Author Topic: Is it worth spending $1000 to break my AT&T contract?  (Read 6588 times)

bigkid70

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Is it worth spending $1000 to break my AT&T contract?
« on: August 12, 2015, 10:17:34 AM »
Hey all,

I'm a new Mustachian and I'm also in the process of investigating cell phone options to replace my AT&T contract. I'd cancel with AT&T today if it weren't for the fact I just got a new phone (a Samsung Galaxy S6), and I still owe about $230 of the price of what's now my girlfriend's phone (my "old" S5). Long story short, I'm stuck with the phones and have to pay for them if I cancel service...and the price of the S6 is $720 (ugh), which means it'll cost me almost $1,000 to get out of the contract.

I think I already know the answer to my question, but I also know I'm not great at knowing the best, most statistically/mathematically sound financial decisions (yet!).

So, what I'm wondering is if there's any reasonable argument for not spending the $1000 (as much as it'll hurt) to break my contract, since I'll be able to realize a ~$100/mo reduction in my cell bill if I do so.

Thanks in advance for any help/advice!!

I'm a red panda

  • Walrus Stache
  • *******
  • Posts: 8202
  • Location: United States
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #1 on: August 12, 2015, 10:18:33 AM »
I'm guessing no- since this is not a typical early termination fee, but needing to pay for pricey phones you chose to get- but you need to do the math.

How much will you save by switching to another plan?  In the time left on your contract, is it more than $1000?

« Last Edit: August 12, 2015, 11:26:34 AM by iowajes »

TheDude

  • Bristles
  • ***
  • Posts: 467
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #2 on: August 12, 2015, 11:21:49 AM »
EEK, I think I would look into something like Tmobile wont they pay some of that for you.

But either way it probably still worth it. If you can save 100 a month. Thats only 10 months. Plus you can probably sell the S6 and S5 for decent amount. Hell the more I think about no way the math doesnt work. Make it happen!

AZDude

  • Handlebar Stache
  • *****
  • Posts: 1297
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #3 on: August 12, 2015, 11:29:52 AM »
The phones are a suck cost, so forget about them. If you save $100/month, is that including the phone payments? Look at the actual WTF, minus the balance on the phones, and the actual savings minus the payments on the phones.

Then see if paying the ETF is worth it. The phones are yours now, regardless of what carrier you have.

bigkid70

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #4 on: August 12, 2015, 11:42:50 AM »
Thanks everyone! I think you're right, AZ. The cost of the phones blows (and sucks!), but I have to look at it as a necessary evil and result of previous, un-Mustache informed decisions.

Without the cost of the phones included, I'm looking at monthly bill of ~$135. I'm pretty confident I can find plans for two phones at a price that will justify dropping AT&T.

Now, I just need to do the research and figure what carrier/plan that is. I was thinking about Republic based on some initial readings here, but more and more it sounds like that carrier isn't all that awesome.

Daley

  • Magnum Stache
  • ******
  • Posts: 4319
  • Location: Cow country. Moo.
  • Got that mustache feeling.
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #5 on: August 12, 2015, 11:44:26 AM »
There's a tool for this sort of question once you work out a good MVNO plan from the guide to switch to that's compatible with your existing handsets:

http://www.techmeshugana.com/tools/wirelessroi.html

Stay away from "ETF payoffs" from other major carriers, you're effectively just generating more electronic waste and getting roped into another contract elsewhere. Don't be afraid to do the math. It's a shell game, and they're counting on you not to actually crunch the numbers.

BarkyardBQ

  • Pencil Stache
  • ****
  • Posts: 666

bigkid70

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #7 on: August 12, 2015, 12:06:21 PM »
Thanks I.P. and zdrave. IP, your Frugal Comms Guide, was mainly the "research" I was referring to when I was talking about finding a new plan. So, thanks a lot for the link to calculator!

All signs point to eating the cost of the phones upfront (which I would have eaten anyway over time), and then finding a new, cheaper plan.

Jack

  • Magnum Stache
  • ******
  • Posts: 4726
  • Location: Atlanta, GA
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #8 on: August 12, 2015, 12:26:31 PM »
The phones are a suck cost...

Look at the actual WTF

I thoroughly enjoyed both of these Freudian slips!

waffle

  • Bristles
  • ***
  • Posts: 286
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #9 on: August 12, 2015, 12:43:24 PM »
Are you actually on contract? It doesn't sound like it since you didn't get a subsidized price on the phones. If you are on contract then I would look at tmobile. They might still have their promotion where they will pay for your early termination fees. I did that last year and now save $100/month. You can bring your phones with you (though you'll still have to pay them off). Once your bill with ATT is settled then ATT will unlock your phones to use on any carrier. They did require that I trade in a phone and buy a phone for the deal. I just traded in an old junk flip phone, and bought a cheap $30 flip phone from them. worth the hassle to save $350 on my part.

