How did my phone bill get so high?!? Why you should pay attention to your bills

This is a guest-post from Tim Ellis, author of Seattle Bubble, a blog and forum dedicated to real-estate market conditions in the Seattle area. Tim is a long-time GRS reader. Previously on GRS, Tim has written about renting vs. buying, renting in a new city, setting homebuying priorities, and gaming without breaking the bank.

Recently my wife and I sat down for the first time in a couple of years to review and update our budget. Since last adjusting our spending and saving plans I had gotten a new job, we bought a house, and we adopted a baby, so it was definitely past time to take a new look at the big picture of our finances.

The Unwelcome Discovery

Most of the adjustments we made were typical and fully expected—mortgage payments, baby supplies, and so on. However, one item in particular jumped out at me as I was going through our regular monthly bills: Our monthly Vonage telephone bill was way higher than I remembered it being.

I logged onto my account to try to figure out what was going on and sure enough: Since early 2009 our bill had gone from around $17 to over $30—a 68% increase! How did this happen without me noticing earlier? Let's start with a little background.

The Critical Error

All of our other monthly bills (water, electricity, cable, mortgage, etc.) get paid manually every month as they comes in. Many of them have an auto-pay option, but I prefer to spend the five minutes that it takes to pay them myself each month so I can keep better control over exactly when money comes out of my accounts, and so I notice if the bill is different than I expected it to be. However, our Vonage bill was the one exception to this rule. Way back in 2003 when I signed up for Vonage, for reasons I can't recall anymore I gave them my credit card number, set the bill to auto-pay, and more or less stopped thinking about it. That was my critical error.

Sure, each month when I would pay off our credit card balance I would track all of the items that went into that month's bill, but since most of the items on there were non-recurring purchases, my mind was never in “bill pay” mode where I was watching for unusual increases. Little did I know that while I wasn't paying attention to my bill, Vonage had increased my base service rate by 33% ($5) and added four new taxes and fees to my bill.

Vonage Bill Chart Breakdown

 

So what have I learned, and what am I going to do about it?

The Moral of the Story

Pay attention to your monthly bills! Paying close attention to your bills is the only way to make sure that they're not being jacked up for no good reason.

Sure, auto-pay is convenient, but by not noticing this jacked-up bill earlier I have spent over two hundred dollars more than I needed to for basic phone service. That's an expensive convenience. If you can use auto-pay and still keep close tabs on your bills every month, great! As always, do what works for you.

The Solution

Lots of people these days have switched to cell phones for everyone in the house instead of having a “home phone.” We have a cell phone, but still prefer the benefits of having a phone that never drops calls, doesn't need to be charged every night, and rings in multiple places throughout the house when someone calls.

For basic home phone service, we've cancelled our Vonage account and ported our phone number to an Ooma Telo device ($208 at Amazon, $180 when I picked one up at my local Costco, and occasionally just $150 on Woot). Ooma provides basic VOIP phone service for as little as a couple bucks a month in taxes. It costs us a bit up front, but with around $27 a month in savings, we'll break even in just seven months.

You have probably read it on these pages before, but it is absolutely true that nobody cares more about your money than you. If you want to avoid throwing away your money on an inflated bill for months on end like I did, you need to keep an eye on your bills and figure out what's up as soon as you notice any changes. It never pays to let your guard down when it comes to your money.

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Nicole
Nicole

Our cell company mysteriously dropped our discounts this month… very high bill. This is not the first time this has happened. 😐 And of course it always takes several phone calls and waiting on hold to get them to fix the problem. And we’d never know if we didn’t check our bills each month.

SB @ One Cent At A Time
SB @ One Cent At A Time

Best way is to issue threat of service cancellation, call usually gets routed to customer retention, or similar, department where they take better care of customers. Also try to call them on Saturday evening, when call centers have lesser traffic of incoming calls.

El Nerdo
El Nerdo

That depends, when you’re in a contract they can threaten you back with cancellation fees. Happened to me with the atrocious ISP known as Qwest. They had the worst service ever but I was on a two year contract. I cancelled anyway but had to pay a bunch of money. Never, never, never, never again. Die, Qwest, die!

