Great ways to spend $1,000 that don’t involve a cellphone

If you were to jump on Google or Bing (yes, Bing) and enter “iPhone X” you will be inundated with page, after page of (likely) unwanted advice on exactly how you can pre-order the new iPhone so you can have the latest iteration in your hands as quickly as possible after launch. Forget the fact that we know have access to very nearly the sum of human knowledge in our hands, computers smaller than a child’s shoe that are infinitely more powerful than their predecessors that took up entire rooms, and all we use them for is viewing cat videos.

Why are that many search results even warranted? People have a sense of urgency over this phone because Apple are expected to struggle to keep up with demand, which is kind of ironic, as millions are expected to snap up a cat video player that has a starting price of $999, and when sales tax is applied that figure could easily well into the 4 figures.

While you are camping outside the store, freezing cold and possibly in the pouring rain, to buy something else that nobody really needs, it may be worth thinking how that $1,000 could be much better spent on debt reduction, emergencies and retirement plans.

Help eliminate your debt

The average family in the United States has $8,377 credit card debts, with the average balance on a student loan debt being $34,144. Instead of throwing 4 figures at a cell phone, what if you spent it on lowering some of that lingering debt? You may also want to consider looking at some of the best private student loans while you’re at it too, and try and avoid that kind of student debt in the first place.

Let’s say you have a credit card debt of $8,000. If you were to make minimum payments of 3%, at a standard interest rate of %15, it is going to take you exactly 172 months, or 14 years and 3 months, to fully pay off that debt. You will also have paid out $5,370 in interest fees. Now let’s say that you took the $1,000 away from Apple and put it toward your credit card debt instead, and continued to repay at the amounts stated above. You would be debt free 8 months sooner, and pay $714 less in interest.

That new emoji sharing device isn’t looking like such great value anymore, is it if indeed it ever did look like great value for money. New gadgets are great and everything, but there are more important things to think about.

Save up for your retirement

No phone is going to last until retirement, and with iPhone’s track record of easily broken screens, it may not even see out the year. However, if you took that money and invested it instead, in a low-cost ETF then you may see some actual value-for-money returns later.

If at the age of 30 right now, you would earn returns on that investment worth, roughly, 6% every year. If you kept that grand in there until you hit the age of 65, it would be worth $7,686.09. Double your investment and you are looking at a significant amount of money indeed. In fact, if you were to invest $1,000 every year, instead of buying something you quite obviously have no need of, then you would be looking at savings in excess of $121,000 when you retire.

Get an emergency fund started

Over half of families in the United States have under $500 stashed away in case of emergency. Putting the iCash into a bank account, and leaving it there, means that you will be prepared the next time that your car breaks down, there’s a burst pipe, your furnace packs up or the washing machine goes on strike. None of these things are cheap to fix, and having that money set aside is going to pull you out of a tight spot.

An emergency fund such as this will not only save you money, by removing the need to break out a credit card or take out a loan, but it will also provide you with peace of mind because you will know that their is a buffer to cushion the blow should something go wrong. It is though that an emergency fund should represent around 3 to 6 months of all household expenses, $1,000 is an excellent start and is infinitely better than it not being there at all.

So, what should you do?

In the end, it is entirely your decision whether you get the new iPhone or not, whether it is worth being in a debt 8 months longer, or if it is worth losing over $6,000 in interest over the next few decades. Only you can decide, only you can make that call. What is important, however, is that you understand the very real costs that come part and parcel of spending so much money on anything that is going to be obsolete 12 months later, with its manufacturer trying to force yet another unneeded version of it on you when that does happen.

You have the option of going through life with the latest phone, that’s your right if you have the money to spend, but it may well come at the cost of a greatly reduced retirement fund which is going to have a tangible impact on your future happiness – regardless of how sweet that phone looks. Or the one after it.

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