Author: Mike Holman

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Personal Finance

Calling Home From Another Country – Long Distance Voice Plan Vs. Skype

This post is long and a bit technical. To make things easier, I’m going to start off with the conclusion for the people who don’t read the entire post.

Summary

If you are traveling to another country and are planning to phone home on a smart phone using Skype in combination with a data roaming plan – I would suggest you reconsider.  Skype is a bit of a data hog and your data charges will likely be higher than a reasonable long distance voice plan.  Look into getting a long distance voice plan for your phone calls.

Monitor your data usage during your trip – make sure that the monitor you are using is real time (unlike the one I was using).

Another option which has been noted in the comments, is that you can change the SIM card in your phone and get much cheaper data rates that way.   Rogers customers can unlock their phone for $50, but only if there phone is out of contract.  Check with your carrier to see if this is an option for you.

On with the article

I recently spent a weekend in Chicago at a blogger conference. Before I left, I signed up for a U.S. data roaming plan from Rogers for my iPhone so that I could access the internet and not pay crazy roaming fees.

The regular roaming data charge is about $30 per megabyte (MB) of data, which is pretty easy to use by reading about three or four web pages, so a data plan is a must if you plan to be surfing the net at all.

The Rogers roaming data plan was $10 for one month plus $1 for every megabyte of data I used. This isn’t a great deal, but it’s a lot better than $30/MB of data used, which is what it costs without a data plan.

You can read about my initial experience at How to avoid cell phone data roaming charges when traveling to the United States.

We left our kids at home with my Mom and needed to call at least once a day to say hello. My plan was to use Skype to make these calls. I have a Skype long distance plan on my phone already, so there would be no extra charge for making long distance calls.

I had estimated my data use at about 5 MB per day, based on my historical use and the fact that I wasn’t going to use the phone a lot while in Chicago.

The Rogers website has a data transfer monitor which I kept an eye on while in Chicago. My data usage seemed to be pretty minimal and ended up being 10 MB for the whole trip which was a bit lower than what I predicted.

I was pretty pleased with myself for taking the time to figure all this out and having a successful conclusion. But then I got the bill….

I was expecting to be charged about $10 for roaming data wireless use. In fact, the charge was $65.67!

After checking the bill details, the pricing and charges seemed to be in order – it was only the excessive amount of data usage that was the problem. The amount didn’t jive with Roger’s online data monitor or my surfing time.

It occurred to me that one difference from my normal iPhone web behaviour was the long distance Skype calls I had made. I suspected that this was the source of the extra data usage.

A regular web page might use up a quarter or a third of an MB of data when it is loaded onto your phone – but there should be minimal or no data transfer going on while you read the page.

I don’t know how much data is required for an internet voice call, but I suspect it is not a small amount and I do know that it is continuous, unlike reading web pages.

I decided to give my friends at Rogers a call and see if they could help me understand what happened and how to avoid the excessive data charges in the future.

What I wanted to know was:

  1. Why did the online data monitor only show 10 MB of data used during the trip when it was actually 66 MB?
  2. Do Skype calls use more data and if so, how much?

Because of past experience with bad reps, I have a rule that I always call Rogers at least twice. In this case, the first rep I talked to was completely useless, so I ended the call fairly quickly.

The second rep was ok. He wasn’t the sharpest knife in the drawer, but he did say that he didn’t think the online data monitor was reliable while in the States. This is something that hadn’t occurred to me – I had assumed their online monitor was real time.

I was then transferred to the tech department and talked to someone there who was very helpful.  The tech guy confirmed that the online data monitor was a few days behind. This means it is ok for checking out your monthly data usage, but not for roaming data.  It would be nice if Rogers could mention that fact on their website.

The tech guy gave me a great tip on how to monitor your data usage, which you can use on an iPhone. I suspect other smart phones have a similar feature.

Go to:

  • Settings
  • General
  • Usage

The “Usage” screen indicates how much data you are sending sending and receiving in the Cellular Network Data Sent and Received lines. The numbers are in kilobytes or megabytes, so if you see “KB” after the number, divide by 1000 to get the approximate MBs used.  Add both the Sent and Received values together to get the total.

Tech guy said that this screen should be very accurate. What you can do before a trip is to reset the statistics (“Reset statistics” option is at the bottom of the page), which will zero out the data usage numbers. You can now monitor your usage on the trip quite accurately.

This is what my phone usage screen looked like after a 5 minute Skype call. The “Send and Received” values under the “Cellular Network Data” were 3.3 MB + 2.4 MB = 5.7 MB. The “Reset Statistics” button is at the bottom.

