Every time I log on to Mint.com and check up on my monthly budget, there’s one thing that sticks out at me like a sore thumb. My smartphone bill.
I spend about $90 each month on my smartphone and seeing that my phone is long due for an upgrade I figured it was the perfect time to re-evaluate my smartphone needs.
My current plan is with Verizon and includes 450 voice minutes, unlimited text messages and unlimited data usage. I’ve been happy with the plan I’m on and have had the same plan for at least the past 6 years. However, in the spirit of trying to lower my expenses I thought I’d examine my usage and see if changing my plan or switching carriers could help me save on my bill.
I found it’s not even a hard process. Verizon has a feature right on their website that analyzes your usage in comparison to your plan for you! After running the analyzer, it looks like I’m probably overpaying for what I actually use.
Analyzing My Plan
The graph below shows my voice usage over the past six months. Yes, you’re reading that right…my average talk time over six months is 4.8 minutes per month!! Granted, that doesn’t count Verizon to Verizon talk time which is free. But two things are abundantly clear when I look at this graph. 1) I should probably call my mom a little more often. and 2) I don’t need to be paying for anywhere close to 450 minutes per month!
Text messages aren’t much different. I pay $20 per month for unlimited texting privileges, and only use about 350 each month.
Looking at Verizon’s plan options I could switch to a plan that gives me 1000 texts each month and save $10 per month on my bill by doing so. Unless I somehow turn into a teenage girl in my sleep I don’t think I’ll have a problem staying under 1000 texts per month!
Where things get tricky is with the data/internet usage. I am constantly on Facebook and Twitter from my phone and the data access is really all I want a smartphone for in the first place!
I’ve been lucky enough up to this point to be grandfathered in with an unlimited data plan even though Verizon has switched to tiered plans, and now to a shared data plans over the time I’ve had my smartphone plan with them. I’ve held off from upgrading for as long as I possibly can because I don’t want to lose my precious unlimited data!
The cheapest data plan Verizon now offers is 2GB of data per month, which as you can see I routinely surpass. I think I could cut down on some of my data usage by making sure to connect to wi-fi when I’m at home, but having to constantly worry about reaching the limit isn’t something I really want to worry about every month.
So What Are My Options?
If I stay with Verizon, I’ll be paying roughly the same, if not a little more each month for a plan that fits my usage even worse than the one I’m in. I’ve briefly look at plans from the other major carriers and its pretty much the same story.
I thought all hope was lost until I started doing a little research and saw more and more people mentioning prepaid smartphone plans.
Apparently, prepaid carriers like Virgin Mobile, T-Mobile, Straight Talk, and Metro PCS have really stepped up their smartphone games lately. No longer are you stuck with the worst phones on the market when using a prepaid plan. Now you can use a prepaid plan and still have an iPhone 4S or the Samsung Galaxy Nexus. The catch is, you pay full retail price for the phones instead of the carrier subsidizing most of the cost. So instead of getting an iPhone 4S for $99 as I would through re-upping my Verizon contract. I would have to pay $649 for the same phone on Straight Talk.
Don’t be scared off by that initial sticker shock though. Over time the prepaid plan may still come out ahead.
Straight Talk offers a prepaid smartphone plan consisting of unlimited minutes, unlimited text and unlimited data for $45/month. So I could save about $45 per month over my Verizon contract. The question is, how long would it be before the monthly savings of the plan made up for the higher initial cost of the phone?
If it takes longer than a standard 2-year Verizon contract for the prepaid plan to show any savings I probably won’t bother pursuing it because being able to upgrade to a newer phone every two years or so is a benefit I’ve come to enjoy. So let’s look at the numbers…
Verizon: 450 minutes, Unlimited Text, 2GB Data – $90/mo, $99 for iPhone 4S with 2 year contract
Straight Talk: Unlimited minutes, Unlimited Text, Unlimited Data – $45/mo, $649 for iPhone 4S with no contract
Cost for first year: Verizon: $99 + ($90*12) = $1179
Straight Talk: $649 + ($45*12) = $1189
Cost for second year: Verizon: $90*12 = $1080
Straight Talk: $45*12 = $540
Total Cost Over Two Years: Verizon: $1179 + $1080 = $2259
Straight Talk: $1189 + $540 = $1729
So there we have it! If I switch to the prepaid plan I can save $530 over the course of a typical two-year cell phone contract!
Before I actually go and officially make the switch I want to do a little more research on the network size, quality and reliability of the prepaid carriers . But I really can’t imagine them being so bad that I’d rather pay an extra $530.
Have you made the switch to a prepaid smartphone plan? Leave a comment below and let me know the pro’s and con’s of your experience!
UPDATE: I made the switch to Straight Talk Wireless and my real savings have been even greater! Check out my post How To Save $700 By Switching to a Prepaid Smartphone for all the details.
Edit – A few people in the comments mention a post on Mr. Money Mustache’s website. You can check that out here and see how he and his wife are now paying just $10/mo for their iPhone service!