Out With The Old, In With The New: Reduce Your Phone Bill

Share Button

Throughout the month of December, The Simple Dollar is posting a daily series focusing on specific activities you can do right now to set the stage for a great 2011. Out with the old, in with the new.

14. Reduce your phone bill.

Two episodes in my own life are relevant here.

A couple years ago, I cancelled my business phone line and moved to Skype. It reduced the monthly cost of my business related calls by about $30 a month.

I figured that there would be significant drawbacks to the switch – limited availability and so forth. What I actually found was that Skype was, for my purposes, as reliable as an ordinary phone. I simply cannot remember a single time where using Skype for work purposes put me at any sort of disadvantage versus a landline.

This, of course, raised the question: why not just use Skype for personal use?

Similarly, for a long time, I had unlimited minutes on my cell phone – but I paid out the ear for them. I had this impression in my head that I used my cell phone a great deal and thus I needed unlimited minutes.

For six months, though, I kept my cell phone bills and took a look at how many minutes I was actually using each month. Even if I chose a limited minute plan that covered significantly more minutes than the heaviest calling month, I’d still be saving about $30 a month by switching plans.

If I chose a more restrictive plan, one that covered five out of the six months, I would be saving almost $50 a month.

These two stories have some key factors in common.

Knowing your actual needs for phone usage directly leads to saving money. Most of the time – and I’ve certainly been guilty of this in the past – people pay extra for a monthly service that covers everything that they actually do plus everything that they think they might do. The problem is that the “maybes” rarely occur and usually wind up being very expensive to pay for.

A much better approach is to simply pay for what you normally use, then deal with the exceptional situations as they come. For example, if you have a plan that covers 99% of your calling needs and saves you $30 a month compared to what you’re paying now, then you can use a small bit of that $30 a month to cover that extra 1% and still find yourself way ahead.

How vital is a mobile phone, really? In truth, most of the mobile calls we make can be handled at home, leaving the mobile for specific needs that can’t be met from a non-mobile device.

For example, over time, I’ve gradually moved most of my calling to Skype, which I can use on my iPod Touch anywhere where I find a wi-fi signal and (obviously) anywhere at home as well. This has reduced my cell phone usage and because I keep up on that, I was able to reduce my cell phone contract to a lower level, directly putting money in my pocket.

In fact, were it not for travel, I would probably move entirely to a “pay as you go” phone. I’ve ran the numbers several times and I seem to consistently find that my cell plan is just a bit cheaper per minute for an average month than a pay as you go phone.

I don’t suggest that people abandon their mobile phone. However, I do encourage people to rethink their overall phone plan. Replacing your landline with Skype, then making an effort to use Skype for many of your calls, will not only drastically reduce your monthly landline bill, but it will also lead to a reduction in your mobile bill as you reduce the number of minutes you actually need.

In any event, there are many options for reducing the monthly cost of your phone usage – and any reduction you can get in a monthly bill is money that goes straight towards improving your financial situation, whether through savings or debt reduction.

Share Button
Loading Disqus Comments ...
Loading Facebook Comments ...

35 thoughts on “Out With The Old, In With The New: Reduce Your Phone Bill

  1. I, as a 22 year old recent college graduate, do not plan on ever having a land line. Right now me and my fiance and my sister and her husband all share a family plan through Verizon, which is an awesome setup because it greatly reduces our cell phone bill every month from what it would be if we had only two people on a plan.

    Also, you didn’t mention it but it should be said, Skype calling to regular phones does cost a small fee every month. Of course this isn’t an issue if everybody you ever want to talk to is also using Skype, but it is something to consider. There is also the cost of having a computer on a lot of the time to receive calls via Skype. The cost will GREATLY depend on the type of computer a person has, but it would be some additional cost.

    And 100% agreed when you talk about being realistic with yourself about what you will ACTUALLY USE.

