The mobile phone is a financial liability. Thanks to a story I heard about Tamaki families turning their financial lives around I've been dwelling on unnecessary drains on finances such as cellphone spending.
The Tamaki project run by the Commission for Financial Literacy and Retirement Income, BNZ and the Ministry for Pacific Island Affairs involved financial coaching of families in 2010-11. Many of those families were depending on the minimum wage or not much more and thought they were broke. Several have now saved more than $10,000, says David Kneebone, the commission's executive director.
It's by taking control of non-essential spending that people can begin to save, or save more.
Cellphones are something rich and poor alike overspend on and no doubt figured in the Tamaki example.
Mobile phones are virtually essential these days. I cornered a wide variety of people I've run into this week and about half of them are overspending needlessly.
There was a mixed bag of people who use pre-paid credit or monthly packages and those on expensive on-account deals.
About half of those I spoke to could save money with just one phone call to their existing provider - all of which have good deals. Shopping around could save more.
Many people have no idea of the cheap deals available. One who was spending $30 a month said she couldn't afford to make calls and only used it for texting. Yet all of the main providers have $16 or $19 a month pre-paid plans that include a minimum of 90 minutes of calling. It would take just one phone call to her provider to switch.
In the old days I wouldn't have used pre-paid because it was too much work to top up. Now pre-pay can be renewed automatically by direct debit. In the words of Telecom subsidiary Skinny's chief executive Paul Taylor, it's "set and forget". It is equally convenient to have pre-paid or on account.
Last year I ditched my on-account plan and took the $4 a week deal from Skinny for calls, text and data, which suffices even though I'm umbilically attached to my smartphone.
One of the main reasons people go for expensive on-account plans - which range up to $169 a month - is the "free" handset. But they are far from free.
I did the maths on a "free" Samsung Galaxy S4 and the $99 monthly charges add up to $2376 over the 24-month contract.
The same phone costs $757.49 from Expert Infotech and on my $4 a week package the total ownership cost over two years would be $1173.49. That would make the "free" phone $1202.51 more expensive for me than buying it outright and signing up for a sensibly priced monthly deal.
I know some people wouldn't buy from parallel importers. Even if I bought a New Zealand-sourced phone from Dick Smith at $899 I'd still be $1061 better off.
I would never buy on hire purchase. But if someone used Dick Smith's current "interest-free" deal, the phone itself would cost $1207, taking the total cost of ownership on a $4 a week package to $1623.78 over the two years, making it $752.22 cheaper than the "free" deal.
In my less charitable moments I think anyone who gets a "free" handset because they think it's cheap needs to have the letters S.T.U.P.I.D. plastered across their forehead.
These deals should have a stigma attached to them. They're even worse than HP, which is saying something.
The other downside is if the phone gets stolen or broken, you're stuck in the overpriced contract for two years with no phone. Nice one. That is unless you pay for the overpriced phone insurance, which is another can of worms.
My price comparisons are, of course, between expensive plans with huge amounts of calls and data and unlimited texts. It could be argued that I'm not comparing apples with apples. People who take these deals, however, do it for the "free" phone and most don't need such expensive packages - especially if they have background data turned off.
Everyone's usage is different. Considerable numbers of people still prefer to pay for credit when they need it. But even standard credit is a competitive market, with providers such as Vodafone offering added extras such as extra free data or texts every time you top up.
One of the fathers I cornered at the school gate reckons he spends no more than $20 a year on top-ups, which astounded me because I know he works as a consultant. He simply chooses not to use his phone to make outgoing calls and texts or use data.
I found some people being quite clever with their smartphone plans and usage. One woman I spoke to pays the absolute minimum with 2degrees and shares her husband's data, which is paid for by his company.
On the subject of 2degrees, the company also offers "carry over" minutes, which means if you don't use your minutes they carry over to next month.
I've often wondered why people get separate SIM cards for their tablets and pay for two connections when it's very easy to turn your smartphone into a mobile hotspot and use one data package for both. When on holiday I connect the laptop and kids' iPods through my phone and pay an extra $1-$4 for the week for extra data. That's a lot cheaper than $20 a day at the hotel.
Some of the people I spoke to were on incredibly expensive on-account plans. One was paying $90 a month and didn't even have a "free" phone. Ouch.
There is also the question of making overseas calls from your mobile and roaming while overseas. In Australia I buy a Yes Optus SIM at the airport and for A$2 a day I get all the data, calls, texts and children's YouTube usage I need for my stay.
There are other options for roaming in Australia and elsewhere. Telecom on-account customers pay $6 a day for data in Australia and higher, but fixed rates in other countries. Vodafone customers can buy chunks of data starting from $15 for 100Mb.
If you like to call overseas from New Zealand on your mobile there are good deals. 2degrees combos include free calls and texts from New Zealand to Australia and Skinny's monthly deal includes the same.
On weekly deals Skinny offers 6c a minute calls to China, India, the United States and Britain, Canada and Australia. Vodafone has two hours for $2 deals with some pre-paid plans, or free calls to Australia on some of its Red plans. Telecom pre-paid users can pay $9 a month for 90 minutes of calls and 90 texts to "selected countries".
One of the things I love about Skinny is there is no casual data rate. If I run out it cuts off my data rather than let me suffer "bill shock", as Taylor puts it. I can add 40Mb more data for $1. 2degrees has Spend Control, which can be set to stop your usage when you hit a pre-set level.
I've spent quite some time trying to find the cheapest deal for tweens and young teens. Unfortunately they can't just buy a bundle of 5000 texts and use them until they run out. All the deals I found expire after a month.
We've got two 2degrees student SIMs in our household, which were the best I could get at the time for the kids' call and text usage. Anyone who only texts can get an unlimited package for $8 a month from Skinny.
Anyone who is paying more than $16 to $19 a month for their mobile phone bill should ask themselves "why?" and shop around.
Skinny has the cheapest monthly deal at $16 - with add-ons to suit most usage patterns. Vodafone, Telecom and 2degrees all start at $19 for calls, text and data packages. Even owners of dumb phones who don't use data would be better off on these packages. At most, the $29 plans should suit even big users of their mobile phones.