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Family Finances: Drive Down the Cost of Your Phone!

Filed under: Budgeting, Family Finance
Tags: , , — Written by: Simos
June 18, 2010
Your budget’s best friend ... or worst nightmare?

Your budget’s best friend ... or worst nightmare?
Photo by: Michal Ufniak (Stock Exchange)

Just get a fancy new smartphone? Hidden fees and costs from your phone plan can drive up your credit card balances and bloat your telecom bills beyond your worst nightmares.

But there are ways you can fight back to “trim the fat” and still benefit from the great features of modern phone technology. If you take a few steps to be savvy, you can enjoy your phone and keep your credit card payments low.

Here are a few tips.

Beware of “bundles”: In today’s telecom environment, your phone company often wants to be your cable company, internet service provider, and heaven knows what else. Before you agree to a “convenient” bundle with an introductory rate that’s bound to grow when you least expect it, compare all your options. It’s often the case that there are several companies competing for your business in all these categories, and you can get a better deal selecting single-service options from two or three providers. Don’t be fooled by “convenience” … with virtually all bills handy online, do you really need to save five minutes at the cost of $20, $30 or more a month?

Know your contract and your hidden fees: It’s tempting to skim over telecom contracts and assume we understand the basics: “the company reserves all rights, and if you don’t like it, tough.” But when it comes to phone bills, what you don’t know can hurt you. Recently, I upgraded to a terrific new phone that seems to do about everything but make toast; but I didn’t look up my town’s “communication service fee.” It’s almost as big as the state’s separate fee – and altogether, they add $15 a month to my bill. Go over the contract carefully, with a neutral third-party expert, and understand your rights in issues like billing disputes, plus trapdoor charges like roaming. Talk to others who have the same service and see if they’re satisfied.

Take advantage of cost-cutting features: If you have a smartphone with “apps”, you can often use them to slash your charges in unexpected ways. Plans for these phones have two interdependent parts: your voice plan (expressed in minutes) and your data plan. Depending on your usage patterns, you can use this to your advantage. Certain apps can shift many calls from your minutes to your data, for example. Others can set “alarms” so you know when you’ve passed a certain usage threshold. With the right tools, you can protect yourself from nasty surprises on your monthly bill.

Keep the kids away from those 1,000 texts a day: It may not be the “cool” thing to do, but you can use your children’s telephone use as a teachable moment for budgeting. With new reports estimating teen texting – often the most expensive “add-on” feature for a cell phone plan – at thousands of messages a month, you might want to pull the plug on some of those fancy features. A good way to control a teen’s telephone budget is to trust them with a pre-paid phone that you only fill up each month; these tend to be more basic, but they limit a user’s ability to get into financial trouble.

Use your computer to make your phone more cost-effective: There are a number of “phone alternative” services that can lower your costs by allowing you to take calls from your home desktop computer. Some of these are so rich in features that they can actually replace your cell phone, your landline, or both depending on your needs. Look into “voice over IP” to learn more – the technology behind it has matured, and the array of options is growing by the day

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