This Cell Phone Strategy Will Help You Retire 7 Years Earlier
Written by Christy Bowman
June 22, 2018 |
If you don't have the patience to hunt down the best possible cell phone plan, you might be delaying your retirement by an insane 7 additional years!
The incremental time you spend now to understand every nuance of the optimal cell phone plan is much less than you think, and I promise, you won't have to dial into a call center and spend hours listening to someone trying to up sell you on services you cannot possibly ever need.
And best of all this plan will keep you out of debt!
To begin, you need to think of your cell phone plan in terms of the ways you will actually use your cell phone. Far too often, people get cell phone plans thinking they need things like always on voice and always on data. They get hung up on the cell phone device itself. They lose their rationality when contracts offering a $0 device get dangled in their face. But $0 for a device never happens: the cost of a $0 the device is always embedded in your monthly payment.
There is a reason they call it a contract and that's because you are not able to walk away without having fully paid off the terms. If you think about the typical cell phone contract, its 2 or 3 years. But just think about how fast technology moves. In 2 or 3 years, you will definitely need a more advanced device. And you will probably have demands for data that exceed any plan they offer.
Learn to Live Without Voice
I'm not talking about reducing the number of times you make a voice call. I'm talking about eliminating them 100%. Send a text instead. Or if you actually do need to make a call, connect over a WIFI using tools like Skype. Voice is a huge drain on your finances and you probably don't even make many voice calls on your cell phone.
But you do pay for them. If you think about the incremental costs you pay for things like unlimited voice or 250 minutes of talk time, you are not purchasing calls but instead time. And if you fail to use that time within the month, its usually gone. Even if your plan does carry over voice minutes, that doesn't change the fact that you aren't billed by the calls you actually make, but the time you spend as a pre-allocated amount.
A plan that billed you $0.25 per call would probably result in a monthly bill of about $1.25. Carriers know that, which is why plans that operate like a pay phone don't exist. Mobile carriers can't gouge their own customers enough with a plan like that. So to fight back, you need to live without voice and not pay for any minutes at all.
Live Without Data
In all likelihood, I just lost you. But data costs are possibly the scam of the century. You are paying for a product that costs more to measure than it does to deliver. And don't give me that bull about network construction costs and upgrades. The original network costs were completely paid for decades ago, and upgrades? Please...we still live in a world with parts of the country that lack basic cell coverage. That money is going to mismanagement, not upgrades.
If you live in an urban area, you probably have multiple wifi options available to you right now. You cannot go to a restaurant, public transit or shopping mall without getting free wifi. For years free internet and free wifi have been available at your local library.
Just shut it down: force yourself to fill your data needs when you are within proximity of free wifi. And if you already pay for wifi at home, consider that a with separate mobile data plan you are incurring data costs twice.
The Math
If you and your family have 3 cell phone bills, and pay the average of $97.86 per month that is consistent with averages across America, you can reduce that bill down to $15.00 per cell phone if you are will to make some small adjustments to how you use the device. That reduction will free up $248.58 per month, which you can put toward retirement savings.
If you are 25 and earn the average annual working salary in the United States of $50,183.15, the amount you would have in retirement by age 65 if you saved 10% of your salary each year is $848,688.48. To save that amount, you would need to have your savings compound by 5% each year, and you would have to get annual raises of 2% - both pretty normal numbers.
However, if you free up $248.58 per month by changing your cell phone plan, you will be able to devote 15% of your income to retirement savings (you'll actually have another $39.48 with which to go shopping each month as an added bonus even after increasing your savings). By saving 15% between age 25 and 65, you'll have $811,713.70 after 33 years and match the amount of $848,688.48 between your 33rd and 34th year of saving. That's crazy!
Summary
By eliminating unnecessary services in your cell phone plan such as voice and data, you can strip your monthly mobile costs down to the bone. You're getting shafted today anyway, so beyond the cost savings, you'll have the peace of mind in knowing that you're standing up to the big guys. And when you do the math, the effect this reduction has on your monthly bills is simply amazing: you can retire 7 years sooner by chopping your cell phone bill today.
Have you reduced your cell phone bill in an effort to save money? Have you eliminated services such as voice or data? Do you notice them once they are gone?