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People cannot buy a phone outright. It's that bad. We're literally financing a $500-1000 device because they can't take the hit up front. Now I'm sure most peop

People cannot buy a phone outright. It's that bad. We're literally financing a $500-1000 device because they can't take the hit up front. Now I'm sure most people here could swing a phone tomorrow if they needed to say theirs was stolen, but you gotta think about how many people just can't. How about tires, there are places to rent tires. Financing a car? Common. 8 payments to put two front tires on your car? Seems insane, but for a lot of people in America it's either that or you keep the donut on for a few more months.

meddlepal 8y ago
The problem is largely people buying things they cannot afford. Everyone wants a smart phone, a large television, a game console and a bunch of other junk. But what you want is not necessarily what you can afford. Now I am not necessarily disagreeing with your point. There are legitimate life needs that people cannot afford (e.g. the tires and car you cited), but nobody needs a $500-$1000 smart phone. Nobody needs a top of the line television, computer, internet connection or subscriptions to all the fancy on-demand media services... and yet by and large American's want these things.
coryrc 8y ago
A car isn't a necessity. A $500-$1000 phone is not a necessity. These are bad choices people make. Why they make those choices is subject to many theories, but their situation is entirely within their power (but maybe not knowledge) to fix.
- yammajr 8y ago
  > A car isn't a necessity If you happen to live in a city. If you live outside a big metro area, at least in the US, a car absolutely is a necessity. Where I live, there are no buses, no cabs, no uber, nothing. I don't have children or need to haul large loads frequently, so I might be able to make it work, but it would be a HUGE quality of life hit, necessitating taking a different job nearer me which almost certainly wouldn't pay as well as what I make now, moving closer to work - if I can find anything that's nearby and reasonably priced - and/or spending large amounts of time walking/biking. If I did have children or other dependents, there's just no real way I could expect to not have a car.
  - PenguinCoder 8y ago
    I agree and my situation in regards to Uber/public transportation is the same. People who say a car isn't a necessity in America, have likely never lived out of a big city. I live in a rural area (not quite USDA definition), where the closest store is 12mi one way. It's a convenience store/gas station. The grocery store is 3mi more up the road. I have kids, animals, and somewhat of a small hobby farm (chickens, garden, etc). It is an absolute necessity for me to have a car and all the costs that entails. I'd rather give up my cell phone than the car.
savanaly 8y ago
A phone of that cost is a luxury item. Now I'm in the category of people who can afford that and I want to make sure I'm not just living in a bubble when I dismiss what you said, so I opened up a tab and typed in "cheap phone" to google. The first result is a $20 phone from best buy. It appears to do calls, take pictures and video, do web browsing and have some library of available apps. So I don't think "People cannot buy a phone outright" is a very helpful way to frame it. Rather say that "people cannot buy a top of the line luxury brand-name phone outright". Which doesn't sound as bad, right?
- flukus 8y ago
  You're not wrong, people that can't pay cash for a phone shouldn't be buying one. But there are a lot of expenses in that range that are more of a necessity, car tyres that OP mentioned, other car expenses, removalists fees and bond payments, a fridge breaking down. There's some even bigger ones you can't put off like funeral expenses or missing work for medical reasons. A $500 phone gets used as an example because it's something people here will buy somewhat often and without much thought but it's missing the point to argue that there are cheaper phones.
  - sjg007 8y ago
    You can finanace an iPhone for basically 0%.. and it could last you 5+ years. Example are the iPhone 5s that are still quite usable.
    - beatgammit 8y ago
      And how much does that cost compared to less expensive options? At $1k for an iPhone, you're paying $200/year if it lasts you 5 years, more if you stay on the upgrade wagon. My phone cost me $250 (Moto x4) and it's an improvement on my previous $400+ phone (Nexus 6). I could buy a new one nearly every year for the price of making payments on an iPhone. But people see a top-of-the-line product at a monthly cost they can afford and jump on it, not realizing that they could buy a cheaper option and get much more financial stability, and thus much less stress. And yes, it's not just phones, but to me it's a symbol of the other decisions you make it life. Nearly everyone I know who complains when payroll is a day or two later than expected has a way nicer phone than me, drives a nicer car, and eats out a ton. I, on the other hand, have a house I can afford, am well above average on retirement, and have enough cash in the bank to survive without a job for several months without touching my investments. If people realized that they could be out of debt in just a couple years of living more frugally, I'm sure they'd do it. But people just assume they'll be stuck, so they don't even try and spend everything in luxuries now.
zaroth 8y ago
I think there’s nothing inherently wrong with spreading out payments for durable goods over the lifespan of the device, only if it can be done at a reason APY. The problem with pay-as-you-go is the interest rates, penalties, fees, etc. When AT&T or Apple sells me a phone with a monthly payment, I take it because it’s literally the price divided by 24 payments. Zero percent interest. No brainer. Better debt servicing and better risk assessment and higher trust in buyers would bring down default rates and decrease APY making these programs reasonable and proper. At the extortionate rates necessary due to the extreme default rates and difficulty in collecting payments, they are terrible.
