awareness, calculations, medium potatoes

The Great Phone Bill Calculation

phone bill

I did not choose a black and orange theme on purpose for Halloween — it just happened!

So the last time I went to get a new phone, this is what happened:

               Me: Hi, my phone stopped working this afternoon, can I have a new phone please?

               Sprint salesman: Sure, what kind of phone and service agreement are you interested in?

               Me: Like an iPhone. Like the cheapest iPhone.

               Sprint salesman: Ok, would you like —

               Me: Whatever you recommend. Just a phone that works. And a normal service agreement.

Aaaaand…that was how I ended up with a $130/month bill attached to a brand-new 2-year contract. That, combined with not reading something thoroughly before I signed it. Yup, it’s another cautionary tale brought to you by The Yachtless! (Although when I figured this out a full three weeks later, I did call Sprint and begged to have it lowered back down to the $86/month that it had been previously, and the nice lady on the other end of the phone had mercy on me.)

So, if you’ve been following my blog, you may know that I enjoy pretending like money is potatoes. Specifically, Small Potatoes and Big Potatoes. Small potatoes are the pennies and dollars that we save (or earn, or lose) when we make choices like whether to buy the fancy oatmeal or the cheap oatmeal. These choices definitely add up (hint: choose the cheap oatmeal), but they add up fairly slowly. Big Potatoes, in contrast, are the much larger chunks of cash that result from much larger decisions.

This fall I’m job-hunting, which is a Very Big Potato. However, I’m also pondering some small potatoes, and one of these small (or maybe medium-ish?) potatoes is shaped like a smartphone.

Ok, I promise I’ll drop the potato metaphor now!

Everyone, everyone, everyone I have talked to about phones says that Republic Wireless is the way to go. I won’t describe RW’s service options in detail here; you can check out Cash Cow Couple’s review if you want more info. But the point is that no matter what, it’s pretty much going to be cheaper than my current bill of $86/month. However, my Sprint contract isn’t up until November 2016, so if I switched now I’d have to pay an early termination fee, plus with Republic Wireless you are required to buy one of their phones up front. Which means that I need to do some math and figure out the break-even point to see if/when it’s worth it to switch.

So, confession: as a newcomer to the world of finance savviness, I’ve never calculated a break-even point before. I don’t even actually know how to do it, but I figure it’s kind of self-explanatory, so I’m getting out my calculator now. (Well, ok, actually I’m getting out my iPhone. Poor thing – if it only knew I was using its services to decide whether or not to keep it in my life.)

Anyways. Please please please stay here with me while I do this, since I don’t really know how to do it! Here are some numbers (I’m basing this off of the price of the Moto X phone, which I think I’d spring for since it has the best camera and that’s important to me):

phone compare

As you can see from the table above, which hopefully doesn’t contain any major errors, the thing about Republic Wireless is that your monthly bill depends on how much cell data you actually use; that’s why there are two different possible scenarios above (the green vs. the blue). I’m looking at my Sprint usage report from last month, and it looks like I used…a little over 2GB of data. Is that a lot? That’s probably a lot.

If I continue to use that much, my break-even point (relative to just keeping my current phone and service) is…November 2016. Ugh.

BUT. What if I could somehow drastically reduce my monthly data usage? If I could get it down to 1GB, then my break-even point (again, relative to just keeping my current phone and service) would be August 2016!

Another complication here is that I’m not sure I want to spend $518.95 outright when I’m on the verge of possibly being between jobs…so maybe better to wait until I have my next job in place to make any major decisions?

Now for the philosophical part. Like I said, the break-even point is a totally new thing for me, and I find it to be rather a curious concept. Break-even points are based on the assumption that things will continue to go on as expected for months and months. And, I mean, I do think it’s likely that I’ll want to consistently have a phone for the foreseeable future, and most likely the prices of phones and service plans will not change drastically over the next year. But I just want to recognize, for whatever it’s worth, that any plan founded on the assumption that things will go on as expected is inherently a tiny bit flawed. I’m not saying that it’s bad to have a plan – I’m a definitely a planner, and I think it’s a smart strategy. I just want to recognize that life is unexpected, and plans don’t always work out the way we think they will.

Thanks for helping me through my first break-even point calculation! Hopefully the first in a long, long line of them.

You may notice that I didn’t actually make a decision anywhere in this post about when/whether to switch! Aaaaahhh! What should I do? Should I shell out over $500 right now even though I’m in an uncertain place job-wise? Do you think I can keep my data usage down if I set my mind to it?