How much data does a Skype phone call use?

None of the reps could shed any light on Skype call data rates, so I decided to do my own test.

I reset the data stats on my phone and then made a few timed phone calls. The results confirmed my suspicion that the Skype phone calls are data hogs.

The average data usage was 1.12 MB per minute which works out to $1.12 per minute.

I thought I was being smart by using Skype for my long distance calls instead of using an expensive long distance voice plan, but in fact the Skype calls were costing me over $1 per minute, which is far more than any long distance plan.

The other problem which I realized when I was writing this article is that in my mind, I wasn’t counting the Skype calls when estimating my data usage.  Definitely a miscalculation.

How I will reduce roaming data charges in the future

Now that I’m older and wiser in the ways of international data transfer charges, I have a new set of suggestions about how to reduce your roaming charges.

  • Look at your regular data usage and estimate your usage while traveling. Try to consider differences in behaviour such as more long distance phone calls.
  • Research available plans with your carrier for data, voice, and text messaging.
  • Use WIFI wherever possible. Any internet usage (including Skype calls) will not cause any data transfer charges if you are connected to WIFI.
  • Use a long distance voice plan for any phone calls back home. At Rogers I could have signed up for a plan which costs $5 for a month plus $0.10 per minute. This is less than one tenth the cost of using Skype. Even if you have a cheaper data plan, using a long distance voice plan will guarantee the per minute cost, which is not the case with Skype.
  • If you want to make calls with the phone without internet – turn the roaming feature off.
  • Monitor your data usage during your trip.  My regular web surfing used more data than I thought.
  • Try to limit use of the phone.
  • Leave the phone at home (I’ll never, ever do this).

How much data does regular surfing use?

I wanted to verify that my normal surfing wasn’t using a lot of data. To do this I did several tests where I reset the data usage stats, surfed for a while and then checked the stats to find out how much data was used.

Keep in mind that there are a lot of different variables which can affect data used for web surfing. Downloading videos and large files requires way more data transfer than a typical web page or email with no attachment.

The tests confirmed that for my regular surfing which consists of reading newspaper articles, some emails, Google Reader, Twitter and Facebook – I was typically using about 0.34 MB per minute or about $0.34 per minute of surfing.  This is more than I had expected, so while my main problem in Chicago was the Skype calls – my regular surfing also cost more than I thought it would.  Even if the Skype calls used the same rate of data as the web surfing, it still would have been far more expensive than a long distance voice plan.

Now I just have to remember all this stuff for the conference next year!

 

Categories
Announcements

LinkStuff – First Hockey School Edition

Last weekend, my son started his first hockey school.  It’s basically a learn-to-skate with a bit of hockey thrown in.  He seemed to like it and more importantly, I loved it!  It was quite exciting to see him skating around in hockey equipment and I knew a couple of the other hockey dads which made for a good time.  

There were a ton of kids and lots of instructors and while it seemed like a bit of a zoo, it was extremely well organized.  There was even a dog in the (very) crowded dressing room to add to the fun.

On with the links

Million Dollar Journey did an excellent review of the ING Streetwise index funds.

Phil from PT Money is planning to buy a new houses and use their current home as a rental.

My University Money was born in the USA and lived there for a total of two days.  Now he’s on the run from the IRS.  Unbelievable.

Rob Carrick had a very useful post on how to interview a financial advisor.

The Wealthy Canadian has some really good advice for anyone thinking of buying and investment or retirement property.

Thicken My Wallet has some do’s and don’ts when doing job interviews.

A long, but interesting look at the history of economics.

Canadian Capitalist covers the state of the Canadian ETF industry.

Boomer & Echo say that a power of attorney is very important.

Boomer & Echo is also giving away a copy of my RESP Book. Go enter now!

The Oblivious Investor compares ETFs vs. Index Funds.

My Own Advisor figured out the Best Canadian bank stock.

Michael James is interested in the BMO ETF screener and comparison tool.

MapleMoney has Five fall car care tips.

Carnivals

Carnival of Financial Planning

Totally Money

Carnival of Wealth

Categories
Announcements

How Do I Calculate My 3.6% Raise On My Social Security Payment In 2012?

It was recently announced that anyone receiving Social Security or SSI payments will get a 3.6% raise in 2012.  The big question everyone wants to know is exactly how much extra money they will be receiving next year?  This article will show you how to calculate your Social Security raise as well as calculate the new total payment including the raise.

How do I calculate my 3.6% raise on my social security benefits in 2012?

To figure out your exact Social Security increase you need to what 3.6% of your current amount is.

To do this – use a calculator and multiply your current payment by 0.036 – this will give you the amount of your raise.

