Cell Phone Contracts and Critical Thinking

Admittedly, this post is out of our typical genre, but it’s something that bugs me and is way too long for a Facebook rant, so I decided this was the best medium to voice my opinion. 

While browsing the Internet today, I came across a T-Mobile ad, promoting zero money down on a new iPhone 5. What a great deal right? Well then the small print shows up. Customer will pay $27 a month for 24 months, which continue even if the customer cancels service with T-Mobile. So how much does $27 a month for 24 months become?

$648! (Although, this is $1 cheaper than buying it off Apple’s website.)

This comes in comparison to the $200 price you’d pay if you locked yourself into a two-year contract with your preferred cell phone provider, which comes with the obvious early-termination clause. These clauses seem to be the root of these no-contract phone plans. People don’t like being locked in. But looking at it from a financial perspective, the answer is obvious, which we can show through two situations.

Situation A:

You buy the new phone from T-Mobile and pay the $27 a month for two years. Even with the argument of the time impact on the value of money, you’re still looking at spending $620 present-day dollars. However, you’ve got a new iPhone that you use for any provider that supports the same structure as T-Mobile.

Situation B: 

You buy a new phone from any of the other Big Four (AT&T, Sprint & Verizon) for $200. Even if each of them requires a $35 activation fee, you’re looking at $235 before you start service. The very next day, you cancel your service, and receive a bill for your $4 in fee from one day of use, plus the early termination fee that ranges from $325 (AT&T) to $350 (Verizon& Sprint) (Interestingly enough, T-Mobile has the lowest cancellation fee at just $200, regardless of device). So to get to the same outcome as Situation A, you’ve reached a grand total of either $565 or $589, still saving up to $55 present-day dollars.

*If you want to make the argument that you would have to pay for one month worth of service in Situation B, that’s fine, but we’d also add that into value received. To compare that to Situation A plus one month of service, you still come out ahead.

Moral of the story: Don’t let these no-contract plans fool you. Wireless companies wouldn’t be offering them if they didn’t have something to gain. Each situation is different, but make sure and do the math before you decide one way or another. If you can’t do the math, make sure you get a phone with a damn good calculator and preferably a common sense app.

 

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Ridley’s on Football Outsiders

Our very own Mike Ridley recently had a guest article published on the highly-regarded Football Outsiders website. Make sure to check it out and let him know what an idiot he is in the comments.

What I Would Do if I Won the Lottery

Recently, a big Powerball Jackpot was awarded to a lucky man in New Jersey for the sum of $338 million. Of course, this got me thinking, “What would I do if I won that much money?” (“That much money” of course being the approximately $115 million the winner would receive after a taxes, assuming they take the lump sum amount). The obvious answer? Move, change my name and never talk to any of you sheep-shaggers again!

But in all seriousness, winning that large chunk of change is an astronomical, life-changing event. Just the thought of it makes me pensive (it’s likely the accountant in me). So I’ve gathered my thoughts and made of list of the ten things I would do if I won the lottery.

1. Change My Name: What? You thought I was kidding? I think changing your name is almost an absolute must. I don’t want all sorts of people coming out of the woodwork. All that would do is lessen my already pessimistic view of society. I don’t need people I haven’t seen since Bush Sr. was president stalking me on Facebook and asking for money. Speaking of…
   
