As I was reading Thomas’ great post 6 Simple Tricks On How To Save Money, I started thinking about one of the biggest expenses that we have in our daily life nowadays: the cell phone. This cool & useful device can really cost us a fortune if we are not careful! There are ways to make sure that you do not over spend with your cell phone and I wanted to point them out for you, so that you can put more money back into your pockets:
Respect your rate plan
One of the ways that cell phone companies make a bundle of cash is on the fact that most people do not respect their plans. Most people use their phones more than their allocated time and end up paying big time for it. If your plan doesn’t give you a lot of daytime minutes, take the habit of avoiding using your phone during the day. Also, check at what time your evening plan starts at. You may have unlimited evenings but it may start at 6, 7, or 8pm. A call that you make at 6:58pm and talk until 7:15pm, you will pay for the full call if your plan for the evening starts at 7pm. Just calculate how long you can use your phone on a daily basis without being charged extra and discipline yourself to not use it more than that.
These have become quite popular in the recent years, and it can be very addictive. Make sure that you either have a text message plan option or avoid the practice altogether. Again, if you have a plan for it, calculate how many per day you are allowed to send without being charged more, and stick to that limit. Ideally, you should avoid them as much as possible. I used to get my business alerts on my cell phone, and although at first I found it pretty neat, I eventually got sick of it. I would start hearing the beep even when it didn’t ring, as I was getting just a crazy number of messages, 24/7. I felt like I was always “connected”, and this takes its toll. Sometimes, it’s nice to not be reachable! Most text message option plans are in the range of $10 a month….use that extra $120 a year for something more beneficial & less annoying 😉
Do not surf the web on your phone
Cell phone companies have unraveled a brand new money pit with this one. With the advancement of technology and the possibilities of surfing the web on your phone as if you were on a computer, this practice is growing very much. Of course, every time you surf on your phone, you are being billed for it. They charge you by kilobyte (kb) and if you know anything about web pages, you know that a single page can be 20-100 kb. At $0.05 per kb, which is the average companies charge, you are looking at paying at least $1 per page you view. If you do absolutely need to surf the web on your phone, get a flat rate unlimited surfing plan, but again, this will increase your monthly expense again. My view is that if you already pay for internet access at home, you don’t need to pay even more for it. Avoid such an unnecessary expense.
Is your phone a business expense?
If you have a small business or you are an entrepreneur, you absolutely need to make your cell phone a company expense. You will be able to have the expense tax deductible and you will avoid paying taxes on it. For example, here in Canada, we have about 15% tax, so on a $50 monthly cell phone bill, that’s $7.50 a month, or $90 a year that you can put back in your pockets. Plus, imagine the savings you can make when you buy a new handset! You can save another $75-100 easily in taxes, plus you can consider your handset an asset. All in all, you can greatly save by having a cell phone as a company expense.
Ask and you shall receive
What surprises me a lot is that most people do not consider simply calling up their cell phone company and demanding a better price! Trust me, if you haven’t done so, try it today. You see, cell phone companies have tremendous competition and they do not want to lose their clients. After the points I have mentioned so far about how they make money off you, can you blame them? 😉 Seriously, call them up, and say that you want to close your service. What they will do is transfer you to the “customer retention center”. Of course, they won’t say it explicitly like that, but that’s what it is. There, they will offer you plans that they do not advertise, but don’t be afraid to negotiate and get the deal that you feel you should be paying. Use your loyalty as leverage, believe me, they do not want to lose you. Every time I feel like I pay too much for my cell phone, I do this. You wouldn’t believe the deal I have right now. I have most options for free, I don’t pay network access fees, and I even once got a new handset. Try it out, you will be happy you did!
How many people do you know off the top of your head that has complained about being stuck in a contract with a cell phone company? See my point. When you are binded with a contract, you have just destroyed your leverage with the company. As you saw in my point above, leverage can get you big savings. Plus, what happens if you really do want to switch company for an even better plan elsewhere? You won’t be able to if you are stuck with a contract. So try to avoid them as much as possible. Do not fall prey to their tactics of offering you discounts or a new handset. Two to three years is a lifetime when it comes to technology, so you do not want to be stuck for that length of time.
Get a handset yourself
Following from my point above, cell phone companies will try to lure you into a long term contract by offering you a brand new handset completely free. To you, it may look like you are getting a $600 new phone, but that’s not the case! First, the handset prices at your cell phone company are grossly exaggerated. Shop around online, and you will see that the handset is not as expensive as advertised with your cell phone provider. Plus, consider the fact that they get the handsets for a mere fraction of what they claim they are worth, and you will understand that for them, it’s just a ruse to get you locked into a contract for a few years. They know competition is fierce in their industry, so that is why they want to take away your freedom to go elsewhere. I suggest you get your handset via a friend or check online, such as on Ebay, and you will be guaranteed to save money plus avoid to be under a lengthy contract.
Assess your actual need
If you only need a cell phone for emergency purposes, it would be more convenient for you to get a “pay as you go” plan, where you just recharge funds on your own. This is a great way to manage how much you actually spend on your cell phone. As well, assess if you really need to have caller ID. Do you care to know who is calling you? Same with voicemail. If you rarely get voicemail messages, there is no point in keeping that option. The service provider will try to pile the options onto you by offering you a bundle discount, but if you barely use any of them or realize the lack of necessity for them, put that extra $10 a month it would cost you to better use!
Avoid cell phone use when traveling
Let’s be honest, roaming charges and international fees for cell phone usage are ridiculously high. Text messages are twice as expensive, and any minutes that you use your phone, you are pretty much double-billed as you pay for the charges for the local provider where you are vacationing, plus the fees your actual provider charges you. For example, last year on a trip to Mexico, I used my cell phone freely without thinking about it. I came back and found myself with an extra $40 on my bill. So try to avoid using your phone overseas. Personally, I like to stay away from all such technologies when I am on vacation. If you travel just a few times per year, you can save yourself another $100 a year. It is more economical to use a pay phone than it is to use your cell phone when you are in another country. If it’s to communicate back home, I would suggest paying a few dollars for a quick internet session and send emails instead of using the phone.
As you can see, by simply applying yourself a little bit, you can literally save a few hundred dollars per year in regards to your cell phone use. Sure, it’s a cool little gadget, but at the end of the day, your cell phone will not put food on your table and pay your rising gas expenses! Prioritize & manage your cell phone necessities and make it a habit to not spend more than you should. You’ll be happy you did at the end of the year 😉