Slash Your Phone Costs

Want to hear a shocker? My family ran up nearly $2700 in phone bills over the last 12 months. And that doesn't include new cell phones, or our landline-based DSL Internet access.

Why so much? We have two adults and two adolescents. That's four cell phones and lots of text messages. We also have two landlines--one for the family and the other for my home office.

Like just about everyone these days, I need to save money, so I set out to find ways to lower our telephone expenses. Here's how I went about it, and how you can do the same.

Lock Down Cell Phone Costs

Cell phones are the biggest expense in our family--our bills tally more than $160 most months. They're probably the biggest phone expense in your household, as well.

But before you can cut down your cell phone costs, you need to find out what you're paying for. You should start by examining your last cell bill, but it won't be easy--our most recent Verizon bill ran 34 pages, and required a translator.

I found more information, in easier-to-read form, on Verizon's Web site. If you're a Verizon user, you can log in to the site with your user name and password. Click the My Bill tab, and then, staying on the Bill Summary tab, click the Voice link. A pop-up will show you how many minutes each family member used during that month, plus the total. You can check other past bills, as well.

This information led me to an important discovery: We regularly used between 500 and 600 anytime minutes a month--far less than the 1400 we were paying for. Right there was a way to save money.

But how much could we save? That wasn't on the bill.

Which brings us to that translator I mentioned above. To really know what you're paying for, you have to call your carrier and fight your way through push-button hell until you get an actual human being.

The human being I got (who was very nice and who understood my need to cut expenses) told me I would save $20 a month by going down to 700 minutes. She also said that I could save another $30 by eliminating our unlimited texting.

Taking $20 off a $160 phone bill doesn't sound like much, but it's a start. You can also reduce cell phone costs by attacking the usage charges that vary every month. Here are a few tips.

Keep an eye on the minutes: Most companies offer several ways for you to learn how many minutes you've used up so far on a billing cycle. For example, Verizon users can dial #646 for a free text message.

Block music downloads and applications: Frequently, kids discover that they can download music and play games on their phone, but they don't consider that it will show up on the phone bill. And anyone can accidentally access the Internet and incur a charge.

Shop for better rates: Comparing plans is easy, but moving an entire family to a new carrier can be heartbreakingly expensive. If you added family members to your current plan at different times, each phone number may have a different contract end date. At no one time would you be able to move everyone to another carrier without incurring multiple termination fees. For a family of four, those charges could run into hundreds of dollars.

The solution? Wait until everyone's contract runs out before you upgrade anyone's phone or change the plan. Then everyone will be in sync.

Consider a prepaid plan: Think of this advice as a subset of "Shop for better rates." If you're using fewer than 200 minutes a month, a prepaid plan is probably your best option.

Watch who you call: 800 numbers aren't toll-free when called from a cell phone--unless you do so on a weekend. And international calls, even to Canada, are outrageously expensive. On the other hand, calls to other cell phones attached to the same carrier may be unlimited.

Make sure everyone knows the rules: No long, conversational phone calls before 9:00 p.m. on weekdays (or whenever the particular time is with your service). Keep texting to a minimum, too. (Okay, I admit that we gave up on that one.)

Keep the Landline?

Here's a big question: If you have cell phones, do you need a landline? A lot of people don't bother with them.

And yet my family has two landline phones. We keep the home phone because my wife doesn't want to give it up, and she's reluctant to make our friends learn a new phone number. And I need my home-office phone so that I can keep my work and home lives separate. I give my office number to all sorts of people with whom I wouldn't want to share my home or cell numbers.

Despite what some folks think, you don't need a landline for 911 calls. Cell phones work just fine in an emergency. And if the electricity goes out, they're actually better than most of today's landline phones, which require AC power.

It's true that a landline gives you unlimited local, incoming, and toll-free calls, and lower per-minute charges in many situations. And another consideration is DSL, which comes over the phone line. If that's your source for Internet access, you'll have to switch either to cable or to a so-called naked DSL account that doesn't involve analog phone service. Either way costs more. AT&T would charge me $10 a month more for the DSL package I have now if our house were stripped of phone service.

So if you intend to keep your landline, how do you lower costs?

Examine your bill--both local and long distance--for extra, optional charges. If you're unsure what a charge means, don't hesitate to call the phone company and ask.

