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January 20, 2011


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Thanks so much for publishing my guest post! I had a lot of fun writing it!

It’s not worth it to me, but I still pay it. In my situation, I look at it as paying for my phone (free with contract) instead of it being subsidized by the phone company (which makes it come out about even).

Of course, I'm on a $15/mo limited data plan. I do find myself using it and grateful for it on trips. We recently went on a 3777 mi road trip, so having the GPS option with data on the phone saved us from needing to purchase a GPS. (It'll be used more come summer when my partner and I are driving all over New England to his cycling races)

I would not pay $30/month, however.

I think part of the cause for that "definitely more than half" number also comes from the phone options out there. My criteria when searching for a phone is "decent user interface, good camera, wi-fi enabled calling" While most non-smart phones have 2/3 of those, all 3 is tricky, because providers are selling fewer and fewer non-smart phones these days. My sisters just upgraded and were limited to about 4 different phones—which all cost more than the low-end smart phones. Not everyone thinks about the fact that they may get the phone for free, but it's costing them $360 more a year. At least, the providers are probably banking on that.

I agree Rae! I was amazed when I went in to the Verizon store how cheap you can get a phone as long as you commit to continuing your contract. I got my non-smart phone for something like $8. Verizon and AT&T are making a mint on the monthly payments.

I gave up my smart phone and data plan when my wife and I had our Daughter. I figured I really needed to save the money. I actually went through IPhone withdraws when I got rid of it. Its now been over a year and I still miss the IPhone but I love that I don't have to pay the extra amount for the data plan. Plus it cut down on feeding my internet addiction (or at least I believe I have an addiction).

When I change jobs, I plan to negotiate a phone allowance/reimbursement. That way I won't have to feel bad for paying for the data plan.

How about going with Sprint where they don't charge extra for Data if you get the right total plan? (okay, they're about to charge $10 extra per month for smart phone data plans). So, switch to Sprint, save $20 AND have the useful smart phone, and deposit the extra $20 into savings.

You get savings AND a smart phone with data!
Can't tell you how often being able to check my bank account from my phone has helped me keep in my budget.

@Jacob: for fair comparison, you should use after-inflation returns, and the outcome is more like $60k than like $175k. Your point still stands, though.

Another perspective (credit to that other finance blogger called Jacob) is that you need $9k of assets to cover the data plan expense (assuming 4% withdrawal). If it takes you a year to save that amount, having a data plan means retiring a year later.

Its expensive, no doubt. But worth it to me. My husband and I have a family plan - we pay 155 currently for unlimited data (3 lines), but we are going to drop one of the lines. (we used to have a separate line for his business, but now we are going to use google voice). So that drops the cost to 135. We were paying 85 before (for 3 lines, no data) - so the increase is $50 for both of us. We are able to write off some of the cost through his business, and my work gives me $50/month towards a cell phone. Now that I have it, I don't think I could go back. It really is like having a computer with me where ever I am.

That should say 155/month for a plan with unlimited data. That is for the entire plan, not just the data option.

It's a cute story, but somewhat disengenious. No offense, but this could be applied to anything someone spends money on. Wants or needs. Data plan or heat. Cable or Food. Clothes or light bulbs.

It's actually the oldest "think about" in personal finance. The good ol' opportunity cost question.

Everyone that earns an income spends money on things they could cut back on. We could all lower the heat, or shut it off, or sit in the dark, or bike to work, or hand wash and hang dry our clothes, or brush with pond water, eat homemade rice or a myriad of other things. But life expects more from us.

And the PF blogoshphere takes square aim at technology for some reason. an i-this and cable that and netflix this and techie that.

I suppose it could add up, and for some it does, but in the scheme of things does it really matter. A phone. Or cable.

My position is if having cable (or sat), or a smartphone with a data plan makes any significant difference in your financial life, then your problem likely lies somewhere else. Maybe inadequate income, or past mistakes, or large debt, or whatever.

I think a mobile computer (smartphone) that takes the place of a phone, a home phone, a music player, a GPS, a phone book, a calculator, a camera, a video recorder and several other items is a pretty good use of money. It's an all in one, like a copier, scanner, fax, printer. one machine replaces 4. A smartphone replaces about 10 devices and is portable. So yeah, to me it is worth it.

But more so is having a financial position, like yours FMF, that is completely unaffected by the addition of a $30 data plan. I mean, we all have to spend the money somewhere right?

Personally I just want a phone and texting. I don't care to be that connected and would rather not. I am connected enough with my internet connection at home and waste enough time with that. Having a smart phone would just add to my connection to the web but disconnection to the people around me.

