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Four Ways to Cut Your Phone Bill

People everywhere are scrambling to trim the soaring costs of food and fuel to keep their budgets from bursting.

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However, you may find a few extra nickels and dimes in an unexpected place -- by cutting back on your phone bill.

"Telephone charges, and especially long-distance charges, are a discretionary expenditure. They can be reduced to make room to save for other financial goals like retirement," says William Jordan, president of The Sentinel Group, a financial planning and wealth management firm in Laguna Hills, Calif.

Here are four ways to reduce your phone bill and pocket the difference.

1. Use toll-free services and calling cards for long-distance calls
A huge portion of the phone bill is usually made up of long-distance charges. Many traditional phone companies charge between 5 cents and 10 cents per minute, plus a monthly fee of around $5 or $10.

Calling cards and their corresponding toll-free number plans offer some of the best long-distance rates around, with charges of about 3 cents to 4 cents per minute.

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Calling card companies offer users cards with special account numbers and personal identification numbers to dial before making long distance calls.

"My husband and I did away with traditional long-distance years ago because we had calling cards," says Marcia Brixey, author of "The Money Therapist: A Woman's Guide to Creating a Healthy Financial Life."

"Every six months, we add on about $30 worth of minutes. When we recharge our card, it's always at the same rate."

If you commit to making all of your long-distance calls with calling cards, you may be able to switch to a more basic telephone package from your home phone provider, which could save you up to half of your monthly costs.

While calling cards can save money, buyers should be aware of hidden fees. Some plans require minimum usage times, monthly charges or both. Once you use up all your minutes, some calling card plans may also charge a higher rate to replenish the long-distance minutes.

New users will also need to get used to the idea of dialing their account numbers and PINs each time they make a long-distance call.

"It's cumbersome to dial a lot of numbers, but I tell myself that it's a whole lot cheaper than dialing a land line," Brixey says.

Another potential problem for users is the risk of running out of minutes while on a call. Before placing a call with a calling card, an automated prompt will tell you how many minutes you have left to use.

"You don't want to be in the middle of a business conversation and then have the phone go dead," says Brixey.

Instead of calling cards, consumers can also use toll-free services for long-distance. Users dial a toll-free number for service access before making their long-distance calls (which incur charges).

Many toll-free services are offered by traditional phone companies, and consumers can use enhanced features, such as the ability to access directory assistance, make collect calls and purchase calling cards for later use.

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