umvi 8y ago
I'm a well off software developer. I've been using a $50 Nokia Lumia 520 for the past 3 years or so. When this one dies I'll likely "splurge" and buy a Nokia 2 ($100). That our I'll buy a Blu phone ($50). I would consider my neighbors poor. They have state-subsidized rent, for example. They use food stamps. They also smoke a pack a day each. All they need to do to buy a new phone is not smoke for 5 days. Not that it matters, they all have iPhones inexplicably. It's just a viscous self-feeding cycle and I don't know how to help them break out of it.
- gammateam 8y ago
  Being able to send the same emojis to communicate effectively and having blue bubbles is a lot more valuable than you might think If you are part of any professional membership or subscription to get you through life, then there are some similarities The point being that maybe they overspend on conspicuous consumption, using an iphone alone isnt an indicator in isolation. Who knows where the price limit is, but low interest low velocity on phone payments with easy upgrades makes this practical
  - loco5niner 8y ago
    >Being able to send the same emojis to communicate effectively and having blue bubbles is a lot more valuable than you might think That's pretty hard to believe.
    - reidjs 8y ago
      I thought so too for a long time, but I have met a woman who confused in me that she will not date men if they have an Android phone. I doubt she’s the only one.
      - ams6110 8y ago
        Hope you didn't ask her for a second date.
      - loco5niner 8y ago
chrissam 8y ago
It seems like a bad decision to pay $500-1000 for a smartphone if you can't pay upfront. My sense is that people push their financial situation to the limit in order to get more stuff faster. You might say "if they had more money it wouldn't be an issue" but my feeling is that, for most of these people, if they had 20% more money, they'd just find the new limit. I don't necessarily fault this behavior, if the things you're buying make you happy then maybe it's perfectly rational. But if that's true, it seems nonsensical to define poverty as "precariousness of one's finacial situation". The only definition of poverty that makes sense to me is the material one.
AnimalMuppet 8y ago
If they charged you $500 up front for a phone, it would be obvious how much it's not a necessity, and they would sell many fewer phones. They would therefore sell service to many fewer phones. They don't want that. So they follow the make-your-compliment-cheap strategy (if you're selling razor blades, make the handle really inexpensive). Edit: Thanks for the downvote, stranger. Care to explain?
esotericn 8y ago
Well, sure, but that's a "people cannot buy a phone outright because people cannot buy a phone outright" problem. If you can't afford a 1000 dollar phone, then taking a loan out to buy one is completely illogical. It's a depreciating asset with diminishing returns - a 200 dollar phone does basically all the same things. The issue is that loans have a psychological effect on some individuals which makes them more like to spend more than they would otherwise. They end up in a sort of situation where wealth doesn't exist at all and all future income is accounted for already.
zjaffee 8y ago
Except the thing about all of the items you've mentioned is that you can get stupidly low rates, and in some cases no interest loans, my savings account interest rate is higher than that of my car loan. You're better off taking out the loan to build credit at this point than just paying for something outright.
- toasterlovin 8y ago
  > my savings account interest rate is higher than that of my car loan Then you overpaid for your car.
scarface74 8y ago
Why would you not “finance” the phone? All the carriers basically have payment plans where they just take the cost of the phone and divide payments by 24-36 months. You don’t pay interest and there is no markup.
- toasterlovin 8y ago
  Because then you’re paying a ridiculous amount of money for your monthly plan. You should be paying for your device outright and then using it on a prepaid carrier. The reason the large carriers finance at 0% interest is because it ties you to their exhorbitant plans for 2 years.
  - scarface74 8y ago
    For $70 a month from T-mobile all fees included you get unlimited talk, text, data and 3G tethering. The price goes down to $60 a month for two adults - yes both adults need cell phones, how else are they going to be reachable for jobs and if one is at work and the other is at home? I know my older son doesn’t have cable or home internet and he uses his phone for everything including entertainment, internet connectivity to his computer, etc. I’ve known families with children who were going through things and the kids studied on a hand me down laptop and use their phone’s internet access and tethering to do homework.
    - androidgirl 8y ago
      And my prepaid plan is all unlimited at $30 a month on my phone I bought all cash for $200. It's much cheaper!
      - scarface74 8y ago
        Actually, we are paying $40 a month for each phone on a family plan but I was making an apples to apples comparison so I said $70. How long will your $200 phone get updates? How long will it be fast enough to run the latest apps? If you bought a 32GB 5s in 2015 for $499, you would still be getting updates and it is still as fast as most midrange Android phones. I bought a 64GB iPhone 6s in 2015 for $749 and just recently gave it to my son. It is still going strong, and if history is any guide, it should still get updates for at least another 2 years. It’s also faster in single core performance than any but the highest end Android phones. https://bgr.com/2015/09/10/iphone-6s-iphone-6-iphone-5s-prices/ https://bgr.com/2015/09/10/iphone-6s-iphone-6-iphone-5s-pric...

