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The Economics of: Phone Data

The Economics of: Phone Data

Last year, Mama Sasquatch wrote a post on how we have been evaluating our bills to save money. One of the main money sinks was our cellphone data plan. I wanted to expand on that particular bill to show you just how much money you can save by simply cutting your cell phone data plan. I know what you are thinking, “but I love my phone data…what about GPS? what about Facebook?”. We are addicted to our smartphones just like everyone else and I thought that I would miss it too, but I am here to say that I haven’t missed it once. The fact is, you are usually on your phone at home, in a familiar place that has free WI-FI, or have access to services like ShawOpen that make WI-FI ubiquitous. 

In 2014 before we turned our data plans off we were paying an average of $175 a month for our family phone plan. We are now paying an average of $65 a month for our phone plan. That simple change is a savings of $110 a month! A friend commented that $110 of savings was too little of an amount saved to make a difference and motivate them to cancel their data. We wanted to do the math to show how a little goes a long way. Lets say we are 25 years old and wanted to retire at 65. That gives us 40 years of $110 monthly savings. If we invested it at 5% interest we would have a whooping $167,428.49. That’s an unreal amount of money for something that is a luxury service and most likely, a service you won’t even miss. But here is the fun stuff. MoneySense Canada states that the average retiree spends $28,800 a year. Since there are 2 of us, that means that when we retire we should be living off a minimum of $57,600 annually. Cancelling our data plan has given us nearly 3 years of retirement income, which is insane!

Now you might be thinking how does this work for an  individual? I checked out the cheapest talk and text plan offered by Telus which is $35 a month. The cheapest Talk and data plan is $85. By cancelling the data you could save $50 a month. Seems like nothing? Using the same information from above, $50 a month invested at 5% for 40 years gives you: $76,103.86 in savings. Once again, nearly 3 years of retirement income based on an individual retiree spending $28,800 a year. Small changes do go a long way and sometimes it requires going against the grain of what everyone else is doing but in the end the payoff is huge. 

Papa Sas

Say Cheese!

Say Cheese!

Garbage Day!

Garbage Day!