The CELL PHONE Bill - bring your own device and be ready to walk

​Do you look at your cell phone bill and immediately feel cheated?  Sure, I use my Iphone a lot, but most of the time it is connected to wi-fi at home.   So I have to pay $85.00 just to send a few ten-digit texts a day and read the newspaper while I am sitting in the car waiting for three year old to wake up?  Say it isn't so!

This has been a tough one to get around for me - until lately.  I tried switching to T-Mobile a few years ago, but at least then it did not work when I was hiking or skiing in the Sierras.  I was away from work, so I wanted to be able to check my emails.  So unfortunately, I had to cancel T-Mobile within a few weeks and go back to Verizon and its high charges.  Verizon does have great reception, and great customer service.  But the primary reason I needed customer service was to complain about the bill!  So it really came down to the reception.

My clients' cell phone bills are commonly between $60 for one person up to $225 for a couple with kids.  Sometimes it's more when they have bought phones from the carrier and are paying for them in monthly installments. 

My first consumer tip would be to not pay for a phone in monthly installments.  First of all, it disguises the true cost of the phone.  Is your smartphone really worth $1400 to you?  The $700 one, last year's model will perform all the same functions - except maybe it doesn't have the latest styling or the coolest new camera tricks.  The three years ago one can be had for $200, and still gets the new software updates (until the end of the year, Apple will replace an Iphone battery for $29 due to a legal settlement - making it good as new.)

From my point of view, the only people who should have a $1400 smart phone are people way richer than me.  They look good carrying them and pulling up in their sweet Tesla to get the same cup of coffee and gallon of milk I drink and take home in my 2012 Honda, and it helps me know they are richer than me - and think about how I would invest their money instead.

I don't have clients driving Teslas, but I do have clients with $1000 phones.  The reason they bought those phones was because the monthly installments made them seem cheaper than they are. 

My suggestion for the truly thrifty is to buy a cell phone used in like-new condition.  You can oftentimes find an Iphone with an extended warranty still in place because a Tesla driver wants the shiny new one.  Use the phone two years, and sell it.  It will probably depreciate about $300 over two years.  You then sell the phone on Craigslist or Ebay to someone else.  the total depreciation of $300/24 months = $12.50 a month net cost.  Compare that to the monthly plan payments required for even the same model phone, and you are saving $25 or more a month and living within your means.

On to the bill.  For all clients, I would recommend that they simply call their existing carrier and ask how they can save on their bill.  I see many clients paying 2011 rates because they never changed their package, and a simple phone call could save $25-60 dollars.

In addition, I learned yesterday that Comcast offers cell phone service to its existing internet subscribers.  The best thing about this is it operates entirely on Verizon's network.  The second best thing is that it is cheap.  The representative at the store in Palo Alto offered me $10 off my cable bill if I signed up.  I could have unlimited data for $45, and get a $150 gift card.  You can also simply pay $12 per gigabyte, so many people could reduce their cell phone bill to $12 or $24.   With the $150 gift card and $10 internet discount factored in, the 1 gigabyte user would effectively have a free phone for over 22 months.

With the $10 cable discount factored in, the net cost of the unlimited cell phone service is $45-$10 = $35, plus the gift card.  Verizon is charging me $75.  They are both Verizon service so I can still count on my phone working wherever I am.  Importantly, I am not locked into anything, and can switch if I am dissatisfied.

Over five years, assuming some tax savings ($2) from the lower rate, if I invest this savings and achieve a 7% rate of return I will have saved $3696.00, and all my calls will still be on Verizon's network using my preferred phone.  Buying and selling my phone and saving another $25 makes that number $5543.00. In addition, I won't have to get annoyed every time I see my credit card getting hit with the phone bill.  Not being annoyed 12 times a year for five years is valuable.