In with the new: Reduce your phone bill

This post comes from Trent Hamm at partner blog The Simple Dollar.

 

Throughout December, I've been posting a series focusing on activities you can do to set the stage for a great 2011. Today we'll focus on reducing your phone bill.

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Two episodes in my own life are relevant here. A couple years ago, I canceled my business phone line and moved to Skype. It reduced the monthly cost of my business-related calls by about $30 a month.

 

I figured there would be significant drawbacks to the switch -- limited availability, etc. What I actually found was that Skype is, for my purposes, as reliable as an ordinary phone. I cannot remember a single time when using Skype for work purposes put me at any sort of disadvantage versus a land line.

 

This, of course, raised the question: Why not just use Skype for personal use?

 

Similarly, for a long time, I had unlimited minutes on my cell phone -- but I paid out the ear for them. I had an impression that I used my cell phone a great deal and thus I needed unlimited minutes.

 

For six months, though, I kept my cell phone bills and took a look at how many minutes I was actually using each month. Even if I chose a limited plan that covered significantly more minutes than my heaviest calling month, I'd still be saving about $30 a month by switching plans. If I chose a more restrictive plan, one that covered five out of the six months, I would be saving almost $50 a month.

 

These two stories raise several key points.

 

Knowing your actual needs for phone usage directly leads to saving money. People often pay extra for a monthly service that covers everything they actually do plus everything they think they might do. The problem is that the "maybes" rarely occur.

 

A much better approach is to pay for what you normally use, then deal with the exceptional situations as they arise. For example, if you have a plan that covers 99% of your calling needs and saves you $30 a month compared with what you're paying now, you can use a small bit of that $30 a month to cover that extra 1% and still find yourself way ahead.

 

How vital is a mobile phone, really? Most of the mobile calls we make can be handled at home, leaving the mobile for specific needs that can't be met from a non-mobile device.

 

For example, I've gradually moved most of my calling to Skype, which I can use on my iPod Touch anywhere I find a Wi-Fi signal, as well as at home. This has reduced my cell phone usage and I've been able to reduce my cell phone contract to a lower level.

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In fact, were it not for travel, I would consider moving to a pay-as-you-go phone. I've run the numbers several times and have found that my cell plan is just a bit cheaper per minute for an average month than a pay-as-you-go phone.

 

I don't suggest that people abandon their mobile phones. However, I do encourage people to rethink their overall phone plan. There are many options for reducing the monthly cost of your phone use -- and any reduction in a monthly bill is money that can improve your financial situation, whether through savings or debt reduction.

 

More from The Simple Dollar and MSN Money:

• Holiday gift series wrap-up
• In with the new: Start a potluck circle
• In with the new: Put up some passive barriers
• Free calling: Is magicJack for real?
• Phone plans to get more complicated
• Should you switch to a prepaid cell?