meddlepal 8y ago

The problem is largely people buying things they cannot afford. Everyone wants a smart phone, a large television, a game console and a bunch of other junk. But what you want is not necessarily what you can afford. Now I am not necessarily disagreeing with your point. There are legitimate life needs that people cannot afford (e.g. the tires and car you cited), but nobody needs a $500-$1000 smart phone. Nobody needs a top of the line television, computer, internet connection or subscriptions to all the fancy on-demand media services... and yet by and large American's want these things.

coryrc 8y ago

A car isn't a necessity. A $500-$1000 phone is not a necessity. These are bad choices people make. Why they make those choices is subject to many theories, but their situation is entirely within their power (but maybe not knowledge) to fix.

yammajr 8y ago
> A car isn't a necessity If you happen to live in a city. If you live outside a big metro area, at least in the US, a car absolutely is a necessity. Where I live, there are no buses, no cabs, no uber, nothing. I don't have children or need to haul large loads frequently, so I might be able to make it work, but it would be a HUGE quality of life hit, necessitating taking a different job nearer me which almost certainly wouldn't pay as well as what I make now, moving closer to work - if I can find anything that's nearby and reasonably priced - and/or spending large amounts of time walking/biking. If I did have children or other dependents, there's just no real way I could expect to not have a car.
- PenguinCoder 8y ago
  I agree and my situation in regards to Uber/public transportation is the same. People who say a car isn't a necessity in America, have likely never lived out of a big city. I live in a rural area (not quite USDA definition), where the closest store is 12mi one way. It's a convenience store/gas station. The grocery store is 3mi more up the road. I have kids, animals, and somewhat of a small hobby farm (chickens, garden, etc). It is an absolute necessity for me to have a car and all the costs that entails. I'd rather give up my cell phone than the car.