Bella
Bella

I pay bills online – my banking website shows me the last three payments made to a company when I click on their name. This helps me to see any changes month to month – easiest way to keep track of satalite, DSL and phone bill changes. Then I just call and ask what changed that month if I see a jump. Usually it’s a promotiona rate that expired and I’m able to immediatly either cancel the service or transfer to the ‘retention dept’ my favorite people in the whole (customer service) world… As for paper bills – no better… Read more »

babysteps
babysteps

Cable companies have another “interesting” unexpectedly high charge, for when you move your small business account to them. The install is free with an x year contract, and the monthly rate stays where it’s put… But the partial first month is invariably way higher (like 150% of what the contract full month price is) – somehow the contract rate is good only for full months. Has happened with Optimum Online & Time Warner. Doesn’t seem to affect the final month (got a normal pro-rated refund – assume you must be beyond the contract minimum), and the contract rate didn’t change… Read more »

Elizabeth
Elizabeth

My provider sends us a letter anytime our services increase — usually with an explanation why, though I never really believe it! I keep track of my bills even though I’m on autobay so I’ve never had a problem. HOWEVER, I notice that phone companies aren’t so good about letting you know they’ve changed their plans! I found out through a commercial on TV that there was a cheaper phone plan available that met my meets. I’m not saving a whole lot, but I’m getting more perks (like two calling features and free long distance minutes.) It pays not only… Read more »

20's Finances
20's Finances

Great tool. This is the very reason I rarely set any of my payments to automatic payments. I like to be in control of that money and see when the company raises the price (unexpectedly) like Netflix, for example.

David
David

Unexpectedly? You mean those 2 emails from the CEO announcing the price hike didn’t get the message across?

BD
BD

Or all the talking about it in the news (both paper and online) months beforehand.

Brett
Brett

Can’t stress the importance of this article enough. Two examples to share. First is with the phone company. Due to requirements of fostering, we are required to have a traditional land-line in the house. Trying to combine and save, I switched to DSL on a promotional deal to help offset the higher cost (was on Magicjack). Of course, the 1st bill was wrong. I was told to wait 2-3 billing cycles. When it still wasn’t fixed, I called back. I was told that they couldn’t go back and correct the previous bills, but they could apply the discount going forward.… Read more »

Michelle
Michelle

I had this experience with my Comcast bill for internet. WE had moved to a new apartment and set up a new account. Our bills came in around $50 a month, and in the chaos of moving, I didn’t read that initial agreement carefully. A year later, it suddenly appeared on the bill at $80! Turns out we had signed up for a ‘new customer’ rate that expired after a year. I found this out when I called to inquire, and it was understandable enough – and internet is one of our more serious priorities in home options. My mistake… Read more »

Tom
Tom

This is a nice point-counterpoint to the previous article about setting up autopay. I don’t mind automating my fixed bills (Mortgage, car payment, student loan), but I need to see the electric, water, credit cards before they’re paid.

Dogs or Dollars
Dogs or Dollars

Exactly what I was thinking, after just commenting over there.

Convenience is great, but it can cost you. Maybe not in late fees but in apathy to higher than ought to be charges.

Well Heeled Blog
Well Heeled Blog

Agreed. I put my student loan bills on automatic withdrawal, but the other bills I’d like to see before I click pay. To be honest, though, this has cost me in late fees a few times in the past 5 years.

Jake
Jake

Beware of Vonage!

You can cancel the service, but they will keep billing you. I took me 3 attempts and a threat of lawsuit to finally cancel the service.

The Tim
The Tim

It seems that porting my phone number over to Ooma automatically canceled my Vonage service.

But just to be sure I called into their customer phone line and was assured that “There won’t be any more charges on the account.” We’ll see what happens when the next billing cycle rolls around…

David
David

I would love to hear your experience/thoughts after using Ooma for a couple of months. I use Vonage right now and think the rates are starting to look too high for what we use. I’m always looking for alternative options. My wife won’t let me get rid of a home phone, so cell only isn’t an option right now.

