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Behavior

How Smart Are Smart Phones?

Nearly half of people who have cell phones pay more than $100 per month for the service and 13 percent pay $200 or more, according to a survey by an online coupon company.

That doesn’t include the cost of the physical phone, the app and music downloads, the extra data plans. A certified public accounting organization in Oregon, Oregon Saves, estimates that the total cost for a two-year contract can easily reach $3,000.

And then there are the rogue teenagers who go over the monthly limits on minutes set by their parents’ cell plans – eventually, the parents relent and buy an unlimited data/text plan, which drives up their monthly charges permanently.

Wow, this habit is getting expensive.

The cell phone isn’t the only electronic habit that’s costing us.  We also pay hundreds for cable TV, the Internet on our home computers, the land line.  The automatic withdrawals for these services suck hundreds from our bank accounts each month – and we may not notice how much we’re spending since the transactions are electronic.

The Wall Street Journal recently ran an article about a groundswell of rebels who, feeling the financial squeeze, are going without a smart phone or are moving to prepaid phones with certain costs.

The cost of this socially necessary addiction is particularly onerous for low-income people.   The Boston Globe in a recent article about “iStrain” quoted a single mother who can’t afford her teenagers’ surprise cell charges.   The newspaper quoted American Consumer Credit Counseling, a local agency, on the financial strain these phones cause its strapped clients:

More than half of the agency’s 20,000 clients tell counselors that their wireless phone bills are adding to their woes.

“Wireless bills are a significant problem, especially once you add in text and data,” said Katie Ross, the [agency’s] education and development manager, “but people don’t want to let go of staying connected.”

One-third of cell phone owners are instead cutting back on water, electric and gas use to pay for these smart phones, according to CouponCabin.com, which hired Harris Interactive to conduct a September survey on smart phone costs.

But there may be a backlash.  The Journal reported that 30 million Americans do not own a cell phone.  Getting rid of your smart phone may seem like heresy when people are lining up around the block to purchase the Apple iPhone5 to replace their Apple iPhone4.  Going phoneless is probably unrealistic for most people: cell phones are part of work, life, and keeping track of where your teenager is.  Yet Americans are still drowning in underwater housing markets, wages are depressed, and the middle class is squeezed – the cell phone bill is a burden for many.

I got fed up with paying $125 per month on my “Crackberry” and recently got a MetroPCS phone.  The company, which targets the low-income urban market, charges $50 per month for unlimited data and text – no contract required.  I’m not trying to sell MetroPCS: its coverage isn’t quite as good as Verizon’s, and the phone quality isn’t great.  But the service works, and I’m saving $75 per month.

If you want to cut down on the cost of your electronic habits, it costs a couple hundred bucks to break a cell phone contract.  So you may have to wait to save, but perhaps that’s a smart thing to consider.

4 Responses to How Smart Are Smart Phones?

  1. Dave says:

    I just upgraded to an iPhone 5. I’m paying $61 a month with a grandfathered unlimited data plan and a 20% discount through my employer (a large tech company). At that price it is reasonable. At twice that price, no way.

  2. Carol says:

    We pay 23 Euros a month for a 100MG Internet connection with 4G (no data limits) and that price also includes phone with free international calls, and cable TV.

    You are getting ripped off in the States.

  3. Jim says:

    Been with Virgin Mobile for several years. I’ve got a phone ($14.95) and a locked-in automatic pay plan for $5/month. Not a whole lot of “smart”, but I’ve got an emergency phone in my pocket at all times for cheap.

  4. Gerard says:

    First: I do have a cell phone and I’m using it. But to be honest, I’m convinced that 80% of the minutes you use (and therefore pay for) aren’t necessary. So I agree that getting rid of your smart phone (cell phone) is possible. But who does?