I would comment on this topic, but i am too busy facebooking, watching funny cat videos on youtube, and checking my email on my iphone to do it. Matt, your comment is spot on, but not necessarily a comforting thought for many of us. Even my friends and I notice it when we hang out. Unfortunately though, the value and productivity far exceeds the 30 dollars for most people. Smart phones are here to stay--good investment or not.

I recently upgraded from a regular smart phone to the 4G HTS EVO smart phone that runs on the Android platform. My carrier is Sprint. I already had an unlimited data family share plan with three lines. Plus, I recieve a 25% corporate discount (pretax and add-on features) from an incentive between Sprint and my employer.

My new phone is like a pocket sized computer! The full color touch screen is great, easy to see, and its easy to navigate. Its amazing and does absolutely everything my full sized lap top does, more actually. I'll never go back; its so convenient to fully access all my data anywhere. In fact, when I recently bought a new-to-me vehicle, I saved a couple of thousand by foregoing the pricey navigation package in the car because the navigator on the phone was so savvy, easy to use, and easy to see and dash mountable. And, can be switched between driving and walking mode. (great for when I was recently in NYC and wanted to get around on foot and in the subway - full subway map on the phone)

Before I upgraded to the new phone, my plan cost my $120 a month + tax for unlimited data for 3 phones. When I upgraded to the Droid phone, Sprint added a $10 a month charge for premium data service. We also have no landline and use the phones as our sole telecom. Thats less than $50 a person.

Totally worth it to me. Never going back.

I have a $29.99 cell plan and $40 (inc taxes) internet connection at home and no land line, no cable tv either. I don't need SMART from a phone. A cell phone IS a luxury and often a waste of time. Mine replace the land line and camera iin my life. That ias all. Of course I can afford it being a retired very young multi-millionaire but, I don't see the value. When I had my business the cell plan was $49~ a month but, who nees THAT many minutes?? Amazing.....Guess I thought that way about a LOT of gadgdets over the years and invested the difference. It pays off!!

My husband and I just switched from regular cell phones to Android phones with Sprint. Not counting the initial cost of the phones ($400 for both), we're saving money every month with our plan. We went from two phones and an air card for internet (we don't have cable, etc) to just the two phones, using tethering software so a phone becomes a high speed modem that's actually faster than our air card. We went from paying $170 per month to $140! So maybe I should take that extra $30 and put it in that mutual fund...

This is precisely why I didn't have a smart phone until just recently. Now that Virgin Mobile offers unlimited web and texting on plans starting at $25/mo, I'm actually spending less than when I was on Verizon and getting more. I don't use a lot of cell phone minutes, so $25/month all in gets me what I need for talk, text, and web. Also, it's a pre-paid plan, so I have all the flexibility I need.

Here's how I see it. I have a 2gb data plan ($25 a month). I work as an EMT @ $12/hr. Open shifts come out as emails with relatively large schedules attached, first come first serve. One overtime shift = $12 x 1.5 x 10hrs = $180. On average, I get 2-3 shifts a month simply by having the data plan and push email (which uses a lot of data so don't try to convince me that the 200mb plan is better). Thats $540 a month for a $25 and 30 hr investment. Not to mention all the blog reading downtime I get (which uses data).

The moral of the story is that you pay for data, so as long as what you are receiving as data has worth greater than the price of the plan, the plan is worth it.

Some great discussions here! Thanks for reading!

@ Richard - I think I have an internet addiction as well. Something about so many things being within a couple keystrokes! In that way, it is probably a good thing I haven't upgraded to a smart phone yet.

@ Head n space - Thanks so much for that lead! I didn't know that Sprint charged so much less for data plans for smart phones. I have to admit that at 10 dollars per month, that may change my mind. I'll head over to their website and check it out.

@ Concojones - very good point about adding in inflation. I include the inflation factor on retirement planning calculations, but when I am just trying to get the feel for the cost of something like this, I leave it out.

@ Sarah - so sounds like with the reimbursement from your work for $50, the data plan doesn't cost you any extra! Great personal finance handling there! I like it!

@ Troy - You make some very good points. You could do scenario analyses such as these until the cows come home (or however the saying goes) on every aspect of your life. The point of it all is just to do what people are doing here - think about their own situation and determine if it really is adding value to their life. The problem is not that people are spending $30 per month for smart phone, but that they are spending $30 here, $50 there, $100 there...and then all of the sudden, they have credit card debt, and their finances get turned inside out.

@ Meg - Sounds like it is definitely adding value to your life. Congrats on working it in and using it to avoid extra spending on other consumer electronics such as GPS devices.

