Hidden Cellphone Costs Can Pull You into a Financial Black Hole
Cell phones are necessary tools for school, work and play, but hidden wireless carrier fees, designer accessories and other sneaky costs can turn the devices into financial black holes.
My plunge into the financial cell phone abyss started with text messages on my basic mobile phone. I sent too many, far more than I realized until I received my bill. I promised myself stricter self-control, but that didn’t last.
Soon I had to upgrade to a BlackBerry with a pricey data plan for Internet access. I needed it to communicate with my grad school professors through email, but mostly because Sarah Jessica Parker had a pink one in “Sex and the City.”
Then reality struck. I left my job and had bills to pay, including the cell phone bill which had grown to hundreds of dollars. I was locked in a contract with no income to pay it off. I also couldn’t escape the fact that I still needed to communicate with the outside world.
Before figuring out what to do with my cell phone, I first had to understand what led to my enormous bills.
Hidden Cell Phone Costs
In the last four years many people have lowered their budgets for clothing, dining out and entertainment, but continued to spend more on cell phone bills, according to a 2012 report from the Labor Department.
Cell phone expenditures were 4 percent higher in 2012 than in 2011, the Labor report shows.
Hidden costs not advertised with data packages, repairs, phone cases, replacing stolen or damaged phones accounts for some of the increase in spending.
|Hidden Costs||Average Price Range|
|Repairs||$11.95 to $199|
|Replacement, Lost or Stolen Phone||$200 to $500|
|Extra Phone Cord||$5.99 to $25.99|
|Phone Case||$5.99 to $79.99|
|Screen Protector||$4.95 to $29.95|
|Monthly Insurance||$6.99 to $9.99|
|More Data||$10 to $40|
|Apps||$0.99 to $15.99|
|Speakers||$10.99 to $69.99|
|Car Mount||$6.99 to $27.99|
|Breaking Contract||$150 to $350|
|New Activation||$26 to $36|
|New Device||$100 to $350|
|TOTAL||$540.84 to $1,828.94|
Understanding Cell Phone Expenses
The cost of maintaining your phone may be difficult to manage.
Accidental expenses occur when cell phones are left behind, dropped on the floor or stolen. The cost of replacing or repairing a phone can add up, especially since it is unplanned. When you purchase a new phone, take into consideration what it will take to keep this phone intact and in your hand. You may want to invest in an OtterBox case and screen protector.
Can you afford insurance? Have you lost or broken phones in the past? What will you do if it happens again? Having a plan for these mini-emergencies will keep panic from setting in when the unexpected happens.
Another accidental expense stems from losing cell phone chargers. If you’re on a tight budget, you can’t afford to leave your cord at a hotel or a friend’s house and quickly replace it.
Usage expenses occur when you change or exceed the allotted usage for your plan. While going over on minutes is mostly a thing of the past, using extra data can end up costing a bundle. You may want to consider changing to an unlimited plan if you constantly run out of data. If you have a laptop, use that instead of your cell phone to cut overages. Analyze the value of these expenses instead of paying without considering your other financial needs.
Hype expenses are the most needless and easiest to incur. Fancy and pricey cell phone covers, speakers and the latest apps fall under this category. Apps are fun, but downloading several at 99 cents or more start to add up.
Changing to a new plan or contract often means paying upgrade fees, including activation and penalty costs for breaking terms. Getting locked into a two-year plan may seem like one-time expense, but you might find that after one year you’re eager to have a new phone with better features.
Taking Control of My Cell Phone Bill
The growing cell phone bill called for extreme measures. I bought a “dumb phone” — a basic device with no Internet access, no camera and no apps. A smart phone, one that comes with all those bells and whistles, wasn’t in my budget.
I marched into Radio Shack and spent $15 on a no-contract pay as you go phone. I paid $30 for a monthly service that included 1,500 minutes of talk time and 1,500 text messages. If I ran out time or messages, I had to purchase more from the store. It wasn’t an automatic charge that I would discover in my bill a month later.
Sure, people jokingly asked what decade my phone was from. Friends would ask me if I received the picture they messaged me. Since I didn’t have GPS, I had to call someone and describe my location if I was lost. I couldn’t take part in the Foursquare “checking in” craze. I never played Angry Birds.
I made sacrifices and my pride was bruised, but going basic was effective.
After one year with my basic phone, I had spent a total of $375 in phone costs, including the price of the phone. If I had stayed with my BlackBerry, without going over the set data plan, I would have spent $1,200 — not including the cost of the phone.
Staying in the Smart Phone Game
More than half of U. S. mobile phone owners use smart phones and many of us take little consideration for the fees that can add up to thousands of dollars we never planned on spending.
After a year of using my pay as you go phone, I had saved enough earnings to afford a smart phone. I searched for an inexpensive plan because I was paying off student loans. I knew early on that I wasn’t going to throw away extra dollars for perks I didn’t need, contracts I couldn’t keep and more data than I would know how to use.
I love my smart phone, but I track every dollar I spend on it to make sure it doesn’t pull me into another financial black hole.
About The Author
Alanna Ritchie is a content writer for Debt.org, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College.