I found a few things on our bills that must have seemed like good ideas once, but not anymore. On our local bills, we're charged $7 a month for something called WirePro, which is insurance to cover home wiring problems. As with an extended warranty on a new TV, not having it is something of a gamble, but the money saved is worth the risk.

On the long-distance bill, we were paying $9 a month to lower our national and international by-the-minute fees. But even with the higher fees, we weren't making long-distance calls totaling $9 a month.

So that's another $16 saved--as long as our wires hold out and we don't go overboard on long-distance phone calls.

Into the VoIP

Luckily, we have another option for long-distance calls, and it's dirt-cheap, with nearly unlimited minutes: Voice Over Internet Protocol (VoIP).

Once too hard to listen to, VoIP now offers improved quality, and it makes a great alternative to landlines or supplement to cell phones. And you're not limited to talking with other VoIP users.

Not that it's a complete win-win option. While the audio is improved, it still sounds worse than that of a landline. And it requires that you either keep a computer on to make and receive phone calls or use special hardware.

Nevertheless, VoIP seemed like a good alternative to my landline office phone. I looked at two very different services.

You probably think of Skype as a free service for talking and instant messaging with other Skype users, possibly with video. That's all the free service does, but for a price Skype will connect you to telephones all over the world, and it'll give you a phone number so that other people can call you.

If you don't phone internationally a lot, Skype's most attractive phone system offer gives you unlimited calls within the United States and Canada for $3 a month, or $30 a year. Well, sort of--it isn't really unlimited. You get 10,000 minutes per month, which could be a problem if you're on the phone more than 6 hours a day. And it isn't really $30 a year--at least, if you really want to replace a landline. A real phone number costs an additional $30 a year, and voicemail costs $20. Even so, that works out to a monthly average of less than $7--still a tempting rate.

But there are bigger problems. For one thing, Skype offers no 911 emergency support, though that shouldn't be a problem if you have a cell phone. The second thing is, you can't simply plug a regular phone into Skype. You can install Skype's free software onto on your PC and plug in a microphone (or, better yet, a headset); of course, you'll have to keep your PC on all the time so that you can receive calls. Or you can buy a stand-alone Skype phone that connects either to your computer (which means you still have to leave it on) or to the Internet directly.

I tried two different Logitech USB headsets, one wired, the other wireless. Both worked. I also tried Belkin's cell-like Wi-Fi phone, which, as I write this, is on sale at Skype's site for $130. I liked it despite some strange quirks (leave it on as you take a walk, and it makes odd sounds as it finds and loses signals), but it doesn't work with hotspots that require Web authentication, such as at Starbucks and Tully's.

Also, Skype's technical support is all but nonexistent. You get no phone or chat support, and e-mailed queries aren't answered quickly, either--if you receive an answer at all.

The biggest Skype problem, if you want to use it as a landline replacement, is the selection of phone numbers. You can't transfer your existing number, and you may not be able to get a new number in your area code. But if you can't, keep trying; on my second try, they had some available.

Phone Power, another VoIP provider, offers a more landline-like experience. You can use your regular phone and transfer your existing phone number. But it's nowhere near as cheap as Skype is, and I found setting it up quite a challenge.

When you sign up, Phone Power sends you a gadget that you daisy-chain between your modem and your router (you can also plug it directly into the router if the preferred setup doesn't work). Then you plug your phone into the gadget and use the phone as you normally would. It includes voicemail (which you can have forwarded to your e-mail address--a nice touch), and 911.

The best plan (3000 outgoing minutes, unlimited incoming) costs $23 a month after the discounted first three months. That's considerably more than Skype, but still less than a regular phone bill with voicemail and long-distance fees.

During my setup of Phone Power, I would have given up if it weren't for the company's excellent tech-support staff. I talked to several support representatives as we struggled to get both the phone signal and my Internet connection working. They all proved polite and knowledgeable, and were truly concerned with helping me fix my problems.

Nevertheless, I'm going with Skype for my office phone, despite the phone number problem and lack of support. Not only is it cheaper, but having my office phone travel with my computer suits my work habits.

So with all those changes, how much have I cut our phone bills? Halving the number of cell phone minutes saves us $20 a month. Dropping the landline extras is another $16. Switching to Skype would save me about $33. In the end, that's close to $70 a month, or over $800 a year. Not bad when you're trying to save money in this unpredictable economy.

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