Dumb Money: Too Much Cell Phone

by Kevin on June 24, 2008

Nokia Progression

(Photo by jurvetson)

This is a continuation of my Dumb Money series. Other tales of Dumb Money? The Gym and The Lottery.

Ah, the cell phone. What would we do without these wonderful devices? (+5 points for alliteration) They keep us constantly in contact with friends, family, and co-workers. You can surf the web, watch movies, and twitter everyone on the planet… all from a single device. Call California. Call Chicago. Call your Mom. All for the same rate.

It amazes me that this is all done by 1s and 0s inside the little computer chips residing in the phone’s case.

Cell phones are great. I’m pro-cell phone. But there are a great many people out there that are paying a dear price for their cell phones… a price much too high. Money that could be spent paying down debt is instead used to cover fees for text messaging and “administrative”.

This is a mistake we’ve made, too.

Our Cellphone Contract

Our cellphone provider is Verizon Wireless. They have the best network by far, and you pay a slight premium for it. The “Can you hear me now?” ad campaign is truly indicative of their coverage. Thumbs up to them there.

We pay $69.99 per month for two phones and 700 shared minutes. Nights/weekends kicks in at 9pm. I get a 10% discount through work, and so after taxes and fees we pay roughly $68-69 each month. Do the math and that’s $0.10 per minute. Our two year contract is up in February of next year. We’re still trying to decide if we will renew, continue on the current plan, or switch plans/providers. We like Verizon a lot, but we’d love to save some money, too.

The Minute Paradox

We use right around 50-60% of our monthly minutes every month. That equates to about 350-400 minutes. Unfortunately, Verizon no longer offers a 450 minute family share plan. It has been discontinued; the 700 minute plan is the smallest one available. Even if we had a 450 minute plan there is then the risk of going over on minutes and paying hefty fees.

I’m guessing many of you are in the same predicament.

“But I Need to be in Constant Contact!”

You’ll hear people with Blackberries scream this all the time. The constant need to be constantly in contact with the entire universe is crucial to business success these days. Even for people whose companies won’t pay for it (because they don’t see the role requiring it), the extra $30-45 per month is absolutely necessary even if it pushes their phone bill over $125 per month. Does the receptionist really need that Blackberry? Probably not.

Reassess your current needs. I did this recently as I pined for a Blackberry. I thought I needed a Blackberry. Not to mention it was hip, cool, and a new gadget for me to play with. But then I ran the numbers and sat down to think. I sit at my desk all day, connected to the internet on my laptop. The moments I am in the car are either: going to work in the morning, going home in the evening, or going to a client meeting during lunch. I don’t desperately need to be connected at these times.

Do you?

How to Avoid Having Too Much Cell Phone

  1. Look at what you currently are using. Look at your minute use, and how many text/pic/video/e-mail messages you are sending from the phone. Does the cost justify the use? What if you simply went to a pay-as-you-go plan for texting (if you use a small amount of them) instead of paying the $15 per month constant charge?
  2. Assess your current needs. Has something changed? Were you just promoted and really do need to stay in contact with your team 24/7? Or is everything the same and you just saw a cool phone that you wanted?
  3. Shop around. Look at other providers. Look at their costs. Do you get a corporate discount? Do you use it? (For example, I get 10% off with Verizon through my company.) If you were just promoted, will your company now offer to pay for your service (or part of it)?
  4. Consider other options. Have you considered getting a pay-as-you-go phone like Virgin Mobile? Some plans you must put in $10 worth of talk time each month and it costs $0.10 or $0.20 per minute. If you talk 300 minutes per month and it costs you $0.10 per minute, that’s $30 per month. Also, consider how else you could communicate in the same way. Skype? Sitting at your desk?

Cell Phones Epitomize Dumb Money… for some people

If you buy a new phone every three months and don’t work for Engadget or Gizmodo (or any other review site), you’re out of your mind. Phones are extremely expensive and the newest crazy feature that just came out will be old news in three months… when you upgrade again. To avoid spending too much money on your cell phone, truly sit down and assess your needs. Don’t upgrade or buy simply because it looks like a cool phone. That’s a slipper slope. Inevitably, your cool new phone will be old, scratched up, and outdated. And you’ll want to replace it again.

Additionally, who needs to watch movies on their cell phone? Seriously? Is that 4 inch screen truly satisfying? I don’t believe in walking around with your iPhone earbuds in your ear throughout the day, watching movies and listening to music. Unplug. Look around. Strike up a conversation with the person sitting next to you on the subway.

As I mentioned before, our plan essentially costs us $0.10 per minute for 700 minutes. But we only use 300-450 minutes per month. Perhaps we should change to a pay-as-you-go-model? It is something we will definitely consider.

What about you? Have you made a mistake in your cell phone purchases? Or have you been successful in keeping costs down?


Frugal Vet Tech July 25, 2008 at 8:48 pm

Something else to consider when looking at your minutes – (at least with Verizon) calls to other people who use the same cell phone company are free. Husband and I have the 700-minute two-phone plan and we often use over 600 of those minutes. In addition, we also use a few hundred minutes calling each other and other people who also have Verizon, which means we’re really getting more than 700 minutes for what we pay.

I keep trying to come up with ways to reduce our cell phone bill and haven’t been successful. I need to have one for work, because I’m on call 24/7 (work pays part of my cell phone bill). Husband doesn’t need one for work, but it makes life easier if he does (he has to carry a pager and if they page him, he needs to respond fairly quickly).

Kathrn January 12, 2009 at 10:49 am

After reading this article i immediately looked over our Verizon bill and was able to take my family down to the 700 min plan and I blocked all the little things that were eating at our plan..ie Ringback tones! I mean …really do we need them? No!! and by doing this I was able to save $35.00 a month. That is a $420 year savings. I am now taking a really good look at doing the same to our land line phone…either we will take down to the bear bones…$14.95 a month with NO extra…just like my mom and dad has when I was a kid or just do away with it all together. I am going to evaluate the usuage; but just off the top of my hea, I am pretty sure the only people call the house phone are solicters!

I am so glad that I have become a subscriber to your RRS. We are dedicated savers!!

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