existing one. The consideration, then, should be whether the upgrade is worth the loss in savings.
Jul 16, 2007 @ 22:31:12
I think considering the service plan cost (or upgrade from one’s existing plan, as Loren says) is legitimate, but everything after that in the original quote is silly on its face, because it applies equally to any purchase whatsoever — a different cell phone, a movie ticket, a hamburger, a book, Augie’s pack of gum…
Now, the columnist does acknowledge this at the end, that it’s about shopping vs saving in general, and that in general people should be saving more. But I think stringing the proposition out so far is just treating his readers like they’re four years old.