Anyone here good with numbers?

[andrewducker]

I'm currently looking at the difference in price between going to a Samsung Galaxy Nexus by getting a contract (£35-ish/month) or by buying up front (£480+10/month). This works out to about £120-£140 cheaper by buying the phone myself, depending on exactly how I do it.

My question, then, is about discounting future costs. If I spend £480 now rather than in chunks then I lose the utility of that money over the next two years. How does one account for that?

I assume there's a simple equation I could plug in that would tell me to stop being so stupid and just buy the fucking phone, but I'd like to be sure...

Comments

[nameandnature]

It's interesting that you phrase it that way: this article talks about working it out in terms of the effective interest rate you're paying to borrow the cost of the phone and the talk plan from the phone company if you take the contract.

[andrewducker]

Thank you - the spreadsheet there gave me my answer - I'm effectively 14% interest for two years, which is way over inflation.