  2. I don’t work for the company, but here’s a plug for what we use: We had phone service through Frontier, paying ~$55 per month. I dropped it and went to ooma (see oomaDOTcom), a VIOP system which is free. Free as in $0 per month. It works great, and no more phone bills. The only potential downside is you basically don’t have 911 service any longer.

    By the way, I thought your iPod Touch was broken… ???

  3. What about people who want to call you? Skype mobile is fine for initiating calls, but can’t receive unless you have the actual app open.

  4. I just barely dropped my phone service by $30 a month. I possibly could have gotten it lower.

    One other thing that I use all the time at home is Google Voice. I just plug my microphone into my computer and all of a sudden I have a totally free option for calling (no subscriptions or per minute charges). Biggest negative is that you have to be using it on a computer at the current time, so you couldn’t hook up your iPod Touch with it.

  5. How vital is a mobile phone? For me personally, I would say extremely. I don’t have a landline at home. I feel much safer when I am traveling by myself (especially at night) knowing that I have a phone with me in case of emergencies.

    I also work in corporate America, so while paying for a Smartphone is expensive, it also gives me freedom. I can leave the office at lunch if I need to, knowing that I can easily keep an eye on things while I’m out if there is a lot going on. I can take a vacation day and enjoy the day knowing I am reachable if needed.

    That being said, I think Trent makes a great point about reviewing your bill and removing extras that you don’t need and/or aren’t using.
    Everyone’s phone usage and needs are different.

  6. Here’s what we did: Magic Jack for $20 a year, DH has a regular cell phone plan with minimal minutes with Verizon, I have a pay as you go with T-Mobile ($0.10 a minute, good for a year).

    That way, we have unlimited calling at home and work, we each have a cell phone on us at all times for emergencies, and we can use his cell when we travel (because pay-as-you-go networks are not that great outside major cities.)

    This setup works great for our particular situation. Though, I will say that after 6 months of this I still get iPhone withdrawals. YMMV.

  7. I have not crossed over to a true cellphone user yet. Too expensive. My husband and I share a cellphone, Virgin plan – you pay $20+tax, you get $20 worth of minutes and 3 months of service. Our land line is $25 per month. So total phone bill amounts to about $33/month.

  8. I’m curious what kinds of considerations you’ve made in regards to 911 service. Although you have your cell phone, having a land line is still the most reliable way to reach the proper 911 channels. Having young children, like you do Trent, this definitely should have crossed your mind. I’m sure you weighed the risk versus reward (cost savings), but is the $12-13 monthly fee for the cheapest possible land line worth it? I personally have the cheapest land line I can buy and use Google Voice to make any long distance calls (from my land line nonetheless – GV will ring my phone for me) for free.

  9. @#8 Derek — that’s an interesting point. I heard someone say once that they would always have a landline with a corded phone because in the event of an emergency you don’t think clearly. You might not remember where you last put your cell phone down and the cordless phone might not be in its dock. A landline with a corded phone is always in exactly the same spot, easily accessible in an emergency.

    I don’t have children yet, but for some reason that short conversation has always stuck in my head.

  10. @#8 Monica – I think it should also be noted that when the power goes out, having an actual corded land line phone still works since it’s so low power that it’s able to draw power from the phone line. If your cell phone has no battery power left, you’re out of luck and can’t make calls or text. Cell phone networks also tend to get quite busy when things like the power go out.

  11. Great tips! For ideas on how to take charge of your health care costs, check out Whatstherealcost.org.

  12. And, of course, if you also get other services through your phone company (internet in my case) the marginal cost of a landline is often not too bad. Getting rid it wouldn’t be a “drastic” reduction in my monthly bill, that’s for sure.

    JJ

  13. We still use Skype, but the voice quality (as determined by those we call) calling from computer to a landline or other cell is soooo bad at times that it renders it useless for calling people we regularly speak to. (It would be better if these folks would simply log on to skype as computer-to-computer quality is excellent!)

