Earning More vs. Spending Less, Round 2: It Takes Money to Make Money
Published on - August 27th, 2012 (by El Nerdo) This is the second installment of a series. The first article can be found here.
Last week I spent a thousand bucks on a phone. I paid full price for it, in cash, [blockLink]1[/blockLink]. It’s not the phone I originally intended to buy though. I had first picked a little HTC phone that was cheap and had an old version of Android in it, and it was on sale for $180. A modest, frugal smartphone.The HTC was very nice and it was supposed to do the trick, but Android won’t work my calendars the way I need to (like my iPod touch which I use as an organizer), Evernote ([blockLink]2[/blockLink]) asked for a new micro SD card, Spotify would just freeze there without launching, and my bluetooth headset had connection problems. The day I bought it I was up till 3 am setting it up, and still no cigar.
So I decided to go crazy and fix this once and for all. And yes I felt guilty and apprehensive about it, but I did it in spite of my stupid feelings because I needed a definitive solution to my communication problem, and I knew I’d find a solution at the end of the bleeding process, or else the solution didn’t exist.
So the next day I broke down and went back to my neighborhood Radio Shack and exchanged the little toy for the $650 iPhone. At the register I bought 2-year Apple Care for another hundo (“$99,” they call it, but come on!) The next day I got a LifeProof case for $80 so that it never gets wet (I know Apple is picky about servicing phones that have been exposed to foggy bathrooms, and we’re in monsoon season here). And $18 for a car charger. That’s $847.
Originally I also picked a plan with 300 minutes of voice and unlimited data for $35/month, but with auto-pay it would go down to $30. A week later I had burned down the minutes, so last night I had to upgrade to a plan with unlimited voice that’s $50/month. That’s $85 in one week.
Add 7% sales tax to everything I listed above.
Yes, I can hear the sound of hairs being raised on the back of your necks when you read how I just spent $997.24 in a phone that will continue to suction $53.50 off my budget every month for the foreseeable future. I can also see the pointed fingers, and hear the cries of “spendthrift!” and “lifestyle inflation!” in front of the jury as the prosecution demands I get burned alive for [blockLink]3[/blockLink].
And yet, I think I made out pretty good with this deal.
See, until last week I was a 20th-century primitive who never had a proper cell phone. I bought a Nokia years ago, but it was a burner I’d recharge only sporadically, for emergencies. I was always counting my 10-cent minutes, and trying not to talk much on it– so it wasn’t a proper phone, like the ones you can just pick up and dial without thinking about the hold time for a customer service representative.
Meanwhile, I’d been using Google Voice and Skype to conduct business. It’s all great and you can talk free of charge from your computer; but if your internet fluctuates (like when you upload big files for a client) your calls falter or fail, and the interpersonal dynamic suffers. Same thing if your computer for some reason (gasp!) crashes.
Before this I used [blockLink]4[/blockLink], but they all suffered similar connectivity problems, so I figured why pay for a line when I can get the same iffy service for free on the web.
Only problem is now I had to stand in front of the computer to talk, or have a laptop on at all times to carry around while I spoke; so I’d sit down to work with two computers: one to do all the heavy lifting, the other running as a phone. But then the laptop broke, so I had to talk from the workstation, which means I was tethered to it like of those ancient phone booths people used to beat when they were angry with the operator.
So I got a bluetooth headset to pair with the computer. This allowed a measure of mobility, except that the thing would run out of battery in the middle of a call and I had to jack it to the power and sit there yanked by the ear, trying to discuss business. And I couldn’t use the headset while editing video, because the video software can’t relate to it as an audio interface.
So now that I started making money again I decided (deliberately, frugally, consciously), to get me a good deal on a modest phone with a limited no-contract plan.
Except that I already told you the story of the little cell phone that couldn’t.
And it was at 3am when I was still trying to get the thing to work the way I wanted that I said to myself (with an imaginary screaming voice) ENOUGH OF JURY-RIGGED SOLUTIONS AND PINCHING PENNIES AND LOSING SLEEP. I HAVE BIGGER FISH TO FRY AND I AM THROWING MONEY AT THIS AND WILL NEVER SUFFER COMMUNICATION PROBLEMS AGAIN! (That’s an adaptation. In truth, I used a lot of unprintable words.)
In the name of frugality I had already been t[blockLink]5[/blockLink]. Burner phones that I couldn’t freely use. Pricier internet to ensure good bandwidth for free internet calls (how free is that really?) which kept me trapped indoors. Extra laptop always on the side, to make sure I could talk while doing other work (that’s an expensive and clunky phone if you think about it). Bluetooth headsets (and other nonsense) to add yet another point of failure. A non-phone organizer also tethered to wi-fi. A new budget smartphone that wasn’t too smart.
The reason I burned through all three hundred minutes of talk on the first week is that I was busy with business calls– conference calls, calls to distribution, calls to clients, calls to crew, without end, working 14-to-16 hour days. These long days were enabled by the so-called “luxury” phone–the one that sounds clear and does my calendars right and beeps me with reminders at all times and runs my music when I’m stressed and keeps me organized and takes great photographs and *just works*.
And because it just works, and I could focus on other things and not on “making the thing that talks to people work” I got rid of a lot of non-productive busywork, I was able to keep track of my notes and to-dos and appointments anywhere, I was able to talk uninterrupted wherever I went, which meant more productivity, and I was able to make deals that can pay for the phone five times over in the space of just one week–this in addition of the regular work I already had lined up. A week! Basically, 1 day of work = 1 fully loaded phone. And right now I’m writing from the road while working on those contracts.