If you aren't on contract then just switch to whatever is cheapest in your area. Pay off the phones and have them unlocked to take with you or sell to recoup some of the cost then buy new cheaper phones.

bigkid70

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #10 on: August 12, 2015, 01:03:21 PM »
@waffle - no, I'm not on a contract. I got the phones on AT&T's Next plan, so you get the phone for no money down, and then you pay for the phone in installments that are added to the monthly bill.

So, yes, I'll just be paying the phones off, unlocking them, and finding the best deal in the area.

Thanks again to everyone who replied.

I'm a red panda

  • Walrus Stache
  • *******
  • Posts: 8202
  • Location: United States
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #11 on: August 12, 2015, 01:11:05 PM »
@waffle - no, I'm not on a contract.

So there is no contract to break? 

You can ignore my response upthread- I guess I am now really confused based on the title of the thread being whether you should break your contract?


If all you are wondering is should you pay off your phones: well then, yes. You should.  You have to no matter what you do next.

bigkid70

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #12 on: August 12, 2015, 01:13:37 PM »
Good point, iowajes. Sorry for the misleading thread title.

TheDude

  • Bristles
  • ***
  • Posts: 467
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #13 on: August 12, 2015, 04:37:28 PM »
Those phones are very much not sunk cost. I think you pay them off and sell them and down grade phone. The S6 is a great phone but not worth $720 It will easily fetch 400-500 on the used market.

Hamster

  • Pencil Stache
  • ****
  • Posts: 623
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #14 on: August 12, 2015, 08:25:26 PM »
The phones are a suck cost...

Look at the actual WTF

I thoroughly enjoyed both of these Freudian slips!
Ha! I had the same thought.

Emg03063

  • Bristles
  • ***
  • Posts: 458
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #15 on: August 13, 2015, 06:17:38 AM »
Those phones are very much not sunk cost. I think you pay them off and sell them and down grade phone. The S6 is a great phone but not worth $720 It will easily fetch 400-500 on the used market.

^this, or maybe just tell AT&T you're having a financial problem (which is true), and ask if you can downgrade with them.  Save you the cost, hassle (and maybe the depreciation) of buying & selling the phones.
« Last Edit: August 13, 2015, 05:15:23 PM by Emg03063 »

bigkid70

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #16 on: August 13, 2015, 08:04:57 AM »
Good points about selling the phones to help recoup some of the cost (which I agree is not sunk). Selling them will also give me more flexibility when looking for a new plan since I won't need to get one that I can use the Samsungs with.

To your point Emg, your suggestion sounds as though I'd still be stuck with AT&T, which I'm pretty sure doesn't have the lowest price plan options.

Daley

  • Magnum Stache
  • ******
  • Posts: 4319
  • Location: Cow country. Moo.
  • Got that mustache feeling.
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #17 on: August 13, 2015, 08:08:58 AM »
Question, you originally said:

I'd cancel with AT&T today if it weren't for the fact I just got a new phone (a Samsung Galaxy S6)

How new is new? Under or over 15 days?

bigkid70

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #18 on: August 13, 2015, 08:15:41 AM »
Over 15 days, IP. You were thinking of using the "buyer's remorse" option?

Daley

  • Magnum Stache
  • ******
  • Posts: 4319
  • Location: Cow country. Moo.
  • Got that mustache feeling.
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #19 on: August 13, 2015, 08:21:25 AM »
Pretty much. That's what it's there for.

Emg03063

  • Bristles
  • ***
  • Posts: 458
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #20 on: August 13, 2015, 05:23:13 PM »
To your point Emg, your suggestion sounds as though I'd still be stuck with AT&T, which I'm pretty sure doesn't have the lowest price plan options.

I don't see why.  What I'm suggesting is that you ask AT&T if you can return your overpriced phones that you bought from them and haven't fully paid for (presumably for original price).  There's no reason to commit yourself to AT&T going forward just because you've asked them a question.  If they agree to take them back, you can replace them with dumb phones or less expensive smartphones, using whatever carrier you want, but that's a separate issue.  You don't have to tie them together, but by all means let AT&T try to keep your business.  See what they offer.  Sorry I didn't make that clear in my last post.
« Last Edit: August 13, 2015, 05:26:17 PM by Emg03063 »

rafiki

  • 5 O'Clock Shadow
  • *
  • Posts: 38
    • SnappySix.com
Re: Is it worth spending $1000 to break my AT&T contract?
« Reply #21 on: August 13, 2015, 05:41:23 PM »
If for some reason you can't give the phones back, you can always try to sell them. I ended up doing that when I left Sprint. They charged $400 to cancel the contract and I ended up trading the phone in to Amazon for a $300 gift card. This was the easiest way to maximize the trade in value of the phone for me (your mileage may vary).  It's not perfect, but closed that $400 deficit pretty well.