    Skype tends to be what we use to call customer service, etc. where the calls tend to be longer. (Never use cells for these calls.)

    I have an old T-Mobile cell that uses maybe 1000 to 2,000 minutes a year. Best part, for $100 purchase a year, minutes carry over. Sound quality is excellent (of course, we live in an apartment building with a T-Mobile tower on the roof!).

    But, I needed to get an android phone (for business reasons, it’s about being able to easily text, go online and use apps for work)so I just sprung for a new Samsung Intercept prepaid from Virgin Mobil (sprint service).

    Love the phone, especially for texting. Great keyboard. Sound quality? OMG. I’m just glad I didn’t transfer my old cell phone number.

    It’s great on the fly for going online (we’re constantly checking for hours, etc. and it’s great). And at $25/month for unlimited text, data, web and 300 minutes, it’s perfect for our needs (we don’t talk in public much on the cell, especially for business. HATE talking in public about private things. Isn’t that what texting is for? LOL)

    Both cells, however, require a battery charge one to two times a day. That means electricity. (We don’t have a car.)

    So, we still have a landline, which we pay too much for because of how Verizon structure it (and all the taxes). But it’s still comparatively cheaper than old plans for Verizon. (We don’t have long distance on it.)

    So right now, we’re paying about $70 a month BUT we are using two cells, one VOIP, and one landline.

    That’s less than most people pay for ONE cell phone and it gives us the options we need.

    We live in a major city and if the power goes out, we know that in our building there are maybe only one or two other neighbors who have landlines. So we’ll keep ours. On 9/11 (we live in NYC), landlines were lifesavers. Literally.

    It’s not what you pay, it’s what you’re getting and how it meets your needs. People swear it’s a waste to have the landline and part of me agrees.

    But the peace of mind is worth it to us. Especially since there is no way to use VOIP or charge our cells during power outages. And those cells don’t last long without the charge, even when they are off. (Those claims about battery life? Seriously, somebody should sue the companies for false information.

  14. The one time I had to call 9-1-1 on my cellphone it got me to the local emergency services without a problem at all, and this was in a different state than my cellphone number is “based,” so they clearly didn’t go off area code.

  15. We dropped our land line completely after analyzing how much cell phones would cost/ benefit us. Two of our 3 kids are disabled, and without a cell phone my husb and I can’t leave the house together to go out. Its rare we are someplace with a definite number. And we were paying $90 a month for a land line and basement level internet. For that we could get 2 cell phones that allow us to be much more active in our lives and have others reach us when needed. The only challenge being that one of our sitters, my MIL, does not have a cell, so when she comes, I have my husb leave his phone at home so I can go out and leave a phone at home. We also ported our old home phone number over to my cell phone. So my cell is our home phone. This works great because school, doctors and therapists call only one number and will always reach me.

  16. I remember reading that if you have skype, and are in an emergency, and just get a dial tone, you cannot be tracked precisely for location. A landline pinpoints your address. A cell phone triangulates you to a general area between towers.

    I do not think any small savings is worth not having 911 available, especially with small children or the elderly- those who might not be able to dial well in a crisis.

    If you do not have 911, then you can set up a speed dial to the local fire department. Often they respond faster with an ambulance anyway.

  17. @ Kevin, I wasn’t sure if you were right about the iPod Touch being broken, I thought that Trent got a refurbished one.

    But he didn’t he posted about his Ipod being broken and what he was going to do then followed up with a post about how he got a Nano instead (which was October 20th btw).

    I know that Trent has talked about using Skype before and I’m wondering if part of this post is a reworking of an older post from when Trent did have a working Touch.

    It’s disconcerting to have a blogger say one thing in one post and then a few weeks or months later say something else. This feels kind of like the Estate Planning post where Trent was going to talk to his siblings and their parents over Thanksgiving. Then in a mailbag he told someone he didn’t like to discuss financial situations with his siblings so he never brought up the issues.

