Google "iPhone X," and you'll get pages of advice on how to pre-order the new Apple phone as quickly as possible on its release date. The need for speed is justified by the fact that Apple is expected to have difficulty meeting demand for the newest addition to its iPhone lineup, with only around 2 million to 3 million phones available on launch day.
The projected shortages will occur because millions will race to buy a phone with a starting price of $999. That's right: More than a grand for a phone, once you factor in tax, and its going to fly off the shelves.
While you're waiting in line to buy -- or eagerly clicking your mouse to pre-order -- it might be a good time to look at some of the other things you might do with this four-figure sum of money instead of adding your cash to Apple's overfull coffers.
1. Pay off debt
The average American family has $8,377 in credit card debt and the average balance on student loan debt has reached $34,144. What if you diverted your iPhone cash to paying down some of this debt?
If you make 3% minimum payments on $8,000 in credit card debt at an interest rate of 15%, it would take you 172 months to pay off the card and you'd pay $5370 in interest. If you reduced that balance by $1,000, you'd pay off the remaining debt in 164 months and pay $4,656.08 in interest. You'd be debt free eight months sooner and have an extra $714 in your pocket.
What about if you put that $1,000 in iPhone funds toward a $34,000 student loan at 6% interest with 15-years left to repay and monthly payments of around $286? You'd save more than $1,300 in interest over the life of the loan . Is it really worth $2,300 of your hard-earned money to have the latest Apple device?
2. Save for retirement
Your iPhone X will definitely not last until your retirement, no matter how well you take care of it. But, what if you took that $1,000 you were planning on spending on the phone and invested it in a low-cost ETF that tracks the market?
If you're 30 years old now, you earn returns of around 6% annually and you keep that iPhone cash invested until you're 65, the money you didn't spend on that phone will be worth $7,686.09. Considering the average median retirement savings for families between the ages of 56 and 61 is just $17,000, that's not an insignificant chunk of change.
And if you saved $1,000 every year instead of upgrading to the latest iDevice, you'd end up with over $121,000 at retirement age. Ready to stop the upgrade cycle yet?
3. Start your emergency fund
More than half of all American families have less than $500 saved for an emergency . If you put your $1,000 iPhone cash into a bank account, you'll be prepared the next time your car breaks down or your furnace stops producing heat -- and you won't have to stick your emergency bills on a credit card.
Having an emergency fund not only saves you money since you can cover a problem without going into debt, but it also gives you the peace-of-mind that comes with knowing you have a financial cushion. While your emergency fund should ideally be enough to cover around 3-6 months of your household expenses, $1,000 is a great start.
4. Pay down your mortgage
If you own a house, you probably have a mortgage. Have you considered putting the $1,000 you were going to spend on an iPhone toward paying off your house sooner?
If you owe $160,000 on a 30-year mortgage at 4.13% interest, you'd save a total of $1,898 in interest if you made an extra mortgage payment five years into your mortgage term. You'd save an extra $1,361 in interest if you were 10-years in when you made your extra payment.
In fact, your savings would be over $1,000 in interest as long as you're less than halfway through paying off your home loan . The iPhone sticker price more than doubles if you think about the lost opportunity to pay off your mortgage faster.
What should you do?
Ultimately, only you can decide if getting that cool new iPhone is worth an extra few months of being in credit card debt or an extra $1,000+ in interest over a couple decades.
The important thing is to consider the real costs that come with spending so much cash on an item that's going to be obsolete in a year or two. Especially if you buy the next model too.
You could go through your whole life with really nice phones -- but end up with too little retirement cash in the bank. This may not be the best bet for your longterm happiness, even if that phone does look pretty sweet right now.
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