How We Cut Our Phone and Internet Costs by 50%
When Rosa and I retired in May of 2009, we had an annual phone and internet expense of $1404.00:
- Two cell phones @ $ 65.00/month*
- One landline @ $ 24.00/month*
- DSL @ $ 28.00/month*
*includes fees and taxes
We used our cell phones for all long distance calls except for international calls which we placed using pre-paid minutes on Skype.
Even though we weren’t paying a lot of money for phone and internet services by today’s standards, we knew that we were paying more than we needed to pay for the way we connected to friends and family. For example, we only used about 60% of the 550 paid minutes of our cell plan each month. Most of the minutes consumed were the unlimited minutes on evenings and weekends or unlimited minutes for calls placed to other phones in the network, mostly calls to each other when one or both of us were out of the house.
We canceled the cell phone monthly subscription and switched to pre-paid cell phones, instead. T-Mobile offered the best plan for us: Once we purchased $100 worth of minutes, any subsequent minutes we purchased would be good for twelve months. Minutes with other carriers expired in either three or six months. We liked having the additional time to use our minutes and figured it would save us money in the long run.
Our investment for the first year included $30.00 to purchase two cell phones and another $200 to purchase 1000 minutes of air time for each phone (2,000 minutes total). At an average usage of 83 minutes per month, the 1000 minutes per phone would last twelve months. So far we have averaged well below 83 minutes per month per phone in actual usage. This has confirmed our suspicion that we were using the minutes on the subscription plan because we had them, not because we needed them.
To limit incoming calls, we gave out our new cell phone numbers to members of the immediate family only, for use when they couldn’t reach us at our home phone. We instructed them to try the home phone first. All others received the number for our home phone. That is the only number they have. An answering machine is connected to the home phone to take messages when we are out of the house.
Switching to pre-paid cell phones saved us $550 the first year. We expect to save even more the second year as we will not have to purchase the phones ($30.00). It looks as though we will be purchasing fewer minutes, as well, which will further reduce our cost.
Next, we considered ditching our landline. Between increased rates, fees, and taxes, our cost for the landline was escalating at an alarming rate (34.3% over a 19 month period). The last increase bumped the total monthly bill to $28.00 including taxes and fees. After some research, we purchased the magicJack internet phone service and said bye-bye to AT&T.
magicJack cost us $40.00 for the hardware and the first year of service. This saved us $248 the first year based on the $24.00 per month cost of the landline. Actually, it saved us $296.00 per year considering the new monthly total for landline service would have been $28.00 per month. Unfortunately, AT&T increased the cost of our DSL service to $35.00 per month when we discontinued the landline. Our net savings the first year totaled $164.00 based on the $24.00 per month landline cost or $212.00 based on the $28.00 per month cost. Service renewals for magicJack only cost $20.00 per year, so we will save an additional $20.00 in subsequent years.
The magicJack service includes unlimited long distance calling within the United States. This replaced our long distance use of the cell phones without adding any cost. We still use pre-paid Skype for international calls. magicJack also includes free voicemail. We chucked the answering machine.
These changes saved us a total of $714.00 from the original annual cost of $1404.00, a reduction of just over 50%. To put this savings into perspective, it is the equivalent of the annual income generated by a $23,800 five-year certificate of deposit at the current interest rate of 3%.
By evaluating our actual phone usage and understanding our needs and preferences in the area of communication services, we were able to reduce our costs without giving up any real value. True, we aren’t personally accessible every minute of every waking hour, like some folks, and we don’t want to be. We have our lives to live. However, we can still be reached by phone, voicemail, or email 24 hours a day, seven days a week. Please leave a message. We’ll get back to you.
K.C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based Lifestyle, Double-Dome Publications, 224 pages.
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