Your teenager wants a new iPhone 4, and with Black Friday coming up fast, you're feeling generous. Swayed by compelling and gorgeous TV commercials and the constant nagging of your enthusiastic teen, you're starting to think maybe this would be the perfect gift. Hold on a second. I'll give you a sneak preview: Since when did you give your kid a gift that costs $2086.76?
You'll be signing a two-year contract for that shiny black handset that seems like it costs a mere $199, but by the time you get through paying for it, including all its associated fees and charges, you might end up being the most generous parent on the block. It might make you think twice before you venture out on Black Friday to pick up a new iPhone for that beloved teenybopper of yours.
To give you an idea of the cost breakdown of an iPhone 4, I added up the total cost of owning and using the phone, along with the associated fees, approximate taxes, and the plan with the fewest minutes of talk time available. Since our premise has you giving this iPhone to a teen, unlimited texting is a must in our hypothetical scenario. Let's take a look at the results:
AT&T iPhone 4:
$39.99: lowest-priced plan, 450 minutes
$15: 200MB data plan
$20: unlimited texting
$1.50: government fees and taxes
$1835: 24 months of service
$215: cheapest 16GB iPhone 4 and tax (tax amount depends on state)
$36: activation fee
$2086.76 for the 2-year contract
Whoa. That's a sobering number. And that's not counting purchases of those tempting apps — your kid will probably want a few of the 400,000 that are readily available. Here's my suggestion: tell your teen to keep that cellphone she's currently using, and then you can consider springing for an 8GB iPod Touch, which does almost everything the iPhone does as long as it's within Wi-Fi range. That'll keep your gift-giving cost down to a still-generous $229 with no monthly fees.