Cellphones eating bigger part of family budgets

Cellphones eating bigger part of family budgets

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SALT LAKE CITY — Government data shows some families are paying more for their cellphones, thousands a year on phone plans each year, even as they cut back on dining out, clothes and entertainment.

According to recent Labor Department data, spending on phone services rose more than 4 percent in 2011, the fastest rate since 2005. The average household's annual spending on telephone services rose to $1,226 in 2011 from $1,110 in 2007.

The Wall Street Journal reports more than half of all U.S. cellphone owners carry a device like the iPhone.

Will Vandertoolen, a credit counselor with AAA Fair Credit Foundation, says a cellphone isn't just a phone or a convenience anymore. Increasingly, people feel unlimited data and games, music, Internet and apps are a necessity.

Phone spending
Average household's annual spending on telephone services:
  • 2011 - $1,226
  • 2007 - $1,110
    Source: Wall Street Journal

"As we work with individuals that need to cut their expenses, they rarely are willing to give up the cost and convenience of a cellphone," he said.

"It's about all of that access right at our fingertips," he added. "It's difficult for someone to give that up, and very rarely when we are working with someone on budgeting do they want to give up that expense."

He says as more young people demand it, their parents are buying it for them, often taking on that expense of the phone bill without having their child pitch in to help.

For example, you find the latest smartphone at a great price for the holidays, so you buy it for your teen.

You're never going to give up that smartphone when you have it. You've just accepted that expense into your budget from now on.

–Will Vandertoolen

But what about the multi-year contract? And the data plan? You have to have unlimited, right? Next thing you know, it's a budget buster.

Vandertoolen says he sees it happen all the time.

"You're never going to give up that smartphone when you have it, right? So you've just accepted that expense into your budget from now on," he said.

For those needing to scale back, he says it may not make sense to cancel a contract to save money if there are only a few months left on the contract. Plus, the cancellation fee could be costly. But if you have more time on your contract, it could male sense to pay the cancellation fee now instead of incurring the phone expense each month.

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Mary Richards


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