For example, let’s say your current monthly payment is $825.12.

  • Get a calculator – either a real one or online calculator.
  • Type in “825.12” (or whatever your amount is). Don’t type in the quotes.
  • Press the “x” key – this is the multiplication key.
  • Type in “0.036” (without the quotes).
  • Press the equal key “=”.

The answer showing on the calculator is your raise.

Keep in mind that some people will see some of this raise reduced by increased Medicare Part B premiums.

How do I calculate my new total social security payment for 2012?

To figure out how much your total Social Security payment will be after receiving the 2012 COLA increase, you have to add 3.6% of your current amount to your current payment.

To do this – use a calculator and multiply your current payment by 1.036 – this will give you the amount of your raise.

For example, let’s say your current monthly payment is $825.12.

  • Get a calculator – either a real one or online calculator.
  • Type in “825.12” (or whatever your amount is). Don’t type in the quotes.
  • Press the “x” key – this is the multiplication key.
  • Type in “1.036” (without the quotes).
  • Press the equal key “=”.

The answer showing on the calculator is your raise.

Keep in mind that some people will see some of this raise reduced by increased Medicare Part B premiums.

 

Categories
Announcements

Social Security COLA Is 3.6% In 2012

Great news for anyone receiving Social Security (SS) checks or Supplemental Security Income (SSI). You will be getting a 3.6% cost of living adjustment starting in January of 2012. Considering the average Social Security check is $1,082 per month, the average raise will be about $39 per month.

Admittedly, this increase will not likely change anyone’s lifestyle, but that is not the point. Each year inflation erodes your spending power and getting an increase equal to the amount of inflation is necessary in order to ensure that your standard of living does not decrease.

There was no Social Security COLA in 2010 or 2011, so this is the first time SS and SSI recipients have received a COLA raise since 2009, when the increase was a seemingly large 5.8%.

How do I calculate my 3.6% raise on Social Security payment in 2012?

To determine your increase, please check out the article: How do I calculate 3.6% Social Security raise for 2012?

What to do with the extra Social Security money?

This one is easy – nothing. If the official inflation figures match your personal spending, you should be needing the extra money for your regular consumption. If you do have extra money left over, then of course saving it is never a bad idea.

The Social Security COLA is determined by an index called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Bureau of Labor Statistics analyze changes in this index between the third quarter of the current year and the previous year to calculate the COLA increase for the following year.

For example, to figure out the 3.6% increase in 2012, officials look at the third quarter numbers for 2010 and 2011 and figure out the increase.

Categories
Announcements

RESP Book Giveaway At Boomer & Echo

Just wanted to let everyone know about an interview with me that is published over at Boomer & Echo.  There is also a book giveaway, so if you want a chance at a free RESP book – head on over to enter.

Thanks a lot to Robb for doing the interview.

Categories
Investing

Separating Financial Advice Fees From Mutual Fund Fees

Rob Carrick recently wrote an article called Let’s stop hiding the cost of mutual fund fee in which he suggests that unbundling advisor commissions from mutual fund fees will allow investors to understand how much money they are paying for financial advice.  This is a good idea and is in the works for England and Australia by the end of 2012.

Paying a separate cheque to your advisor will make their compensation about as visible as it can be.  However, I’m not convinced that it will be enough.

To benefit from more fee disclosure, investors have to know the dollar amount of fees they are paying their advisor AND the cost of alternatives and the cumulative effects of the difference.  How many investors have any idea how much bigger their retirement pot would be if they could save one percent on their investment costs per year?

Annual fees don’t seem significant

Most investment costs are quoted in percentages and 2% per year doesn’t seem like a high fee when compared to other common percentage charges such as sales tax, income tax.  It’s the cumulative charge over time that matters.  An investor may not think that saving 1.0% per year is significant, but if she knew that over 25 years, the saving would create 27% more money for her, that would mean something.

What are the cheaper alternatives?

If my mechanic quotes me a price for labour and some engine part that I’ve never heard of, how do I know if I’m getting a reasonable deal or not?  An inexperienced investor might not question an investment charge because they have no idea if they are getting a deal or not.   How many Canadians know that advisor commissions are negotiable if you have enough money?

This investment knowledge is something that can’t be regulated and the lack of it reduces the effectiveness of fee disclosure.

What should an investor get for his investment fee?

One of the secondary issues with high Canadian investment fees is the question of how much advice investors are getting for their money.  You can justify any fee if there is enough service provided, but that doesn’t seem to be the case.  A lot of investors use a financial advisor to select investment products and don’t get any real financial planning.  How can the government educate those people that if they are paying a full service fee, they should be getting full service investment advice?

