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                                     News, commentary, opinion on politics, government, books, social trends, American life, travel, cycling, books, other stuff

                                           News, commentary, opinion on politics, government, books, social trends, American life, travel, cycling, books, other stuff

Why aren’t you able to save money? Your cell phone is killing you. So is the cable bill.

A contract cell phone is a bad deal. They lure you in and keep you there, of course, with the offer of a highly discounted phone or even one for “free”. Well, I have to have a cell phone, right?, and that new smart phone looks pretty cool, so here I go.

First, the monthly bill is too high. Second, the contact enables the cell company to add all kinds of charges. The most notable is going over the limits, whether talk time or data, included in the deal. Suddenly, you’ve got a bill for 150 dollars instead of one for 68 and you ask yourself, “How did that happen?” 

Wait. The contract also means they can add other mysterious charges to your monthly bill and then you have to fight to get them taken off.  What’s that charge labeled “one time charge” for five dollars? How did it get there and what does it mean? Do you call in and protest and just shrug and pay it? You know the answer.

I watched a documentary called “Inequality for All” the other night about the struggles of the middle class, and those just below, to hang on to their economic status (not having their house foreclosed, for one) in the face of wages that don’t keep up with inflation, being put on part time or laid off, all common events across America. At one point in the documentary, they showed a family of three trying to do a written budget. I stopped the video and looked at the figures on the page. At the top was one that said, “Cell phone” and across from it was $172.

If you are paying more than 100 dollars a month for  cell phone service and you are making less than 100 thousand a year, you are wasting money that could go to either savings or enjoying a little bit better lifestyle. 172 a month works out to (hold your breath) $2,064 per year. Over five years, that’s   $10,320. Over ten years, $20,640. and that’s with no extra surprise charges added on.

Looked at another way, if the family of three in the documentary was  making 54 thousand per year, they are spending almost 4% of their before tax income on cell phones. After tax, that would work out to almost 5%, assuming a 22% tax rate.

Even in families who are barely getting by, Internet and cell phone service are looked at as essential these days. Parents use cells to keep track of their kids, or just to check in when they can’t be  home, spouses use them to keep track of each other and let the other know when a schedule change has come up. School age kids in most parts of the country have to have the Internet as a research tool. Paying bills online avoids the steps involved in mailing payments, plus paying online lets those with little room to spare in their budget to pay at the last minute.

Still, is it worth it? The wife in the documentary turned to the camera at one point and said, “How do you build wealth?” She was essentially saying, how can we have anything more than what we have now when everything goes right back out to bills? The first answer, of course, is to cut down on the size of those bills.

The TerryReport will have more as we go along on the issue of saving on cell phones and “cord cutting” for cable. The first thing everyone should understand is that the “pay as you go” services are not, with some minor exceptions, inferior to the “big name” companies. You can get unlimited talking and texting at Target these days for 35 dollars a month. No extra charges, no add-ons (other than taxes). 

How much you “need” data depends on how you live. The use of data and the Internet becomes most useful in finding places if you are traveling. Otherwise, on a daily basis, how much do you need to look things up while driving or walking around? The average person uses under 2 gigs of data a month. Chances are, by using data more carefully, you could easily get by with 1 gig or less. In any case, most plans offer 3g data on an unlimited basis, so you can handle most functions without paying more.

There is no need to be paying big cell phone bills. People who live on the edge, with little or no savings and who would be in big, immediate trouble if one member of the family lost a job, want cell phones just like everyone else. It is part of keeping up with modern life. Everyone has a cell phone. Okay, but do you have to have the latest model? Do you have to have a phone with every feature imaginable? (Most people don’t use most of the features anyway.) Being able to keep more of your money for yourself just means making careful, intelligent decisions and going with something that might meet 89% of your goals/needs instead of 140%. It is not difficult. We will have more here in the coming days about some good choices in non-contract cell service.

If you have questions on these issues, contact The TerryReport.

How to cut your cell phone bills

The CNN Money website has an article about no contract cell phones and it has it ALL WRONG. There is very little in the article that is useful, but the worst part is misinformation. If you want to read it, go ahead, then come back here for the correct story.

From AT&T, announcement on their website about how they can rip you off, with your implied permission:

Other Monthly Charges/Line: May include federal & state universal service charges, a Regulatory Cost Recovery Charge (up to $1.25), a gross receipts surcharge, an Administrative Fee, & other gov’t assessments. These are not taxes or gov’t required charges.0

What is a “gross receipts surcharge”?

What is a “regulatory cost recovery charge? Sounds like just another add-on.

Why would they charge you an “administrative  fee”? What, they don’t make enough charging you for the service, so they sneak that one in on you? Notice, also, how they list the fees and then say “other government fees” even though those on the list are not of government fees, but add-ons. This appears to be designed to confuse you into thinking that the charges are government fees when they are not.

One mobile carrier has a brochure that promises “no absurd charges”. Now there’s a good idea.GoSmart is the name of the company.

Note: this website receives no payments of any kind from any cell phone company.

