There's a pretty good chance you either own a smartphone or, according to the stats, you're going to own one really soon. A recent Nielsen report said that almost half of all mobile subscribers now have smartphones.

If you already have a smartphone, the reasons are pretty obvious why you'll hold on to it. You can download apps to organize your work, play games, search Wikipedia, get directions and connect to the Internet whenever you want.

However, like anything else we buy, there's a cost of ownership that we rarely think about when we make a purchase.

So, what's the real cost of owning a smartphone?

What It Really Costs
According to the Wall Street Journal, the average data, texting and minute plan for a smartphone costs about $2,100 for a two-year contract. However, that's not the real cost. The average tax on smartphones is about 15% and some can be as high as 20%. On top of the taxes, you need to factor in costs like overage charges and other fees. When all of these are added together, the average cost for owning a smartphone is $3,400 over two years.

There are a lot of comparisons out there between iPhone and Android phones, so if you're trying to decide which one is cheaper overall, keep in mind that according to, paid Android apps cost an average of 2.5 times more than paid iPhone apps. reports that 57% of Android apps are free, versus only 28% of iPhone apps. This does not mean that if you go with an Android phone your bill will definitely be more expensive, but you may want to keep it in mind when you decide which phone is best for you.

How to Save Money
There's no real good way to get around owning a smartphone. If you want one, you're probably going to buy it. Here are some tips to keep the monthly bill lower.

  • Get Less Data - The average smartphone user only uses about 20% of their data a month. If you know you are not going to be a power-user, consider the lowest data plan.
  • Sign Up for Fewer Minutes - A 2009 report by Consumer Reports said that 1/3 of smartphone users used less than half of their allotted minutes each month.
  • Watch App Purchases - This is an obvious one, but can be so hard to keep in check. Compare your app purchases month to month to see how much you're really spending.

Smart Alternatives
The days of having to sign up for a contract are over. There are good smartphones available through places like Boost Mobile and Virgin Mobile that still run Google's Android and have cheaper data and texting options.

You'll pay more upfront for the phone if you choose a pre-paid carrier, but it could literally save you thousands of dollars over the course of two years. The best part, besides a cheaper bill, is that if you don't like the carrier you can always quit with no cancellation fee.

The Bottom Line
There are lots of choices out there and all the information can be overwhelming. If you think a little outside the box and actually figure out how many minutes, data and texting you're actually going to use, then you might be able to save some real money. Or, you can sign up for a pre-paid carrier and kiss those costly contracts goodbye.

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