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Save with prepaid cell phones

by retirebyforty on August 22, 2012 · 32 comments

in expenditure, frugality

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tracfone prepaid cell phone save money

My C student phone

How much do you spend on your cell phone every month? I haven’t upgraded to a smart phone from my prepaid cell phone because I hate paying any kind of monthly fee. I’m missing out on the smart phone revolution, but I don’t think I really need it. I’ve been living with a “dumb” cell phone for 15 years and only a land line before that. I’m rarely away from my laptop long enough to need a smart phone. I also talk and text on my cell phone infrequently so a prepaid cell phone make sense for me. The majority of my calls are made from my home phone which is hook up to the Ooma voice over IP service and all local and long distance calls within the US are free. With my usage, it’s probably not that smart to upgrade to a smart phone.

Smart Phone Cost

Let’s take a look at how much it would cost to move to the Cadillac of smart phones – the iPhone 4S.

$299 Apple iPhone 4S – 32GB. We’ll go with AT&T since I have some of their stocks. I would probably pick the mid range model.

This phone comes with a 2-year contract.

$40 - cheapest calling plan with 450 minutes/month

$30 - 3GB data plan. I’m going with 3GB here instead of the cheapest 300MB plan. I’m sure once I got started, I would go over that limit pretty quickly.

$20 – unlimited text messaging. I use text messaging so this is needed.

Total cost = $299 + ($90*24 months) = $2,459

That’s a lot of money to spend on a cell phone. If you are struggling financially and your smart phone is not making you any income, then you should consider a dumb phone.

Currently I use Tracfone and spend less than $100 per year on my cell phone. With Tracfone, you just purchase the phone and then buy prepaid minutes for the phone. You don’t have bills or contracts so you won’t get any surprises at the end of the month. You can just get a new model when the phone stops working.

I purchased a Tracfone with triple minutes for life and that’s working out really well for me. Yesterday I purchased a 60 minutes card for $20, but I ended up with 240 minutes on my phone. I searched the internet for a Tracfone promo code and found one that gave me an extra 60 minutes on my purchase. (The code is 67861, but it probably won’t be valid for long.) This 240 minutes usually last me about 3 months.


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If you don’t talk or text much, a prepaid plan is the way to go. It is also a good way to limit your kid’s cell phone usage. If I stay with Tracfone, I would spend about $200 over the next two years on my cell phone. That’s less than 10% of what the iPhone would cost me over two years.

There are some cons with Tracfone of course. If you use the cell phone a lot, then it’s probably better off to go with a monthly calling plan. Tracfone also have limited selection of phones. I have the Motorola EX124G (no longer for sale.) I guess this is a C student phone. I can browse the internet and use Java apps. I only used the Google maps app a couple of times and that was it.

If you need a smart phone for business, then it’s probably worth the cost. I don’t see how paying so much for a plan for personal use is wort it. What about you? Do you have a smart phone and is it worth the cost? Tell me why I should upgrade to a smart phone. 

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{ 32 comments… read them below or add one }

Chase Miller August 22, 2012 at 7:15 am

I have a dumb phone. I’m still on with my parents until I graduate from college and then I will be using a tracphone or some kind of prepaid phone too.
Chase

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retirebyforty August 22, 2012 at 3:35 pm

That’s good to hear. You will probably make more money after you graduate, but why pay more if you don’t need it.

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Calgary_Girl August 22, 2012 at 9:47 am

Sorry but I love my iPhone 4S. To me, it is worth the money to have the convenience of checking emails, browsing the web and being able to access the apps that I find useful all while in the go! To each their own I guess :-)

(Sent from my iPhone)

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retirebyforty August 22, 2012 at 3:39 pm

Heh heh, sure. I think that’s fine if you can afford it.

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Nick August 22, 2012 at 10:06 am

I L.O.V.E. this post, especially in that you posted it today…. ironically the day I post about how many people choose to waste money on fancy phone plans instead of downgraded and using the money to buy life insurance so their family is set if they die early…

So. I have an iPhone and love it. But I think you’re doing just… fine… :)

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retirebyforty August 22, 2012 at 3:44 pm

Thanks. I’ll head over and check out your post.

