How to win at cell phones

In my last post, a little over two months ago, I went about setting mission and purpose for this blog. As is typical for me, what was then a vague notion has bloomed into a few different expanding themes, all of which I’d like to continue to explore and develop over the next few months.

It would be nice, of course, if I’d write about them in the process as well. I tend to forget that.

So you’ve already gathered I’ll be trying to tease out the best parts of Mustachianism here. But that’s just the start. I’ve also been thinking tons about Community, Minimalism, Sustainability, and some other neat capitalized ideas. All of them will intersect with the great thing, the Gospel.

And at times this blog will just be straightforward, practical counsel for real life. Like today — how to sidestep a commonly accepted consumer money pit, save a buck or forty, and laugh in your rearview mirror.

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So today, we’re going to talk in a simple fashion about cell phones.

How to Win at Cell Phones

Everybody I know owns a cell phone. Since nobody my age pays for a landline, the cell phone is the one key item of technology with which all of us interact on a daily, if not hourly (or 10-secondly) basis. It is likely the most reliable expense to show up in our (hypothetical) monthly budgets, and because of this ubiquitous demand, cell companies have been making bank for years.

But, the market has matured to the point that you can now either A) get a really well-tailored device and service plan that matches your needs and delivers it extremely cheaply, or B) get suckered into a plan that delivers way way more than you need, most of which you don’t even use, and for a premium that makes the whole deal a terrible bargain. I personally am more attracted to choice (A), but everyone is entitled to their preference.

So below you’ll find some simple things that you should consider doing from now on.

1) Avoid contract plans, always

So modern handsets are fairly expensive, yeah? Who wants to pay $400 to buy a phone outright, when you can pay $100 if you buy on contract? Seems like an awesome deal, but it’s actually a sucky deal.

What’s really happening here? You’ll want to readjust your consumer lenses to see the situation as it really is: when you get a phone at a cheap price on a contract plan, what’s really happening is that you’re making a down payment on that phone, and paying the rest of it off through the course of your 2-year contract. Yep, just like a car loan. Except instead of 1-2% interest on the loan, you’re probably paying a much higher rate than that. Like, ridiculously higher. The math works out really favorably for the cell provider. But not for you.*

Don’t believe me? Here’s what I want you to do: make a spreadsheet and do the math yourself.

In your first column, find a “normal” cell service plan from the provider of your choice. We’re going to calculate the total expense over a two-year period. So, enter that monthly rate and multiply by 24. Whatever that number is, add the cost of purchasing the initial device (on contract) to it. That sum is at the bottom of column 1.

In your second column, find a contract free cell service plan from whatever provider you find appropriate. Take that monthly rate and again multiply by 24. Also add to that the cost of buying the same device at a market rate, outright. That second sum should go at the bottom of column 2.

Now you’ve got two columns which respectively calculate the 2-year expense of going contract-bound or contract-free. Feel free to share your results in the comments at the bottom. I know that for me, and for most people, the grand total in column 2 will generally be way, way cheaper.

*The one exception to this math, possibly, is the great Family Plan. A family plan is basically like getting a volume discount on a contract plan. If you can find your way into a decent family plan with either your actual family or your 3 or 4 closest friends, then you may find yourself actually competing well with the low cost of contract-free plans.

2) Do not pay for unlimited data

There are several reasons to ditch your unlimited data, if you can help it. For starters, there’s a good chance that your carrier will actually either cap or throttle your data speed once you’ve gone past a certain level of usage. Check the fine print. Second, the vast majority of people paying for unlimited data would probably not even notice a diminishment in service if they reduced to the mid-range of the data tier, because they never actually use that much data.

Third, for the love of God, if you actually do use that much data, why are you using it?

Begin Soapbox:
You don’t need to download movies and music to your phone all the time. You just don’t. Certainly not over the air, anyway. Use wifi for God’s sake. It’s free. And why do you need to carry around so much entertainment in your pocket all the time anyway? Are you afraid you might get bored? Wake up. Pull your pants up. Life isn’t about being comfortable and entranced all the time. Let’s talk about this more later.
End soapbox.

