Are Smart Phones Smart?

The Budget Doctor's Advice on Cellular Phones

Most Americans own and carry cellular phones. They are small, convenient and useful for staying in touch and getting assistance without bothering strangers. They can also be fairly cost effective. Cell phones can be purchased at discount stores for as little as $10 and a $10 prepaid phone card should be enough to handle emergencies and few casual conversations each month. Some people have actually saved money by purchasing a cell phone and cancelling their home phone service!

Unfortunately, most consumers don't save money. As technology evolves, many consumers line up (yes literally line up) to buy each new phone product that promises instant happiness. And each new phone costs real money and offers additional services that cost more each month.

If you buy a new iPhone you can pay $499 for the phone and get a 24 month service contract that gives you unlimited data for $30 a month, unlimited texting for $20 a month and unlimited voice for $100 a month. That means cellular service that costs $170 a month! One reason for the expense is that phones are now computers. They access the Internet, play videos, take photos and have applications that enable everything from trip planning to banking. These instruments are called smart phones but that doesn't mean they are always a smart investment.

Here is the Budget Doctor's suggestions for making a cell phone decision:

1. Know why you are buying a phone.
   If it is just for emergency communication, a $10 phone may be perfect.
2. Commit to how you will use the phone when you buy it.
   If you buy a data plan that gives you 200 MB of data but then download a 5 minute video or 3 songs every day, you may get a bill for an extra $200 at the end of the month.
3. Eliminate overlaps
   If your phone has a GPS, you don't need a separate GPS. You might also eliminate cameras, game systems, ebook readers and even computers if you buy a smart phone.
4. Keep your phone until you need a new one.
   There will be a new phone next month that does something that cannot be done today. That doesn't mean you should buy it. In fact there will likely be a much better phone out in 6 months. The longer you wait the better phone you will find.
5. Consider buying used.
   The rush to have the newest thing means that good quality used phones costing one-half or less than their price new are always available. You may be able to get an inexpensive phone and a 12 month contract, permitting you to save up for the next generation.
6. Pay attention to the provider.
   You need reliable coverage where you spend time and where you call. If you sign a 24 month contract with no service at your home you have made a serious mistake.

Many consumers consider a smart phone to be a necessity even though they didn't exist a few years ago. The fact is, it is a luxury and only people who can include the cost in their budget without sacrificing more important things can afford smart phones.

There is a tendency for consumers to embrace every new technology just because it is new. Then we look back nostalgically at old things and even pay a premium to buy them.

Just think how smart you'd look driving a 1963 Chevy equipped with a car phone.