@ Mark Ard - That's great to hear that you're able to jump on the shift notices as they come out! It reminds me of a similar time when I was stuck in the Charlotte airport during a snowstorm, and everyone else was able to make hotel reservations on their SmartPhone. Since I didn't have one, by the time I started looking for a room, all of them were booked, and I had to sleep on the floor of the D Concourse! haha

I'm going through the apps on my iPhone and I'm only now realizing just how many of them have validated having a $30 unlimited data plan.

Streaming Pandora radio in the car is the most quantifiable justification for my data plan. It has enabled me to drop my redundant (for me) satellite radio service, which was costing me $13/month--plus I can skip through songs I don't particularly like. I also don't feel the need to buy any music downloads having Pandora do my music progrmming.

Using the free Mapquest app in conjunction with the built-in GPS ensures the maps I use are always up-to-date, so I don't need to spend $100 every year or two on map updates for my Garmin GPS (which has been in mothballs since I got the smartphone).

The RedLaser price comparison app has saved money countless times, both when I buy an item and when I don't buy. You can't always fully research prices beforehand, and impulse buying decisions do occasionally pop up. If I can check the online price while looking at an impulse item "live" in the store, I can either validate that I'm getting a good price, or tell myself that I'll buy it online, at a lower price, when I get home. By the time I get home, the impulse is gone and I usually wind up not buying it at all.

Everything's cheaper at warehouse clubs, right? The GroceryPal app helped me today while I was at Costco, where fresh salmon filets were nearly $9/pound and the less-preferable frozen filets were about $7.50/pound. That seemed kind of high--queried multiple stores for specials in one step, and found they're on sale for $6.99 at a grocer I normally visit every weekend.

The GasBuddy app tells me the lowest price on gas not only around where I am at the moment, but also along the route I'll be taking. I pretty much know the lowest-priced gas stations along familiar routes around where I live and work--but on longer trips through unfamiliar areas, I can easily save at least $2/fillup knowing in advance where the lowest prices are, without going out of my way.

I'm able to purchase LivingSocial and Groupon discounts through their apps--these sometimes sell out, before I'd have the opportunity to get to my desktop PC to buy them. The ability to purchase them on my phone means not being shut out again.

I can't put a price on the savings of time and aggravation TrafficView has provided by helping me avoid congested routes.

These are just some of the practical examples justifying my decision to spend $30/month on a data plan. I'm sure there are other apps on my phone that, in conjunction with a data plan, save in ways I haven't thought of. And I'm sure there are other apps yet to be installed that will save as well.

I am in no way a fan of posts such as this. Honestly, one can say the same about anything that is obviously a want as oppose to a need in our world. Do I need this, do I need that? I think as one becomes more secure with the way they run Thierry own financial life, these are the kinds of things that factor into ever choice one makes whether to save it or to spend it. If we remove all of our wants from life and just live on our needs... Imagine how much wealth one could amass, regardless of income.

Concentrate on saving as much as possible in everything you want and need and you will be fine. That is what we have done for years and we now have everything we want and need and are save 35 percent of our income. For

I have a "dumb" phone with texting. I'm sure at some point I may get a smart phone, but right now I can't justify paying that much for a data plan on my phone. I'm at a computer all day long (software developer), so the need for another internet device sitting beside me is pointless. I'm seriously considering switching to prepaid soon. If I need a phone number or something while I am out I usually just text Google. I have a GPS in my car, so even with a map upgrade every couple of years that is only $5 a month on average.

Though I am in the technology field, I almost always wait for consumers to drive the price down before buying something, and then I keep it forever. My iPod is 6 years old (a cost of about $4 a month). I plan on replacing the battery and hard disk in it soon and keeping it for another 6 at least.

This post is useful for me since DH has been wanting a smartphone for some time and my teenagers have been wanting unlimited data. The comments are helpful in that I now know that there are some economical options out there. We have been w/ATT forever, but that may soon change.

Think about these nuggets, though, FMF ...

* If you are in sales, data that you get in a timely manner via the data plan in your smartphone helps you keep customers and make sales you would not have otherwise made. Over a 30 year career, this can be MASSIVE - far more than the $175k compounded savings.

* Even if you are not in sales, being able to respond to your boss or your internal partners in your company can be a boost to your career, or at the very least, prevent you from being hindered in your career. Hard to value this reliably, but over a 30 year career, the advancement versus non-advancement impact could be significant.

* If you are an investor, you may find out about an important bit of information in a timely manner and enable you to buy/sell a security before it crashes or before it skyrockets. Not a huge deal if you are a passive investor, but if you are an active investor, it could be huge.

