Are You Paying Too Much On Your Phone Bill?

We often review people’s budgets  to help them find savings and one area that I consistently find people spending more than they probably need to is on their phone bill. The average landline bill is probably only about $20 but most people also have a cell phone bill that averages about $50 per month. As people switch to smartphones with more expensive data plans, that cell bill will only increase. The average smartphone user now spends over $100 per month.

The first opportunity to save is with your landline. Cell phones are arguably sending the traditional landline the way of the VHS tape and most young people I know have already ditched their landline altogether. On the other hand, if you talk on the phone a lot, a landline can cut down on the number of minutes you need on your cell phone plan. There are also concerns about the health risks of long term exposure to cell phone radiation and emergency services having better response to a landline.

One way to keep your landline while cutting your bill is to switch to a VOIP phone system in which your phone calls are routed over your Internet connection. There are lots of options but my personal favorite is a device called an ooma. Unlike some of the other VOIP options, you’re not sacrificing quality. By using a HD Voice technology to transmit twice as much speech information as a standard landline call, the call quality on your ooma can actually be better than your current landline. You just need a high-speed Internet connection (which can also save you money on movies and cable tv).

The ooma has a one-time cost of about $250 but allows you to make and receive high-quality domestic calls for free and international calls at very low rates. You can divide that $250 by your current landline bill to see how many months it would take to break even. After that, you have a landline phone without the monthly bill.

You can use the same approach of paying more upfront to save money in the long run with your cell phone bill too. There are a variety of pre-paid phone companies that offer cell phone service with much lower monthly bills. The catch is that you may pay more upfront for your cell phone but once again, you can save more in the long run. These plans are popular in Europe but still haven’t caught on in the same way in the U.S. yet.

When choosing a pre-paid phone plan, I like to stick with ones that use a network from one of the Big 4 (Verizon, AT&T, Sprint, and T-Mobile) so that you don’t have the coverage limitations found on smaller networks.  As someone who needs mobile access to my email (Google GPS navigation is essential for me too), I also look for ones that offer smartphone data plans. My personal favorite here is Virgin Mobile, which is owned by Sprint and uses their network. I travel extensively all over the country, including many remote areas, and I’ve yet to have a dropped call or lose signal (except for a brief time driving on a highway in a rural part of CA). Best of all, I only pay $25 a month for 300 minutes (I rarely go over the 300 minutes but when I do, additional minutes are only .10 each.) and unlimited text and data. There are also pre-paid plans from companies like Boost (also owned by Sprint) and T-Mobile with unlimited minutes as well as data for $35-55.

The “catch” with pre-paid plans is that the phones are unsubsidized and the choice of phones is more limited. The idea is that you pay full price and hence more for your phone upfront but then save money in the long run because of the much lower monthly fees. That being said, I only spent about $120 for my Android phone and it does everything I need it to do and more. In fact, I‘m happier than if I had bought the latest and greatest smartphone, only to feel buyer’s remorse after a better one inevitably came out the following month. As it is now, I can be content to know that I got the best phone available for the price I pay.

Innovation in mobile technology is causing people to spend more on their phone bills but technology can be made to work for your wallet instead of against it. You can keep your landline while dropping your monthly bill and unless you absolutely need to be on Verizon or AT&T’s network or can’t live without an iPhone, you can also enjoy the luxury of a smartphone without paying an arm and a leg for it. Talk may not be cheap now, but it can be.


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