You pay too much for your cell phone

The other day I was chatting with some friends and the topic of cell phones and plans came up. As background, as a family of two adults and one child our monthly cell phone bill for all of us is less than $100, including saving for a new phone every 2-3 years. Our friends are paying over $200.

But wait, you say, I bet you don’t have unlimited data, and they do! Correct, I say, I only have 5GB, but I only use about 3-4 GB per month, so why should I pay for unlimited? Also, I say, my spouse gets 16GB per month with rollover data, and never comes close to using it. If you look at your own data usage I would be very surprised if it were above 4-5GB per month, unless you don’t connect to WiFi at all on your phone.

But wait, you say, I bet your child uses all kinds of data, don’t they need unlimited? No, I say, it is good to teach young people about budgeting and responsibility, and cell phone data is a good place to start. Scrolling social media or watching videos when not connected to WiFi is almost never necessary, it’s often just laziness. Think about it, how often are people sitting at home, or in a coffee shop, or an airport, etc, and using up their mobile data when they could just connect to WiFi. By giving our child a budget of 5GB per month, and telling them they need to connect to WiFi if they want to watch videos most of the time, we are providing them a way to learn the value of efficiently allocating scarce resources. If they go over on their data, they can buy extra data…another good life lesson!

But wait, you say, I’m on company xxxx with the “best network”, they say so in their commercials! I don’t want some cut-rate operator. Ahhh, I say, you should realize that there are really only 3 national mobile networks, TMobxxxxx, AT&yyyyy, and Verizzzzzz, you can guess the names, and they are all pretty good. Most people would never know the difference between the networks except some people in certain rural areas that may get better coverage on one of the networks vs the others. Most of the other mobile brands have agreements with one or more of these three, and are actually Mobile Virtual Network Operators (MVNOs). As such, when you buy, for example, Xfinity Mobile or Straight Talk Wireless, you are actually using Verizzzzz’s network.

You should also realize that mobile phone plans are categorized as either “pre paid” or “post paid”. For the cell phone company, “pre paid” means they get the money up front, so their risk is lower, and they charge less accordingly. They offer especially nice discounts if you are willing to pre-pay up front for a whole year.

Now hold on, you say, I’m still paying off my phone so I can’t switch for another 19 months! Ahhh, I say, maybe not. Take out a piece of paper and a calculator and you might be surprised at your options. Take 19 times your monthly cell phone bill and set that number asside (for example, 19 x $85 per month = $1615). Now look on your latest cell phone bill and see how much you still owe on your phone, the “buy out” amount. For example, let’s say it is $550. So what if you paid off your phone and switched to a $15 per month plan. Here’s the math: take $550 and add that to 19 x $15 (550 + (19x15) = $835). Would you rather pay $1615 for cell phone service over the next 19 months or $835??? (Trick question). But wait, you say, why $15, is that really possible? YES, I say, if you prepay for 12 months you can get a cell phone plan with 5GB of data on a high quality national network, like TMobxxxxx, for $15 per month.

In summary, think it through. If you want to save money and stop getting ripped off, check out AT&T Prepaid or Mint Mobile, or any of the other prepaid or MVNO operators (Google can help you find them).

One final tip, my spouse and I travel a lot around the US, so for us having two different companies on two different networks is helpful. We almost always have good coverage on one of our phones, and we can use a hotspot to connect the other phone if necessary.

On another post I’ll talk through the virtues of using Google Voice or similar as your main phone number….

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