If I am to [blockLink]6[/blockLink], let it be over making thousands and not trying to save pennies.
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Why do we save money? To buy the things we want. Right?
If we saved just for the sake of saving, where will that end? Like the old lady who live in pathetic poverty, just to leave millions for her kids to fight over in court?
So why feel guilty when you buy the thing you want? Isn’t that what you saved for?
The key obviously is in the long run to not want things that will outrun our savings. Doesn’t sound like you did that.
Enjoy your phone!
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I agree with William — this is part of why we save up money! So that you can buy exactly what you need that will work well and do what you want. You saved enough money that you don’t need a cheap solution, so congratulations on the new phone (and the stuff you bought to protect the investment)! Use it guilt-free, dude, you didn’t buy it willy-nilly, it was a well-thought out purchase!
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^ This. If you save money and don’t have a place for it, your cash will soon have an “identity crisis”. I suggest once you birth your money (earn it), give it a name and a place in this world, otherwise it’s worthless.
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Oooh – two things made the hairs on my neck stand up
1) “Radio Shack”
2) The iphone 5 is probably coming out next month :-/
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My carrier is Virgin Mobile (hence no contract), and with no-contract phones you don’t get the latest models– they just started offering the 4S this summer. I don’t think they’ll get the iphone 5 when it comes out. And Radio Shack is just around the corner and it was easier than waiting for an online order.
And the nice thing about no-contract is that I can always upgrade when I need to and put the old one up for sale on ebay/Craigslist without penalties. I’ll wait and see.
There’s always something new coming up next!
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I don’t understand. If it’s “no-contract,” and you’re just buying the phone outright, why does it matter what they “offer?” You just buy the phone, plug in your SIM card, and use your plan, don’t you? Why does Virgin have to “offer” the iPhone 5? Why wouldn’t it just work if you bought it from Amazon or whatever, and swapped in your SIM card? Wouldn’t it still make calls? Wouldn’t you still get your data and texts?
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Virgin Mobile runs on the Sprint network and is CDMA, not GSM. So it doesn’t use Sim cards. A special version of the iPhone had to be built to be used on CDMA network, and until that happened (last year, I think) you couldn’t use an iPhone with either Sprint or Virgin. Now, you have to be careful when you buy an iPhone off Craigslist to make sure you get CDMA vs GSM, depending on which network your carrier uses.
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In the US, the mobile market is quite different from many in the rest of the world. Phones are typically locked to a certain carrier (Post-paid as well as pre-paid) and to get them unlocked, when successful, is horribly painful and time consuming, while also running the risk of bricking the phone completely.
Not the best model, for sure… but there are tons of rant posts out there about in. American mobile carriers rule the market with an iron fist.
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Since the new iphone is coming out in a few weeks, the price of older phones will continue to drop. You probably can’t return the phone, but a few suggestions for others buying off contract (which I’m not sure why you’re doing, but I’m sure you had a reason beyond being stuck on a contract): 1) buy refurbished. 2) buy from the apple store not radio shack, etc. The iphone 4 is currently $549. In other words, if you’re going to splurge (which is, as others have noted, why you save elsewhere), don’t forget to do due diligence and shop around to get the best deal.
ps: is apple care worth the money? it costs 15% of the phone’s value to insure that it will work for x number of years, but if you damage it you pay to replace it. iphones have been pretty reliable in terms of not needing repairs. I think for items that haven’t been tested or are more likely to break down (like the newest laptop) apple care is absolutely the right choice, but I’m less convinced about buying it for a phone. i shld add i’m on my 2nd iphone, as is my husband. we have never had a single problem with the phone except dropping it and needing to replace the screens ($100).
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While I’m all for due diligence and shopping around, sometimes the “costs” of doing that can end up being higher than the price of the purchase itself – lost contracts, hours that can’t be billed, making yourself look inept in front of bosses and coworkers. It’s a tricky thing to weigh but sometimes the upfront expense pays off in the long run as it contributes to your career.
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Sheryl, That’s certainly a concern, but I don’t think that’s the case here. I looked up the Apple and BestBuy prices and they’re both less than he paid. I think there’s a different scenario going on: when we get quite frustrated and finally make a decision to spend more money to save money/time/energy in the long term, we often just take the first thing that’s offered rather than spending ten minutes (which wld be 3 times longer than I spent looking up prices!) looking for other solutions. We’ve all done it. The question is what we can learn from having done it.
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@ Tas- ‘pologies, but that info is inacurate. The price of the Virgin phones is the same across the board whether you buy online, at Target, Apple Store & Ratshack (I checked). *All of them* have the iPhone 4 @ $550– I bought the 4S at $650 because 2 years from now (or whenever) it’s going to be “less ancient” and more compatible with things. Check the price for the 4S at Best Buy and you’ll see. Apples/ oranges.
And of course Sheryl is absolutely right– I had the choice to “keep shopping around” or get back to work on moving forward a $4,500 contract. “Yessir, I blew your deadline… but I saved $20!” Well, hm, no contest, in my book.
