Saving $200 a month on your cell bill doesn’t seem very dramatic. Saving $100 doesn’t either. When you start to look at how you use that $200 a month, it can really add up quickly. Let’s take a minute and travel down the road with a family of 5 that just switched from Sprint to T-Mobile and see how the savings add up for them if they do something silly like, apply the balance to their mortgage each month.
If that family of 5 were to purchase a new home today for $250,000 and have a 4% rate on that loan, their monthly payment would be $1193.54 a month. At the end of their 30 year loan, they would have paid nearly $180,000 in interest on that loan. Amazingly enough, that’s the story for most families today. Spending $350 a month on their phones and $1200 a month on housing. The good news, that loan would be paid off in the year 2044 and the house would be theirs.
With the new Uncarrier plans from T-Mobile, that family can cut their bill to under $150 a month and still get everything they need to have. By cutting their bill by $200 a month and applying that to that $250,000 loan at that 4% interest rate, the amount of interest they pay on the loan drops to $131,613. That saves almost $50,000 over the life of the loan with the same monthly expense going out the door. The better part, the home is paid off in just 22 years rather than 30 years. That means during the next 8 years, you pocket that $1,200 your loan was costing you for a total savings of nearly $114,500.
By The Numbers:
$350 Cell Plan Budget – $250,000 (original loan) + $179,673.77 (4% Interest over 30 Years) = $429,673.77
$150 Cell Plan Budget – $250,000 (original loan) + $131,613.78 (4% Interest over 22.8 Years) = $381,613.78
$150 Cell Plan Budget Savings – $1193.54 * 86 months = $99323.98
Savings – $429,673.77 – $381,613.78 + $99,323.98 savings = $147,383.97
Looking at that cellular bill a bit differently yet? A simple $200 cut in your bill can pay off your house 7 years faster and ultimately save you $150,000 over the next 30 years. Not so small now is it?