If you read the story in the Washington Post about a family in the far reaches of the DC area (Culpepper, Virginia) trying to scrape by on 90 thousand a year, several things stand out. First, of course, you have to make good choices to do well no matter how much money you have coming in. Bad choices can spiral outward to force people into making more poor choices later on. 90 thousand sounds like a lot of money to many people around the country (particularly with only a 700 a month mortgage payment), but the pressure people are under often comes from trying to “live the life” of the ordinary, well off American whether they can afford it or not. We all want everything now because we have the idea that everyone else has it, why shouldn’t we? Choices should come before buying all this stuff, however.

The family in the news story has 3 iPads, 3 television screens, one satellite hook-up and a lot of needs for three teenage girls in their blended family. There is little wonder they are having difficulty. Four cell phones costing almost 300 a month? The first thing that real poverty teaches people is that you can’t afford everything. The next is that you have to choose carefully what is important and what is not. The next, when you have more money, is that you can’t waste what you have.

To read the full story in the WashPost, click on the text below.

'Happy Days' no more: “Middle-class” families squeezed as...

The best way to cut down on cell phone bills is to use a non-contract phone from one of the alternative carriers. These service providers use the networks of the major companies (AT&T, Verizon, T-Mobile and Sprint), but they have made deals with those providers to offer services at lower cost. Why do the four big guys allow this? Because they want to get the business (money) and they don’t want to mess around with the no-contract crowd.

All of the major carriers, except Sprint, offer no contract deals now, but that doesn’t mean you should buy from them. Generally, the deals they offer aren’t very good. AT&T, for example, will sell you a no contract phone and plan, but you would wind up paying as much, if not more, than you would for a contract (on a month to month basis). Verizon challenges the customer to pay too much for an old fashion, out of date “feature phone”. Who are they kidding? They treat the no-contract customer like a leper, but that’s the idea, to drive you to go for the contract and pay too much, again and again. (Verizon seems to have some decent deals on no contract smartphones, especially if you are willing to not get the latest and greatest. Maybe that’s because you will pay more for the service monthly.)

The alternative carriers generally cater to those who make less money and they often operate from small stores in “downscale” shopping areas. Again, so what? You can also buy online. Amazon sells a lot of phone, including unlocked ones.

The trick of the major carriers is to lure you in with the latest and greatest new phone technology and then suck money from your wallet for the next two years, at which time you might be ready to get yet another new phone. T-Mobile has shaken up this system by allowing you to see what you are paying for the phone (outright or monthly) and when you are done paying for it, your bill goes down. With other carriers, if you don’t get a new phone every two years, you are actually cheating yourself, because the bills don’t go down when the phone is paid for.

If you decide you want an AT&T or a Verizon non-contract arrangement, you will see a lot of inferior phones that you probably don’t want. This might discourage you from bothering, but don’t give up. There are good phones available that use the same networks from the alternative carriers.

The best suggestion for saving money is to pick your plan first and then see if you can get a phone you’d like to use. Not long ago, Metro PCS was offering a Samsung Galaxy phone for 29. dollars with plans that go to 50 and 60 a month. That is a fully functional, Android phone with a built-in camera, etc.

Where picking a plan gets really tricky (by design) is if you need a large amount of data and want to use your phone as a mobile hotspot. Some phone plans don’t allow “tethering”, which makes a big data plan much less useful unless you do a lot of traveling and want to use your phone for GPS and other location based services. Check first. I have yet to find a good plan that allows tethering plus no contract with a large amount of data.

Generally, the alternative carriers are in no way inferior to the big guys. They use the same networks, so if you roam around the country a lot, you might want to look at the map for the carrier used by the no-contract company to see if it meets your needs.

FIRST RULE: get off the contract bandwagon. If you have a good phone that you like, pay it off and use it on a service provider that uses the same network. If you can’t do this (Sprint won’t accept certain phones, Cricket won’t accept any phone that they don’t sell), then buy a new phone. You can buy an unlocked phone on line (one that can used either on T-Mobile or AT&T and, here’s a plus, on foreign travel as well). T-mobile doesn’t require contracts any  more, they have “post paid” (credit) and pre-paid accounts. There are some down sides to going with pre-paid, but if you check those out and they aren’t important to you, go for pre-paid every time.

SECOND, PICK YOUR PLAN BEFORE YOU PICK THE PHONE. Most people use about 2 gigs of data per month. With texting and data going up, most companies offer unlimited talk time. (Who uses more than 1,000 min. per month?) If you need to use your phone as a hotspot for a computer or a tablet, you are entering a mine field. Walmart, through T-Mobile, offers a big data plan (5 gigs), but then says you can’t use it as a hotspot (even after paying 10 dollars extra) when “roaming”. So, what is it, a non-mobile, mobile hotspot? I dunno.

The TerryReport will post some pros and cons on using various non-contract carriers soon. If you have a question in the meantime, contact us here.

What networks do the “third party”, non-contract cell phone companies use?

BRIGHTSPOT (Target).....T-Mobile

Metro PCS..........................T-Mobile and others

Cricket.................................Sprint  (changing, 2015)

Boost Mobile......................Sprint

Net10....................................T-Mobile, Sprint, Verizon & AT&T (depending on city of sale)

Tracfone..............................same as Net10

Virgin Mobile........................Sprint

AT&T (GoPhone).................same

Verizon..................................same

 

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