What are MVNOs, and How Can They Save You Money?

19. March 2013 · Write a comment · Categories: Cell Phones, Save, Technology · Tags: , ,

Watch out, AT&T and Verizon.MVNO

You’ve probably noticed a lot of new cell phone companies popping up recently. Most of these are known as MVNOs, or Mobile Virtual Network Operators. What the heck?

Basically, MVNOs are retailers that buy voice and data coverage from the giant companies we all know. AT&T, Verizon, Sprint, T-Mobile and others own the cell phone towers and something known as spectrum, or airwaves through which our communications flow. Most of this spectrum is reserved for their own customers, but some is made available to the MVNOs, who buy it at wholesale rates. It’s then sold to you at a deep discount.

What’s so great about these new players? Lots of things. They’ve turned the traditional contract-oriented business model on its head, and eliminated most of the drawbacks we associate with major cell phone providers.

Let’s talk about cost. You typically pay about half as much per month as you would with one of the Big 4. Virgin Mobile USA, which runs on Sprint’s network, offers plans starting at $35 a month. This plan includes unlimited data and texts and 300 voice minutes a month.

If you talk more than that, the industry standard for unlimited everything is $45 a month. That’s what Straight Talk, the best-known MVNO, charges for their plan. Depending on which phone you get with Straight Talk, you could be on any of the four major networks.

MVNOs operate on a prepaid business model, where you pay for service up front. They offer non-contract service, which means they darn well better provide good service and treat you well. If they don’t you’re free to kick them to the curb at any time.

Compare that with the Big 4, whose business model depends on slapping you with two-year handcuffs. You think they’re very motivated to provide service once you’re a prisoner?

The downside for MVNOs is that the phones aren’t subsidized. You have to pay real money for a new one – often $200 or $300 – depending on how fancy you want to get. The tab goes up to $500 or more if you want the newest iPhone.

For most consumers, that big upfront cost is downright scary. We’re used to getting a new phone every 18 to 24 months and paying no more than $200. Some can even be free, depending on promotions at the time. But that initial savings is easily eaten up with the higher monthly rates.

Let’s look at an example. At Verizon, you get one smartphone with 2GB of data for $100 a month ($110 after taxes and fees). You choose the Samsung Galaxy S III, which sets you back another $200. Total cost over two years: $2,840

Compare that with Straight Talk. You get unlimited talk, text and data for $45 a month. The closest phone they offer is the Samsung Galaxy S II for $350. Total cost over two years: $1,430

You’ll have to settle for the previous generation phone, but it’s always best to avoid state-of-the-art anyways. Even with the higher upfront cost you’ll pay exactly half with Straight Talk. The same is true with any of the other MVNOs.

My contract with AT&T expires later this year. I’m excited to explore the non-contract options over the coming months and see what’s out there.

It’s never been easier to escape the clutches of a two-year contract. The savings are real. What would you do with $1,400?

[Note: If you're curious, Wikipedia has an excellent list of MVNOs and which major network they're on.]

See also: Low-Cost Options for Cell Phone Service

Photo by sciencedaily.com

Take Control of Your Finances: Don’t Let Inertia Rule the Day

28. August 2012 · 2 comments · Categories: Cell Phones, Financial Health, Housing, Insurance · Tags: , , , , , ,

We tend to think that history repeats itself. I believe that’s because we have no idea how to predict the future. Or maybe we’re lazy. Whatever the reason, we think that because things have happened one way in the past they will continue that way in the future. Psychologists call this inertia bias.

This assumption of continuity might be convenient, but I’ll show you why it’s poison for your wallet.

Financial success relies on knowing when to change and when to stay the course. For example, how do you know whether to stay with your auto insurance company or switch to a new one? How do you know your cable company isn’t ripping you off? Do you still use that land line or is it there out of habit?

Just because you found a great deal today doesn’t mean it’ll still be a deal a year or 5 years from now. Your goal is to save and be more efficient, so you have to put in some effort. You can’t afford to assume things will always stay the same.

Auto Insurance

I’ll admit – it’s a pain to shop around and get several quotes. The internet hasn’t provided an easy way to compare prices between companies, so we’re forced to call each one separately. Calling to get three quotes could easily take an hour. This is well worth your time though, because yearly premiums can vary by $1,000 or more.