savanaly 8y ago

A phone of that cost is a luxury item. Now I'm in the category of people who can afford that and I want to make sure I'm not just living in a bubble when I dismiss what you said, so I opened up a tab and typed in "cheap phone" to google. The first result is a $20 phone from best buy. It appears to do calls, take pictures and video, do web browsing and have some library of available apps. So I don't think "People cannot buy a phone outright" is a very helpful way to frame it. Rather say that "people cannot buy a top of the line luxury brand-name phone outright". Which doesn't sound as bad, right?

flukus 8y ago
You're not wrong, people that can't pay cash for a phone shouldn't be buying one. But there are a lot of expenses in that range that are more of a necessity, car tyres that OP mentioned, other car expenses, removalists fees and bond payments, a fridge breaking down. There's some even bigger ones you can't put off like funeral expenses or missing work for medical reasons. A $500 phone gets used as an example because it's something people here will buy somewhat often and without much thought but it's missing the point to argue that there are cheaper phones.
- sjg007 8y ago
  You can finanace an iPhone for basically 0%.. and it could last you 5+ years. Example are the iPhone 5s that are still quite usable.
  - beatgammit 8y ago
    And how much does that cost compared to less expensive options? At $1k for an iPhone, you're paying $200/year if it lasts you 5 years, more if you stay on the upgrade wagon. My phone cost me $250 (Moto x4) and it's an improvement on my previous $400+ phone (Nexus 6). I could buy a new one nearly every year for the price of making payments on an iPhone. But people see a top-of-the-line product at a monthly cost they can afford and jump on it, not realizing that they could buy a cheaper option and get much more financial stability, and thus much less stress. And yes, it's not just phones, but to me it's a symbol of the other decisions you make it life. Nearly everyone I know who complains when payroll is a day or two later than expected has a way nicer phone than me, drives a nicer car, and eats out a ton. I, on the other hand, have a house I can afford, am well above average on retirement, and have enough cash in the bank to survive without a job for several months without touching my investments. If people realized that they could be out of debt in just a couple years of living more frugally, I'm sure they'd do it. But people just assume they'll be stuck, so they don't even try and spend everything in luxuries now.

zaroth 8y ago

I think there’s nothing inherently wrong with spreading out payments for durable goods over the lifespan of the device, only if it can be done at a reason APY. The problem with pay-as-you-go is the interest rates, penalties, fees, etc. When AT&T or Apple sells me a phone with a monthly payment, I take it because it’s literally the price divided by 24 payments. Zero percent interest. No brainer. Better debt servicing and better risk assessment and higher trust in buyers would bring down default rates and decrease APY making these programs reasonable and proper. At the extortionate rates necessary due to the extreme default rates and difficulty in collecting payments, they are terrible.

umvi 8y ago

I'm a well off software developer. I've been using a $50 Nokia Lumia 520 for the past 3 years or so. When this one dies I'll likely "splurge" and buy a Nokia 2 ($100). That our I'll buy a Blu phone ($50). I would consider my neighbors poor. They have state-subsidized rent, for example. They use food stamps. They also smoke a pack a day each. All they need to do to buy a new phone is not smoke for 5 days. Not that it matters, they all have iPhones inexplicably. It's just a viscous self-feeding cycle and I don't know how to help them break out of it.