 

Previous Post Next Post

You Might Also Like

23 Comments

  • Reply Jillian October 30, 2015 at 7:49 AM

    When I first got my cell phone, I was always worried about running out of minutes. Then there was texting, and I had all the minutes in the world and had to call people at the end of the month instead of text. Then there were unlimited texts, so no problem at all. Now I have a bazillion minutes and unlimited texts, but I am always spending the last week of my phone cycle obsessively checking my data to avoid going over. I do have a point. Two of them. 🙂

    One- sure, this probably isn’t in the next year, but what the heck is going to be the next thing they add to our phones? Maybe soon you won’t even be worried about data!

    Two- cutting your data usage in half seems really hard. I hate it when I have to be really careful with it. Sure, it’s incredibly likely that I’m waaaaaay too dependent on my iPhone. However, cutting data sucks. It means not checking your email or blog when you’re not on wifi, and for me it means always getting lost because I don’t want to use it for GPS when I totally should.

    I like your explanation of a break even point.

    • Reply Sarah Noelle October 30, 2015 at 6:07 PM

      Hey Jillian! I have a feeling that I would have a similar experience as what you’re describing…I’ve always had Sprint, and since they offer unlimited data I’ve just never thought much about trying to rein it in. I reeeeeally like to be able to use my phone for answering emails and listening to podcasts while I’m commuting (i.e., when I’m between wifi locations), and I have a feeling that that’s a lot of what’s driving the data usage up so high.

      I love your comment about “what’s next?” with our phones — ha! It’s true — technology evolves so quickly. I still have trouble figuring out exactly what an iPad is for (it’s basically exactly like an iPhone, except it doesn’t make phone calls and it’s too big to fit in your pocket?)

  • Reply Des @ Half Banked October 30, 2015 at 7:59 AM

    Oh gosh, this is definitely a Medium Potato – and here I thought Canadians got the raw end of the deal with cell phone bills! (To be fair, we have nothing like Google Fi or Republic Wireless up here… but still, I’m so sorry to hear about your current Sprint situation!)

    I’ve been going back and forth on the “get new phone, pay out my contract and switch to a low cost provider” thing too. I love that, even after the math, you looked at how the initial outlay of cash will impact you in the short run, even just in terms of the certainty / uncertainty of not knowing what’s next. That’s the biggest thing for me – even though I know switching will save me tons of money in the long run, I don’t know that I can justify paying the $200 out of pocket right now to abandon my should-be-illegal high monthly bill. If I just wait until June, I’ll be out of it for free… so patience is my friend right now.

    Kudos on looking at the decision from all angles! And also, can I just say: your Potatoes angle is pretty much my favourite thing right now. I love it.

    • Reply Sarah Noelle October 30, 2015 at 6:11 PM

      Man, it’s such a tough call, isn’t it? Even though I know, logically, that it makes sense in the long run to switch now (numbers don’t lie!), I just….$500…..it’s so much money up front. Maybe when I figure out the job stuff I’ll feel better about making a decision like that.

      Glad you like the potato metaphor! I find money stuff kinda complicated, whereas I don’t really find potatoes very complicated, so it works well for me. 🙂

  • Reply C@thesingledollar October 30, 2015 at 4:44 PM

    Well, I tried Republic and didn’t like the sound quality (I am old and actually *talk* on my phone, so that’s important to me). So instead, I went in with some friends on a “family plan” (fun fact: you can be on a family plan with basically anyone.) I now pay $25/month (1/4 of the overall bill) for unlimited everything, although I gather that if I go over some amount of data it’ll slow down. I’ve never gotten close to that point; I don’t stream music or video on my phone and apparently that’s what really does it. The upshot: see if that might be an option for you. You might even be able to keep your same phone, if you can be on a Sprint family plan? I did get a new phone, but I needed one; my five-year-old flip phone was busted. I would not worry too much about the early termination fee. That thing hurts, but not as much as continuing, month by month, to overpay.

    • Reply Sarah Noelle October 30, 2015 at 6:18 PM

      Oh wait, sound quality is an issue?? I did not realize this! I do talk on the phone to a few people, although I guess I could maybe Skype with them instead? Anyway, I had better think a little more about switching…Aaugh, so many things to consider!
      The family plan sounds like a cool idea. Wow, I have to say, that’s actually pretty socially progressive of Sprint to say that anybody who wants to be a family can be a family! 🙂
      Thanks for the info!

