Is a Discount Cell Phone Plan Worth It?
Mike Earl, CFP®, CPWA®
There is no shortage of discount cell service providers these days. It's to the point where The Paradox of Choice and inertia set in, leading most folks to simply stick with the same cell provider they have always used.
My wife and I switched from Verizon to Consumer Cellular in October 2017. The main only reason we switched was to save money.
The tl:dr version of this post is that we really like Consumer Cellular.
Well, let me rephrase that: I really like Consumer Cellular, and my wife is fine with it. She would go back to Verizon in a heartbeat, since cutting spending doesn’t get her fired up like it does for me.
As the promo video below shows, we’re not their target market (they cater to the 65 and up crowd), but that makes me smile when I think about it. In fact, I first learned of Consumer Cellular from an 82-year old client of ours (thanks Jim).
As a money-savings tool, Consumer Cellular has been a smashing success for us. In 2019, our average bill was just $64.52 (proof in screenshot below). To get a comparable plan at Verizon, we would be paying about $135 per month, or more than double our current cost with Consumer Cellular.
What does that monthly bill get us from Consumer Cellular?
- 2 lines
- Up to 10 GB of shared data
- Unlimited talk and text
You can bring your own device (assuming it’s compatible), or you can buy a great phone from them new. Consumer Cellular offers good pricing on iPhones. My wife just got a new iPhone 7 from them for $200. Are you shocked to find that she didn’t buy the iPhone 11 Pro Max for $1,100?
To read some helpful pointers about Consumer Cellular, see this article.
Choosing a wireless provider is surprisingly challenging in America. There are the major providers like Verizon, AT&T, and T-Mobile (those are easy enough to understand). But then there are seemingly endless numbers of discount carriers.
In my lifetime, I’ve now had cell phone plans with T-Mobile, Sprint (via Ting Wireless), Verizon, and AT&T (via Consumer Cellular). Out of all those, Verizon was by far the best overall cell service/coverage. But Consumer Cellular has worked well for us.
Consumer Cellular partners with AT&T and T-Mobile to provide coverage. In other words, you're effectively on either one of those networks, receiving equal coverage to those folks on AT&T or T-Mobile (whichever one you choose).
You might be asking yourself: is it really worth it to use a discount carrier when the savings are only $65 - $70 per month?
Yes, it’s worth it. If you took that $70 per month and invested it at 7% growth for 30 years, you would have more than $85,000.
We also have a rule of thumb to only spend about $200 - $300 per phone purchase, and we try to keep our phones for at least 3-4 years. Compared to buying a $1,000 phone every two years, we save another $425 per year vs. many people. As a couple, that’s $850 of annual savings, or $70/month.
Total savings of $140/month. Invest that savings for 30 years at 7% growth, and you have over $170,000.
I can understand the eye rolls this post might induce from some folks. A lot of people don’t like talking about cutting spending or frugality.
But part of being successful with money is simply paying attention to what you spend. It’s empowering to cut your monthly spending, as it leads to a greater sense of ownership of your finances – and more money invested for long-term growth.
I get that trimming your cell phone bill alone isn’t going to make you wealthy. But when you start trimming excesses across the board in your spending, the savings can really start to pile up.
Sources:
- https://www.consumercellular.com/
- https://www.verizonwireless.com/plans/#shared
- https://www.investor.gov/additional-resources/free-financial-planning-tools/compound-interest-calculator
- https://en.wikipedia.org/wiki/The_Paradox_of_Choice
Because The Wealth Group, Austin B. Colby & Associates is independent of Raymond James, the expressed written opinions above are our own and not necessarily reflective of Raymond James’ opinions.