gammateam 8y ago
Being able to send the same emojis to communicate effectively and having blue bubbles is a lot more valuable than you might think If you are part of any professional membership or subscription to get you through life, then there are some similarities The point being that maybe they overspend on conspicuous consumption, using an iphone alone isnt an indicator in isolation. Who knows where the price limit is, but low interest low velocity on phone payments with easy upgrades makes this practical
- loco5niner 8y ago
  >Being able to send the same emojis to communicate effectively and having blue bubbles is a lot more valuable than you might think That's pretty hard to believe.
  - reidjs 8y ago
    I thought so too for a long time, but I have met a woman who confused in me that she will not date men if they have an Android phone. I doubt she’s the only one.
    - ams6110 8y ago
      Hope you didn't ask her for a second date.
    - loco5niner 8y ago

chrissam 8y ago

It seems like a bad decision to pay $500-1000 for a smartphone if you can't pay upfront. My sense is that people push their financial situation to the limit in order to get more stuff faster. You might say "if they had more money it wouldn't be an issue" but my feeling is that, for most of these people, if they had 20% more money, they'd just find the new limit. I don't necessarily fault this behavior, if the things you're buying make you happy then maybe it's perfectly rational. But if that's true, it seems nonsensical to define poverty as "precariousness of one's finacial situation". The only definition of poverty that makes sense to me is the material one.

AnimalMuppet 8y ago

If they charged you $500 up front for a phone, it would be obvious how much it's not a necessity, and they would sell many fewer phones. They would therefore sell service to many fewer phones. They don't want that. So they follow the make-your-compliment-cheap strategy (if you're selling razor blades, make the handle really inexpensive). Edit: Thanks for the downvote, stranger. Care to explain?

esotericn 8y ago

Well, sure, but that's a "people cannot buy a phone outright because people cannot buy a phone outright" problem. If you can't afford a 1000 dollar phone, then taking a loan out to buy one is completely illogical. It's a depreciating asset with diminishing returns - a 200 dollar phone does basically all the same things. The issue is that loans have a psychological effect on some individuals which makes them more like to spend more than they would otherwise. They end up in a sort of situation where wealth doesn't exist at all and all future income is accounted for already.

zjaffee 8y ago

Except the thing about all of the items you've mentioned is that you can get stupidly low rates, and in some cases no interest loans, my savings account interest rate is higher than that of my car loan. You're better off taking out the loan to build credit at this point than just paying for something outright.

toasterlovin 8y ago
> my savings account interest rate is higher than that of my car loan Then you overpaid for your car.

scarface74 8y ago

Why would you not “finance” the phone? All the carriers basically have payment plans where they just take the cost of the phone and divide payments by 24-36 months. You don’t pay interest and there is no markup.

toasterlovin 8y ago
Because then you’re paying a ridiculous amount of money for your monthly plan. You should be paying for your device outright and then using it on a prepaid carrier. The reason the large carriers finance at 0% interest is because it ties you to their exhorbitant plans for 2 years.
- scarface74 8y ago
  For $70 a month from T-mobile all fees included you get unlimited talk, text, data and 3G tethering. The price goes down to $60 a month for two adults - yes both adults need cell phones, how else are they going to be reachable for jobs and if one is at work and the other is at home? I know my older son doesn’t have cable or home internet and he uses his phone for everything including entertainment, internet connectivity to his computer, etc. I’ve known families with children who were going through things and the kids studied on a hand me down laptop and use their phone’s internet access and tethering to do homework.
  - androidgirl 8y ago
    And my prepaid plan is all unlimited at $30 a month on my phone I bought all cash for $200. It's much cheaper!
    - scarface74 8y ago
      Actually, we are paying $40 a month for each phone on a family plan but I was making an apples to apples comparison so I said $70. How long will your $200 phone get updates? How long will it be fast enough to run the latest apps? If you bought a 32GB 5s in 2015 for $499, you would still be getting updates and it is still as fast as most midrange Android phones. I bought a 64GB iPhone 6s in 2015 for $749 and just recently gave it to my son. It is still going strong, and if history is any guide, it should still get updates for at least another 2 years. It’s also faster in single core performance than any but the highest end Android phones. https://bgr.com/2015/09/10/iphone-6s-iphone-6-iphone-5s-prices/ https://bgr.com/2015/09/10/iphone-6s-iphone-6-iphone-5s-pric...