I look at it a different way. I'm saving $35 per month over Sprint with my Virgin Mobile plan. The phone cost me about $140, so I essentially pay it off in 4 months savings on this plan. I could upgrade my phone every 4-6 months if I wanted to, at no extra cost from where I was with Sprint. Compare that to the 1-2 year upgrade cycle on a contract, assuming you're able to get a free phone with the contract renewal. If I did upgrade every 6 months, the old phone would still be new enough to fetch $50 on Craigslist, making it even more economical.

Just a different perspective. I'm not actually one to be particular about having the latest and greatest phone, and at most I will upgrade once every 18 months. Switching to Virgin Mobile was one of the steps I took while unemployed to cut down on bills. It's actually been the easiest and most effective way to reduce my monthly living expenses without much sacrifice.