@Holly - If you are looking at an economical data plan, I would go with sprint. They have the Optimus S free w/ contract, and their family plan with unlimited data runs 135 (I think) for two lines, and then 20/line after that. I just saw on consumerist though that starting at the end of the month they will be charging all smartphone data plans $10/month extra though. (Right now the Evo and Samsung instinct get that charge, but no other phones do)

lots justification here to spend today instead of reaping the benefits of compunding and a MUCH better future. Most folks just can't delay gratification. I see VERY little reasons here that outweigh the other alternatives or "investing the difference. It's like driving an older car, not having cable tv, turning down the heat and hot water, bagging lunch, etc., etc., Add it up like an earlier poster (JeffinwesternWA for example)said. you can retire a LOT earlier w/ reasonable frugality for say 20 to 30~ years!

I would agree with Holly! There have been some wonderful pieces of advice in these comments that have made myself second guess whether or not a smart phone is something I would pursue. Mainly, I am amazed how much cheaper Sprint is than Verizon.

@ Bad_Brad - I agree with you that if you are in sales, it does make sense to have a smart phone. But, most of my friends in sales have a smart phone that is paid by their work (their personal finances are unaffected) 70% of professionals employing market timing buying and selling stocks fail to beat the market, so given that evidence, I employ passive investing.

@ Mel_Moitzen - Those are some awesome apps! I knew that the iPhone had a ton of programs, but didn't know it had that many! I guess this is why Jim Cramer is calling Smart Phones a "game changer" in that it completely changes how life works. It looks like in your case, the value of the smart phone does outweigh the $30 per month.

For me, I think the biggest thing is that I don't want to feel linked up at all times. Also, I 1) don't need satellite radio in my car, 2) use a 2 year old GPS which still gets me to where I need to go, and 3) shop at Wal-Mart, a place where their prices are hard to be beaten on their generic Great Value line, so those apps would just sort of be icing on the cake.

Smart phones are expensive, but in my opinion completely worth it. I have completely cut out my cable bill, but I won't ever get rid of my smart phone. Many of the reasons have been stated above, but essentially having the internet in your pocket is just incredibly useful.

I really like and appreciate your point of view Jacob, but having a smart phone and web is more important to me than saving money as it helps save me time which is more important than money to me.
Having GPS and fast web browsing on my Straight Talk smart phone Nokia E71 with my unlimited Straight Talk plan of $45 for unlimited talk,text,web,e-mail & free calls to 411 saves me time searching for a shop or office/home I need to go to, I don't need to stop for directions.
If I'm looking for a sleeping mattress and I don't find what I'm looking for in the first shop in town I don't have to go home to my computer to browse and find the next shop (my husband did this today).
I can do fast money transfers, get news updates on my smart phone no matter where I am so I'm prepared to pay my $45/month for a Straight Talk prepaid plan for unlimited web and my phone calls - It's all about convenience and efficiency for me.

@ Lucia - That's for joining the conversation! So the total plan costs $45 per month (data plan included)? That's pretty good! Is that with Sprint?

That's exactly what I want people to take from this post - to analyze their own situation and make an informed decision! Thanks so much!

With carriers like Virgin Mobile, you can get data plans starting at $25 a month on their limited network. With Straight Talk you can get unlimited calling, texting and data for $45 a month, on the Verizon or AT&T network.

I know I'm really late to this party, but I had a similar experience this past weekend replacing my 5-year old RAZR. I'm a huge tech geek and I loved the idea of having a smartphone connected to the internet. But I remembered this article and it got me thinking. Most of my day I'm either at home, at work, or sleeping. This means I'm never more than 10 feet away from an internet-connected computer. So why do I need to spend $30 extra a month for something that would only really be useful 2% of the time? So, I now have a new Samsung Gravity T and not spending an extra $30/month for a data plan. So cool!

@ Brent - I'm glad this article was useful to you! I'm in the same boat. I think I would like a smart phone, but I'm around a computer so much, that I can just use those devices to access the Internet.

Yep, data plan is worthless for someone who does not NEED to be online on the road, else it it would be mostly used by kids to play games.

If you don't have a contract and you tell them you'll have to find a new provider because you just can't afford it and that you will call back to cancel as soon as you find someone....they will give you a discount or promotion or transfer you to customer relations that will magically find you a cheaper plan. Works with cable and internet, too. There is just so much competion. They want to keep you forever as a client, not, lose a client forever. If they won't help you just ask for the customer retention department. Everyone has one.

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