Technology's growing cost

Budgeting: Waiting a while before springing for the latest gadget and keeping an eye out for deals will work wonders for your checkbook.

March 28, 2002|By Suzanne King | Suzanne King,KNIGHT RIDDER-TRIBUNE

If you're like many Americans, you've watched the amount you spend on technology creep up in recent years.

Instead of just paying for a home telephone and a cable connection, monthly budgets are covering high-speed Internet access, hundreds of television channels and wireless telephones for the entire family.

People are buying larger televisions and faster computers. They're replacing VCRs with DVD players and throwing out paper calendars in favor of handheld organizers.

It's enough to send checkbooks gasping for relief.

Maybe it's time to step back and look at where your money is going.

"We're always trying to get people to look at it and say, `Is this more than I should be spending as a percentage of my budget?' " said Jeff Sheets, director of community development with the Consumer Credit Counseling Service in Kansas City, Mo.

As a starting point, look at how much you spend annually on recurring expenses such as cable, Internet and telephone services. Think about your $70 monthly cable bill for what it really is - a hefty $840 from your bottom line.

To put it in perspective, if your salary is $30,000, you're spending roughly 3 percent of your take-home pay on cable. That's a big piece of the pie, considering that money managers recommend spending 20 percent to 30 percent of net income on housing and 15 percent to 20 percent on food.

"Do you want to spend $840 of it on this?" Sheets asked.

"I talk about budgeting like it's a big pizza," he said. "If you take out bigger slices for technology, that means the other slices have to be reduced."

But, after all, society relies on technology in a way it never has in the past. Many people aren't willing to do without cable television, wireless telephones and Internet links. They want the newest computer games for their children and the latest gadgets for themselves.

So, eliminating the rising tide of technology expenses is unrealistic for many consumers. But people can nip and tuck technology expenses by shopping carefully.

For one thing, being the first in line to buy something new likely will result in a higher price and could leave you the owner of irrelevant technology.

Think beta VCR. When VHS recorders swept the market, beta recorders became virtually worthless.

Wait even a few months before plunking down your credit card, and you'll likely get a better product at a lower price.

You also may be able to save on technology services, such as telephone and Internet, by looking for package deals.

Many telephone companies offer "bundled" services. For one monthly charge, you may be able to get a lower rate than you'd pay for each service individually. But, as with many package deals, you have to ask to get the deal.

And it's always worth asking. Even if you're not in the market to change your telephone or Internet carriers, you may be able to get lower-priced bundles without looking beyond your existing company.

You also can save money - and headaches - by remembering to read the fine print before you sign on the dotted line. This is most important when dealing with telephone or Internet service providers.

"We hear every day from consumers who tried to break a contract," said Linda Sherry, a spokeswoman with Consumer Action, a national nonprofit organization based in San Francisco.

But consumers often find they can't take advantage of a better deal with a competing company because they're locked in a contract for a certain period of time.

The fine print also may provide a road map to other pitfalls, such as rates that vary based on the time of day and hidden charges.

Sherry said one telephone company was "blanketing the universe" with letters about a new flat-rate long-distance service. But consumers who didn't understand that the plan included only calls made at certain times of day and to certain locations ran up astronomical charges.

The situation is common, Sherry said.

"What you don't know can come back at you," she said.

It may be a good idea to ask the salesperson to explain important details in the contract. Sherry suggests asking the person what details you should pay special attention to. But she pointed out that reading the details for yourself still is important.

Also, think about how you pay for your service. Automatic deductions from a credit card, for example, aren't always a good idea, Sherry said, even though many Internet service providers recommend that payment method.

"People who pay automatically tend not to scrutinize charges very well," she said.

If the company deducts the wrong amount, customers can't do anything to dispute it after 60 days. Also, canceling service billed through an automatic deduction can be more difficult.

To keep your technology budget down:

Wait to buy. Being the first in line to purchase new gadgets, software and services will likely result in a higher price and less refined products.

Look for bundles. Many telecommunications companies offer better deals if you buy packages.

Read the fine print. Hidden charges and details in phone and Internet agreements can cost you.

These Web sites might help guide you when shopping for wireless, long-distance or Internet services.

www.trac.org - The Telecommunications Research and Action Center offers a price comparison tool for long-distance plans.

www.10-10phonerates.com - Helps shoppers sort through dial-around phone plans.

www.letstalk.com - Offers advice about wireless plans.

www.dslreports.com/search - Helps you find the best high-speed Internet service in your area.

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