KDH
KDH

I’ve had Ooma since the first of the year, and love it. We paid the $40 to port our existing phone number from the phone company and have had no problems with it. Call quality is good and we’ve been able to move our cell phones to a lower minute plan because of the free long distance–saving us even more money.

The Tim
The Tim

So far, so good! I’ve been quite pleased with Ooma. I especially like the “contacts” feature that lets me set names to phone numbers that would otherwise just show up as “WIRELESS CALLER” on my CallerID.

Dan Wagner
Dan Wagner

Another happy ex-Vonage OOMA user. I switched over a year ago after Vonage raised the rate on their low cost plan. Call quality and reliability are better with OOMA than Vonage in my experience. We pay ~$3/mo in taxes. Can’t beat it really. Even if you pay for the premium features it is still a much better deal than Vonage (once you recoup the adapter price).

julie333w
julie333w

We also switched from Vonage to Ooma, but I have not been very happy with the quality of the calls on Ooma. Often the call sounds like it is breaking up. I would like to switch back to Vonage, actually. When I called Vonage to cancel they offered me a much better rate. With that rate I would have staye with them but had already purchase the Ooma box. We are also having one other problem – we get all our calls no problem except for two familiy members, who are Vonage customers, say that when they call they get… Read more »

Brandon
Brandon

I’ve had Ooma for almost 2 years. The call quality has been excellent. I may have gotten disconnected one time, however, I’m not sure. The person I was talking to was talking on an AT&T cell phone and was driving through an area notorious for having a bad/no signal, so I’m not sure.

I’d highly recommend it, I’d put up with much worse for what I paid for it!

The Biz of Life
The Biz of Life

I could say the same for cable bills— they just mysteriously seem to creep higher month after month.

Why not try google voice instead?

El Nerdo
El Nerdo

And this is why I don’t do auto pay.

For phone, I use google voice. Instead of forwarding to cell I use google chat so it’s completely free.

It’s not really an always-on phone that rings all over the house, but I don’t want that– I prefer to shut down the phone when I’m not available.

Des
Des

The big take-away I see here is that you need to be reading your credit card statement, not just giving it a cursory glance. I have EVERY bill of mine on autopay, but I also read the statements when they come in. It seems like if you aren’t actually watching what is being charged to your card you may be missing more than just your phone bill increasing – how do you know there’s not fraud? Plus, if ALL your bills are autopay, then you’re automatically in “bill pay mode” when you read your statement.

Laura
Laura

I have all my bills on autopay. That way I don’t have to worry about sending a check or paying it online. The one thing I won’t do is switch to paperless billing. I like getting my bills in the mail. That forces me to actually look at the bill, and verify that we are paying the right amounts. That’s how I discovered that we had a water leak a few months ago, when our water bill almost doubled from one month to the other.

LAB
LAB

I switched to using Tracfone at the beginning of 2011. Now I have 3 of them. No contracts, etc. Texting, email, and web browsing are unlimited because these services use the minutes that I have already paid for and put on my Tracfone. NO surprises at the end of month!

First+Step
First+Step

I have a lot of our bills on auto-pay, and Quicken budgeting helps me to realize when there is a change. I generally look at the bills anyway, but I may not always catch the increase. When I enter the bill in Quicken and the payment is slightly different than the budgeted amount, Quicken sends a message asking if I want to change my budget. It helped me to realize that our land-line phone bill had gone up, and I was able to go to the phone company website to get a better deal. We still have a land-line because… Read more »

Stellamarina
Stellamarina

I like out land line for the same reason. We have a princess phone, with a cord, to plug in to the jack if the power goes off as the cordless ones do not work without power.

Ben
Ben

I agree that Vonage is too expensive. Many people will read this article however and not take action. They are too nervous to switch to new VOIP technologies such as Ooma and Net Talk.

* There are minor differences that scare people away such as 911 service being different and a misconception that the quality of the line is not good.
* However, they fail to look at the benefits such as $40 per year phone service.

