Can You Really Afford that Smartphone?

About 21% of people spend more on their smartphones each month than they did on groceries. The USDA estimates the average family spends anywhere from $550 to $1250 each month on groceries. To have people spending more than that for their smartphones begs the questions: how much are people spending, why are they spending that much money, and above all, can they really afford to pay that much for their smartphones?

How Much Are People Spending?

In 2007, data indicated that the average household was spending $1,110 annually on phone services. This amount rose to approximately $1,226 in 2011. While that does not seem like a lot of growth, there was a massive rise in the amount the average household spend annually on their phone service. As of 2012, households with more than one smartphone were paying much more than that: an approximate total of $4,000 per year. This amount easily surpassed other service bills like Internet and CableTV. Smartphones and their bills have continued to rise in the past few years, and many estimate that the industry as a whole will earn up to $50 billion more each year by 2017.

In order for a consumer to spend 30 minutes of video every day over a 4G connection, they can expect to pay about $120 each month from carriers like Verizon. However, this is only if they do not do anything else on their phone—when the carrier adds the costs of texting and calling, this amount grows almost exponentially.

Some of the most expensive plans for an iPhone, perhaps the most popular smartphone on the market, from carriers like AT&T and Verizon cost consumers approximately $150 every month. However, this number will increase with fees, taxes, international roaming, and any overages in usage. For larger families it may be understandable why their costs reach over $200 every month—for a family of four, each person could have a smartphone with a plan costing $50 each month to reach this mark. But for one individual paying that much money, the cost is almost astronomical even without the cost of purchasing the smartphone. So why are people paying these prices for their smartphone bills?

Why Are People Paying This Much?

There are quite a few reasons why people are paying these prices for their smartphone bills every month. While smartphone plans include some data, there is always a cap based on the plan. When a consumer reaches that data cap, he or she still has the ability to use the Internet through their data connection. However, there are overage charges to do so. Verizon Wireless offers a range of plans—all of which they say include unlimited talk and text. However, the prices change based on the data allowance that a consumer picks—for six gigabytes of data each month, a consumer will pay $60. What happens if that consumer uses an additional six gigabytes of data? For every gigabyte that someone uses above his or her limit, Verizon Wireless charges $15. That means that an additional six gigabytes costs a consumer $90, bringing the total monthly bill to $150. Verizon does offer larger plans, they actually go up to 100 gigabytes, but consumers still see a rapid rise in prices. In fact, for that mentioned 100 gigabytes a consumer would pay $750 every month.

However, the onus does not lie entirely on the consumer. Mobile phone carriers fully expect consumer data usage to continue to rise as many studies indicate that in two years many people will only own a smartphone due to the trend to going mobile. As such, mobile phone carriers also expect (and actually almost force) consumers to continually pay higher prices for data. Many consumers rely on their smartphones for any number of tasks beyond the basic functions of calling and texting their family, friends, and business contacts.

What carriers are not taking into account is that many consumers are still only earning minimum wage, or at least their wages have not risen as the price of their smartphone bills have. This means that people are not earning more money, but they are still paying more. Additionally, while some may say that a consumer can simply opt-out of purchasing a smartphone, this may not always be feasible. Many carriers are carrying fewer “regular” cell phones, if at all. In fact, if a carrier has a “regular” cell phone, it is often just a flip phone, making tasks like texting quite difficult on the user.

Takeaway

Almost anyone could force themselves to afford a smartphone and an expensive data plan to accompany it. But for many people, it would require cutting back on the other expenses in life—such as rent or mortgage payments, groceries, tuition, and healthcare—as well as regular purchases for items, including shampoo or dish soap. However, families and individuals need to eat nutritious food in order to stay healthy and keep on living—without food, it is only a matter of time before someone’s health is compromised. So why should someone cut back on groceries just so that they can afford to keep up-to date on expenses related to their smartphone?

 

With Billshark, consumers will no longer need to cut back on the amount of money spent on groceries to ensure that he or she pays their smartphone bill on time. We are a team of experts negotiators who are fully prepared to call your service provider and negotiate a lower price on your monthly bill, making owning a smartphone more affordable. Rather than directly engage in what is often an arduous process, show your service provider that you are serious about lowering the price. We know numerous tricks that would greatly improve your chances of having a lower bill. We will split the savings for the first year with you, and leave you with a lower bill and an affordable smartphone.

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