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I have been pondering buying the iphone from Virgin Mobile too. Like you, I have been patching together solutions and trying to live without a smartphone. I have had an itouch for years, I love it, then over a year ago I bought a Mi-Fi to get email and internet on the fly. I have a throw away prepaid phone I rarely use. Unlike you, I don’t use my phone for work or to make money…it really is a convenience. Still at $20 for mobile wi-fi, plus $7 a month for prepaid cell, the no contract iphone at $30 a month is enticing. I hoping the $650 price drops when the iphone 5 comes out…
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I agree with William. This wasn’t a “yay, awesome, I got a sweet phone” where you don’t use any of the features. This is a business item you use frequently to run your daily life. Also, totally worth it to spend an extra $15 or so a month for unlimited voice. I can’t believe it is that cheap.
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Even in these situations, I still see if there’s a cheaper solution to do what I need.
An Obihai device would have let you use a regular landline-type phone (cordless is fine!) with Google Voice. One-time of $50 or so.
What’s the cheapest landline option available to you? $10-$20/mo? That’s a possible route; use Google Voice forwarded to your landline when you’re at home, and forwarded to your mobile when you’re not (or just forward to both). If you’re home most of the time, this would likely save money. If you’re out most of the time and would need at least a $30/mo mobile plan…ok, savings would be minimal at best.
Setting up QOS on your router may solve the bandwidth issue. It may take the better part of a day to setup properly, but results are worth it. For those who don’t know, QOS = quality of service…various ways to set it up, but a quick way would be to give a certain device priority (i.e., the obihai device mentioned above).
But as far as the moral of the story, I get it. I often try to go the cheap route, only to end up spending much more than if I’d done it right the first time. I needed some tools to change the oil in our car and scooter…did I buy a whole tool set? Nope, just the wrenches for $20. Guess what, gotta have a socket to get to the scooter’s drain plug. That’s another $15 or so. Oh, but now I need a tape measure, and a smaller screwdriver, and…shoulda just bought a proper tool set.
It can be hard to decide when it’s best to go cheap, when it’s best to go quality, and when it’s best to go somewhere in between. Sometimes I get it right. Often I don’t.
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I’ve had Vonage, SunRocket (took my money and went broke), Packet8/8×8, Speakeasy, and it was always always always a pain. Provider can’t guarantee QoS throughout the network–not even when my ISP was the same as my phone provider (Speakeasy, expensive!).
And yes, I have the same kind of problems deciding when and where it matters to spend the money! I’m only human
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I live in Chicago area and the cheapest landline is $32 a month. (no features on it)
Do $10-20 landlines exist?
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I have a $10/month landline in Ontario, Canada with my local cable company. I got this rate for 2 years and it goes to $15-19 after that (but I’ll renegotiate that).
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I live in the SW burbs, and yes they do. My landline costs about $10/month. It’s an AT&T copper line, with no added features whatsoever. (No caller ID is hard, but it gets easier as the years go by, a little.)
I changed my long distance provider over to an independent company who gives a couple of coins to a charity I support. When I set it up, I had the option to switch over the local toll calls as well. My long distance and local tolls calls are between $3-5/month, and the service is seamless. All billing is done online, and I couldn’t be happier!
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Maybe the problem was not doing it before.
At the end of your statement, you say you make up for the expense just in one day of work. So learn to make your good choices. All of the time (counted as money) you spent configuring and looking for solutions is maybe more than the amount you spent on the new phone.
Maybe a better solution would have been track how many minutes you spend (you can track that using google voice or with a simple notepad) and not pay 35$ to later upgrade to the 50$ one. (35/1000=3,5% saved).
Another option would be get a cheaper phone. If you still want to keep on the apple philsophy (just works), get an iphone 3 or 3g or 3gs on craigslist. Or a brand-new galaxy 3 for 469: 650-470=180; 180/1000=18%
And the list could go on
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To say that you made off with a ‘deal’ is offensive to frugality and the intelligence of frugal people. Simply whining that you may get ‘burned at the stake’ by frugal people doesn’t justify your poor choice.
Besides, you could have bought a less expensive, more reliable, operationally superior Bold 9900 for about $500.
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Haha! That was a very funny reply Joe! Calling a Blackberry superior to an iPhone is by far the funniest thing I have read or heard for a long time. You rule!
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Too many people are afraid to spend money to earn money. While that’s not the only reason people fail to make more money, it’s a big one. With that said, $1k for a phone still has me thinking about what else you could have done with that money. Make sure you enjoy your money’s worth!
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If you are so convinced that you wrote a full post on it then it should be the right decision in your case. My problem is I often can’t justify some of my purchases. They are not that impulsive though.
Sometimes I convince myself enough to spend money but, later realize that was a bad decision.
You projected your phone purchase as a business investment, so far return had been good for you so be happy and enjoy. You needed to spend the money on something else anyway.
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“If you are so convinced that you wrote a full post on it then it should be the right decision in your case.”
“Sometimes I convince myself enough to spend money but, later realize that was a bad decision.”
Anyone else see the irony here?
If I find myself trying to over-justify a decision, I try to step-back and see just what’s going on. I too bought an expensive phone (well, not THAT expensive…under $500 for a Galaxy S2 last year). I finally decided that I was only able to HALF justify the purchase…so the other half I took out of my miscellaneous fund.
I’m about to spend quite a bit on what amounts to a costume…can’t really justify it at all, not financially anyways. I think that’s better than if I was trying to come up with all kinds of excuses as to why it’s the right decision. I want it, I’ve wanted it for many years, so I’m a gonna get it (with wife’s permission, of course). No excuses.
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Care to tell us more about the costume? Because inquiring minds want to know. :0D
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The biggest point here is spending to save money. I always get reminded of the false economy of buying a cheap chair for work for instance.
