Save Money Using Prepaid Cell Phone Service

One of the biggest changes I made when I decided I needed to cut my monthly expenses back was to get rid of my cell phone plan when it was up for renewal. The biggest change I made was cutting off satellite TV and going to the Amazon firestick. You can read more about that here.

Going to prepaid cell phone service was not a decision taken lightly. I made the switch about two years ago. I was with Verizon. I had three phones on the installment plan for fancy phones, and my bill was running me about $350 a month total. Prior to that, I was with AT&T on a contract plan, and my bill was about the same. Back then, they charged quite a bit when you went over data. I had insurance on all phones. My bill was always high.

I was drowning just trying to keep our cell service turned on. I knew something needed to change, and that’s when I started doing some research.

Sure, the newest phones are fun. But, are they really a necessity? No. I bought my youngest daughter an iPhone SE. It was on sale at Target for $104. I bought a Huawei Honor 5 from Best Buy. It was $169. Both phones were unlocked. I went to AT&T Pay As You Go. I signed up for Auto-pay, and our phones are bundled. I pay $70 a month total for both plans, 10 gb of data per month (for each phone), and our data does rollover because I’m on auto-pay.

My oldest daughter went to her own plan. She got a $200 phone for free for signing up with Cricket. Her phone plan is $35 a month. If you add up her $35 and my $70, that’s $105 a month when I was paying around $350 before. That’s OVER a $200 savings per month.

What’s wrong with monthly installments?

I have researched the most popular prepaid cell phone carriers such as AT&T, Verizon, Boost, Virgin Mobile, Cricket, and MetroPCS. I have checked out AT&T and Verizon’s postpaid plans. It looks like they have cut out the extra data fees and base service is about the same regardless if you have a postpaid phone or prepaid phone these days.

Where you end up making a financial mistake is in the commitment on your cell phone. When you finance a phone on one of their installment plans, you’re going into a 24-30 month agreement with the cellphone company. $30 a month for a new iPhone sounds great, but for 30 months? That’s quite the commitment. My first marriage barely lasted that long.

While you don’t technically have a contract, you still can’t switch carriers or get a new phone until the one you’re paying on is paid off. Let’s say, a year into it, you hit hard times. You really can’t afford to keep paying your monthly phone installment charge plus your the bill for your service.

For this story, you have an iPhone XX, and you’re paying $30 a month for it for 30 months. That means it’s a $900 phone. So, you’ve paid $360 at that 1-year mark. You still owe $540. That’s a big chunk of change when you’re having hard times and need to cut your cell phone bill down. If you take the loss and don’t pay it, it’ll reflect on your credit. That sounds like too much stress to me.


Go ahead and outright buy a phone that you can afford to save yourself money and possible financial issues in the future. Recently, I upgraded to the Huawei Mate SE off of Amazon. I like the Huawei phones because they’re unlocked. I know there was some negative coverage in the media because they’re Chinese made. However, they haven’t given me any problems, and they really are comparable to the Samsungs.

How will you know what phone you can afford?

Dave Ramsey helped me out with this question. First of all, he does NOT recommend insurance on your cell phone device. Insurance is costly, and you’ll still have a deductible anyway. There’s also a chance that however you damage (or lose) your phone isn’t even covered in your policy. That’s happened to me more than once over the years.

Here’s what Dave says, “If you don’t have the cash on hand to replace your phone if something happens to it, your phone is too expensive for your budget.” I love that!!

While it may be tempting to spend your hard earned money and splurge on a super fancy phone, keep what Dave said in mind. If something happens to that phone, can you afford to go to the store and buy another?

You can still find a more affordable phone with many of the features of newer iPhones or Samsungs. My Huawei phone has fingerprint recognition, a big screen, and the front and back cameras both take good enough pictures. I use my phone for work a lot. My phone can keep up with all of the apps I need, and I haven’t had any issues working on the go.

If you step back and evaluate on what you need rather than what you want, you will figure out that buying a phone that you can afford will be better in the long-run. Besides, as you’re saving money and being financially smart now, you’re building your riches. One day, you’ll be able to afford that iPhone XX. 😉

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About the author : Loreina

Mom. Blogger. Virtual Assistant. Business Owner. Pretty much in that order. When I'm not saving the day, I'm sleeping. It's not an easy life, but someone's gotta do it!

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