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Lance@MoneyLife&More August 22, 2012 at 10:30 am

I recently got a smartphone and actually wrote two posts on if I should get one and then why I am glad I did. Luckily for me I am on a family plan so my base rate is $12 a month and I only had to add a $30 data plan though. It has saved me more than $30 in time a month as far as my blog goes. On top of that I wrote another post on how I got AT&T to give me a $200 phone after a two year contract for free and they waived the activation fee.

All of that said if you wouldn’t use it a prepaid phone is a great deal.

Also, there are apps like textplus that will give you free texting that only uses data if you use the texting phone number they assign you. It is pretty awesome.

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retirebyforty August 22, 2012 at 3:50 pm

If you are using it for business, then I think it’s well worth it. I usually don’t like to work when I’m away from the computer so I don’t think I would use a smart phone that much. That’s cool about the texting app. I didn’t know that.

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Kim@Eyesonthedollar August 22, 2012 at 11:51 am

We have dumb phones on an ancient plan that was grandfathered in when AT&T took over our area. My business pays the bill. I honestly don’t know if I’m smart enough for a smartphone and I hate typing on the virtual keyboard thing. We’ll have to be looking for new phones at the end of the year when I sell my business. Do you know if prepaid phones work in all areas or only in cities?

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retirebyforty August 22, 2012 at 3:52 pm

Tracfone ask you to type in your zipcode when you buy a phone from them. I think it should work in all areas, but I’m not sure. You probably will need to contact them to make sure. I’m sure a smartphone would suck up a lot of my precious time. I don’t think I need another distraction. :)

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Early Financial Freedom August 22, 2012 at 12:19 pm

True to a point but not everyone with a smart phone wastes money. My wife and I got our iPhones to test the apps/sites we’ve built for our clients a few years ago. That being said, I don’t see the need to upgrade as soon as something newer comes out.

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retirebyforty August 22, 2012 at 3:53 pm

You are 100% right. I forgot to put this in the original post and updated it after I saw your comment.
If you use the smart phone for business, I think that’s a legitimate cost.

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RichUncle EL August 22, 2012 at 12:25 pm

I have a smart phone and it does make things easy, but boy do I hate that monthly bill. For two smartphones it is about 180 monthly. I think that is way too much, but I hope and pray competition will pick up and I will see this price go down next time I switch carriers.

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retirebyforty August 22, 2012 at 3:54 pm

Wow, $180/month is a lot of money. If the cost come down to $25-$35/month, then I might consider getting one.

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Mike Long August 23, 2012 at 1:01 pm

It’s getting a lot better if you do some digging.

I just purchased a Galaxy Nexus smartphone through the Google Play store. The cost was $349 purchased outright with NO contract.

From there, you can shop around for a phone plan. MVNO’s are companies that resell excess bandwidth from other providers. MVNO’s that resell from T-Mobile and AT&T usually allow any outside phone onto their plans.

Straight Talk offers an unlimited plan (phone, text and web) for $45/month. But the best option going right now is at T-Mobile.

With a T-Mobile prepaid plan, I can bring my fully owned, unlocked Galaxy Nexus phone to T-Mobile for $30/month. With that, I get unlimited text and web, and 100 minutes a month for phone.

But if you talk on the phone more, that may not be a limitation either.

Using T-Mobile’s own app called Bobsled, you can use WiFi (at your home, office or any HotSpot) to make calls that do NOT count against your monthly 100 minute allotment.

So if you have WiFi at home with decent speeds, and you have WiFi at work that you can access, you can save those 100 voice minutes for those time when your coverage is cell only.

Total cost for this setup over 2 years is $1,069 – considerably more than the $200 you are paying, but less than half the cost of an iPhone 4S on a 2 year contract. You get a phone that is every bit as good, with no contract, for half the price.

It might be the ultimate compromise between the two extremes. :)

-Mike

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retirebyforty August 23, 2012 at 10:33 pm

Wow, thanks for the info. $30/month is not bad at all. I’ll have to keep this in mind for the future.

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krantcents August 22, 2012 at 4:17 pm

I don’t have a smart phone either. I gave up my land line several years ago. I use a lot more minutes each month though. I share my minutes with my wife and we use 700 minutes a month.

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retirebyforty August 22, 2012 at 11:38 pm

I like my VOIP land line. It’s completely free and the sound quality is better than the cell phone.