  18. The thing I enjoy most about your site is the messages others post. Those that post give a wide variety of opinions that engage the reader even more. Thanks!

  19. I was an iPhone junkie till my hours got gut and eventual lay-off.

    I kicked the smart phone habit, $80/month, and used just Skype for a bit. I would use the skype app on my iPhone in my house where we have wifi. But it was always a little awkward never answering a call from potential employers, instead always calling them back.

    After a few months of that I got a Tracfone. Certain models of phones have “double minutes for life”. So you buy a 200 minute card and you receive 400 minutes. The phone I got only cost 20 dollars, a little LG flip phone. They have promotions all the time. When I signed up they had a ‘buy a 400 min card and get discount w/ this code’, so I got 800-min at discount.

    The volume I bought turned out to be 12-cents/min good for 356 days of service, life of minutes extend-able w/ purchase of more minutes. Texts are 1/3 minute so in my case ~3-cents. The larger volume you buy up front the smaller the cost. They have a super save minute card that knocks the cost per minute down to 6-cents.

    I hope posting this in an open forum doesn’t draw their attention so they’ll find a work-around, but I can read texts on my external display and it does not deduct any minutes. After viewing them on the display I can open them up in the phone and it still won’t deduct the amount.

  20. If you are stuck with a 2-year plan, and lose our phone, you can buy a same-company pay/per phone from Walmart or such, take it to the “Phone store”, and have them reprogram the sim for your phone number.

    I had to do this. The phone cost 20 bucks, the sim programming 15 bucks. Sure beats what the phone store offered!

    Caveat- I only need my phone to make phone calls- I pretty much have a computer at home and work, and can survive transit and activities sans internet.

  21. Bear in mind also that your minute-tracking may well have been higher than necessary due to the knowledge that you had unlimited minutes – you aren’t being charged by the length of the call, so you can chat a bit longer, where you might not have needed to, and if you had to cut back you could easily do so…

  22. Another big advantage you don’t mention of getting rid of the landline is cutting down on wrong number and advertising calls. My husband and I got rid of ours when we realised that for the last month every time the phone rang we groaned (and of course, that even the least-tech savvy of our relatives had turned to Skype and texting our mobiles anyway).

  23. I set up a Skype system at home for roughly $5/mo for unlimited US/Canada calling.

    Having a *real* phone # costs $30/yr. Their basic unlimited US/Canada plan is also $30/yr.

    I run Skype 24/7 on a server that I have running anyway, and it connects to a real phone via an ATA device (Yealink B2K). So, when people call, it rings my home telephone. I don’t need to be at my computer to answer it. It goes to my real phone’s voicemail if I don’t answer. So, anyone calling would have no reason to suspect I am using anything but a real phone line.

    There are times when my server acts up and the phone does not ring. But, then Skype is set up to forward my call to my Google Voice account which then transcribes the message and emails it to me. I’m willing to deal with that occasionally in exchange for the privilege of paying only $5/month for 95% satisfaction.

    For 911? I have 91# set up as a speed dial to the local 911 dispatch # (ask the police, etc for the real # that 911 routes to). I labeled the phone with a note saying to dial 91# for 911. I spoke with the person in charge of the dispatch center, and he said the only thing I lose calling in with Skype is that it does not automatically bring up my home address on the 911 dispatcher’s screen when I call. However, they have a faxable sheet that we can use to provide details about our home address and occupants that they will then add to their database so that it is available to the dispatcher. I can live with that.

    Sorry for the long post, but hopefully the 911 info will be helpful to someone!

  24. We’re outside US, so many things are different for us. But our setup: no kids, we both have cellphones which we use for almost everything (he’s got a reasonable voice/data plan, I use prepay), we have a landline for incoming and local calls as well as internet, and have 400 Skype minutes per month to landlines in the 2 countries we call often.