Summary

Separating advisor compensation charges from mutual fund company fees is a step in the right direction.  I’m not sure if it will really help most investors by lowering their investment fees or by increasing the amount of financial advice they get.  The reality is that there are a fair number of lower cost investment products available in Canada and the majority of Canadian investors are just not interested.

 

Related articles

Should financial advisors disclose their commissions?

Better investment fees and performance disclosure might help

Categories
Announcements

LinkStuff – Short RSS Feeds and Emails Edition

I hope everyone had a good Thanksgiving.  I don’t think the weather can get any better than that.  We were in Northern Ontario and I took my kids swimming at the beach.

If you read this blog through an RSS reader or via email, you’ll notice that you have to click through to the site to read the entire article.  I made this change as a result of all the “scraper sites” which are sites that copy articles from various blog feeds and post them on a different site. It’s not clear exactly how Google treats this duplicate content, so to be on the safe side I’m going to try to eliminate the problem altogether.

Parry Sound

On with the posts

Early Retirement Extreme has a interesting and funny post explaining how he lives on $7,000 per year.

Paula from Afford Anything had a great post called Stop crying that there are no jobs and create one.  Love it!

Squawkfox has a delightfully scary recipe for Halloween monster meat heads.

Larry MacDonald talks about the welfare state and the debt supercycle.

Michael James has an interesting way of evaluating financial goals.

The Oblivious Investor answers the question it is ok to sell low when fixing a broken portfolio?

My Own Advisor has a bunch of reasons for investing in dividend stocks.

Echo wrote is comparing his spending to his financial goals.

Canadian Capitalist says that current stock volatility is normal.

Carnivals

A few additional links

Categories
Announcements

LinkStuff – Turkey Day Edition

A Happy Thanksgiving to all the Canadians out there! If you don’t feel like reading any money articles – check out Funny food turkeys, which is a post my wife did a couple of years ago.

Last weekend I went to Chicago for the first annual Financial Blogger Convention.  I can’t begin to tell you how much I enjoyed that conference.  Well, actually I can – read my complete conference review if you are interested.

Chicago has some rivers/canals going through the downtown area which is very neat.  We did an architectural boat tour and I’ve included a couple of pics.

It was really good to finally meet up with people that I’ve known online for several years and have never met in person. There were too many people to list, but I was especially happy to finally meet Mike Piper from the Oblivious Investor, who has been a great book publishing mentor to me.  There have been many, many emails between us over the last year and half since I started my first book and I’m thinking I probably should have bought him dinner or for that matter – paid for his trip for all the help he has given me. Maybe next year I’ll buy him a drink. 😉

Chicago-Tribune building as seen from boat tour.

Other people I met up with that readers of this blog might know:

Walking along the river.

Media mention

Katherine Scarrow from the Globe & Mail wrote a good article: Don’t let home maintenance costs crush your budget. She mentioned my recent post about estimating home maintenance costs.

On with the links

Ever wonder how to make your own homemade dishwasher detergent and rinse agent?  Me neither.  But after noticing there was almost 550 comments on this article, I’m a bit intrigued. Plus we keep running out of the stuff and it doesn’t work that well.  I’d love to try more DIY solutions for common products, mainly because I’m curious as to how they are made.

Josh wrote about Five ways to bust procrastination on Krystal’s blog  – I really like the last point about opportunity cost, which was crystallized (no pun intended) in the comments by Josh –

“Do I want to pay $40 to read the NY Times right now?”

No – no, I don’t!  There is a cost to everything and that includes the time you spend reading articles that don’t really need to be read.

Canadian Capitalist shows how currency unhedged portfolios are less volatile.  Both CC and I are big fans of unhedged foreign investing which is a fancy way of saying we like to invest in other countries, with their currency.

Jeremy from GenXFinance wrote a great post on how to be a conservative investor.  It’s written from an American point of view, but it’s valid for Canadians.  A good read.

Evan from My Journey to Millions had an interesting piece on people who should grow up (not exactly the words he used).  He’s right – just because you aren’t successful, doesn’t mean it isn’t your fault.

The Finance Buff had a very good article where he comments on how a lot of people have an irrational sensitivity to service price increases.

Million Dollar Journey updates on his 2011 stock picks. FT did pretty well and might be a contender this year!

Thousandaire has some advice for “occupy Wall Street” movement.

Cash Money Life says that banks have a right to make a profit.

Wealth Informatics has an indepth analysis on how large her emergency fund should be.

Carnivals

Carnival of Personal Finance

Festival of Frugality

Totally Money Carnival