When Sarah and I signed our first cell phone contract, we signed up for a plan that gave us roughly 400 minutes per month, which seemed like a reasonable amount based on our estimates. After the two year contract, we found that we had only gone over that limit twice, so we signed up again for the same limit.
Before our next contract signing, we sat down to evaluate our situation. During the previous two years, we had only gone over our alloted minutes twice, so it seemed straightforward that we would just continue our plan.
There was a bit of a catch, though. We still had those bills from the overage months, and when we sat down and did the math, the cost of our overage minutes from those months was far higher than the two year cost of a plan that would cover all of those minutes.
That’s right. Upgrading to a plan that covered all of that usage and gave us far more breathing room in every other month was cheaper than the overage costs of just two months of usage.
Needless to say, after some shopping around, we upgraded our minutes.
Overage costs, whether due to data use, text messages, cell phone minutes, or any other reason, can be incredibly expensive. It only takes a little bit of overage to eat up a lot of dollars.
The trouble for many people is that the overages aren’t a regular thing. It’s obvious you should upgrade your plan if you’re going over several months a year, but what about one or two months a year?
Those are the situations where you owe it to yourself to run the numbers.
Here’s how you do it.
Pull out a bill with overage fees. The key piece of information you need here is how much a single minute of overage costs you, or what a single text message overage costs you. If it’s an added expense beyond your plan, what is it costing you per minute or per text message or per megabyte? Get it down to dollars and cents.
Then, if you can, look back through old bills to figure out how much you go over in a given year. Do you routinely go over your data limit each month, but “just a little”? Do you go over your minutes by 100 … but just three times a year? How much do you really go over?
Multiplying these two numbers together will give you a good indication of the annual cost of your overage.
Now, check out the website of your provider and figure out what plans they offer. Are there any plans that cover your overage so that you won’t have overage fees any more? How much extra does that cost per month? Multiply that extra cost by twelve and you have your annual cost for a plan that eliminates overage fees for you.
Once you have these two results, go with the one that’s cheaper. Most of the time, it’ll be the better plan, not the “occasional” overage.
Even if it turns out that your overages are less expensive, it’s still a worthwhile exercise, because now youknow they’re cheaper. As with anything, the less you pay for the same service, the better.
This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere.