Posted by Jill Boynton on February 11, 2019
Last night my son Sam called and asked for my advice; he cracked the screen on his phone and was quoted $380 to fix it. He didn’t know if that was worth it, or if he should buy a new phone. A lot of questions came up: how much did he still owe on his current phone? How long is he likely to keep this phone? What is the cost of a new phone? Pretty soon our heads were spinning! That’s when I told him to do a “cost analysis”.
Sam took out a piece of paper and made 3 columns: “Months 1-12”, “Months 13-24” and “Months 25-36”. Our goal was to compare the cost of both options going out 3 years. Sam filled in each column with all costs associated with option 1 (to fix the screen). These costs included the repair cost, current monthly payments and (18 months from now) the cost of a new phone (that’s when he decided he will replace this one). Then we did the same thing on the line below for the other option, which is to replace the phone now. Pretty soon it became clear that fixing the phone was cheaper than buying a new one, even if it did cost him $380.
I find that almost always, in situations like this where the pros and cons are not overwhelming in one direction, getting out the pencil and calculator is a good solution. Sometimes the answer is very clear when the data is in front of you in black and white.