When Talk Ain't Cheap

We're in love with our cell phones—but not with confusing plan options and poor service. Are you in need of an upgrade?

by Mary Rowland

Illustration: Roz Woodward

Cell phones are no longer simply an option for many Americans. Frequent fliers must have them. College students, too, many of whom no longer even bother with a land line. We're crazy about those little phones—but not about the hassle of deciphering obscure service plans and dodging hidden fees. A recent survey in Consumer Reports found widespread dissatisfaction with cellular service, with 35 percent of respondents saying they are seriously considering switching carriers to get better service.

The best time to research your options is before you buy your phone or when your contract is nearly up. Most carriers require one- or two-year contracts, so before you commit to a plan, you need to consider:

HOME AND ROAM. Where will you use your phone? Most carriers provide a home area. If you leave your home area, you are "roaming" and must pay additional fees. The home area might be the urban area where you live, your entire state, or the whole country. Choose carefully because calls made or received outside your area can cost a lot. For more information, go to www.wirelessguide.org.

GAB FEST. How much will you talk? And when? Both calls you make and those you receive count toward your monthly limit. Carriers provide a range of plans, with the lowest level being a pre-paid phone card. Choose this if you expect to use your phone only for emergencies. If your child is a college student, consider one of the "family plans" where you get unlimited minutes between family members as well as a discount on the second account. Some carriers offer free minutes between all customers who use that carrier's plan. Many plans offer free minutes on weekends and weekday evenings. You'll save if you choose a plan that closely matches your family's pattern of phone use.

BELLS AND WHISTLES. Consider various frills. Ask friends what they like and dislike about their phones. Do you want a folding phone? A tiny one? Check the keypad to make sure you can easily access the buttons. Some phones take and send pictures. Some connect with the Internet and allow you to send e-mail. Don't get something that is merely gimmicky. But if you have just had a baby and the grandparents live on the other coast, the picture phone might be worth the extra fee. Be careful about "text messages," especially if your child will use your phone. Text messaging can be addictive for teens and usually costs extra. Unless your plan includes that feature, you can get hit with a stiff bill.

SERVICE QUALITY. The sleek cell phones may gleam, but how good is the carrier's service in your calling area? Check results of a survey, like the one done by Consumer Reports (www.consumerreports.org) that evaluates carriers. Ask your friends if they're happy with their carrier. What would they look for in choosing a new carrier? Consumer Reports suggests you start with a one-year contract in case you are unhappy with the service. Two-year contracts typically offer a better deal as well as a bigger discount on the phone. But most contracts carry a stiff fee for early cancellation. Be certain you understand what that is. Also check to see if you are permitted to change phones during the contract period.

CHECK THAT BILL. Go easy the first billing period, especially if more than one person uses the phone. When the bill comes, go over it carefully to make certain that you understand the costs and that there are no surprises. If you incurred charges you did not expect, verify them, and figure out how you can avoid them in the future, perhaps by calling during different hours.

KEEP THE PEACE. Remember to turn your phone's ringer off in theaters, in movies, at church, and during dinner!

Lease or Buy Those New Wheels?

Photo: Stockbyte

Chances are good that the new Camry in your neighbor's driveway is leased. Last year, more than one-third of Americans decided to lease rather than buy when it was time to get a new car. If you're in the market, ask yourself these questions:

What means more to me, lower monthly payments or lower overall cost?

How long do I expect to drive this car?

Is car design and prestige a top priority?

Will I put more than 18,000 to 20,000 miles a year on my new car?

Buying a car is cheaper overall. But you can probably lease with no down payment, and your payments will be lower each month. If you plan to keep a car for five years or more, buying is for you. If you want a fancier car than you could otherwise afford, consider leasing. Your monthly payments will be lower, but you will never escape them. Most leases provide for 12,000 to 15,000 miles per year. Extra miles cost 10 cents to 25 cents each. If you think you will drive considerably more than the lease allows, lean toward buying.

The Bank of You

To many Americans, a federal tax refund check is one of the rites of spring, bringing money to finance a renovation project or some yard work. Three out of four individual tax filers got refunds last year, according to the Internal Revenue Service. The average refund was $2,000; the total over $200 billion.

But it's time to be smarter with your money and recognize that a tax refund of more than $500 means you're allowing the government to use your money for free. A better plan: change your tax withholding to bring in a little more net income each payday—and discipline yourself to put the extra cash into a retirement or rainy day fund.

If you want to stop loaning Uncle Sam your extra bucks, start with your W-4 form. (It's on file with your human resources office.) The W-4 helps your employer estimate how much tax you'll owe based on the number of "allowances" listed on the form. Allowances include one for yourself, one for a spouse, and one for each child. But using the allowances is an inexact science, so if you consistently end up overpaying taxes throughout the year, use the worksheet on the W-4 to make an adjustment.

If your refund check is more than $500, look at IRS Pub 919 for help on how to adjust your withholding for the new year. You can print out the W-4, fill it out, and take it to your human resources office to make a change.

Rx for Savings

Illustration: Art Glazer

Odds are that the doctors you visit do not know how much you pay for the prescriptions they give you. Sure, they know that generic pills are cheaper than the brand-name medicines. But they probably don't know which drugs are cheaper according to your health insurance plan's formulary, nor how much of a co-pay you fork over when you show up at the pharmacy counter.

Some tips for saving a few dollars when you need a prescription drug:

GO ONLINE. Check the Web for prices on any maintenance drugs you take. At least two Web sites, www.DestinationRx.com and www.pillbot.com offer to compare prices and find the lowest online price. The sites break down the quantities to give you a "price per unit," or the dollar amount for each pill you take. A new site from Consumers Union is another great resource. It lists "best buy" drugs in these categories: anti-depressants, arthritis/pain, heartburn/acid reflux, and cholesterol-lowering medications.

ADD IT UP. Drugstore.com list prices for 30 tablets and for 90 tablets. Often three times as many tablets cost only twice as much. But double-check. Drug companies generally charge less for the most popular dosage of a medicine. For instance, 30 tablets of 20 mg pills might cost $20; 30 tablets of 40 mg might be $75. Find the most economical way to get the dose you need.

ASK FOR A PRICE MATCH. Check with your local pharmacy to see if it can match the lowest price you found online. Some will. Don't forget that you must pay shipping and handling for online orders.

SEE ABOUT OTC DRUGS. At your next regular checkup, ask your doctor if any of the medicines you take could be replaced by over-the-counter (OTC) drugs. If you have a high co-pay, an OTC drug may work well for you at a fraction of the cost.