I have been blogging about personal finance for quite a long time, and in doing that, I've gotten to read a lot of other great blogs. One of the common themes that many great personal finance bloggers write about is trying to cut costs, and one big area is to reduce their cell phone bill. Well, here I go going against the grain. See, we just recently decided to start paying MORE. We just signed up for Verizon mobile service.
Here's the breakdown and our reasons. Let me know what you think.
Old Plan: The Sprint Unlimited Data Plan with four lines
We have been customers of Sprint for years. I think my wife and I figured out that she has been with them for almost fifteen years. It's been a long time.
Our plan with them was a family plan, and in addition to my wife and I, my mother-in-law and sister-in-law were also on the plan. The total cost was around $224, so our two lines cost us $112 per month. We had limited minutes that we never came close to, and unlimited data, because when we signed up for the plan, minutes were still the measuring stick. Now, of course it's minutes.
New Plan: Verizon ‘The New Plan' with 16GB of shared data six lines
We decided to switch to Verizon. We talked between the four of us and all agreed to move over. In addition, my parents also decided to hop on board, as they were hitting the end of a deal that they'd had that saved them a lot of money, but frankly, was very limiting in what it offered and had very poor customer service to boot.
Any new plan now has capped data limits. The days of unlimited data are behind. So, after a trial run and some conversations, we settled on the 16GB plan. Now, calls and texts are free.
After splitting up the costs, our monthly bill for the two of us should end up around $130 per month.
Why We Are OK With Paying More
Most people would cringe with the thought of paying more money. But, here's why we were OK with making the change.
- Coverage at home . We've had a lot of frequently dropped calls at our house. Sprint does not provide overlapping coverage. As a result, our house is just far enough away from a tower to drop calls.
- Coverage away from home. Sprint provides good coverage around heavily populated areas. This did not help us out for our many camping trips. We'd go to lake shore areas and have no coverage at all. This wasn't ideal at all.
- It actually could be considered a reduction in spending – So, we're paying $130 now versus $112 previously. That's an increase, right? Technically, yes, but in an apples to apples comparison it's not so simple. See, with Sprint, we had that rate with a subsidized phone purchase. We'd all gone past our two year agreement and owned our phones outright, yet the cost was still $112 per month. With Verizon, part of our $130 is actually paying for our hardware. After two years, that cost drops off. So, if you look at just the cost of the ‘plan', we're actually paying about $70 per month. The other $60 is paying off our hardware.
- Gift cards – We signed up for our plan via Best Buy. They had several promotions that netted us $600 in Best Buy gift cards. If you divide that over the 24 months we're paying for the phone, it's like w're getting $25 per month back.
Why Not A Lower Cost Provider?
As I mentioned above, I've seen a lot of great success stories about cutting cell phone bills. Trust me, I read many of these articles and tried to see if there was any way we could duplicate the success. The one big stumbling block is that most of the lower cost, non-major carriers offered in our area all piggy back off of one major carrier's network. Which one?
So, basically, we could have ditched Sprint, gone to somewhere else and paid half the price, and ended up with the same crappy service. And, actually it would have been worse. See, the service in our house was so bad that they provided us an in-house range extender that was free, and wasn't compatible with any non-Sprint phone, even if it used their network.
In short, no thanks.
Why Pay For Hardware?
One other question I knew we might get is why we are paying that much per month for the hardware. We could have gotten cheaper hardware, but our justification is that we use our phones as our primary tool for communication. I haven't bought a PC or laptop in almost ten years. My wife got a new laptop last year, but that was mainly because of her needing it to run her online business.
Outside of that, our phones do the work. So, for us, having devices that are fast, cutting edge, and with lots of storage matter. We can justify the cost by the fact that we use it.
Part of the $600 we got in gift cards was for the opportunity to trade in one of the devices that had held very good value. This is always a consideration, as well, because I would have to think that in 2-3 years when we may be ready to look again, we could take advantage of similar opportunity. Cheaper phones would be worth little or nothing, so the gap could actually be much smaller than it appears.
So far, we're happy with our new phones and happy with our plan. A capped data plan is something that we'll have to get used to. We did a lot of research and we're more than comfortable with our decision.
While nobody likes to pay more for something, it does make it worthwhile when you get positive value along with the increase. With the newer hardware and the service that is hands down the best in the area, the extra cost is met with tangible value. For us, that makes it a win.
Readers, what do you think of our decision to spend more on cell service?