Insurance companies differ in how they assess risk and how much of that risk they’re willing to take on. To one company you might be a moderate-risk driver, but to another you could represent a low risk. In addition, companies often raise and lower their premiums based on which area of the country they’re targeting. If they’re trying to rid themselves of customers from your zip code, you may find your premiums increasing quite a bit.

Those who remain with their auto insurance provider year after year are probably paying more than they should for coverage. The same goes with home and renters insurance, so shop around at least every two years.

Cell Phone Providers

I’ve covered how to save on your cell phone bill several times in the past. Most people remain with the same old provider they’ve always used – most likely one of the Big Four (Verizon, AT&T, Sprint and T-mobile). If you’ve been reading the news recently you know that these behemoths are passing through large price increases whenever they think they can get away with it. They’re doing away with unlimited data, which is ironic because that’s where we’re headed with cell phone usage in America.

What does this mean for your wallet? You’re probably paying 50% more for cell phone service than when you signed up a decade ago. You’re also stuck in one of those nasty two-year contracts, where they lock you in and provide inferior customer service. Instead, switch to one of the low-cost, no-contract providers like Straight Talk, Virgin Mobile or Metro PCS. With Straight Talk for example, you’ll get unlimited across the board for $45 a month, no contract.

Here, remaining in an overpriced contract with one of the Big Four will cost you about $500 a year, or more if you have additional lines. Just because it may have made sense before doesn’t mean it does now. There are better options out there.

Buying a Home

Since the start of the crisis people have moved out of houses based on economic necessity and have moved in with parents or other family members. Some have become renters. Housing prices have tumbled the past five years as a result.

Now it looks like housing prices have finally hit bottom, and interest rates hover around 3.5% for a 30-year loan. That’s the lowest rate on record. If buying a home makes sense in your life, this is the time to act. Prices don’t have anywhere to go but up.

If you’re looking at the gloom of the past five years you might assume prices will continue to drop indefinitely. You may be sitting on the sidelines, waiting for the economy to pick up again. When it does you will have missed your chance.

So Much “Normal”

With inertia bias such a large part of our lives, is it any wonder we have so many words in the English language to describe how things are always done? Typically. Usually. Normally. Generally. Ordinarily. Regularly. Characteristically. Did I miss any?

Like bad habits, inertia is tough to break. But your financial health depends on your ability to know when to change and when to stay the course. Shatter those molds and watch the savings add up!

Can you think of a time when inertia caused you to spend more than you should have?

Photo by thestrategyguysite.com

Ripoff Alert #3 – Cell Phone Cramming Edition

18. May 2012 · 16 comments · Categories: Scams & Ripoffs · Tags: , , ,

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe.

Cramming

According to the FCC, cramming is “the practice of placing unauthorized, misleading or deceptive charges on your telephone bill.” Providers of cell phone service, traditional land line service, and business line service cooperate with third-party marketing organizations to put unauthorized charges on your account.

For individuals the charge typically ranges from $3-$5 a month, and for businesses it’s more like $20-$30 a month. The phone companies are hoping you won’t notice such a small amount. Multiplied over thousands of accounts, this is real money for service providers and third-party marketers, who split the spoils. (Doesn’t this get your blood boiling?)

A little over a year ago as I was going through our family cell phone bill, I noticed a suspicious charge for $10 on my sister’s line. It had a vague description like “membership fee”, so I called them up and asked what it was for. Apparently she had signed up for a monthly ringtone service via text and was being billed $10 a month for it. However, my sister said she hadn’t signed up for anything. So I asked them for a credit on my bill, and I was surprised when they offered to credit the entire total of charges going back 6 months.

Most consumers and small business owners, however, don’t go through their cell phone bills every month to see what they’re being charged for. Be suspicious of items like “monthly usage fee”, “service fee”, or “membership”.

Cramming can occur even if you’ve authorized a service but were misled about how much it would cost. And next time you get a spam text, don’t ignore it because it could be a warning sign that your phone company is about to rip you off.

There’s a federal law that requires phone providers to clearly explain each charge on your monthly bill, but this doesn’t mean they always follow the law. You need to go through your bill each month and check for phony charges. Basically, you should call your provider and question anything that is unclear. In most cases you’ll be offered a 2-month credit on your bill.

Has your phone company tried to rip you off with one of these charges?

Buy Current Technology, Not State of the Art

04. April 2012 · 16 comments · Categories: Save, Technology, Trends · Tags: , , , , , , , , , , , , ,

Companies in the tech industry love to tout their latest and greatest must-have gadgets. Cell phone providers are a great example. We’re constantly bombarded with ads for the newest smartphones, which cost only $200 with a 2 year contract! What they don’t tell you is that today’s new device is tomorrow’s outdated technology.