  • Reply lifetimeandmoney November 1, 2015 at 11:10 AM

    Wow, great article! I need to rethink my phone options as well…

    • Reply Sarah Noelle November 1, 2015 at 11:26 AM

      Thanks! There’s so much information out there that it can be pretty time-consuming to sift through it all, but I’m a firm believer in the power of simple calculations. 🙂

  • Reply Our Next Life November 2, 2015 at 2:06 AM

    And maybe your new job could include a phone? I have on my future to do list some vague thing about “figure out this whole cell phone situation before retiring,” since I’ve had a work-paid phone for years now, and truly have no clue how much data I use or how much it costs. But I know lots of people in all kinds of jobs who have their phones paid for, so maybe it’s something you could negotiate for?

    Our big concern with the wifi-first phones is sound quality, and it seems to be very locality specific. So see if you can ask local friends what they think. And on your break-even chart, everything looks great — except I bet you can find a much cheaper phone case! 🙂

    • Reply Sarah Noelle November 2, 2015 at 6:49 AM

      Oh yes, the work-funded phone — you’re so right; this would solve all my problems! I should definitely make that a priority in my job search. It’ll be my number-one interview question from this point onward. 🙂
      Thanks for looking over my break-even chart, as I know you know what you’re doing when it comes to charts and graphs! It’s true that there are cheaper phone cases out there, but I’ve discovered that I am someone who needs a super heavy-duty case (Otterbox/Lifeproof), or my phone is not likely to last very long. My most recent fail involved dropping my phone into a gigantic mug of tea that I was holding.

  • Reply Kat November 2, 2015 at 4:02 PM

    Hahaha I’ve done the same analyses and think constantly about gettig rid of my Sprint phone and contract when it’s up in May 2016. And I still can’t make a decision either! (Note: they say they have the best service here in Boston – I think they lie).
    I like the unlimited everything plan, and that gives the freedom not to worry about surprise bills or minutes.
    I used to have a Virgin Phone that runs on the Sprint Network and I have seen an increase in data speeds and call quality with Sprint over a discount carrier that uses the other network. I originally went with Sprint because after several spreadsheets, it worked out to be less expensive to pay the higher plan and get the discount phone, than get the discount plan and pay for the phone.
    However, it looks like Sprint is doing away with discounted phones for commiting to a contract, so this will also have to start to be brought into my calculations. Sprint also offers a lower cost month-to-month plan, but phones bought through Sprint for contract plans won’t work, so you have to buy a special Sprint phone to change plans?
    Over time with phone costs and whatnot it seems to be rather small potatoes to switch or not…

    • Reply Sarah Noelle November 2, 2015 at 4:51 PM

      Hi Kat! Wow, you really have done the research on this. I agree, the more I think about it, the more I think it’s a smaller-ish potato. (Plus I’m not sure how to factor all of my time doing research and calculations into the break-even point!) It definitely is nice not to have to worry about minutes and data usage, that is for sure. At this point I think I’m leaning towards waiting until I find a new job and then reevaluating. I can’t believe how complicated all of these options can get.
      Thanks for your comment! 🙂

  • Reply A.J. November 2, 2015 at 6:05 PM

    I love how you’re delving into the nitty gritty of this cost.
    I agree with some of the other commenters that cutting data is hard, especially since it sounds like you’re already not a massive data consumer (2 gb is not a lot). If you want to cut it down to 1GB, and I’m sure you’re already thinking of this, make sure your phone is using your home or work wifi connection when at all possible, especially if you’re downloading a podcast or uploading a ton of photos or something.

    For a more extreme suggestion, you could do something like get an ipod Touch (used) and then use that for photos, streaming, podcasts, texting and email, which you could only do over wifi. Along with that, you’d choose the cheapest possible cell phone use it like a “dumb” phone, just for calls and texting within your plan limits.

    Or, you could go even more extreme and give up on a regular phone altogether. In this scenario you could keep a google voice number and use Skype and Google Hangouts for calls to family and friends. You would just ride out your phone contract to the end then…. not get another one. I’ve considered this option as a thought experiment for myself, but it’s hard to fathom how I’d deal with issues like calling my insurance company or apartment hunt without a reliable way for people to call me. Google Voice is also still pretty buggy and there’s no guarantee it’ll continue to be supported. There are actually many ways to make calls on a mobile device without a cellular plan, like WhatsApp, Skype and Google Hangouts, but those don’t solve the problem of needing a contact phone number.

    • Reply Sarah Noelle November 2, 2015 at 10:58 PM

      Wow, A.J., these suggestions are extreme! 🙂 Yeah, I would definitely try to be conscious of when I was in a wifi zone and when I wasn’t. But I think it would still be tough.