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what’s the problem with signing a contract? if you’re willing to go a version below the ‘latest’, you can get an iphone for just $50
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I’m confused – if you hadn’t bought a new cell phone for years, why weren’t you eligible for one of the upgrade iPhone plans which runs $200 instead of $650? I know Virgin may not offer them, but does the somewhat cheaper monthly bill really end up saving you money over the life of phone given $450 higher starting costs?
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(That said, as to the general point, I completely agree. There’s often no better use of money than to spend it to make things work smoothly for a change.)
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“I know Virgin may not offer them, but does the somewhat cheaper monthly bill really end up saving you money over the life of phone given $450 higher starting costs?”
I only checked AT&T Wireless, and the cheapest unlimited voice plan for a smartphone was $89.99/mo (plus taxes and fees), so let’s figure $40/mo extra. First year, that’s $480 saved. If he keeps the same phone the next year, that’s $960 saved. Also, IF the phone he bought was unlocked, then it’ll be worth more if/when he sells it.
I’ve found that the majority of the time, it’s cheaper to pay full-price for a phone and go prepaid.
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Hmm, I pay $45 (including text, data, and voice) but I pay my portion of a family plan. Didn’t realize it was that much cheaper to do it that way.
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Yeah, I used to have an old cell phone, which I affectionately called “my Soviet era phone.” I paid about $51/month with no data plan. When my parents got smartphones, I found out I could get one as well, switch to their family plan, and pay only $40/month for unlimited talk, text and 4G Internet. The phone company apparently doesn’t care that we have different area codes and obviously don’t live together. It’s a great deal.
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Good post El Nerdo!
I got my first Blackberry when I was working 2 contract jobs – every time I worked on the mobile job #2 at lunch time, I made $150 so the phone paid for itself in a few days. I have an HTC now but miss that old BB, I could type a mile a minute on it and there were no app distractions.
There’s a few purchases that regular people who aren’t business owners can make that can raise their income – I’d argue that clothes, a good hairdresser, and shoes would fall into that category. Doesn’t mean you have to go hog wild, but a reasonable amount of good quality stuff goes a long way.
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HAPPY BIRTHDAY JACQ! Love your site.
And Nerdo, sounds to me like you need to tether your conscience and lasso a good accountant! It’s a business expense and a good one at that.
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Oh thanks KSR! Mr. Market didn’t get me a present today…
My motion-sickness afflicted youngest kid left a “present” on one of the rides though. LOL
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You know, you touched on something right there. I still have a Blackberry and because I’m not app happy, it works better for me than my wife’ iPhone 4S. I’m not trading it in for anything when the contract ends.
I believe there’s a market for a smart phone that’s just “smart enough” with a real keypad, that’s bulletproof and works for work. I don’t need a game machine on my phone. But maybe that’s just me…
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Nope, that’s the kind of phone I want too.
For me, it’s a tool, not a toy … and I really don’t want to handle it any more than I have to!
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Amen! I just went through this on a much smaller scale this weekend. Needed a box of cereal; went to the corner convenience store where it was $4.19. I balked because I could get it at Target for $2.99; but Target is 1.7 miles from my house. So, for the grand savings of $1.20, I still don’t have cereal
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A used iPhone 3 off Craigslist would have done all the same tricks for $500 less.
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No way. The 3 (or even 3G) are quite clunky on the new OS, and don’t integrate with the computer nearly as smoothly. Those are definitely being phased out, especially with the release of the 5 coming up soon.
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The iPhone3 doesn’t run the new OS – it runs iOS4, and while not as quick and responsive as a 4s or (presumeably) the upcoming 5, it’s still just as fast as they were when they first came out. They work just fine. I haven’t had any issues with mine.
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It sounds like you are getting a lot of value for the money that you spent. I think that is the difference between being frugal vs. being cheap!
As long as you paid for it with cash, I think you did great =)
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Money leads to more money. It’s always like that. But, having money is not insurance that you’ll always have money. You have to be smart about it.
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I personally just use a prepaid cell phone that I charge minutes on once I year. I do most of my talking on my cordless phone that is connected to my Google Voice acocunt via an Analog Telephone Adapter (ATA). This is a standalone device that does not tether you to a computer running an OS. The important adjustment to make is the Quality of Service (QoS) on the router so that the VoIP packets have priority over everything else. I paid $30 for the adapter from Amazon on sale. http://www.amazon.com/OBi100-Telephone-Adapter-Service-Bridge/dp/B004LO098O/
I have been pretty satisfied with that solution. Previously I ran an open source Asterisk server, but it got to be too much of a PITA to manage patches and whatnot. With the OBi100, you plug it in, log onto the obihai website, setup your account information, and it just works. Maybe 2-6 times a year they release firmware updates, but that’s about the service interruption I’ve experience (aside from my ISP).
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Wow, I’m glad my comment about using a VoIP adapter with a link to the product on Amazon was marked as spam. Guess I’m done contributing here.
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Oh come on, Rob. Grow a thicker skin. Are you really surprised that a comment containing a link to purchase a product on Amazon was flagged as potential spam? That’s shocking to you? Gimmie a break.
The spam filters are automated, and (surprise surprise) a hyperlink to Amazon apparently sets it off. If a human reviewed it, I’m sure they’d see that it was a legit comment. But to claim you’re “done contributing here” because you can’t comprehend how an automated spam filter interpreted a comment containing an Amazon link as “spam” is a just being petulant.
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Well Kevin, I thank you for your beratement of myself (and apparently two others do as well) and on the mechanics of the spam filter.
Since my original comment posted fine (it only got marked as spam when I went to edit it and fix some typos), I assumed it must have been marked as spam by a human reader.
However, I felt I had something to contribute to this article as the author’s problem could have been fixed with a $30-40 device versus spending a grand on a smartphone.
And as far as “taking my ball and going home,” I just feel out of touch with the site in general (reader since 2007). Honestly, I switched to only reading the site in Google Reader (about the time of Tyler K.’s article…), instead of loading the main site (which I pretty much only bother to read Brokamp’s article). So basically, I am stating that it isn’t worth my effort to load up the main site to provide a comment which would get marked as spam.
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Oh come on … aren’t you interested in sticking around long enough to see Honey’s train wreck hit the wall? I’m already popping some popcorn. That’s way more entertaining that whatever’s happening over at The Simple Dollar these days.
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“Since my original comment posted fine (it only got marked as spam when I went to edit it and fix some typos), I assumed it must have been marked as spam by a human reader.”
This exact same process (editing a post and then having it marked as spam) has happened to me several times at GRS after making what I thought was a thoughtful comment– yes it was a little frustrating. I didn’t have any outside links in my post either. It hasn’t happened to me in a while so I assumed it was a problem that got fixed.
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Human readers here at GRS will NEVER mark an obviously non-spam comment as spam. It just won’t happen. Non-spam comments are obviously non-spam. If your comments are getting routed to spam, it’s automated. It’s just as frustrating as it is for us as it is for you. I (J.D.) stop whatever else I’m doing many times a day to go make sure there aren’t any false positives in the spam filter…
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And look at that … even as I was posting about your bad attitude, a moderator has approved your original comment. Still gonna take your ball and run home, or do you think you can get over this egregious violation of trust?
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You can buy the top-up cards at Target. If you use the Target Red Card credit card, you save 5% (even on the top-up cards). Also, sometimes the cards are on sale (a little less than 5% off the face value). Finally, when you use top-up cards you also don’t pay taxes. Maybe this won’t work with the $5 off the plan for the auto-debit, but I would think auto-debit would use your stored cash value first.
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I’m not going to get into the details whether or not you could have gotten a better deal elsewhere. But if it is something you need for your work and business, helps you do it more effectively, then that is a good decision. I need to make a similar decision about my comics. I don’t make money off of them, but they are important to me. Right now, my work space for them is a box. Yep. I do not have dedicated space for storing or working on them, so whenever I want to, there is the work of finding them in the box, clearing off a space to work, and finding pencils/pens etc. It is enough of a barrier to really reduce me working on them.
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Without debating the details of whether El Nerdo’s choices were good or bad, his post points to a phenomenon I’ve noticed: that while lifestyle inflation exists, sometimes the infrastructure of society changes due to technological advances and there’s a tipping point at which something that used to be a toy becomes a necessity. For years, our family got by without cell phones. About 7 years ago, that changed when we couldn’t locate a public phone to call the person watching our son to coordinate whereabouts and he was effectively “lost” for 2 hours; then we ponied up and got pay-as-you-go phones that were the cheapest we could swing that still did what we needed (make and take calls). Last month I finally broke down and got DS a long-coveted iPhone, after researching to death what would work best for the least cash (including using an employee discount to bring down the monthly price), because life had changed to the point where it was no longer just a toy but a necessity – he stays organized on it, he communicates with friends with it, he’s finding his way to a teen writing workshop even as I type this with it thanks to Google maps. Now I want one, as I can see how much it would help me to stay organized, conduct my business, and find out just when the damn bus will show up already. (But I will still wait and limp along with my sad little pay-as-you-go’er until finances improve.)
Lifestyle inflation, or keeping up with technological advances that change radically how we do business and make money? That’s the $64,000 question.
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El Nerdo,
Much better post this time. Not overly long and made its way to your point without wandering
Now, as for the business expense: It is pretty easy to figure out what something is worth to you. You have an hourly rate you are charging your clients or you can figure one out based on the product(s) you provide. Based on that, how much money did you loose (hoe many hours did you spend x rate) futzing around with the phone? I’m willing to bet that number is shocking. I’ll also point out that this is one of the reasons businesses pay more for their stuff: when things don’t work, the costs add up quick.
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Great article, focussing in making more is always better than on daving more (because making more has infinite calability). One little item: AppleCare+ now covers that wet bathroom and even dropping it in the pool. So you might want to return that expensive case.
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I have never used a smartphone, not do I see myself getting one in the future. My husband gets a free cellphone with work and I have a ubercheap phone that is a pay as you go. We spend $10 a month on cellphone service, and about $20 on a landline.
But I also don’t have my own business like El Nerdo. This sounds like a reasonable expense, although I have to ask, if you work at home most of the time, why not a land line? This might be a question that only a Luddite would ask, but I still much prefer talking on a land line. The phone doesn’t get hot in my hand, and I can rely on it to not break up.
Even though I find smart phones undesirable personally and actually love not being plugged into the internet when I am out and about, it’s hard for me to judge anyone from a financial perspective. If they can afford it, why not? It’s less the finances of it and more the fact that people are constantly looking down rather than at the world around them that has me up in arms. But I digress
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Heck, it’s hard for me to charge you with crimes against frugality when I just spent $500 on a tubular skylight to bring a little bit more light into my dark kitchen. Oh, and yeah, I forgot the $75,000 on the new bedroom and bathroom on the back of my house. My point is we all have different ways of spending our money.
