[Updated 2/13/09]
The economy downturn is hitting on us in many aspects of our lives. While the government is working on the economy stimulus plan to help us spend more, my advise to you would be quite the opposite. You see... What gets us into this catastrophe is careless borrowing and spending over the past few decades. Continue this spending spirit would not get America out of this mess but worsen the situation.
To get out of this financial crisis with a stronger America, we need to change our culture - spending on what we need and saving for our future. The point I'd like to put more emphasis is
to invest your cut expenses in your future, such as, your business assets that could fuel growth of your business in the long run. If we had done this, our economy and American people would have been at a much better condition today, because we have got the savings needed to ride out the economic storm.
Having said that, I decide to make a change to my cell phone plan to save some bucks. I have got a local phone service and am able to make interstate calls using a service provided by a prepaid phone company. My cell phone is really for emergency calls or occasional talks with my family members and friends. Yet, I'm paying about $50 every month, which is $600 a year. A pay-as-you-go prepaid phone service would cost me only $100 for a full year based on my usage; a $500 that I can invest in my Internet business.
It would be just a good idea to call up your cell phone company to find out when your current contract expires. You may be pleasantly surprised that you're already out of contract. In my case, I knew my contract would last for another year. But, I called and found that I'm actually out of contract due to the switchover, when the company consolidated their billing systems.
Here are some key elements you want to consider, when shopping your pay-as-you-go phones:
1. Network Coverage: You have to know where you'll be using your phone, and check the vendor's coverage map to make sure those areas are well covered. Based on my research, Verizon offers the best coverage across the country in general. T-Mobile has spotty coverage in many areas and customers of T-Mobile have experienced lots of dropped calls. Again, that all depends on the areas you plan to use the phone. Coverage is the most important factor to me.
After all, if the phone can't get any signals, what good is the phone? It's true that most of the vendors offer roaming services. But, roaming services are normally charged at a much higher rate that you would want to avoid as much as possible.
2. PlansThere are quite a few plans available from cell phone vendors. Even though the plans may look the same, different vendors may impose different interpretations or rules. So, you should always speak to the sales representative to find out the details. But, one thing you should be aware of, before you call:
- Daily access fee: In general, the big three vendors - AT&T, Verizon, and T-Mobile (Sprint does not offer pay-as-you-go) offer plans that charge various dollar amount depending on how much so-called daily access fee you're willing to pay. The fee is an extra service charge in accessing the vendor's network for the day you use the cell phone. The daily access fee ranges from $1 to $4 dollars; each comes with a different airtime costs per minute. For example, Verizon charges $0.99 of access fee for $0.10 of air time per minute, $1.99 for $0.05, $2.99 for $0.02, and $3.99 for unlimited air time. In addition, Verizon also offers various benefits of unlimited use (e.g. nighttime, weekend, and mobile-to-mobile).
Some vendors offer plans that don't charge the daily access fee. For example, Verizon Prepaid Basic charges $0.25 of air time per minute without the daily access fee. To me, this plan is ideal for an emergency phone. Verizon Prepaid Basic is a new plan and has not yet appeared on their website as of today (2/11/09). Refilling $100 or more with T-Mobile gives you special gold rewards, such as, $.10 per minute with additional 15% free air time and without having to pay the daily access fee.
One advantage with a no contract phone is that you're allowed to
switch among these plans anytime you wish.
3. Expiration of RefillsWhen you purchase a new prepaid phone, the phone comes with some free (usually $10 worth) airtime. You'll have to made additional purchases of air time (called refills) within a certain period of time (60 days for Verizon). You consume the airtime for both outgoing and incoming calls.
Be aware that each refill comes with an expiration date. The larger your refill amount is, the longer your refill lasts. For example, Verizon has the following refill schedule:
- $15-$29.99 expires in 30 days
- $75-$99.99 expires in 90 days
- $30-$74.99 expires in 60 days
- $100 or more expires in ONE YEAR!
Your leftover dollars typically roll over to the next period, provided you make another refill prior to the expiration date.
4. PhonesYou can purchase the prepaid phone from retail stores, such as, Target,
BestBuy, and
WalMart, as well as on the Internet. Before purchasing the phone, you should clearly spell out the exact features you need. Keep in mind that we want to scale down what we want to what we absolutely need. And, the more features you get on your phone, the more service charges you're going to pay. So, ask yourself honestly: Do you need a phone that surfs the Internet, downloads the ring tones, accesses your emails, or lets you do
texting? Can you live without any of those services?
If you purchase your cell phone in California, watch out for how much taxes you pay and you'll be surprised (this time,
unpleasantly). Regulation 1585 of the state code on sales and use taxes specifies that
all cell phones will be taxed at the full retail amount, regardless of the price paid as part of a special offer. My cell phone was listed for $20 on Verizon's website. But, I have to pay $16.50 of sales tax, because Verizon claims that the retail price of my phone was $200. Ouch! If you're interested in learning more about this insane tax code, read
this article.
5. Activation FeeOnce you get your new phone, you'll have to activate it. And, sure enough, there is an activation fee. Verizon charges $25 to activate your phone. You may be able to avoid the activation fee, provided you pay $100 of airtime upon purchase of your new phone with Verizon. There is a catch, though. The $100 airtime expires after 60 days instead of a year. Ouch!
6. Small VendorsWhen you go with small vendors like Net10,
TracFone,
Virgin, and Metro PCS, you'd have to do more research on their coverage. Some of these vendors re-sale the bandwidth from the big four vendors (AT&T, Verizon, T-Mobile, and Sprint). You also need to watch out for their charges for roaming services, when you're in an area outside their network. If you plan to use the phone outside the states, you better have a in-depth discussion with your customer service staff or sales representatives of the service providers. This in fact applies to the big service vendors, too.
Pay-as-you-go phone plans may not be your best choice. But, they're inexpensive choices for those who are light in cell phone use. If you would spend some time reviewing your cell phone usages, chances are you'd be able to eliminate or scale down some of your subscribed services. Or, you might simply cancel your local and long distance phone services and completely live with your cell phones. Any of these actions can put more of your hard earned money in your banks and eventually improve your financial status.
If you're interested in other saving ideas, read
my earlier post that discusses where to look for saving opportunities without sacrificing much of your standard of living today.
If you have kids growing up to be teenagers, you would likely start wondering why they're spending so much time on the Internet. Are they doing research on the Internet for their homework as they claim? Or, are they simply spending time chatting with friends? Are they visiting websites with inappropriate content? Whom are they meeting on the social network? Welcome to parenthood in the Internet era!
