In my line of work, I meet with people all the time to discuss their financial situations. After establishing exactly what the situation is, my end goal is to get my clients back on the road to financial success.
One topic that often comes up with clients is the topic of shared phone plans. This is a topic both my clients and I feel very strongly about.
I’m Kimberly Gaines, Nationally Certified Credit Counselor with Pelican. I’m both qualified and privileged to hear the interesting details of how some financial decisions have long-term effects. After seeing the negative effects firsthand, I couldn’t help but become an advocate in helping people make healthy financial decisions.
Think of your financial decisions as a grading scale. “A” and “B” means you researched, studied, and carefully looked at all your options. “C” and “D” means, well, there are some areas to improve upon for next time.
The grade associated with sharing phone plans is “F.” Allow me to share what I’ve experienced and what I know about the subject to explain why.
Notice the first letter of each section title below.
Although it is perceived that you will save money by connecting your phone plan with others’, this is normally not the case. When there are multiple individuals on a phone plan, the main account holder has the daunting task of having to collect portions of the bill from others.
Often times, this causes the account holder to have to front the money and wait to be reimbursed. As this continues to be a challenge and an effort to avoid conflict, some will just decide to pay the whole bill and not even bother asking for the funds. Consequently, you have taken on additional debt that probably doesn’t fit in your budget.
Yes, this trend can even affect credit scores. The account holder reaches a point where they are ready to cancel the whole contract. The old saying “everybody has a breaking point” certainly fits when you are responsible for yourself as well as others in a phone plan.
Most phone plan contracts are two-year agreements. If this “breaking point” is reached and the contract is terminated within those two years, the other people on the plan are not held responsible when the unpaid funds are sent to collections. It is the account holder whose credit score and credit standing takes a negative hit.
Ask yourself—is it really worth it? I think you may already know the answer.
Now, to the most important “F” of all—your family.
I have personally seen and heard of families failing to meet their end of the deal when it comes to family phone plans. Whether it be the monthly costs of the phone(s), the data usage bill, or excessive overages, phone plan financial obligations cause family members to break communication with one another far too often.
Also, the other individuals on the line lose the flexibility of seeking a better option for phone services within that two-year contract period. What’s the use of having a communication device yet potentially losing communication with your family over something as minor as a phone bill?
Here’s your chance to get an “A.” There is an alternative! I recommend that you look into a prepaid option. A prepaid option allows you to avoid any type of commitment that would affect your credit, and it’s usually a less expensive option.
With the variation of costs associated with phones and phone plans, paying more to talk, text, and browse the internet is not smart—not even for a smartphone!
When searching for the best phone plan option, you have to consider more than just cost. Being responsible for making sure everyone pays you on time, every month, every time is a big task! All in all, unless with your immediate family (spouse and kids), let others obtain their own phone plan—this friendly advice will save you from a lot of strain on your finances, FICO score, and family!
Do you currently have more than one person on your phone plan, or have you ever done this before? How did it work out for you? Let us know in the comments!
My name is Kimberly Gaines, and I’m certified through the National Association of Certified Credit Counselors and the Credit Union National Association. I possess over 20 years of financial experience of which 9 of those years at Pelican State CU. I have starred in several #AskPelican videos, where I answer financial questions for our members. Beyond this, I also dedicate time to teaching financial subjects at community workshops and in schools in Pelican’s branch communities.