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Slackerjo August 22, 2012 at 5:23 pm

I decided to do a $1oo cell phone challenge. I bought a prepaid 1 year card for my very old 2007 phone. I work on the phone so after work I want nothing to do with a phone. No idle chit chat, no texting, no playing games. Just silence.

Suffice to say, my $100 has hardly been challenging. After 3 months, I think I have used up $7.

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retirebyforty August 22, 2012 at 11:40 pm

That’s a great challenge. I can understand not wanting to be on the phone if you’re already doing that all day.
I used to work with computers all day and didn’t want to spend any time on the computer at home.
$7 in one month is pretty awesome. :)

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Roshawn @ Watson Inc August 23, 2012 at 5:40 am

We have awesome plans… unlimited text, data, ~500 minutes, free mobile to mobile, etc for $30 each.

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retirebyforty August 23, 2012 at 10:28 pm

Wow, that’s pretty good. What plan is that?

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Gillian @ Money After Graduation August 23, 2012 at 8:40 am

I made the mistake of upgrading to a smart phone when I actually found the features useful.. now that I am done school I do not need data at all. Ever. And I just had to pay out $270 so that I could pay off the phone, because my company has restrictions about what plans you can be on when you sign up for a “phone tab”. It will save me money in the long run, but it was a big price to pay for a stupid mistake. Data is nothing special unless you absolutely need it for business!

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retirebyforty August 23, 2012 at 10:30 pm

Sorry to hear that. Hopefully, the data price will continue to come down in the future.

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SavvyFinancialLatina August 23, 2012 at 9:30 pm

I only have a smartphone now because my company paid for it and is paying the monthly bill. Before I started working I had a metro pcs phone with just text and talk. I had a tracfone phone when I first got my cell phone, my parents now have that cell phone.

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retirebyforty August 23, 2012 at 10:34 pm

That’s a good deal. My old company paid for my cell phone when I first started, but then they expected me to be on call. After a few years, I gave told them no thanks. :)

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Silly Lily August 24, 2012 at 10:36 pm

Hey man, Syd and I are totally with you there. We both still use candy-bar phones and have been refusing to give in to smart phones for years… however, it’s getting really difficult for us as cell phone manufacturers are not putting in $$ and time to invest in non-smart phones these days so our ‘dumb’ phones have more problems than ever! We may have to give in to smart phones but now I’m thinking of pushing Syd to research more on the prepaid plan!

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retirebyforty August 25, 2012 at 8:41 am

Did you see one of the comment on the android phone? $30/month isn’t that bad.
If you don’t talk that much, then a prepaid plan is a great.

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Greg August 25, 2012 at 11:14 am

Another cheap option is to use an older iPhone on the T-Mobile network.

See http://tinyurl.com/8q7fyjt for a great tutorial:
1. You must jailbreak the iPhone to install the necessary software (which voids the iPhone warranty, but an old phone should be out of warranty anyway.
2. Then you unlock the phone from AT&T, and insert a T-Mobile SIM card.
3. Restart the phone, and you should be good to go.
It sounds hard, but it’s not; I was able to do it one the first try.

I recently did this for my mother (!) and she pays only $30/mo ($10 to be on our family calling plan, and $20 for the lowest data plan). She has no problem phoning or texting.

Downsides:
1. You only get 2G speed, not 3G or 4G;
2. Some features of the iPhone won’t work. I remember reading that GPS may or may not work, but it seems to work fine for her.
3. Contacts don’t sync with T-Mobile’s website. To enter her contacts, I had to transfer them to the SIM card, and import them that way.

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Barbara Friedberg October 12, 2012 at 9:52 am

dumb phone, virgin wireless, $20 /month!

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Doug October 17, 2012 at 9:44 am

I have used a pre-paid cell plan for several years now, different providers. I have been the longest with Virgin Mobile. I have a smart phone and I think it really is “smart” because I do not pay ANY extra for data service. I’m grandfathered into my original plan at $25 a month for 300 min and unlimited data. So many friends spends $100+ a month on cell phones locked into a contract – I can quit anytime if needed. I’m a big fan of prepaid, but I know for coverage purposes it may not make sense for everyone, but if you live in any good size town, I think it would make sense. A lot of times you can get a “deal” for a used phone or a special sale directly on the company website.

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retirebyforty October 17, 2012 at 5:08 pm

$25/month is pretty good. I should look into that. Thanks for the tips.

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