One of the easiest ways I’ve found to cut costs was on our cell phone bill. When we were on Verizon over a year ago, we spent about $160 a month on our cell phone plan. Now we spend only $63/month, which is almost $100 in savings a month, or $1200 a year. How did we do that? We got rid of our cell phone contracts, got unlocked phones, and got prepaid plans.
This is why I will never get a 2-year contract again:
1. Cell Phone Contracts are a Sham
The standard two year cell phone contract does not benefit the consumer at all. I hear it all the time – people wait for their phone contracts to end so they can renew their contract and get a new phone at the cheaper, subsidized price. An iPhone 6 on contract starts at $200 while buying it off contract is $650. That would seem crazy to buy a $650 phone, right? That’s exactly what AT&T and Verizon want you to think. They don’t give you a $450 discount because they’re being charitable. They make up that difference by charging you higher monthly fees, all while locking you in as a customer for two years. It’s worse for people on a family plan – everyone has different contract end dates which makes it even harder to leave your provider.
- Unlimited Text & Calls
- Unlimited Data (2.5GB high speed)
I highly recommend Cricket for anyone that would ever consider switching to a (*gasp) prepaid provider. Cricket is owned by AT&T, so you’re basically getting AT&T service, just at a cheaper rate. AT&T does this so they can compete with other prepaid brands like Metro PCS and Straight Talk. The T-Mobile prepaid plan that I use for myself only has 100 calling minutes, which I get around by using Google Hangouts which allows me to call over my data connection. While it makes regular calling a little less convenient, I save $7 a month vs. using Cricket, which is $84 a year in savings. Remember, Dad is Cheap.
Verizon and AT&T make you think that by using their plans, you’re getting the best possible coverage. While I can’t completely disagree with that, I do think that the coverage with most providers work well enough, especially in major areas. Living in LA County, I’ve used AT&T, Verizon, Cricket, and T-Mobile and they’ve all worked fine. The great thing about being off contract is that i’m ALWAYS shopping around for that better deal and I can always jump carriers whenever I want.
I get it, I get it. We all want the latest and greatest. We get sucked into the marketing that we need “The Next Big Thing”. The truth is, nothing new has really happened since phones went from 3G to 4G. While screen sizes have gotten a little bigger and cameras have gotten sharper, there is nothing that compels me to get a shiny new phone. I have a perfectly fine iPhone 5s that I intend to keep as long as possible until it slows down to a crawl or my daughter breaks it. I think I just jinxed myself 🙂
4. It’s All About About Total Cost, Not Monthly Cost
Whenever I tell someone to go off contract, the biggest issue that they have is that they don’t want to pay full price for a brand new phone. Shoot, I don’t either! Which is why I’d recommend to people that they’re better off buying a used phone on Craigslist or on sites such as Swappa. I talk about iPhones in this post only because it’s the most popular phone out there, but you can also get a good brand new Android phone such as the Moto X or OnePlus One for less than an iPhone.
If you have a cell phone contract you’re still paying full price for a new phone, it’s just hidden in the monthly costs. When you compare the total costs of getting a new phone you can see how much you can save if you go prepaid:
*Total Cost = $2160
*Total Cost = $1490
Total Savings = $670
Is Verizon and AT&Ts coverage worth the added cost of $670? Not to me. While the upfront costs of paying for an unlocked phone off contract is crazy expensive, in the end you save a lot more in the long run. Most people don’t worry about cutting their cell phone bill because they can “afford” the monthly payment. Even if you can cut your payment $10, that’s an extra $120 in your pocket each year! Now that $1200 a year we save can go to more important things like retirement, paying off our house, or funding our daughter’s 529 Plan. Once I realized how much the total costs were of having on a cell phone contract, it was a no brainer to ditch my contract and go prepaid.
cover photo image credit: 401kcalculator.org