      To be honest, I hadn’t considered any of these other options you mention! I do know someone who doesn’t have a phone at all and just uses Skype, and I think he gives out his girlfriend’s number as a contact number when necessary. But I don’t think I’m quite ready to get rid of a phone altogether. (Although it would be freeing in a lot of ways…) And Google voice I’ve definitely heard mixed reviews about as well.

      At this point I’m not ready to take the leap. $500 out of pocket up front is just…a lot. But I will be thinking about it! Right now I’ve got the most expensive option possible, so there’s nowhere to go but up (well, down).

  • Reply Leigh November 4, 2015 at 1:23 AM

    If you want to use an iPhone, MVNOs like Cricket Wireless, T-Mobile prepaid, or Ting are all great options. I personally have been using Ting for the last 3 years and my bill has been about $27 per month with taxes and fees for ~50 minutes, ~50 texts, and ~400 MB of data. I’d previously been on Sprint and paying $85 per month, so that was a huge savings! I’m debating either switching to the T-Mobile prepaid $30+taxes/month plan that gives you unlimited text and data and 100 minutes or a Cricket Wireless (an AT&T MVNO) plan for $35/month plan with 2.5 GB of data and unlimited text/minutes.

    I don’t like Republic Wireless because you have to buy their one phone and then it’s locked to their network. And I want a nice, new phone and a cheap monthly bill.

    • Reply Sarah Noelle November 4, 2015 at 7:29 AM

      Hi Leigh! Wow, this is great information; thanks for sharing it. I actually would love it if I didn’t have to switch phones….I also should really be tracking how much time I spend on the phone per month. I know it’s not a ton, but 100 minutes would probably add up quickly. I should probably look into Cricket if they have unlimited text/minutes.
      Man, does it take a lot of research and calculations to switch to a better plan! 🙂

      • Reply Leigh November 4, 2015 at 10:25 AM

        If you have a Sprint iPhone, it might only work on either Sprint or a Sprint MVNO like Ting. That’s why I originally switched to Ting myself – I had a phone I wasn’t quite ready to get rid of yet and it would save a huge chunk off my bill. I’d actually estimated I would be spending about $10-15 more per month than I ended up spending. My phone after my Sprint phone was an unlocked Google Nexus 5 and now I have an unlocked GSM iPhone 6S.

        • Reply Sarah Noelle November 4, 2015 at 8:42 PM

          Ohhhhhhhh. More stuff to think about. I keep forgetting that I don’t have just an iPhone, but specifically a Sprint iPhone. Ting sounds good in some respects, but I would have a lot of trouble limiting my texting that much. Now I’m thinking maybe Cricket…so many things to consider!

          • Leigh November 4, 2015 at 9:13 PM

            You have an old iPhone 5C, right? So you could switch to Ting with your iPhone 5C if you think your bill would be cheaper than $86/month: https://ting.com/rates and then when you’re ready for a new phone, take a look at Cricket. That way, you could save money instantly (no activation fees) and re-evaluate properly when it’s time for a new phone. Do many of your friends have iPhones? I know I use iMessage a lot with my friends that have iPhones and that keeps the texting down.

            There are a fair number of good options!

  • Reply Melissa December 3, 2015 at 5:38 AM

    So I am really late to the game, but if you want no phone bill at all, look into freedom pop. You can bring your existing phone to sign up for a plan (I did not do this though so I am not sure how it works). Basically you get 200 minutes of talk, 500 text messages, and 500 MB data for free each month. I tried it out while still on my other plan to compare and I found it works for me. Drawbacks are mainly the limits, but they also have other discounted plans for people who use more data or minutes, etc. (and it sounds like you might want more data) I mostly access the Internet over wifi, have never been a big texter, and make calls for free over wifi using Google voice, so I am able to stay within the free limits without a problem. Signal is not always the best in some places but so far call quality had been good. You also have to pay small monthly payments for things like data rollover. However, I never had that with my other plan anyways. For me the minor issues are nothing in comparison to the savings!

    • Reply Sarah Noelle December 3, 2015 at 7:50 AM

      Wow, Melissa, I hadn’t even heard of Freedom Pop! I can’t believe how many different service providers there are out there. This description is really helpful — thanks for sharing it. And actually, you’re not too late to the game because I haven’t actually made any changes yet. I’m job-hunting right now and decided to wait until after I have a new job to figure out a new phone plan. Glad I have another option to consider!

      • Reply Melissa December 3, 2015 at 2:07 PM

        Yes the amount of options is mind boggling! I looked into so many companies before choosing freedom pop. Best of luck to you on your job hunt! 🙂

        • Reply Sarah Noelle December 3, 2015 at 9:18 PM

          Thanks, I appreciate it! 🙂

    Leave a Reply

    %d bloggers like this: