I’m starting a new post series about the lessons I’ve learned so far in life, both financial and about life in general. We’ve all learned valuable lessons along life’s journey, sometimes the easy way and sometimes the hard way. Hopefully someone will read what I learned and avoid having to learn the same thing the hard way. Check back every Friday for a new lesson learned.
My First Cell Phone Contract
I was in high school at the turn of the millennium, when cell phones were starting to become widespread. By the end of my senior year I really wanted one of my own, and not just a pre-paid one. I would be going to college in the fall, and I wanted a “real” cell phone.
So I signed up for a 2-year cell phone contract and felt like a real adult. The plan was something like $30 a month, which I could afford. I had been working at Wal-Mart since turning 16 and could swing the payment. What I didn’t know at the time was that there are fees on top of fees on top of taxes on top of a bunch of other random charges. My $30 a month cell phone plan was more like $45.
It didn’t take long to realize that I just didn’t use enough minutes on my monthly plan to make it worthwhile. And the monthly payment meant I had to work more hours during that first year of college. I put in close to 30 hours a week working at Wal-Mart in the evenings after classes. My cell phone wasn’t the sole driver of that, but it played a part.
My grades didn’t suffer or anything, but while my friends were hanging out back at the dorm, I was off to work. Sure, I thought I looked pretty cool talking on my phone as I walked around campus (which admittedly wasn’t very often), but not cool enough to justify what I was paying.
Compounding The Mistake
It was less than a year into my contract when I finally decided I was done with the cell phone contract. It just wasn’t worth it. So I called the company to cancel, only to be told that there was something like a $150 early termination fee! Ouch, maybe I should just ride it out. At least I knew enough to do the math on it though. I knew that my $45 a month payment for another year would approach $500 total. Paying the early termination fee would sting (and force me to put in some more hours at work) but it was the better option. So I went ahead and cancelled the cell phone plan. I bought a little pre-paid phone soon after and thought it was just fine.
Before signing up for something, make sure it’s something you truly need. And make sure you understand exactly what it’s going to cost.