Get a cell phone for less than $5 per month!

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Would you like a (reasonable) cell phone plan for only $5 per month?  Or, how would you like to save $600 over two years v.s. your current plan.  Seems impossible, but it is not!

First of all let me clarify: I'm talking about a cell phone plan for people who might use on average less than 30 minutes per month.   Who cares, right?  Well I can think of lots of people who might!  How about (emergency-mostly) cell phones for your kids?  Or cell phones for your less technology inclined parents?

If you are trying to get a normal (individual) cell phone plan, it seems that the cards are stacked against you.  I personally have two-cell phone plan with a reasonable number of minutes (but no data) for about $58 (and count myself as being lucky).

The other day my Mom called me about getting a new cell phone.  However, I was also interested in what they were charging her for her plan.  While she only pays $32 per month ($384 / year), she has very low usage (below 300 minutes per year).   I may not like my AT&T cell phone bill, but at least I'm getting some value from it.  She on the other hand is just plain getting ripped off (paying easily over $1 per minute!).   This started me on a quest to find a cheaper alternative for her (and upgrade her cell phone in the proces).

Turns out that prepaid cell phone plans are tailor made for people like her (and have other advantages as well).

I browsed around for a while and there are a myrad of prepaid plans and options.  Some have unlimited minutes, but charge you per day.  Some have variable per day charges (and per-minute charges).   Some have cheap minutes, but the minutes expire quickly.   It gave me a headache just trying to figure out which plan would be best for her.

The real trick, it seems, with these pre-paid cell phone plans is keeping your service active and not expiring your minutes.  All of these plans seem to have a huge hassle factor, not a good choice for Mom.

Then I ran into a pretty cool blog and an article about cell phones.  In the article and buried in the comments was a recipe for getting cheap service that is seems perfect for my Mom.

Here is the simple strategy:

• Get (or convert to) a prepaid phone from T-mobile
• 1st year:  buy one $100 card to obtain "Gold" status and get 1000 minutes
• each subsequent year: buy the largest minute card that you think you'll need.

The key is that with T-mobile gold status, any minutes you buy are good for one year.  This is important because I want a simple, hassle free plan for my Mom.   If she has to keep buying minutes every 90 days it will never work for her.   Buying minutes once a year is acceptable.

Check out T-mobile Gold rewards program, it is pretty straightforward.

Given my Mom's low usage, it is most economical for her to buy a single $50 card (460 minutes for the second year).  She might not use all of those minutes, but it is better than buying lower cost cards (and is simpler).

Since my Mom was already a T-mobile customer (and wasn't bound to a contract), all we did was call T-mobile up and convert her phone to pre-paid.  It took about a week, but it didn't cost anything.  They even gave her 12 free minutes for the conversion and kept her old number.

She is now cell phone bill free!

What if you are not a T-mobile customer?

If you want a new phone, T-mobile has a few cheap prepaid phones (that include Sim cards) for as little as $20.  Check out their phones here.  Of, if you already have a phone that takes a Sim card (like an iPhone), you can buy just the card for as little as $7 (also from T-mobile).

Note: if you don't know what a Sim card is, check out this link.

I tested out my Mom's Sim card in my jail-broken iPhone (pictured above) and it worked just fine.   Since you can pick up used iPhones for quite reasonable prices on Craigslist I think this is a perfect choice for Mom.  However, you have lots of choices for phones.

So, how much is she saving?

Her ongoing cost will be

• No cost to convert (and got 12 free minutes)
• $100 for the first year (starting in a about a month)
• $50 for each year thereafter

This works out to $8.33 per month for the first year.   Then it drops to  $4.16 per month thereafter (less than $5 per month!).  The first year she will save $284, next year it will be $334).   In two years she will save over $600!

I'm sure there are other good prepaid plans out there, but this one seems pretty good for people who want a hassle free phone.

References and further reading on prepaid cell phones:

• http://www.prepaidreviews.com/