Pop quiz: How many megabytes do you think
it takes to stream an episode of Cobra Kai to your phone? How about uploading a TikTok? Listening to a podcast? If you’re like most people, you have no
idea. And yet, when you go to buy a cell phone,
the sales rep will present a bunch of different data plans to you, as if you know how many
gigs you're going to use over the next 30 days. That’s why most people end up going with
what seems like the safest option: unlimited data. Sounds good, right? I mean, I use my phone a lot, and I don’t
want to count megabytes. Sure, it’s more expensive than the capped
plans, but at least I’ll know that I won’t run out of data in the middle of a road trip
or an important video conference. Before you make that call, there’s a few
things you should know about “unlimited” plans. It's data. Data. First, unlimited plans are not exactly unlimited. They usually still have a data cap and once
you go over that, your speeds will slow down, depending on how busy the network is. Secondly, many carriers will sometimes give
capped accounts higher speeds than unlimited ones. The reason is that when capped customers go
over their limit, they can be charged extra, so there’s incentive for the carrier to
let them rip through their data as quickly as possible. Unlimited customers have already paid everything
they’re gonna pay, so why make it easy for them to use data? It’s kind of like an all-you-can-eat buffet
that deliberately uses small plates to keep the diners from eating too fast. Third, and this is the big one: you probably
don’t need that much data anyway. According to a 2018 study, the average usage
by unlimited data customers was only 6.1 GB per month. That may seem strangely low, but it’s because
you only use your mobile data when you’re not connected to a WiFi network... and WiFi
is everywhere. At home, at work, on campus, at the gym and
the coffee shop. Sure, there’s a small number of people who
might rely on mobile data, like if you do a lot of business on the road, or don’t
have broadband at home and use your phone to stream movies. But for most of us, “mobile data” represents
a small percentage of our overall usage. So then why are most of us subscribed to unlimited
plans? Mainly, because that’s what the service
providers want us to do. Unlimited plans are heavily promoted by the
big carriers, often bundled with phone discounts and free subscriptions to streaming platforms. In fact, you have to dig pretty deep into
their websites to find any alternatives. And most of the big wireless companies have
started making their capped data plans “pre-paid” only, which means you have to pay for a whole
year of service up front. They really want you to choose unlimited. And why wouldn’t they? With the cheapest “Premium Network Access”
plan offering 50GB a month, that means the average customer is using less than a quarter
of the data they’re paying for! That would be like paying for 100 gallons
of gas every month, even though you only use 20. And you don’t get credit for the gas you
didn’t use--it goes right back to the oil company. Now, if you happen to be one of these people
who actually uses 50 to 100 gigabytes of mobile data a month--you might want to cut down on
your screen time--but, you are getting a really good deal. That’s way less per megabyte than the average
rate, but only because all those other customers are paying for megabytes they’re not using--essentially
subsidizing your low price. This is similar to the business model of many
gyms and fitness clubs. Most of their members barely use the services
they pay for, which keeps the price low for those who work out regularly. So how much money can you actually save by
forgoing unlimited data plans? I think it’s time to… RUN THE NUMBERS! One year ago, Kevin got a new phone from one
of the major wireless carriers, and the sales rep strongly encouraged him to go with an
unlimited plan. Kevin travels a lot for work, and relies on
his phone when on the road, so he figures he’s probably a slightly above average data
user. He opts for the mid-tier option: 50GB of data
without slow-down for $75 dollars a month (plus fees and taxes). A year later, Kevin happens to check his data
usage and finds that he used on average about 7.5 GB a month--only 15% of the total he’s
paying for! At first, he thinks that can’t be right,
but then he starts remembering all the places he typically uses his phone: airports, cafes,
hotels, convention centers--all with WiFi. Not wanting to spend money on something he
doesn’t use, he digs through the carrier’s website and finds that they have an 8GB pre-paid
plan for only $25 a month--if you pay for the whole year up front. That’s $300 now versus $900 over the course
of the year--an easy decision for Kevin, who happens to have enough cash on hand. There is one drawback to Kevin’s plan: at
only 8 GB a month, he will have to be a bit more careful about how he uses his data. Fortunately, there are some simple options
in your phone’s settings to minimize usage outside of WiFi, like turning off push notifications,
automatic app updates and GPS when you’re not using them. Kevin also decides to bring a book with him
when he travels so he’ll have something else to do with his downtime than doomscrolling
through Twitter. And that brings us to another major way your
cell phone is ripping you off: not by stealing your money, but your time. Almost every app and social platform on your
phone is explicitly designed to keep you engaged well past the point of any benefit. Let’s be honest: just staring at the clouds
is probably a better use of your time than arguing with your cousin on Facebook or fueling
your FOMO on Instagram. If switching from unlimited to pre-paid will
save you money and motivate you to cut down on unproductive distractions, I’d call that
a win win. Over the last 20 years, cell phones have gone
from a luxury to a necessity. But unlike most other utilities, the way we’re
charged for wireless service is inherently vague. As someone who likes to keep track of what
I’m getting for what I’m paying, I hate that. Fortunately, you don’t have to stumble around
in the dark. Check your data usage, look into alternate
companies and plans. It may take a bit of digging and a fair share
of discipline, but when it comes to your cell phone, you--not your carrier--should be the
one making the calls. And that’s our two cents! Data. It's data. Okay. It's not the Star Trek character, it's data. Hey guys, it's us again! So many of you leave such really wonderful,
thoughtful comments, questions, and we want to take just a little bit of time at the end
of the video to address them. Miriam Korver, hello. She put that, "This video is applicable to
my situation pretty specifically. I pay 850 in rent, which is over half my income." Oof. That's tough. We generally recommend trying to keep your
housing at under 25% of your income, but $850 is not a high rent, that's an affordable rent. To me, this kinda drives home the point of,
y'know, this viewer--and if anyone's in a situation--doesn't necessarily just need to
do better themselves. We as a society need to better for people
who are in situations like that. There's a really great book about this whole
issue called "Evicted"--it actually won a Pulitzer Prize. His main thought is that we need to expand
these voucher programs for low-income families that will cap how much of their income can
go to their basic needs. And he said something like 70% of the households
that are going through eviction have children. Eviction does happen in poverty but it can
also create poverty. I think this is a good one to leave on. Daniel Grooms put, "It's important to keep
asking "why?" until you actually reach the bottom of the issue. Why can't landlords make money off of cheaper
housing? Why won't communities allow low income housing
to be built?" Why communities won't allow this? Y'know, a lot of us are scared. That something we need to work on. That's something we shouldn't just be okay
with, that that's just the way things are. Because that can change and it doesn't need
to be that way. So ask questions that you would like us to
look at and maybe even answer in our next episode. Yes, indeed. See you later. Bye. Thanks to our patrons for keeping Two Cents
financially healthy. Click the link in the description to become
a Two Cents patron. If you wanna learn more about how fitness
clubs get people to pay for things they don’t use, check out our video “The Hidden Costs
of Joining a Gym.”
