U.S. Markets closed

How to Own an iPhone Without Paying (a Fortune) for It

Jennifer Tuohy
$_57

 

Want to know a secret? You don’t have to pay upward of $70 a month for the rest of your life to own the top of the line iPhone. For years, cell phone companies have conditioned us into believing an outlay of $200 and a sky-high monthly contract is the only way to stay on top of today’s technology. But 2014 is the year of the consumer, and competition is blowing the smartphone field wide open. With these money saving tips, you can shave dollars off your monthly communications bills while still holding the latest device in your hot little hands.

Consider the carriers carefully.

The four big guns in the cell phone carrier space have begun to pay attention to consumer cries of pain from their monthly cell phone bills, and are offering more variety and, in some cases, lower prices. For the most part, however, it’s smoke and mirrors. Take Verizon’s new More Everything plan. You pay only $31.47 to take home a gorgeous new iPhone 5s stocked with 32GB (anything less is a waste). But then you spend $111.24 a month for the next two years. That’s $446 more than Verizon’s standard plan. Currently, these are the best carrier-based options for a new 32GB, iPhone 5s with a two-year contract, based on unlimited Talk & Text and 1GB of data:

Screen Shot 2014-04-16 at 12.56.34 PM

Best Bet: Buy your phone.

While it looks like you’re only paying $200 or so for that 32GB 5s, in reality, you’re paying the full retail price of $750, just spread out over two years of the contract. In some cases, you actually pay more, especially if you don’t take advantage of the upgrade option when your contract is finished. Someone who keeps their iPhone 5s on Verizon for four years will end up paying $4,100. However, if you choose T-Mobile’s new plan, after 24 months, they recognize that you’ve paid off the phone and your bill goes down to $50 a month, a savings of almost $1,000 over Verizon.

While spending $750 up front for the phone doesn’t offer a big savings if you stick with one carrier, it does offer you the flexibility to switch plans and carriers more easily, potentially saving more. Another money-saving option is to buy your 5s on the secondary market. You can often pick up a used, excellent condition 5s on eBay for as much as $250 less than retail.

Bring your own device.

Once you’ve bought your own phone, you can take advantage of lower pre-paid rates offered by the carriers:

Screen Shot 2014-04-16 at 12.56.48 PM

If you go the BYOD route, make sure the phone you are buying will work with the carrier you plan to use. This Lifehacker article will help you figure out which phones work with which carriers.

Adopt an alternative lifestyle.

Today, there are a myriad of smaller companies reaching for a slice of the mobile pie. These “Mobile Virtual Network Operators” use the big carrier’s towers, so you are getting essentially the same service, but with more creative, non-contract pricing structures. However, for most of these options the newest iPhone isn’t available, and you’ll have to step down to an iPhone 5, or (gasp) abandon iOS altogether:

Screen Shot 2014-04-16 at 12.56.51 PM

Ditch that data plan.

While life with a carrier can be more convenient, the real savings lie in ditching them all together. Akin to the trend of cord cutting — where consumers are attempting to cut out cable companies in order to save money on their monthly viewing habits — cutting out the carriers is not an easy solution, but it is a huge money saving one.

In the last couple years, many of the “Voice over IP” services have upped their game, making a Wi-Fi-only smartphone finally a viable option. Services such as Google Voice, Skype and Apple’s FaceTime can be configured to make your carrier-less iPhone work just like a regular phone. Throw in apps such as WhatsApp, Facebook Messenger and Apple’s Messages, and you have your text messaging component, too. The caveat, however, is that carriers will not currently let you have Wi-Fi-only plans for a smartphone.

The solution is to make your own. Purchase a mobile hotspot for about $100 or, if you have a tablet with a data plan, tether your phone to that. The catch is you’re back to relying on the carriers, but with no annual contract and no unnecessary charges for minutes and texts. Additionally, tablet and mobile hotspot plans offer much more data for your money. You can get 3GB a month from AT&T for an iPad for $30 a month, half the price of its cheapest smartphone plan. A Verizon Jet Pack 4G LTE Mobile Hotspot plan is $60 monthly, and you get 6GB available to up to 10 devices, allowing you to provide Wi-Fi to your laptop, tablet and smartphone for less than the price of a single smartphone plan.

Be sure to check that your plan allows tethering, however, and don’t pay a monthly fee for the privilege. Both the iPad and the iPhone have tethering built in for free, something the carriers sometimes neglect to mention.

Be savvy with your smartphone.

If all this sounds like just too much work and you want to stick with the subsidy model of the big carriers, you can still save money. Make sure you take advantage of free upgrades, and remember to get the most out of your old model by trading it in or selling it on a resale site such as gazelle.com or eBay. Cheap upfront rates have hidden the real cost of these computers from consumers; just because you only paid $300 for it two years ago, doesn’t mean it’s worth nothing today. Currently, a 32GB iPhone 5 is worth $230 on Gazelle, more than enough to pay for an upgrade to a 5s.

Don’t dismiss a downgrade.

If you don’t need the latest and greatest iPhone, then your options to save money expand greatly. Every time a new model is released, the older models become more affordable. You can buy a brand new unlocked iPhone 4s for $450, which, if you can keep it going for four years on a prepaid plan, offers incredible savings.

According to this New York Times article, smartphone technology has plateaued, and increasingly, each new release from Apple or Samsung or Motorola is less life changing than the last, meaning that the iPhone 5s you pick up this year could last you five years, making an initial outlay of $750 a lot more palatable (just $12.50 a month). The most common problem with extending the life of your iPhone is the battery. typically, within two years they start to struggle to hold their charge. But it is possible to change out an iPhone battery. You can attempt to do it yourself with the help of tools from websites such as iFixit.com or have it done for you for about $60.

Smartphones are an essential part of life. As is the case with far too many essentials, consumers can all too easily be led down the path of least resistance and higher prices. Educate yourself on your options and choose the path that’s right for you.

Jennifer Tuohy is a freelance writer, editor and social media consultant who covers business and technology topics for eBay, where you can get your own used iPhone (like these) to start saving money on monthly bills. You can follow Jennifer on Google+ and at eBay.

More from Manilla:

We want your input!  Take our quick survey.