No judgment from me.
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I’ve been thinking about making this switch too, so the timing of the post was nice.
How about a followup in 6 months or so, to tell us whether the new phone has indeed solved all the previous problems, whether the new $50/mo plan does everything you need or you needed to upgrade again, etc.?
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I LOVE this article! OMG – Finally, someone who cares more about quality of life than the almighty dollar!
People! Martyrdom is not becoming! Start living! How can we, the ones who espouse frugality as a life choice to others, make anyone understand us when we continue to stay nailed to the cross?
If spending however much it is that seems out of character for you for something that will improve your life, enable you to work smarter or better or – dare I say it – give you pleasure without sacrificing your bottom line, why not do it? And do it without beating yourself up?
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I’m self-employed, and I appreciate the need for a fully functional cell phone. However, we need to remind ourselves how fortunate we are to be able to spend that kind of money, and not have to eat ramen noodles for the next 3 months because of it!
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Frugality isn’t just about saving money but time too. It makes absolute sense in your job to keep your sanity and how much you make. My husband for years got the brand new iPhone through his business. Now that he has branched out into his own business with no partners those old iPhones were collecting dust. I just listed them all on eBay and was very surprised that the first generation iPhone sold for $100. My phone is out of contract ( iPhone 4 16GB) which sells for $250 on eBay used. Might upgrade to 4S when the iPhone 5 is introduced. However I will still be in a contract. Need to find a way around getting a contract.
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You can purchase an unlocked refurbished I-phone from numerous places for a lot less money 2/3′s less at least. Put in your SIMM card and away you go??? Why pay that much for a new one ?
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Can you keep your number if you have a no-contract plan? That’s the biggie keeping me tethered to mine.
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Yes, I’ve used several of the no-contract carriers through the years, and I’ve always been able to keep my number. If you have a specific carrier in mind, their website will usually tell you.
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Yes. I just converted 2 phones to the Virgin Mobile no contract plan. 1 was on a Tmobile no contract, and one was on a TMobile contract. Both phones kept their numbers, with no problems or issues.
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Awesome, thanks! My contract with Sprint is up November 28 so I will wait a couple of months since it’s so close, but I think the $35/month Virgin Mobile contract will work great for me.
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Long time listener, first time caller. Normally I’m fine with El Nerdo articles, because they tend to be witty and have a point, but this one was difficult to stomach.
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Yeah I’m sort of amazed at all the comments congratulating the author, because to me the article sounded coo-coo bananas and I was wondering if this was some sort of joke. He made a $1,000 impulse buy and paid Radio Shack prices for all the bells and whistles – including an extended warranty, really?
I would like to purchase a smart phone, and I appreciate an article examining the costs of that, and my main barrier has been the monthly cost. If he got a plan for $30 a month with 300 minutes and unlimited data, that actually sounds like just what I need! I won’t drop a grand to get it, though.
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You don’t have to if you don’t want the iPhone. They have other more reasonably priced phones available. Phones are one purchase, the plan is separate. Y
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This posting is nothing more than the author trying to console him/herself for about the dumbest purchase he/she could possibly make.
I suspect in time the author will realize this.
Go ahead and drop that phone once and see if Apple will take it back. And then where will that $1000 have gotten you.
Not to mention the long proven assertion that extended warranties are hardly ever worth it. (yet another bad financial decision on your part).
With my devices I take what they would charge me on the extended warranty and I place it into a savings account. I now have plenty in that account to self-insure any of my device purchases.
If I were you I’d return that iphone immediately and rethink your future stategy
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Go ahead and drop that phone once and see if Apple will take it back.
Chevy won’t take back my car if I crash it into a tree, but that doesn’t mean I shouldn’t have bought it.
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I’m not debating that. The point was against choosing Apple Care (or as I call it ‘complete waste of money’). The *fact* is that they don’t cover drops. The *fact* is that in their infinite wisdom Apple decided to design a phone with glass on front and back. *fact* is that most damage to a phone comes from … let me think… oh yeah drops.
Do the math people. They offer it for $99 for a reason.
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I think you’re right about AppleCare. Almost all phone damage is caused by dropping it or getting it wet, and those are the two things that AppleCare won’t cover. So I won’t buy AppleCare, either.
Still, because it’s breakable doesn’t make the *phone* itself a bad purchase (I’ve been using iPhones for years now and have never broken one).
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I’m not even saying the phone is bad.
I’m just confused as to how he can pass this off on a website dedicated to saving money.
Does this article help me do that or is it a commercial for Apple?
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I think you are still thinking of the pre iPhone 4 AppleCare (without the +). As you can see here: http://store.apple.com/us/product/APP_IPHONE_PLUS_AUTO-110480 They do cover drops, and water damage.
I think it’s a great deal. 2 years of coverage for my stupidity, and only 70 dollars more than a 30 dollar case.
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Admittedly Im goming at this at the end of the day, and I have no idea what “apple care” is. That said, my son did purchase an iphone (through our verizon family plan), it did fall and break. Verizon did tell him they could do nothing. He went to the apple store and walked away with a free phone.
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I have an “old” iPhone 4 sitting around at home. I guess I should sell it while it’s still worth money. If people are paying $650 for an iPhone 4s, then my one-generation-old version must still be worth at least $200-300, right?