    I’m a web developer working from home so the internet is an absolute necessity, and because all my family are in other countries the phone bill used to astronomical. Now it’s just the rental and less than $10 (converted to USD) a month for Skype.

  25. And what I mostly wanted to say – we have a portable phone which uses both Skype and landline and connects directly to the router. So we don’t need the computer on. Call quality is excellent. We also have a corded phone (not plugged in, but easily accessible) for when disaster strikes.

  26. We have Ooma (voip that’s free after buying the equipment, I got mine refurbished). It does support 911, as do many other voip servics. This is what the faq at Ooma says:

    “Do you support 911 calls?
    Yes. Ooma provides E911 service where supported. We will collect your address when you register your Ooma device online, and send it to emergency response personnel when you dial 911. Since Ooma works over your Internet connection, you will need to call from a mobile phone if your Internet connection is down.”

    We also have cell phones, no landline. The Ooma is actually my business line for my home office but we use it for anything, really.

  27. A few months ago when I started to get serious about getting debt free, I looked at our cell phone bill and was shocked. Nearly $150 per month for 2 iPhones on AT&T by the time you add in the voice plan, the extra line, 2 data plans, texting, fees, etc. It started out as $75 per month two years ago before I got married and still had disposable income and like the frog in a pot of hot water I never paid much attention to the bill until it finally went over the $150 mark.

    I did a little research, and found several good prepaid cell phone options. At first I was concerned about losing my number as in the past you couldn’t switch a number to a prepaid provider, but that is no longer the case. The best deal I found was with a UK-based company, Virgin Wireless. They have a $25/month no-contract plan that gives you 400 minutes and unlimited texts and data. I pulled the trigger and bought their only Android phone, a Samsung Intercept which is normally $200 but I found it on sale at Best Buy for $160 and used a 10% coupon from the USPS to reduce my initial investment to $150 after taxes.

    I sold my 2 year-old iPhone for $250, which paid for the $80 early termination fee and the the Samsung.

    I estimate that I was spending $75 on just my phone with AT&T so over a 2 year contract I paid $200 for the phone plus $1800 for the service for a total of $2000. Paying $150 for the phone plus $25/month for the Virgin Mobile service means my next two years of service will be $750.

    Now that we no longer have a family plan and AT&T has cheaper data options(for much less data per month mind you), my wife’s AT&T bill is now $50. I’m hoping that when her contract is over in the summer she will choose to join me on prepaid, especially if they offer an iPhone by then.

    Oh, I almost forgot the best part. Since we don’t have home phone, lengthy calls to relatives and out-of-town friends can eat up a lot of cell minutes. I signed up for a free Google Voice account and downloaded the Voice app. Now I can make any call for free using wi-fi or theoretically using the data line on the phone(sometimes this works fine, sometimes not so much).

    The service has been fine…maybe a bit spottier than AT&T, but not significantly so. Virgin Mobile uses the Sprint Network. Two months out I’m still very happy with this choice.

  28. I’m at $15/month for two cell phones, 100 minutes on one and 80 minutes on the other, we don’t talk much so it works for us

  29. This is an area I’ve tried to work on repeatedly. We rarely use our landline but didn’t feel comfortable going completely to cell. We use cell phones so rarely I refused to pay a monthly fee for them, we have them no because my mother in law was so shocked we didn’t have them she added them to her plan.
    I’ve looked at Skype but couldn’t figure out how you actually make a call, can you explain it? Are you making a call through your computer, how are you actually talking? This seems like a dumb question but its not on their site and no one I know has told me how it actually works.
    I have the most basic and cheapest plan Bell provides at $35 (excluding long dis) so I doubt Skype would save me anything unless I start calling long distance a lot.