Point is, you’re probably wasting your money if you’re paying for unlimited data. I suggest you actually dig into your usage habits, check your billing statements, and see what your “unlimited data” is actually getting you. I betcha it’s less than you think. And if you are using a huge amount of data without streaming a ton of online media, then maybe check into your phone’s bandwidth statistics and see if there are any runaway apps that are endlessly refreshing and updating without your knowledge.

3) Do not buy the latest generation of phone

I already hammered on this point when the iPhone 5 came out.

If you wiki the term “durable good”, you’ll learn that supposedly a car, an appliance, or a cell phone are items that can yield happy and useful function over a number of years. Pay attention here — this fact is absolutely true. All of these items are generally good for years.

But, advertisers are willing to gamble billions of dollars a year that you will totally forget that your goods are durable. And if you fall for their bluff, then they really have you by the balls.  Whenever anything new and improved comes out, you’ll immediately feel blasé and dissatisfied with whatever is already in your hand. This, despite the fact that nothing at all changed about it. It functions just as well as 8 minutes ago, before you drooled over the late-breaking Apple keynote presentation (or whatever).

Don’t fall for it.

Here’s a better strategy — next time you’re in the market for a new cell phone, buy the top-of-the-line item from one or two years ago. It’s amazing how cheaply that phone will cost, and how admirably it will perform. Seriously, try it. Do the research on what highly vaunted phones from yesteryear ended up getting good reviews from its users. Once you’ve got your target, Glyde or CraigsList are great spots to pull the trigger.

4) Consider a lesser-known carrier

The big names in cell providers are pretty well established now. Some have stagnated, and others are innovating presently. Still, don’t get a case of tunnel vision here. The market is brimming with good choices that are outside of the main networks we’ve all heard of.

Consider getting a service plan through a Mobile Virtual Operator Network, or MVNO. The most recognizable MVNOs are companies like Cricket or Boost Mobile, but there are literally dozens out there now in various stages of development.

An MVNO is pretty simple — they are resellers of access to the big networks. As such, they have ridiculously low overhead since they don’t have to maintain the expensive hardware comprising the cell networks. This means they generally have better rates overall. MVNOs are often small companies, highly automated, and some of the newer ones may still be hammering the kinks out. But, if you’re willing to shop around and give something a try, you might strike gold. One can get some very good deals out there, if one looks.

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Putting it all together

There’s much more to say about this, and some great resources are out there. But, this should suffice for today. I’ll conclude by laying out how I’ve navigated the mess myself:

Device: Google / LG Nexus 4 – $290

Technically I fell for the bait here and bought a phone that is currently on the market and pretty awesome. It was officially released last year though, and is not top-of-the-line, and it came factory unlocked, and I got a decent deal on CraigsList, and since it’s a pure Google product it should be relatively futureproof for at least the next few years. It is way more power than I need, which means it should serve well for a long time now.

Service: UltraMobile $19/mo – plus occasional add-ons

UltraMobile is a great example of a new MVNO with an aggressive concept. I pay a whopping $19/mo and get 250 minutes of talk time, unlimited texts, and 50mb of data. That may not sound like much, but A) I just plain don’t talk on the phone much, B) most of the data I use is over wifi at home or work, and C) if I ever run out of these small allotments, I can buy more minutes at a rate of $0.02/min, or more data for $0.02-$0.05/mb depending on how much I buy. So even in an indulgent billing cycle, I never go over $30/mo.

UltraMobile is contract-free by the way, and runs over the T-Mobile network. For me that means generally excellent coverage and good speeds, with frequent access to HSPA+. If I ever get close to the thresholds on those allotments, they send you a helpful text to let you know you’re nearing the end. No awkward surprises.

Finally, if I ever find myself without wifi and needing to download real chunks of data, I also have a small FreedomPop hotspot, for which I pay $0.00/mo for 500mb of data, and $3.49/mo to roll over all the data I don’t use. I have a pretty substantial pile of unused data right now.

So, in summary:

Devices: Nexus 4 ($290) and FreedomPop Photon ($90)

Services: UltraMobile (~$20/mo) and FreedomPop (~$4/mo)

Total expense over two year period: $956, or $40/mo if I amortized the cost of the devices.

 

How’s that stack up against your own mobile deal?

*Full disclosure – FreedomPop link is a referral URL. That means if you sign up through that link, I get a small data bonus. And you get to thank me.

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