Should I sell my phone?

jcalc

Last year I upgraded my phone to the newly released Galaxy S2 - I got a 12 month contract for £35 and paid £200 upfront.
Two weeks ago the phone broke and this morning I received a brand new S2 from the insurance company. Now I've less than a month left on my contract and am faced with two options: 1) Keep phone switch to cheaper deal at end of month 2)Sell phone, use my old crappy handset for the rest of the month and take out similar contract for Galaxy S3 when it becomes available.

Looking at just the numbers i've spent £620 last year (contract + phone cost), This year if I keep the phone and switch contracts I'll spend £144 (£12 a month). Given the market price for a second hand phone that was state of the art 2 years ago is about £80, I reckon the S2 will be about the same next year.

If I sell (and assuming I get the same deal on the new Galaxy S3) I'll have spent £620 last year and £620 next year, plus received £300 from phone sale (after costs - value of new S2 is £350). Assuming next year the value of a second hand S3 is equivalent to the current trade in value for a second hand S2, The S3 would be about £250.

So two year cost is:
Option 1) £764 with £80 trade in.
Option 2) £940 with £250 trade in.

Financially speaking, there is little difference. However, Option 2 means my monthly outgoings will continue at £35 (not a big issue), and I will have to continue using a really crappy phone for the rest of the month. Option 2 also carry's a few assumptions regarding sale values and future value of a S3 (plus its a bit of a hassle). However I do get the latest handset. Its a tough choice any suggestions?

grumbler

It's far too complicated for me, but surely what you have already spent is absolutely irrelevant for making this decision.

jcalc

Ah you're right! Last year is a sunk cost, so options are really keep phone and spend £144 this year or sell and spend £320 - much easier choice! Thanks!