Bella
Bella

Yea, but 911 service isn’t just different – it’s no longer garanteed. For people with small children the idea that 911 won’t be there when you need it is pretty significant! I’m surprised that the author talks about wanting to make sure he has a land line – but then goes on to say he has VOIP which is about as reliable as cell phones. The only reason we have our home phone is to get 911 service – I wish there was an option to just get that for like $2 a month – but then everyone would can… Read more »

retirebyforty
retirebyforty

I was lucky to get Ooma before they started charging a monthly fee. It’s still a great deal though.

jennifer ressmann
jennifer ressmann

I find when we get a deal – I mark it on the calendar as to when it runs out. Then I touch base with the phone company to see about other deals when current ones run out. We also nit pick all our bills.

I’m absolutely checking out Ooma! thanks!

Heather
Heather

I do something similar, but I set the payment in Quicken with only the months the lower rate is available. Then I can see when I’m paying the last payment, and call for another promotional rate.

krantcents
krantcents

I check my bills monthly even when I autopay it.

vhien
vhien

I have a mobile phone enrolled to a plan and it’s convinient because before the due date it has automatic update via SMS on what’s the amount of my bill so I’m always updated.

rb
rb

Check all autopay charges in all accts. My friend just discovered a $200 charge per month that was the result of fraud. Someone had stolen the acct number and had been charging this for 2 yrs. They were too busy to check the accts.

Marcia Wilwerding
Marcia Wilwerding

Twice now our local internet/phone company has charged us for the service call to come out and repair the line out at the pole ($35, their responsibility). If we had our bill automatically deducted from our bank account and had our bills only online, we probably would have missed it completely. I’d suggest having paper bills and paying them personally each month. Though we use the online payment services of the companies who provide them (saving postage and checks), one must also beware of extra charges for using online bill payments, which some companies charge for the service. So many… Read more »

Ben - BankAim
Ben - BankAim

That sucks! My home phone/internet bill was creeping up, up to the point I knew they were overcharging me. So I made a phone call and found out that they were charging me for equipment that I didn’t have!! They took off the extra charges but if you don’t watch them, they can easily charge you extra. These were bills we would pay ‘automatically’ and didn’t really pay attention.. not any more.

bobj
bobj

bye voy vonage!

Tom
Tom

I made the same mistake with Verizon, and even though I checked the statement and immediately realized that they were charging me for a service (identity protection, or somesuch) that I had explicitly refused, it was very hard to get reimbursed for the fraudulent charge. I believe this practice has been discussed on this site before. I also had problems cancelling the service, even though I didn’t have a contract, and my disputes with them came at a difficult time, when I was in the middle of a move. I’ll never set up my billing like this again.
Tom

Coley
Coley

“Since early 2009 our bill had gone from around $17 to over $30–a 68% increase!”

That’s a 76% increase, at least.

(30-17) / 17 = 0.76

G. M. N.
G. M. N.

I have most of my bills on autopay – utilities, phone-internet, donations, etc. I do not worry about it. I have my utilities on autopay from my checking and the payment is set up for level pay. I also get a monthly written statement from the city. The phone company also sends out a written statement for my phone/internet. I dropped my cable last year. As to checking, I have paperless statements, but print them out each month (I have years of one sided, used paper) and balance them. I do this with my 2 cc’s also, and pay them… Read more »

Shane
Shane

There are some completely free (at least after upfront costs) ways to get home phone service now. I just recently purchased an Obi100 (Amazon link below) for $43.99 that works with Google Voice to give you free home phone service (it also works with other VOIP services). It was extremely easy to set up as well, and works great so far.

http://www.amazon.com/gp/product/B004LO098O/ref=as_li_ss_tl?ie=UTF8&tag=joofaneda-20&linkCode=as2&camp=217145&creative=399373&creativeASIN=B004LO098O

Glenn
Glenn

I dropped Vonage shortly after the bill went over $20/month for the cheapest plan. I have been using MagicJack for over a year now and it has worked great. The first year of service is only $40 ($20 for the device, $20 for service) I then paid $70 for 5 more years of service. That works out to $1.53/month for phone service, plus electricity to run the small computer connected to the phone. I also use the computer as a file/print server, so it would likely be running anyway. Plus the computer only consumes about 35W. There is one downside… Read more »

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