There are so many things you could do with an extra $1,000 a year. You could create an emergency fund for unexpected expense, such as a health emergency or car repair. You could put a big dent in your credit card debt. You could make some extra car payments and shorten the length of your loan. Or you could put it into your child’s college fund to grow over time.
So, where does this money come from? Rapid changes in technology have really opened up the game when it comes to three very big annual expenses—telephone, cable, and internet services. The competition is exploding, with many new alternatives not available even a few years ago, and people are saving some very serious money—$1,000 a year, and more.
So what do you pay for the combination of these three items? It’s not uncommon for a family of three to pay as much as $200 a month for cell service and another $100 a month and more for cable and internet. Even if you’re on the lower end of things you’re probably still looking at something like $2,000 a year in total. What if you could cut those numbers in half? Well you can, and here’s why:
- The internet is changing the game, big time, for both cable and cell telephone services.
- There are now a large number of new options for cell service that didn’t exist two years ago. These new companies are both the fastest growing and the cheapest, and frequently offer a good-quality service level to boot. Often they just rent time on the towers of one of the big networks.
- The big four telephone carriers are losing customers like crazy to these new services and have no choice but to respond pricewise. People are now seeing through the old model of locking you into a two-year contract in return for a cheap phone. Saving $100, then paying $2,000 extra for the next two years has become the bad deal of the decade. AT&T was just forced to offer a new noncontract cell plan at $50 a month.
- Pay TV is being forced to become more price competitive. Their subscriber base is shrinking as more and more people resort to other alternatives. It’s reached the point where as many as 100,000 subscribers are now leaving the world of pay TV each month.
- Home phones (landlines) are disappearing because they are often unnecessary, with a combination of cell and internet becoming a better way to go for most people.
- There are now government-subsidized free cell services for unemployed people, or those on food stamps or Medicaid (see the excellent article in Bloomberg/Business Week, called “Free Cell phone service for the Poor“).
You’re in a position of great strength at the moment. Do some homework, then shop the competition. If you’d rather not do this and you have a teenager in the family, pay your teen to do the job. Your internet-savvy kid is likely to be quite good at finding the information you need to comparison shop.
If you plan to do the research yourself, think of it this way: Where else can you make $200 an hour tax free for a 4- to 5-hour job? Start by surfing the internet. Take a look at the new alternatives such as Netflix streaming, Hulu, Apple TV, Amazon, and ESPN3 through an XBOX account. Consider the possibility of an “over the air” (OTA) antenna for free local TV. (About.com has an informative article about OTAs and free High-definition TV.) Check the websites of the new and not-so-new cell alternatives such as Metro PCS and Straight Talk (TrakFone’s and Wal-Mart’s new joint venture).
Once you get your best offer, call your current supplier. Tell them what you’ve been offered and that you plan to leave them. That will get you transferred to the “save the customer” department, which always has more leeway to offer a better deal. If you have your cable TV and internet with one carrier, but your phone service with another, ask your TV and internet supplier what kind of money-saving deal they could offer you by bundling these three services together.
The long term benefits are terrific. In a tax-deferred account, $750 becomes $1,000; $1,000 a year invested at a 7% return will give you over $100,000 in 30 years. But forget 30 years. What about the reduced financial pressure involved in having lower monthly bills, or having the financial flexibility to pursue a better life, and doing so lot sooner than 30 years from now? We’re talking some serious opportunities here.
Thank you technology, and thank you internet. You can find even more money-saving tips throughout my blog and at www.moneysmartonline.com.