A common thing that I notice with poor people is that they buy bad cars. 15 year old American sedans. That kind of crap. When you can buy a Japanese sedan, use it for 5 years, spend almost nothing on maintenance, and then sell it for most of what you paid for it.
My phone cost me $250 (Moto x4) and it's an improvement on my previous $400+ phone (Nexus 6). I could buy a new one nearly every year for the price of making payments on an iPhone.
But people see a top-of-the-line product at a monthly cost they can afford and jump on it, not realizing that they could buy a cheaper option and get much more financial stability, and thus much less stress.
And yes, it's not just phones, but to me it's a symbol of the other decisions you make it life. Nearly everyone I know who complains when payroll is a day or two later than expected has a way nicer phone than me, drives a nicer car, and eats out a ton. I, on the other hand, have a house I can afford, am well above average on retirement, and have enough cash in the bank to survive without a job for several months without touching my investments.
If people realized that they could be out of debt in just a couple years of living more frugally, I'm sure they'd do it. But people just assume they'll be stuck, so they don't even try and spend everything in luxuries now.
The iPhone 7 is $449 and seeing that the 5s from 2013 which is three years older is still supported, worse case you would probably still get three years worth of updates for the 7.
A $500 phone gets used as an example because it's something people here will buy somewhat often and without much thought but it's missing the point to argue that there are cheaper phones.