On the topic of spending less vs. earning more, which the title mentions but the article doesn’t really cover much, I have historically come down on the side of earning more, but recently, I’ve been reading Mr. Money Mustache’s site and man — that guy is an inspiration. I’ve never really seen the appeal of the “financial independence” thing before, but now I get it. For the first time in a while my answer to the “spend less or earn more?” question is decidedly “both”.
Also, El Nerdo, I approve of your use of Evernote. My employer pays for my cell phone so there’s no reason for me not to have the latest and greatest (plus, it’s actually sort of important for work ,even though I almost never talk on the phone).
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My life runs on Evernote, and I approve of your work on it! Best app EVER, love the flexibility + power combination. Once properly configured, IT’S BETTER THAN ANY GTD APP ON THE MARKET.
I’d get the paid version but I LOVE THE ADS! I got Crashplan through them and will probably get Shoeboxed next (do you still advertise that?).
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LOL I <3 El Nerdo.
DH & I too felt an enormous weight lift when we realized we could start throwing money at situations. We are cheaper than cheap on some things, but others are Just. Worth. It.
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I’m sorry, but for being on a frugal/personal finance blog, I would have to say that was the dumbest purchase that could have been made.
I have an iPhone 4s and have had an iPhone since the 3g with AT&T. I pay $65 a month ($11 more a month then the author) and it includes 500 minutes (unlimited to any mobile phone on any network), 2gb data and unlimited texts.
I purchased the iPhone 3g for $150 on a 2 year contract. when the iPhone 4 came out, I renewed my contract and purchased it for $150 and a contact renewal. I then sold my iPhone 3g for $250 on craigslist with little effort. the $100 profit makes up a large portion of the $11 difference per month of my cell plan vs the authors. When the iPhone 4s came out I did the same process this time earning a $150 profit. When the next iPhone comes out I will repeat this process.
I also have a car charger, but it is a usb plug that pops into the cigarette lighter in my car and allows me to use my normal charging cable. I bought that for a whopping $2 off of eBay. The case I have on my phone retails for $89.99 and I purchased it brand new for $35 off of eBay.
initial phone investment $150 +tax $10.5
USB plug/Car charger $2 no tax
Case $35 no tax
total price = $197.50 vs $997.24
My point is for being frugal and talking about saving money, why in the hell would you pay retail prices (let alone MSRP on a iPhone) when you can easily find way cheaper alternatives by simply searching.
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Well said. I really don’t think this belongs on getrichslowly. Apparently they let anyone post these days.
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As an old construction friend of ours used to say, “You need the right tool for the right job.”
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Sounds like a good argument to me. I have been debating dropping the cash on a reliable phone as well, and it seems that the time savings and reduction in stress will make it worth it.
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My mind is blown. Blown. I’m constantly amazed by the average American’s pathetically fantastic ability to justify luxury purchases and to define “wants” as “needs.” Especially when those people are in debt (like El Nerdo!) or otherwise can’t afford luxury items.
This is insanity. This ridiculously long justification of a luxury purchase could be done by anyone for anything, and it happens constantly – which is why our country is in debt, why people have an entitlement problem, and why most people can’t afford retirement or necessities (ie, healthcare) yet they have luxury electronics, cable, brand-name items, and other so-called needs.
And to the editors… how is it possible that such an incredibly long article about 1 dude’s ridiculous attempt to justify a crazy-expensive phone is worthy of being published on this site??!! We now know that El Nerdo “likes his words” and enjoys filling up vast amounts of space writing about himself. This doesn’t mean his articles need to get published, especially when they are needlessly long and not particularly insightful or helpful.
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I understand where you’re coming from, but the “Americans” bashing gets a little old after a while.
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The point of the story is that he went from fuzzing around trying to pinch pennies to “splurging” and making more money because of it. He is actually getting richer because of this purchase. What’s so “entitled” about that?
In the long run, the extra money that he makes, the referrals he will get, the client base he is building, they will net him many iPhones in the future.
Sounds like a smart guy to me. Although I guess he could go back to making his own laundry detergent and skipping out on lattes, because that seems to be a more accepted way of becoming rich here.
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What do you think will satisfy the creditors more, ma’am?
Last I checked, they prefer to get paid with large bills instead of a bag of nickels.
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Why do these articles always have the “americans this and the americans that? I spent seven years in germany and I can promise you that every single man woman and child has a “handy” and most of them are “smart” (and yes, unlike in america, you can just pop out that little chip and put it in a new phone)
Now, I live on a fixed income and I have a smart phone that cost me 100 per month. I looked at downsizing it………only I need the build in gps for finding estate sales and such, I need the scanning aps because Im an online bookseller, and I need the creditcard reader so that I can make money. So for me, I have more options to increase income with a phone. And i dont have a landline at all….but if I did it would increase my bundle almost as much as the cell phone.
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Do you own your own business? Can you write it off as a business expense?
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I do understand where El Nerdo is coming form in terms of efficiency, the need to spend money to make money, etc. I’m contemplating having my laptop serviced to make it more efficient for work, or even just buying a new on in the coming months. I’m also contemplating if an iPad purchase would help in my quest to increase my income (or not).
With that said, I am cringing at the though of anyone (unless extremely well off) paying retail price for a cell phone.
