Saturday, October 17, 2009

Can you do without ... extra cell-phone minutes?

(note: This is intended to be the first in an on-going series for this blog, asking people to think about whether they can do without something. The answer will be different for everyone, it may well be that you can't. And that's okay. But consider it).

Even after a year of being one of those annoying frugality acolytes, it still shocks me how much waste I can find in my budget.

I've been eyeing the cell phone on the budget for months. I hate spending $100/month, when we could get a landline for $30. My wife insists that it's important to her, and I can respect that, but it nagged at me.

Its been many years since my wife and I got a cell-phone plan. At the time, I'd heard some horror stories about overusage charges. I also am loathe to appear cheap and always try to avoid buying the least expensive option. So I ended up signing us up for a much larger usage plan than we actually needed. How much larger?

I went over a year's worth of bills today online, and we'd never used 1/3rd of the minutes we were paying for, or even 1/5th of the text messages.

I also found out that I had the option of slimming down to a much smaller plan in exchange for extending the contract, which doesn't bother me because we've had the same plan for so long and I like the company and service.

Total savings: $40/month.

Multiply that by the number of months since we got the cell phone, and you arrive at a number that is awfully close to equal to three paychecks. I spent six weeks of work just paying the phone company for something I never once used!

Bottom line: If someone like me, who is a budget nerd, can find $500/year still there for the taking with just a few minutes effort, how much can someone who has never really thought about it find? Could you give yourself a $1,000/year "raise" by lowering expenses that much without losing anything? $5,000? You'll never know until you look.

Most cell-phone plans are complicated, and that's intentional. They want to scare you into buying more than you need. But given that most plans come with free nights and weekends standard, as well as calls to people using the same company, it'd be hard to use up a lot of minutes for most ordinary users. If you use the phone a lot for business purposes during the day, it might be a different story.

But if you just don't feel comfortable planning it out at the startup, don't be afraid to go over your bills and check out how much you are actually using. That should be the true test. The only caveat is to be careful: Overage charges really can be awful. Don't go overboard and cost yourself more money in the long run.

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