The Importance of Leverage, and How to Cut Your Cell Phone Bill By 40%
Published by MaxBro on Tagged FeaturesWhenever I hear people gripe about the price of oil I always smile and think to myself that those same people will generally have no problem plunking down hundreds or even thousands of dollars on some luxury they really don’t need. Luxuries like iced lattes, cigarettes, gym memberships and especially cell phones.
While gas is certainly expensive relative to a few years ago, it’s nothing that can’t be managed provided you budget your money reasonably. I’m not even talking about penny pinching. I’m talking about making basic purchase decisions that give you far more leverage as a consumer. Far too often people simply buy into whatever is marketed at them without examining to see if it’s actually a good deal or just a mechanism for some conglomerate to continually rip them off month after month.
Over the weekend I looked into my cell phone plan with AT&T and quickly discovered that I was vastly overpaying for services I hardly used. As a 26-year old guy I generally use my phone for more functional purposes (i.e. setting appointments, business, non-chit-chat related things) and don’t usually talk on the phone too much with friends or even family. So it really doesn’t make sense for someone like me to have a plan that gives me a whole bunch of minutes I will never use.
Plus, I also learned that the price AT&T gives you in their marketing brochure is never the actual price you pay in the end. There are usage fees that might include things like email and text messaging, as well as government taxes and roaming charges. There is also the inexplicable $5.00 charge tacked onto my bill bearing zero explanation. Mind you, I’m paying for AT&T’s basic package at $39.99 a month for 450 anytime minutes and unlimited nights and weekend. I do text occasionally, and while it might have saved me a few dollars to add the $5.00 texting service, I never felt I texted enough to justify the cost. In a given month here’s about how my bill breaks down:
Basic Fee: $39.99 (which mysteriously turns into $44.98 with the addition of $4.99)
Taxes, government fees: $4.35
These costs reflect entirely what AT&T and taxes control. I didn’t add texting because I control that cost based on how much I text per month. Also missing are late payment fees and other miscellaneous usage fees. While I generally pay on time now, last year during a prolonged period of joblessness I repeatedly paid late and paid big time for it.
But all in all, my bill for AT&T’s “basic” plan averages out to $49.33 per month. That’s $591.96 per year.
Now, I don’t know about you, but that seems a little high for a stupid cell phone. Especially for one that I don’t even use that much, gives crappy service, and requires a two-year commitment service contract. I’ve had AT&T for over three years now, so fortunatly I’m now no longer tethered to the service contract. Actually, I’m “eligible for an upgrade.” How’s that for friendly-sounding corporate jargon? I mean, am I a human or a robot?
So this past weekend I finally bought a new cell on a pay as you go basis with Virgin Mobile. The reasons for becoming a payasyougoist are many, but they basically boil down to saving you money. Actually, lots of money if you’re not a particularly big cell phone user. Here’s the breakdown for my new cell plan:
Cost of phone: $106.99. The package included the Wild Card model with $20 worth of minutes, and a Bluetooth headset. A bit pricey to be sure, but then you’re not tied to a 2-year contract.
Cost of 200 minutes per month: $20. I don’t think in all my years using AT&T’s basic plan I once went over 200 minutes during any month. Of course, if I do I can always buy more minutes, but no matter what I still retain control over my cell plan rather than relinquishing control to some faceless corporation that thinks of me as a robot in need of an “upgrade.”
Here’s the best part, comparing the two plans:
Cost of AT&T’s basic plan: $49.33 per month, or $591.96 per year.
Cost of Virgin Mobile’s plan: $20 per month, or $346.99 per year with the $106.99 price of phone included.
Total savings: $29.33 per month, or 244.97 per year.
For switching from AT&T to Virgin Mobile’s pay as you go plan my total savings comes out to around 41%. I’d say that’s pretty significant considering I don’t lose anything by switching, and gain a brand new and better model cell phone.
I know it seems like I’m shilling for Virgin Mobile. I’m not. I could care less who the company is offering me the plan provided it gives me the best value. There may be better deals out there minutes-wise, and for some people having a monthly plan and two-year agreement makes sense.
But what’s more important is that I retain control over my plan. If I need more minutes, I buy more without having to worry about upgrading my plan. If I don’t buy them, eventually my service ends and that’s that. No cancellation fees, no reactivation fees. No nonsense.
It’s a great way to control your spending if money’s tight, as it is for me and many other Americans at the present time. When the minutes dry up, you just don’t make any more calls until the next cycle. However, even if all of a sudden I needed to double my minutes to $40, I still save $9.33 per month compared to AT&T’s plan. That’s leverage, the ability to consume more without disproportionately affecting your expenditures. In other words, it’s getting the best value for your money and not letting some company take advantage of you. It’s something Americans have largely forgotten about in the face of endless credit card offers, subprime mortgages, $80 pairs of jeans, $2000 laptops, and a host of other pointless trinkets that don’t make sense to buy unless you’re in the upper income bracket.
Stop bickering about the price of oil. It’ll keep going up, because it’s based on supply and demand and right now there is a ton of demand in the wake of emerging markets in China and India. Worry about needless things you’re paying for month after month, and about getting the best value and leverage for your money. And whether that faceless conglomerate you’re shoveling money onto every month thinks of you as a robot or a human.
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August 31st, 2008 at 10:11 am
I do not believe this
September 3rd, 2008 at 8:01 pm
The basic prepaid-plan Net10 phones are usually free - $30 with 300 minutes included. Minutes are always $.10 per minute, no matter how many minutes you purchase. The basic phone is truly basic, though you can pay more for a better phone.
T-Mobile prepaid plan uses any T-mobile or sim-card phone that you may already own, and is also $.10 per minute if you buy $100 at a time (1000 minutes, don’t expire for a year). They also run promotions where when you buy the phone you get enough free minutes to cover the cost of the phone. Target used to carry this promotion. I’ve used T-mobile prepaid for years and have never come close to using $30 a month (although my teen-aged daughter is another story).
The best part about these prepaid plans is that there are no added-on fees or taxes (other than sales tax).
The worst part is figuring out how much some of these plans truly cost because of complicated rate structures. I’ve researched extensively and Net-10 and T-mobile (if you buy 1000 minutes) were the best deals at always $.10/minute, but now I have to check out Virgin Mobile as well!