This is an idea I first became aware of from Clark Howard, a consumer expert and radio show host.

The problem with always buying the latest technology is that devices are nearly obsolete as soon as the box is opened. By that point, companies have already moved on to promoting the next greatest thing.

My wife and I have been overtaken by tablet envy. We had been in the market for our first tablet for several months, waiting for the right deal to come along. This week that deal came and we decided on an iPad 2. You might be thinking that we’re a little behind the times since it’s 2012 and the iPad 3 (“new iPad”) just came out. But the $500 price tag of a new iPad was out of reach for us. After visiting Apple’s website we found that we could get a refurbished iPad 2 for $350, which is very reasonable for a device that just a year ago many experts were calling the greatest tablet ever.

Apple includes the same warranty with refurbished devices as with new ones, which shows you they really believe in their products. They even replace the battery and outer shell, which are the two parts that take the most wear.

That the iPad 3 came out recently doesn’t change the fact that the iPad 2 is a wonderful product. I’ve seen reports that the new retina display is causing all sorts of issues — overheating and long charge times — in addition to reports that wi-fi reception isn’t as good with the iPad 3. The absence of these issues, combined with a much lower price tag, means that the iPad 2 is still a viable product and a true bargain.

This trend can be applied to many other categories of devices such as HDTVs, digital cameras, GPS units and laptops. Early adopters pay steep prices for the privilege of being among the first to get their hands on new technology.

For the frugal among us though, buying current technology that meets our needs doesn’t have to break the bank. Waiting a year or even a few months can mean big savings, or in some cases more features for the same price. Take HDTVs for example. In 2008 the average 32-inch LCD TV cost over $850. Today you can get one for as low as $199, and it’s likely to have more features than the original models.

Spending more money to get the best possible product is a losing proposition. New products will come out every day, making your device obsolete faster than you might imagine. Avoid state of the art technology and your wallet will thank you.

Photo by top10dir.com

Ways to save on your cell phone bill

26. December 2011 · 2 comments · Categories: Cell Phones, Save, Technology · Tags: , , , , , , , , ,

Just about everyone has a cell phone these days. And over a third now have smartphones. Cell phone plans from the Big 4 (AT&T, Sprint, Verizon and T-Mobile) can cost as much as $80-$100 a month for just one line! So what are your options if you’re looking to save on cell phone service?

Consumer Reports lists Five ways you can save on your cell-phone bill as follows:

  1. Don’t automatically buy from the company store
  2. Consider a lower-priced carrier
  3. Use alternative services
  4. Max out on Wi-Fi
  5. Investigate employee discounts

Here are my thoughts:

  1. The only way I’m buying from the company store is if they have the phone I want and it’s free (with contract.) If you’re with one of the Big 4, the company’s website is a great place to start. They often run online-only specials for popular phones that you won’t get ordering by phone or in-store.
  2. The article mentions Consumer Cellular, which I’ve never heard of, as a low-cost alternative. But some of the other no-contract players out there include Straight Talk, Virgin Mobile, Boost, Metro PCS and Cricket. Some of these run on a Big 4-network, and some have their own networks. The advantage of these players is that you don’t have to sign a contract, and you can get a plan for as low as $30 a month. If you need robust national coverage, some of these options may not be for you. Be sure to check out the carrier’s coverage map before making a decision.
  3. Carriers like to charge a massive fee for texting packages, and if you don’t sign up for one you’ll pay a per-text price of 10 to 20 cents. And unlimited data is becoming practically extinct. This means you will have to be more creative in finding ways to avoid added costs and imposed limits. Both Apple and Android have apps that allow you to send unlimited texts for free. And for data, there’s a mobile web browser I like called Opera Mini that can limit the amount of data your phone uses to surf the internet. It uses compression technology behind the scenes but still gives you the same browsing experience.
  4. Using Wi-Fi whenever possible is one of the most important things you can do to keep your monthly bill down. Most smart phones can switch seamlessly from data networks to Wi-Fi when you’re in range of a hotspot previously accessed by your phone. Whenever I’m around the house, my phone is always using Wi-Fi for data, which allows me to keep my usage below the 200MB level every month.
  5. Check your provider’s website to see whether they offer a discount for employees at your company. Some providers offer discounts for college students too, so it doesn’t hurt to ask.