Free cell phone bill for life

How much cash would pay your phone bill for a life time?

LessonRetirement

As a 22 year old who lives at home, I don’t have as many bills as a retiree would need to cover. However, in today’s world, practically anyone into investing and / or money would have a cell phone bill to take care of.

Cell phones have become a staple of modern day life, and this monthly cost can vary greatly from person-to-person, depending on the phone they’ve picked up (on contract) to the data plan they commit to.

Considering I’m fairly frugal, and live in Canada, the plan I’m stuck with is $39 a month for 600 mb. The Canadian telco’s retain their oligopoly by devouring any smaller telcos which appear on the scene. For example, Wind Mobile was fought over but ultimately sold to Shaw Communications and Manitoba Telecom was purchased by Bell, with the customers being split between Bell and Telus so that they could garner regulatory approval. Considering the average Canadian does not have any choice but to pick one of the Big 3 across the majority of Canada, consumers have been completed gouged.

While it’s no fun being a victim of price gouging, you can ease the pain by participating in the stock market and purchasing some of these companies. The dividends received from owning these stocks can go towards your cell phone bill. Essentially, the money they’re gouging from you and your fellow Canadians, can be put back into your pocket to pay for that exact bill.

In other words, the cash you would receive in dividends from the Canadian telecommunications giants would nullify your cell phone bill. All you have to do is save up enough of a chunk of money to invest enough in order to receive adequate cash flow to cover the bill.

Covering a $40 Phone Bill

With tax included, my phone bill comes out to $45.37 per month, which is $544.44 a year.

Telus, my favourite telecoms investment pays a dividend of $1.84 per year. To cover that $544.44 per year phone bill, I would require 296 shares of Telus. At $42.92 a pop, it would cost me $12,704.32… That’s a lot of money, sure; but the investment value should grow as time goes on too. Therefore, you keep the cash and are rewarded with a paid off monthly phone bill.

If I was to attempt to cover this bill with a different telecom investment, such as Bell, it would cost a total of $12,186.63 to purchase 201 shares which would yield $546.72. Finally, if I were investing in Rogers, it would cost a total of $15,815.96 (much more!) to purchase 284 shares to yield $545.28. The reason it costs so much more to cover your bill by investing in Rogers is due to it’s relatively low dividend yield of 3.45%, while Telus and Bell yield closer to 4.50% (see below).

Company Price Shares Cost Yield Dividend Return
Telus $42.92 296 $12,704.32 4.29% $1.84 $544.64
Bell $60.63 201 $12,186.63 4.50% $2.72 $546.72
Rogers $55.69 284 $15,815.96 3.45% $1.92 $545.28

Now that’s a lot of cash to save up – but the reward – covering your phone bill for the rest of your life, is obviously well worth it. Like all other bills, investing for dividends is one great way to become financially independent – it’s simply a plus if you can achieve such a thing by investing in the same sector as your bill came from, and it seems cool.

While it would personally cost me that much to be able to cover my cell phone bill outright, the number obviously varies depending on the bill. I know people who pay $100 for their phone every month, and I find that absolutely insane – but to each their own.

Covering a $100 Phone Bill

For the sake of completeness, let’s look at how much it would cost to cover a $100 phone bill by receiving dividends from an investment for each of the Big 3 Telecoms.

Company Price Shares Cost Yield Dividend Return
Telus $42.92 653 $28,026.76 4.29% $1.84 $1,201.52
Bell $60.63 442 $26,798.46 4.50% $2.72 $1,202.24
Rogers $55.69 625 $34,806.25 3.45% $1.92 $1,200.00

I definitely don’t want to have to save up $28,000 instead of the $13,000 I’m currently concerned with. This is a great demonstration of how having your bills under control makes it a ton easier to achieve financial independence.

Well, there you have it – you now have the knowledge to calculate for your self exactly how much cash you need to bank to cover your phone bill. The thing about investing to pay off your bills is – all your bills can function exactly like this. We just demonstrated a baseline cost for covering $100 in monthly bills. If your entire portfolio was to pay out the same yields as these telecoms then it’s some very simple math for you to find out right now what you’d need to achieve financial independence.

Dividend Beginner

A 22 year old Canadian dividend growth investor striving for early financial independence; building as many passive income streams as early as possible.
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  • Hey love your articles. Read your updates every time. Keep up the good work!
    Your spreadsheet on the stockportfolio page is broken.

  • Haha that’s exactly how I look at a lot of recurring expenses as well. I calculate the investment size needed in order to cover it in perpetuity. Often this helps decide if I shoukd even spend the money at all.

  • Love the blog. Love these little articles that make me think and do calculations on my own situation. Just wanted to ask what is your opinion on having some money invested in GICs?. I personally have a percentage of my portfolio in GICs invested at 2% just in case the markets crash or something I would not be loosing as much sleep as I can survive by cashing the GICs instead of selling my stocks when they are in the negative.

    • Welcome Faze, I’m glad to have an impact on you. About my opinion on GICs, well, I had about $5.5k in a GIC myself earlier this year which I took my money out of just because I wanted it as dry powder in case any stock market corrections and opportunities occured – but if it’s a small percentage of your portfolio I think it’s completely ok. The only thing to consider is the opportunity cost of having that money locked away for X years when it could potentially be put to better use.

  • Awesome, I just did the *same* calculations last month for my cell phone, land line (I am old school), and DSL connection. I have investments set up to pay for all of those, for life, as well!

    One important benefit: typically high quality firms will increase their yields at a rate that exceeds inflation. Assuming your cell phone bill increases with inflation as well, you will always come out ahead: your dividend income stream will go up, theoretically, faster than any annual increases in your plan. This also leaves buffer to switch to a different plan in the future.

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My publishings on dividendbeginner.com references an opinion and is for information or entertainment purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice. I am not responsible for any decisions you make concerning finances, taxes, or investments. You must perform your own research and always take caution when extending capital.