2. Set Up a “Charity” System: It’s inevitable, when you come into large sums of money and people know the amount of said money, you’ll find yourself at the wrong end of a lot of requests, sob stories and charity cases. Do you have money to hand out when you win $115M? Sure, but you have to be smart about it. That’s why I’d set up a tier system based on the last time we spoke (work settings don’t count) that would look something like this:
   • > 5 years: I’ll look in my wallet and give you the largest bill I have. Since I’m too paranoid to carry $50’s and $100’s, you’re probably looking at some face time with Andrew Jackson.
   • 3-5 years: I’ll require a written request for funds, which must be notarized and be accompanied by two letters of recommendations. Max amount: $250. Lesson: Nothing’s ever free.
   • 18-36 months: This group is probably the group that I hung out with in college but lost contact with as the years went by. They must also submit a written request, but that’s it. Max amount: $1,000, but only with legitimate reasons.
   • 12-18 months: This is the trickiest of all groups. They don’t quite fit the natural fading of friendships as the previous group, but also haven’t talked to you for over a year, so what do you do? Answer: $1,000 36-month bonds. They’ll get a nice chunk of money, but they have to wait for it (yes, I’m evil, I know.)
   • 6-12 months: Since I moved almost 6 months ago to the day, this is the group of people who I had contact with in Boise but have failed to stay in touch with since my move, whether my fault or theirs. Also a tricky group to decide on, so they’ll get a $2,500 36-month bond or $1,500 towards a business idea (I encourage entrepreneurialism to its fullest).
   • < 6 months: Finally, my close group of friends. At this point I figure I’ve given away roughly $100,000. Mere pittance of my total sum of wealth, but then again, most of this is going to people that I would’ve never spoken to otherwise, so it seems fitting. Anyway, I don’t want to create a rapper-like entourage where my wealth is spent maintaining lavish lifestyles for 200 people (cough, MC Hammer, cough), so I’ll give each person a rather generous one-time gift. If the friends have children, they’ll receive a $25,000 gift towards their college fund that can ONLY be used for said purposes. Failure to comply will result if five high-priced lawyers directly up your wazoo (educating children is fundamental, don’t get greedy for yourselves!) If you don’t have children, I’ll pay off your car or help pay off your house, up to the previously mentioned $25,000 mark. This will allow you to have extra discretionary income without the option to blow it on stupid purchases. If you really want the money, you can sell your house and get the paid equity I gave you. It may be tough love, but it’s a smart financial move.
3. Buy a New Corvette: I know this isn’t a smart financial move, but hey, if I’m going to give away $100,000 to people who probably don’t know where I even live, I might as well spend that much on a car I’ve always wanted right? I’ve wanted a Corvette since I was 12 and if you don’t love the brand new ‘Vette, you should see a shrink.
4. Pay Off My House: This is obviously assuming that I don’t move. But I don’t need to go buy a huge beach-side mansion in Beverly Hills. My guess is I wouldn’t like to talk with most celebrities, let alone live among them. And besides, more house = more cleaning and I struggle keeping 1,600 square feet clean.
5. Take Care of My Immediate Family: Item #2 doesn’t apply to my immediate family. Everything I am/do is because of them. They won’t have to worry about anything financially again. (How’s that for a curveball?)
6. Start My Own Business: What would it be? I’m not sure yet, but I know that given the chance, I’m going to be my own boss.
7. Travel the World: You’ve only got one life (don’t confuse this with YOLO, for the love of all that is holy), experience as much as you can. Australia, Alaska, the Swiss Alps, Rome, London, all of it.
8. Finally Buy a Good Computer: I know that what’s top of the line today is old hat tomorrow, but having a computer that doesn’t crash every two days would be nice.
9. Set Up an Education Endowment: As previously mentioned, education is going to be key for this country moving forward. Our country seems to become more dependent, less educated and less motivated with each passing generation. Let’s at least teach a man how to fish before we decide to feed him.
10. Start a CrossFit gym: If you know me, you know that CrossFit is a big deal to me. Why not use my expansive wealth to open a state of the art gym to better myself and others? And this differs from #6 as this will be run as a non-profit. Think YMCA meets CrossFit.

Well, that’s my list. Feel free to tell me how evil I am or what you would do different in the comments.

Bale In The Justice League? No Thanks!

Over the weekend, rumors hit the internet, via Latino Review, regarding the much talked about (and equally maligned) Justice League film the guys at Warner Bros. keep trying to produce. The film, which was originally slated to be released years ago, is reportedly trying to tie to comic book franchises THE comic book franchise that they’ve had success with, Batman. After originally wanting to start fresh with new faces in the roles of the heroes of the League, DC is reportedly backtracking and is trying to convince Christian Bale to don the cowl once more. Supposedly, the fellas at the WB want to use the upcoming Man of Steel as a launchpad for a JL movie, much in the way Marvel did with Iron Man and The Incredible Hulk, with Bale apparently making a cameo in Man of Steel.