I held on to my unreliable Blackberry Curve for a year until my Verizon contract wore out before upgrading to an Android that was free at Best Buys on Black Friday last year. Though getting a smartphone for free is not that easy most of the time, I’m sure with a little bit of research and effort, Nerdo could have spent a fraction of the cost for his phone.
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I personally think that it was the right purchase for the job and whilst apparently you could have found it cheaper, you may well have earned more money in the time you’ve had it than you would’ve saved by waiting.
I know how frustrating the dodgy internet plus online calls can be though!!
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I’m experiencing this on a different scale. I have a 13 year old car. I love it, and nothing is really wrong with it… but I’d love to have newer features, and that’s enough for me to consider seriously selling it and buying a new car!
To keep myself satisfied, I’m buying a new stereo head unit for it that includes Bluetooth, Pandora, and various other features that come standard on new cars nowadays. I could buy a crappier stereo with fewer features for less than $100, but I’d probably be frustrated with its limitations. I instead opted for one that was closer to $300, because in the long run it will prevent me from giving in to the urge to buy a new car!
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El Nerdo, apparently if you got two tin cans with a string some people will complain about the label on the tin cans and the number of strands used to weave the string! EVERYTHING you choose to do will violate SOMEONE’S opinion of smart/stupid.
Rock on and don’t let other people’s stink get on you.
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For future reference, if you were going to buy the phone outright (which it sounds like you did, unless when you went back you also signed a contract?), you would be (and still are) far better off using an MVNO (not affiliated, but I use Straight Talk, who runs on AT&T’s network, and have unlimited talk, text and data for $40/month).
Also, AppleCare can be purchased any time before the factory 1 year warranty runs out. Because you can’t return AppleCare, and a phone is probably the most likely device to be replaced quickly, you may have been better off buying the extended warranty toward the end of the year, when you’re sure you will be keeping it for more than a year. Apple product tend to retain their value quite well, so you can actually upgrade with each edition, thereby extending your warranty coverage each year, if you keep your phone in good condition and sell it. I’ve actually made money on the upgrade before, because out of contract phones are in such high demand and I pay the out of contract MVNO price rather than the primary carrier cost.
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Sounds like a fine business purchase to me and even better if you can take a tax deduction on it. Just to let you know, in case you didn’t already, Radio Shack will price match on mobile phones for up to 30 days. I’m uncertain as to when you bought it but you may want to look into it and possibly reduce the price paid. I used their price match on a laptop once (Black Friday ad but bought it on Monday) and saved myself $150. No lines, no hassles.
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I work for a small business that sounds like it might be a little like yours (production house).
Our clients expect us to use pretty cutting edge technology and to be available anytime/anywhere. iPhones are standard issue for most businesses anymore.
I know it is tough being self-employed but I would not beat myself up over this purchase.
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Hi folks,
I’m finally back home from a short day at work (out after 7! back before 630!) and I’m loving the comments. I even checked them at lunch from my phone but didn’t have time to post. I did exchange emails with a client though, and it was handy! I even found some important phone number my team needed.
Just so you know, I didn’t write about it to justify the purchase or ask for permission, I simply wrote about it because I think it makes for an interesting case study that allows us to take a position, compare viewpoints, an exchange ideas. That’s what discussions are for.
And yes of course it’s a deductible business expense, etc., but I didn’t want to add 200 words to talk about that, or the piece would have lost focus.
Still, when you look at purely personal (non-deductible) expenses, there are splurges that make financial sense– whether it’s the food you bought so you could stay at work late, or getting a good haircut before your big presentation, or a more reliable vehicle so you’re not late to work again because AAA had to tow your hooptie.
Last month I went to a big party with some people who will be funding a future venture of ours and was I glad I got a haircut and that morning– good grooming lets you smile bigger, act freer, and come across as a nicer, happier, more confident, and ultimately more “fundable” person.
I was talking to a friend the other day and he asked how I was and I said “swamped,” and he said “good, that means you’re making money”, and he was right of course, and we both laughed. And when you’re swamped, you don’t have time to perform your own haircuts, but that’s perfectly okay if you’re not under-earning.
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Well said, El Nerdo!
The article resonated with me. I’ve been frugal for so long that I now always feel guilty when I buy anything pricey, even if I need it and can afford it. I am becoming my mother.
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You seem to have a problem mr. El Nerdo. If your workload is impacted if you take 10 or 20 minutes out to check out prices for the newest tool you buy for business, that means you are not running your business the right way.
If you present buying this phone as a business decision instead as a personal splurge, then for god’s sake, make it a business decision. In my company, we are required to get at least 3 offers for any purchase we make bigger than x dollars. You don’t have to do that, but you DO have to shop around. You also have to be able to justify your purchase better than “it will make more money”.
I’m sorry, but a small business will not thrive by throwing money at 1000 dollars purchases without even thinking about the return on investment.
This is not an article that I expected to read on a site that calls itself “get rich slowly”. This is more “get rich by spending big” which is fine if you are donald trump or richard branson, but not if you make your money writing blogposts.
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While I see your point in all this…I still think you could’ve done better, with a little more research. While you blame the “older” android phone for your problems, you never realized that there are newer android phones, that do exactly what you wanted,for a lot less money. I recently bought two Galaxy Nexuses directly from Google for $350 each for me and my partner. They’re unlocked GSM phones and we put them on prepaid plans. Plus,they have the latest version of Google’s operating system which syncs calendars and evernote just fine.
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We can’t save money unless we actually make it first. While both are of course important, that’s a simple way to remember what to prioritize time and energy.
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