Recurring charges in your life, as we have discussed before, can add up to a lot of money over time - a phenomenon I call subscription fatigue. You sign up for various subscription services, and pretty soon you are paying more for month for these tiny bills than you are on your car payment - or even mortgage payment!
$100 for cable, $100 for phone, $100 for cell phone - it is not hard to do, really. Pretty soon, you are putting more money into monthly service fees than you are into your 401(k).
So, it goes without saying that you should keep these fees to a minimum, where possible. Eliminate the ones you really don't need - like Cable or Satellite TeeVee - the less you watch television, the richer you will be. Millionaires don't spend four or five hours a day in front of the boob tube, and neither should you - if you want to be a Millionaire.
Other services you may need, such as electricity and telephone. A simple GoPhone cell plan can be as little as $100 a year and provide you with 83 minutes a month of talking time - more than enough to call AAA if you have a flat tire or to call a friend and tell them you are running late or to ask for directions. And that is all you really need a cell phone for, right?
In the olden days, land-line services were a monopoly of the Bell System (a catchy name if ever there was one) and prices were pretty much fixed. You wanted a phone? It was $15 a month.
But since then, competition in communications has meant that you have choices in communications services - not only in terms of long distance, but in land-line and cell services.
For example, here on the island, I could use AT&T, Comcast, or Verizon for land-line and internet. AT&T uses the traditional POTS (Plain Old Telephone Service) or what we sometimes call "Twisted Pair" (a great name for a punk band, no?) which describes the copper wires going to the house. The official name for this is sometimes abbreviated as PSTN - Public Switched Telephone Network. AT&T then offers DSL - Digital Subscriber Line, for Internet Service. DSL was actually an outgrowth of ADSL - Asymmetrical Digital Subscriber Line, which was a failed experiment by Bell Atlantic to offer movies-on-demand over twisted pair. But once again, I digress..
Comcast offers Cable TeeVee over Coax (Coaxial Cable), and of course Cable Modem. They offer a telephone service as well, over cable, or you could use Magic Jack, Vonage, or any other 3rd party VoIP (Voice over Internet Protocol) type telephony service, if you wanted to.
Verizon offers a wireless solution, with a box that plugs into your RJ-11C jack to provide a land-line solution similar to the docking station that I use. They also offer a wireless Internet solution, but since it is wireless, it has a 2 GB per month data limit. Data limits will be the wave of the future, I'm afraid, as more and more of us stream movies. And I am not sure the wireless solution will work for movies. But once again, I digress.
So, we have competition in the telcomm industry, and as a result, regulations on pricing are more lax. And as a result, your phone bill may be different than your neighbor's phone bill. Phone bills are becoming remarkably elastic.
Of course, one reason your phone bill may be higher than your neighbor's is due to slamming and cramming. I have written about this before and a recent piece in CNN talks about this, and efforts by Senator Jay Rockefeller to put an end to the odious practice. God bless those Rockefellers! You know, we need some of those old-school Billionaires these days. Just kidding. But it goes to show you that rich people aren't all heartless bastards - at least not all the time.
So the first step in analyzing your phone bill is to make sure you are not being "Crammed" with some phoney "service" from a 3rd party, and the second step is to CALL your phone company and have a Cramming and Slamming "lock" placed on your account. It might help. The third step is to stop going to weird websites and stop doing online surveys that ask for your phone number - they are cramming bait. And if some telemarketer calls you, never say the word "Yes".
Of course, that might not protect you - some crammers get your phone number out of the phone book and then just cram a service on your line, and you have to call them and ask them to stop - the phone company won't do bubkis.
But presuming you are not being crammed, how can you reduce your phone bill? Well, it gets tricky, as the phone bill has so many charges on it, and there are so many levels of service.
For example, I originally obtained my line as I needed DSL for business. I used my cell phone for voice, so I had "poverty land line" service with no long distance (blocked) and no caller services like caller ID or call waiting. This was like $20 a month. $22 with the "taxes and excise charges".
When I moved here full-time, I decided to get a long distance plan. For $9 a month, ($12 with taxes) AT&T offered unlimited long distance in the US. However, this required I upgrade to a $26 a month ($33 with taxes) plan with call forwarding, etc. So you see, the costs can easily double when you add long distance.
And of course, that included no international long distance - I use a calling card for that. An international plan can cost another $5 to $15 a month, depending on what plan you get - plus taxes, of course.
But if I mistakenly dial Canada, a simple call can be $5 or more. And of course, those worthless 411 calls (they NEVER give you the right number, do they?) are like $1.50 apiece.
Ahhh, for the days when you dialed "0" and got an operator - at no extra charge! Those are gone for good.
Where the elasticity in pricing comes in is when you add in DSL or cell phone, or some other "package" plan. These are often touted as "bundles" and some of them are pretty good deals, while others basically suck. Some bundle plans offer to knock $5 off a month for a few months. Others may offer $20 off for a year.
What I have found, with DSL service, is that they will do things like offer to give you "premium" DSL service for the cost of middle-level DSL service, or offer mid-level DSL service for the price of "DSL Lite". But often for a limited time.
What sparked this posting was my neighbor comparing her phone bill to mine. Hers was a staggering $100 a month, while mine was just a staggering $70 a month. The difference was in the DSL pricing - she was paying $37.95 a month for DSL service, while I was paying $14.95
Naturally, she was upset about this, and was ready to switch to Verizon or Comcast. But a few phone calls later, she was able to get the DSL bill down to a reasonable level - the offered to lower her level of service and bill her for basic service - for a year.
Myself, I plan on dumping my VoiceMail service shortly. Rather than pay $7 a month for this, I will merely program the phone to call-forward to my cell phone (which has free VoiceMail) and then retrieve messages from the cell phone - which is free if done from the landline. Total savings? $84 a year, which is enough for a nice dinner for two and a bottle of wine. Worthwhile.
Of course, this still requires I have call forwarding. But I might be able to squeeze down to a lower level of service and still have this feature.
The point is - and I did have one - is that a lot of people just pay these bills without reading them or trying to understand them or understand what they are paying for. And people who do that are often victims of cramming and slamming. If you never read your phone bill, but instead have it auto-pay to your credit card, well, you might never notice that you are paying $50 too much. You can be slammed and crammed and might be paying for services you never use.
And the rationale that most people use is, "Well, it's only $100 a month, and that is not a lot of money to make it worthwhile to investigate". But $100 a month is $1200 a year, and over 30 years, at 5% interest, is $83,000. And that is a worthwhile amount of money to save.
And anyone can easily clip $100 from their monthly expenditures and save this much money. But more importantly, once you do, you do have to be vigilant in monitoring these types of expenses, lest they "creep up" over time (subscription creep) and cut into your overall net worth.
Of course, the best defense is a good offense - and that means just walking away from as many subscription services as possible. And some are pretty worthless, such as XM Radio, OnStar, Cable TeeVee, texting plans, and the like. The more subscription services you can do without entirely, the better off you are. Subscription services lead to the "death by 1,000 cuts" - no single one is enough to kill you, but cumulatively, they will bleed you to death.