Tag: YNAB

Michael Rockwell outlines his “Hardware Acquisition Strategy:”

What I’ve come up with, though — being the systematic guy that I am — is a hardware acquisition plan. It should easily take me through the next four years and as long as something doesn’t drastically change, I’ll likely be able to repeat the cycle to maintain a steady stream of new hardware for even longer.

The acquisition strategy spans across four years and allows for regular upgrades of my most important gadgets.

A few years back, my wife and I adopted a budgeting method that encouraged us to think more intentionally about long-term expenses. Rather than scrape together last-minute cash—or worse, take on credit card debt—we plan ahead. First, we estimate the total cost of any sizeable future purchase. Next, we pinpoint the date we’d like to pull the trigger. Finally, we start saving—splitting the cost across the number of months remaining until the buy date.

For example, we’re hoping to buy new iPhones next September. Assuming we pay full retail, that’ll cost us about $1500—$650 for each phone, plus taxes and new accessories. As of October 2015, we’ve already squirreled away $620; that leaves $880 to go. Divide that cost by the eleven budget months left till the iPhone 7 release date, and we’re left with our monthly savings target: $80 per month. If all goes well, we’ll have the cash ready to burn for the purchase come September. No credit card debt, no monthly installment contract.

Michael’s thinking even further ahead. He breaks down his purchase plan as follows:

• Year 1: New iPhone and Apple Watch
• Year 2: Mac Repair or Upgrade
• Year 3: New iPhone and Apple Watch
• Year 4: New iPad

That’s a reasonable timeline. Smartphone batteries start crapping out after two years or so, so a biennial iPhone upgrade cadence makes sense. The Watch would probably suffer the same fate, given its daily charge / discharge cycle. As for the Mac, Michael might be able to eke out a fifth year, but RAM and storage ceilings could make that extra wait unpleasant.

My only real question centers around the iPad. Given that product’s continuing sales decline, I worry about long-term support from both developers and Apple. The upcoming release of the iPad Pro may help, but will that high-end SKU appeal to enough users to actually grow the market? By the time Michael upgrades his iPad in 2018–19, will it still make sense to own a super-sized iPhone, a Mac, and a tablet? I’m not sure.

Fortunately, he’s not committed to spending that money on the iPad. If Apple’s tablet line has petered out three years from now, Michael could always reallocate that cash for something else. Better to anticipate the potential purchase, then beg off, than to scramble last-minute to find the money.

All that said, here’s my “hardware upgrade cycle”:

• Every year (?): new iPhone. Next year, we’ll escape from beneath our last two-year contract just before the iPhone 7’s likely release date. I’ve been crunching the numbers (you should see my spreadsheets!), and you pay a surprisingly small penalty for upgrading every year, versus upgrading every two. The key here? Year-old iPhones typically sell for around $400 on eBay, whereas two-year-old models fetch as little as $150. That steep depreciation makes a yearly upgrade more viable.
• Every four years: new PC or Mac. This category remains theoretical for me. As long as my employer provides a laptop, I can’t justify buying another, separate machine for home use. Yes, I’d prefer to firewall my work computing from my personal computing. For now, though, I’ve resigned myself to a single device, dedicated to work most of the time, but available for personal use otherwise.
• Every two years: new iPad. I haven’t given up on the iPad yet. Recently, I’ve enjoyed writing blog posts (including this one) on Apple’s tablet, using a Bluetooth keyboard. Apps like Byword provide a distraction-free, minimalist writing environment. Plus, the iPad’s svelte form factor puts my monolithic Dell workstation to shame. Still, I can’t justify a yearly upgrade for a glorified typewriter. In fact, I couldn’t have upgraded this year, anyways; Apple didn’t refresh the iPad Air 2.[1]