What is the difference between:
I didn't use to have a phone
I didn't have a phone
Maybe the first option is not correct at all? I will be grateful for explanation :).
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Used to implies some change has taken place - in the past, some action was done regularly ("I used to ride my bike to school") or some state was true ("this used to be more fun"), but at some point that changed (I stopped riding my bike, or I don't go to school anymore, and the fun thing became less fun). And the negative version says that it wasn't the case, but implies that at some point it became true.
So I didn't use to have a phone is saying that in the past you didn't have one, but it gives the impression that now you do - that situation changed. I didn't have a phone is just talking about one time (or specific period of time) in the past, it isn't saying anything about any other time. You can add other words to imply something changed (like I didn't have a phone then seems to contrast with now), but didn't use to has that sense built in.
I started this with "used to is used to" and had to stop because it was going to look very confusing...
I prefer the “didn’t use” option in the case where you now have a phone, but didn’t use to. The other option doesn’t seem to be clear on this.
As to the whether it should be “use” or “used”, I’d say “use” in your specific case.
There does seem to be some confusion around it, but I’d basically align it with the following examples:
I used the soap.
I did use the soap.
I didn’t use the soap.
So you’d have:
I used to have a phone.
I did use to have a phone.
I didn’t use to have a phone.