Going into debt for an iPhone: self-indulgent whimsy or savvy investment

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Some 28 million Americans believe that getting one of 2018's new iPhones is worth going into debt. (Courtesy photo).

Nearly 28 million people believe that getting one of the new iPhones launching a week from today is worth going into debt, according to a personal-finance website.

WalletHub's 2018 Credit Score & iPhone Survey, released on Tuesday, gives folks a window into the huge popularity iPhones enjoy among the young.

For instance the survey showed:
5X more millennials say the new iPhone is worth going into debt for than baby boomers.

29% of cell phone shoppers don't know they could be in for a credit check.

Nearly 187 million Americans trust Apple and Google more with their personal data than the government.

19% of people would rather have unlimited phone data than an excellent credit score.

44% of millennials believe their cell phone has a bigger impact on their life than their credit score.

The survey comments that the economy is booming, and so too is the stock market, thanks in large part to the performance of Apple and its signature product: the iPhone.

Millions of people have wanted one for over a decade now, and demand still appears strong. Even renowned old-school investor Warren Buffett, whose company Berkshire Hathaway now owns a big stake in Apple, has even called the iPhone "indispensable" to many.
But has our love affair with the latest and greatest tech - the iPhone in particular - gone too far? The results of the survey suggest it may have, at least for many young consumers.

For instance, roughly 28 million Americans believe that getting one of 2018's new iPhones is worth going into debt. That opinion is especially pronounced among millennials as well as slightly older consumers. More than 18 percent of people under the age of 45 say a new iPhone is debt-worthy, compared to 5 percent of those who are 45+ years old.
On the one hand, a new iPhone could be perceived as a good investment in an increasingly mobile economy, when a person's social media presence can directly affect their ability to put money in the bank. "iPhones are becoming more than phones. They are quite functional little computers," said Lewis S. Davis, an associate professor of economics at Union College. "Economically, it makes sense to go into debt for items that deliver services over several years. ... If you tend to get a new phone every three years, however, then you shouldn't take out a five-year loan to pay for it."
In many young people's minds, the decision to incur debt to get a new iPhone may simply come down to which impacts daily life more. Debt is expensive, both in terms of interest owed and our ability to borrow for more important things in the future. But a cutting-edge smart phone provides a world of possibilities right now.
Those are also big reasons why 44 percent of millennials believe their cell phone has a bigger impact on their life than their credit score. But are they right?
"Their cell phones do have a big impact on their lives day-to-day, which, when summed over the course of their lives probably does outweigh the impact of their credit score," said Arthur Caplan, a professor of applied economics at Utah State University. "Of course, for those millennials who are planning to own a home, a car and other things that we typically acquire debt for, then they may want to rethink their priorities."
That's important because even though the economy is doing well overall, not everything about our finances has been fine in recent years. In particular, credit card debt and student loan debt have hit record highs, putting pressure on the very people who now seem comfortable borrowing to get a cool phone.

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