I’m a bit of a cheapskate. That’s not entirely true. My wife and I recently booked a very expensive Alaskan cruise. But my buddy Tony and I have just found a new lunch spot. It’s in the service department of a local car dealership where the food is surprisingly good. Tony and I pack a cooler with beer and make a day of it. Last time we had a fresh pasta salad and a meatball sandwich for $20 – for 2.
I love a deal and I hate to part with my money.
T-Mobile Price Increase
Which is why one of the subjects of our lunch last week was the T-Mobile price increase. It all started with a text message.
Neither Tony nor I need a modern plan with enhanced features. I need to make calls, text and get directions on my phone. Occasionally (often) I need to look up a fact to win (or lose) an argument.
I have 2 cell phones with T-Mobile and home internet service with them as well. I’m guessing this plan modernization will cost me at least $18 per month, which is a 13% increase.
The Honeymoon is Over
I loved T-Mobile. I switched from Verizon about 10 years ago. T-Mobile gave us about $2,000 to pay off our 2 fairly new iPhones and our monthly cell service charges dropped by about $30 per month. And T-Mobile paid for our Netflix.
This was a huge savings. It caused me to look into investing in T-Mobile. I sold my shares recently and made about $25,000.
I was a fan of the product, I was impressed by the customer service, and I was a happy investor.
Then management changed and things slowly deteriorated (for me as a customer). The stock has also pulled back about 25% since I sold.
And T-Mobile’s price lock promise is gone. Just ask the folks at Reddit.
Death by a Thousand Cuts
Autopay is a blessing and a curse. It saves the hassle of sending bills every month, but if we’re not careful, prices can sneak up without our knowledge. And this is exactly where I am with T-Mobile. This is the 3rd time my price is going up.
No Mas!
I’ve written quite a bit about MVNOs
Verizon, AT&T and T-Mobile have more network capacity than they can sell to people like us. And while they would prefer to sell it to us directly, they can’t keep up so they sell off chunks to companies called MVNOs who sign up their own customers and pay the big 3 for use of their networks.
These MVNOs typically don’t have the marketing budgets of the big 3 and are typically smaller and more streamlined businesses that charge a lot less.
After advocating for MVNOs for years, I decided to make the switch.
US Mobile
I evaluated a few. My biggest concern is having good coverage. US Mobile allows me to switch networks between the big 3. The first 2 switches are free, then it costs me a few bucks. So if AT&T has a deadspot at a place I frequently travel, I can switch to T-Mobile’s network.
And the cost is $277 per year, pre-paid. My T-Mobile plan isn’t a bad deal, but I pay $40 per line so 40 x 12 = $480 per year.
Divorce
To complete the divorce, I also decided to move from T-Mobile wireless home internet to Verizon FIOS. The FIOS guys were in the neighborhood last year and I opted not to sign-up, but that was 2 price increases ago.
Effort
Most of us decide to stick with what we have because the effort of switching seems like more than we need. Most of us have busy lives and another task is the last thing we need.
I started this project at 7pm on Sunday and was done this morning. And I didn’t work through the night.
Admittedly the phone switch was harder than I expected. I’ve never done one online before and I found out after several phone calls to T-Mobile customer support that I needed to remove SIM lock and then enable port-out. And because I have a newer iPhone, I needed customer service to handle a piece of this.
But the T-Mobile folks were available on Sunday night, walked me through this, and then the transfer was simple.
I started the process on the US Mobile site. When I got stuck, I was able to do an online chat and they told me what I needed to tell T-Mobile to fully unlock my phone.
And honestly, I’m pretty happy that this is a little difficult. I’d hate for it to be easy for a scammer to call T-Mobile and transfer my line.
Savings
Here’s what my savings look like.
I pay T-Mobile $133 per month for 2 phones with unlimited data, wireless home internet, and I pay $13 for Netflix (it would be $19.99 without the T-Mobile discount).
I’m going to pay $35 for FIOS. I get a free modem and I get a $100 gift card to cover the $99 install fee. The guy comes this Saturday to install. I could have done it sooner, but we’re busy.
I will pay my own Netflix now (or maybe switch to HBO Max for a bit).
In total, I’ll save $31.84 per month, and $382 per year.
That’s nice, but not life-changing.
But I expect I’ll continue to have cell phones and home internet for a long time. Probably 20 years or more.
So what happens if I invest that $31 per month in a nice low-cost S&P 500 fund?
As we know, the S&P 500 has averaged a 10% annual return with dividends reinvested over that last 100 years or so. Let’s be conservative and target an 8% annual return.
There’s your $17,000.
Wrap Up
Small increases add up – fast.
And small investments can grow – slowly.
And while the growth is slow, over long periods of time, the magic of compounding can create wealth.
I did a similar demonstration with my most recent group at Women’s Money Matters. Most of the group was in their teens or early 20s. I showed them a demonstration of what they might have if they found just $10 per week to invest and continued investing $10 weekly until they turned 60 – that’s 40 years for them.
It looks like this.
Save a few bucks and invest it. It will make a difference.