Brett Arends's ROI: This one simple move could make you over $150,000

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Possibly the fastest, simplest way to add a ton of money to your retirement account is staring you in the face—often, quite literally.

It’s your cellphone.

A recent survey from discount network provider Ting reports that the average American today is blowing $114 a month on their cellphone bill.

Excuse me?

I know that people these days absolutely live on their cellphones, which they mistake for a social life and human interaction, but this is insane.

It’s especially crazy if you who have money worries, or haven’t saved enough for your retirement, or both. Which means: If you’re outside of the 0.1%.

One thing I’ve noticed, about myself and others, is that as humans we have a tendency to overlook our incremental daily costs—the so-called “latte factor,” as finance writer David Bach likes to call it. Ask someone to fork out $300 and they’ll notice it. Automatically bill them $5.99 a week for a year and they might not.

Which brings us to cellphones.

It is hard to see any good reason to spend over $100 a month on a cellphone unless you have specific needs, such as business needs, or money to burn. You can get cheap access to the cellular networks through discount “mobile virtual network operators,” which simply resell airtime at a lower rate. Many people turn their noses up at them for some reason. I’ve been using them for years.

Ting says its average customer pays $23 a month. It’s one of many discounters.

Ultra Mobile will sell you calls, texts and 1 gigabyte a month for $19. Red Pocket will sell you calls, texts and 5 gigabytes a month for $20.

It doesn’t end there. You can now get cellphone plans that cost $50 a year. No, really. That’s how much it costs for a year’s service through FreedomPop, a company that resells time on the AT&T network. You need a smartphone, because the calls go through an app, but almost everyone has one these days. That money gets you unlimited calls and texts, and 1 gigabyte of data a month.

I’ve used a variety of discounters and the main problems, where they’ve even arisen, have been from sluggish customer service. Generally speaking, I’m very happy with the overall experience. Especially the savings.

OK, so I’m generally FaceTiming and watching YouTube or Amazon Prime on my Wi-Fi network. Big deal.

Weirdly, when I mention this to people who are moaning about money, they act like addicts, and get defensive, or angry. “You’re trying to take away my cellphone,” and so on. It is quite normal now to meet people who simultaneously complain about their financial situation, and get angry at any suggestion they should do something about it, even if it’s pretty easy.

OK this may not be a huge amount a month, but every thing counts and, crucially, it’s really easy.

It isn’t about heroic self denial. Someone who spends $114 a month—the average—on their cellphone bill is blowing $1,360 a year. If you’re not already maxing out your retirement plans, and you’re in a 20% tax bracket, that’s about $1,650 a year extra you could be parking in your 401(k) or IRA.

Yeah, it sounds boring.

But the average long-term “real” return on stocks, in constant dollars, is about 4%.

Invest that amount of money over a 40 year working career, and what you have at the end? Try $156,000. And, to repeat: That’s in today’s money.

Average actual retirement savings among those in their 60s today: Maybe $170,000.

There are studies which suggest even that is a high estimate.

I’ve been known to criticize the FIRE (Financial Independence, Retire Early) movement, but mainly because I think retiring at 40 is probably a pipe dream, and because I fear many of the financial assumptions on investment returns are extravagant.

But the core principle is sound. Actually, it’s brilliant. The more waste you cut, the faster you can save, and the sooner you can achieve financial independence. Maybe it will make you rich. Or maybe it will just reduce your risks of ending up poor.

Either way, it’s a smart move—especially now.