  30. Here are my two cents:

    After a fight with Verizon (almost 7 years ago now), I got rid of my cell phone. My husband never had a cell phone. We’ve had only a landline for years. First, because we had dial-up internet, but long after that went by the wayside, we just never got around to getting cell phones And here’s why: we don’t want the bother. We don’t want to text. We don’t want to be gotten ahold of at all hours, no matter where we are. Mainly, cell phones are a convenience. However, when we thought about it, there are very few times when we wouldn’t be able to get ahold of each other. (If there were an emergency while my husband was at work, for example, I could always call him via his work line.) I, personally, am tired of the “constant contact” society in which we live. I find it incredibly annoying when people are making/receiving texts while they’re ostensibly hanging out with me (occasionally in the middle of a conversation). I think that the availability of constant communication is making people thoughtlessly rude – it seems like people are losing the ability to focus on what is going on right in front of them. The last time I went to a movie, I watched two teenagers text throughout the entire film. No skin off my nose, as it didn’t obstruct my viewing, but I wondered why they had bothered with the movie. We have a little one, and I’ve been told that I should have a cell in case something happens when I’m on the road alone with him, but I’m never more than walking distance from a place with a phone, so I don’t think it’s worth the cost. Plus, I don’t think that the world is *that* dangerous. I just don’t.

    And, as with Katie, the one time I’ve ever had to call 911, I was out of town (this was 9 years ago), and so I was well out of my area code. I used my cell phone, and I got a dispatcher right away.

  31. Swingcheese
    I hate it when someone answers a cell/text in the middle of a conversation, I feel I should just get up and walk out, but with most of the people they wouldn’t get it.
    Or people that talk on the phone for 2 hours when the person is 5 minutes away,
    How did we ever survive before cell phones. or phones at all. I want to go back there.

  32. @SwingCheese: It’s great that having just a landline works for you. But there’s no rule that says that if you have a cell phone, you *must* carry it with you at all times. I have a cheap, prepaid cell phone as my only phone, and I leave it at home about 95% of the time. The other 5%, when I know I’m going to want someone to be able to get in touch with me wherever I am, I find it extremely useful.

    Plus, I talk on the phone so little that the prepaid cell costs less than the cheapest available landline.

  33. @sabrina

    You can use Skype directly on your computer with a headset or normal mic + speakers. I use this setup on my laptop all the time.

    Or, you can add a ~$20 usb adapter that will allow you to plug a regular landline-type phone into it. Then, when Skype rings, your phone rings. You then pick it up like normal and talk.

    Making a call via the usb adapter + phone combination is a little different than doing it via a straight landline, as you must dial it as Skype dials it: country code + area code + full #. After you key that in, you press either the * or # key to tell Skype to dial that number. It gets a lot easier to remember once you’ve done it a lot, and having the convenience of picking up a *normal* cordless phone and walking around in your yard while talking on Skype is just great.

    As I posted above…I get all that for $5/mo. It may not work for everyone, but it’s great for me! :)

  34. @Dave #31: What’s wrong with being on the phone for 2 hours with someone who is 5 minutes away? Maybe I am doing laundry, cooking dinner and cleaning up around the house while my friend is doing the same at her home. What would we gain from one of us going to the others house to talk face to face, other than 2 dirty houses and no dinner?
    While I agree that the phone can be used rudely, such as answering or texting while in the middle of a conversation, I don’t think there’s anything wrong with it in general.

  35. @Johanna: You’re absolutely correct in that one should go with what works best for them and in that a cell phone can be left at home. Part of the appeal of our landline is that it is bundled with our internet, garnering us a cheaper price for both (as opposed to having only cells and no land line). Also appealing (though not particularly flattering) is that it has turned into a bit of stubbornness on the parts of my husband and myself, as we are absolutely sick to death of those who would tell us that we MUST have a cell phone, that I am in DIRE STRAITS every time I get in the car with my kid. These comments come mostly from well-meaning friends and family who cannot understand that, at the end of it all, we simply don’t want cell phones. They are usually the same people who don’t understand why on earth we don’t have cable. :)

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>