In the past I touted not having to pay any phone bills. A big part of the strategy was using a VoIP service called the MagicJack. The MagicJack is a USB to phone jack converter that uses your Internet connection to make phone calls. After five months of service we’re switching to a different VoIP service.

MagicJack was a disappointment because:

• 10% of the time it worked as advertised, with clear signal. The other 90% of the time we had terrible sound quality, it wouldn’t accept incoming calls, or it would send people to voicemail automatically.
• We had to restart our computer each morning to have it work. Screensavers or extended downtime of the computer would regularly interrupt service.
• Our friends and family thought we were avoiding them.
• When I accidentally formatted the MagicJack I was forced to work with their customer service. The first hour we tried an array of troubleshooting techniques to get it working. Once we tried everything the service rep told me to restart my computer, router, and modem. After working with a few of these customer service people I found this was their way of telling you they didn’t want to work with you any more.
• When I’d work with new people they would start over at the top of the trouble shooting list. I would ask them to read my past chat sessions but they were persistent on having me repeating all the steps I’d already taken. There are only so many times I can unplug and re-plug my MagicJack in my computer.
• Customer service would wait 5 to 10 minutes between responses in a chat session. Talk about annoying.
• After 3 1/2 hours working with their customer service they couldn’t fix the problem. Worse yet, they wouldn’t work with me on getting a replacement MagicJack. Instead, they wanted me to sign up for another year of service plus buy the hardware again. No credits for a free year or the ability to use my remaining contract time.

Summary
The idea of getting phone service all year for $20.00 is awesome. But using MagicJack for regular use isn’t a good idea. For occasional phone calls or international travel it could be a great solution. Part of me hopes MagicJacks sticks around because the idea is brilliant. When they get all their issues fixed maybe I’ll give them another try.

In a previous post, Phone Service for Free, I wrote about the possibility of getting phone service for almost nothing. Well, I’ve done it. I’ve taken the plunge and won’t be paying any monthly phone bills.

These are the steps I took to save over $1500 a year by cutting out my monthly phone bill.

Step 1- Buy and Test the MagicJack

If you haven’t read my previous article on MagicJack here’s a summary. MagicJack runs off your computer’s internet connection. It’s a USB to phone jack converter. You get a local number. Every call within the United States is free. It costs $39.99 the first year and is only $19.99 a year from then on. There are no taxes, fees, or other extra costs.

We thought it best to test the MagicJack before we made big changes in our phone setup. To our delight it works very well. We decided to take the leap.

Note – Part of testing the MagicJack involved buying a portable phone system with multiple handsets. Those type of phones require a single phone jack connection and we place the extra headsets around the house.

Step 2 – Cancel the regular phone line

We’re finishing our basement and I rewired all the phone lines. The old lines were broken or poorly wired so I upgraded the wiring. Before we finished the Sheetrock I wanted to make sure the future owners of the house would have a working phone line. For a few months we had a regular phone line. Their cheapest service was $11.00. That’s not bad. But when the bill came it was $28.00/month; almost three times more because of taxes and service fees! We’d gone without a land line for years without any problems so this wasn’t a hard decision.

Step 3 – Switch to prepaid cell phones

The contract on my cell phone was set to expire within a month of testing the MagicJack. Because I have a young family I thought depending completely on the MagicJack would be a bad idea — for safety reasons. After shopping around for some prepaid plans I found that Cingular had the best option for a prepaid phones. If you buy $100 of prepaid minutes they don’t expire for a whole year. Other prepaid phones have minutes that expire. Cingular also has the option of unlimited mobile-to-mobile within the Cingular network. This plan works great for my situation and I get to keep my old number.

I will still carry my cell phone. Without any cost I can see who’s calling me and call them back from a land line. The added safety and convenience of having a cell phone will come in handy from time to time. By turning off my cell phone I’ll save an extra $90 a month.

Summary

I will save $130 a month with this new setup.

Besides saving money the other added benefits are:

• I don’t drive and talk on my cell phone anymore. This happened infrequently but was still dangerous
• It encourages me to plan ahead and make lists
• I don’t have to wait for the weekend or 9:00 PM to talk with unlimited minutes

The total cost of everything is Magic Jack — $40, Prepaid minutes for my phone — $100, Portable phone system — $50. Next year I’ll only pay $20 for the MagicJack and $100 for the prepaid minutes.

This year I’ll save close to $1500. Next year it will be slightly more. If you have any questions or comments please leave a note below.