Phone

Trimming the Phone Bill, Part 2

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If you haven’t read part 1 yet, then you can see it here.

…Continuing on…

GoPhone prepaid wireless service was saving us a lot of money and we were happy with that for several months.  However, nothing is sacred on our budget, and when I was looking over numbers a month ago I was convinced that we could save even more money without sacrificing any change in lifestyle.

I began looking for alternatives and was intrigued when I read a blog post on mrmoneymustache.com.  Mr. MM goes into considerable detail so I will provide a synopsis of sorts.  By switching from AT&T’s prepaid GoPhone service to Airvoice Wireless we could get a comparable level of service for only $10/mo per phone.

Airvoice Wireless

Airvoice is one of dozens of MVNOs, Mobile Virtual Network Operator.  You can think of an MVNO as a reseller who buys network coverage and airtime from AT&T and then sells it in different packages to customers.  Of course there are MVNOs that do the same thing for the Verizon network.  In order to switch from GoPhone to Airvoice we had to do a few things.

1.) Purchase new SIM cards

While it may be possible to switch over to the AirVoice network and retain your original AT&T sim card, Airvoice cards can be found pretty cheaply ($5) online.  There are several different sizes available nowadays thanks to the smartphone race for thinner devices.  Our

iPhone 4S phones required micro sim cards.

micro sim

2.) (Optionally) Port Your Phone Number

Airvoice Wireless makes it easy to keep your phone number.  Just fill out the form on their website and within a day or two your new SIM card will have your old phone number attached to it.  When GoPhone got our port request they terminated our account.  We knew this was coming, but it’s worth saying that any credit or account balance that you had with them gets wiped out (i.e. if you had $5 in your account it is theirs now).

3.) (Optionally) Enable Data & Texting

By default Airvoice has texting and data disabled on new accounts.  You simply have to give them a call and ask for them to enable it for your account.

Here is what $10 gets us each month with Airvoice:

250 minutes or 500 text messages or 30mb of data or some combination of all three.

We’ve only been with Airvoice for a week or so and I still need to switch over Shae’s phone.  There are a few key differences between the two prepaid services.  I like some of them and others I’m not terribly fond of.

Pro’s of Airvoice:

  • Cheaper than GoPhone with similar features
  • Don’t have to explicitly add a data package (saves us $5 when we travel and want maps/email on the road)
  • Same network coverage
  • Unused dollars rollover to the next month

Con’s of Airvoice:

  • A message pops up on the phone after each action that costs money.  For example if I send a text a popup appears on the screen telling me how much it cost, $0.02, and my remaining account balance.  Some people might find this helpful, but I wish I could limit it to once a day or once a week.
  • Their website is very lacking.  While auto refills can be set up.  It takes some digging to find where and how to do it.
  • Visual voicemail does not work.  With GoPhone it would work so long as you had a data package.
  • Account balance will expire unless you add to it every month.  For example if you skip a month you lose service.

So there you have it.  We started off a couple of years ago spending $113/month for phone service and once we finish switching over to Airvoice we’ll be spending just $21/month.

We will save over $1100 a year in our phone bill by paying only what we need and not a penny more.  What could you do with an extra $1100?

Pssst, the correct answer is to invest it, earn 5% return for 20 years, and have an extra $16k in interest for a grand total of $38k.  Is your phone really that important to you?!

Trimming the Phone Bill, Part 1

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Keeping a budget is almost a necessity for living a responsible financial lifestyle, but looking for ways to cut some expenditures is a great way to live more frugally.

I like to look at recurring monthly expenses because while they often seem small, over time they add up to a large amount.  A great example of a monthly expense is the cell phone bill.  Not only are there many options available for consumers in this day and age, but there is also the multiplication effect from households often having more than one phone.  Shae and I each have our own cell phones so each dollar we can shave off the monthly plan actually saves us two dollars.

In this two parter series, I will share how we have saved hundreds of dollars by not accepting the status quo.

In The Beginning…

A couple of years ago we made a financial mistake.  We bought brand new phones on a two year postpaid contract.  Telecoms such as AT&T, Verizon, and T-Mobile incentivize contract plans because they are proven money makers.  Customers buy a new heavily subsidized phone (some are even subsidized down to $0) and then over the next 24 months they pay a higher monthly bill to pay off the original phone cost.  In our case we had purchased the cheapest iPhone 4S models and went with AT&T’s cheapest contract plan.

iphone4_att1

iPhone 4s on AT&T

This set us back $200/per phone upfront and $56.62(with taxes and fees)/mo per phone.  Yep… not very frugal. Surely, we must have been getting exceptional services for a combined monthly phone bill of $113 per month.  Each plan came with 450 talk minutes, unlimited SMS (text messages), unlimited nights/weekends/mobile-to-mobile, and a paltry 200 mb of data (used for connecting to the internet).  Suffice it to say, there were better options out there.

Spending Money to Save Money…

Yes, it is true.  Sometimes you have to spend money to make/save money.  Part of every postpaid cell phone contract is an early termination fee, etf.  Should you decide to prematurely end your two year bondage with the telecom you will face a penalty.  AT&T calculates this penalty based on how many months are left on your contract.  If I recall correctly, it started in the $300 range and decreased by $10 for every month you had fulfilled.  Details can be found on your own telecoms website.

After finding a compatible prepaid plan, more on that in a second, we set up a spreadsheet and calculated if we would save enough on the new plans to offset the cost of the etf.  It just so happened that it would.

GoPhone GoPhone is AT&T’s prepaid option.  It works a lot like their postpaid with several key differences.  Here are a list of similarities:

  1. They both use the same cell network, if you have coverage on one, you’ll have coverage with the other type of plan.
  2. They both can use your existing SIM card (SIM cards are small chips that identify your phone to the cell network.  Your number is associated with your SIM).
  3. You can keep your same phone number.
  4. You can access the internet with the same speed.

The differences mainly come down to billing.

  1. GoPhone you pay for the month that is about to start, PostPaid you pay for the month that just ended.
  2. GoPhone has some cheaper options for infrequent talkers/texters.
  3. You use a different website to manage your prepaid or postpaid accounts even though the money ultimately goes to the same company.

Out of all of the prepaid GoPhone plans, we felt that the $25/mo per phone plan best met our needs.  It offered 250 minutes of voice and unlimited texting.  Any data usage would cost us an additional $5 for 50mb (about enough to check your email for a month).  Since there is an abundance of free WiFi in the places we frequent during our daily schedules we skipped the added data package and cost.  The total monthly cost per phone was now $27.32 with taxes and fees.  When you add up both phones in the household our new monthly phone bill was $54.64, a whopping 51% savings.

You can start to see my obsession with cutting recurring monthly costs.  In just one year, the savings of switching from a contract plan to a pay as you go plan has saved us over $700 a year. Those 200mb of data and 200 minutes of voice data aren’t missed either because we were never using them in the first place.  We made a mistake early on by buying new phones on contract.  If I was to do it over again, I would buy used phones that were off contract.  The upfront cost might have been more, but we wouldn’t have had to pay the hefty early termination fee.

I will conclude Part 1 here.  Stick around for Part 2 where we will go deeper into the rabbit hole of frugality and you’ll be amazed at how much more we have trimmed off our phone bill.  Until then, leave a comment about how much you are paying for your phone, with whom, and if you are using everything that you are paying for.