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"Just in case" should be cheap if not free, not something you have to pay for regularly

Consider the following...
1. I need an unlimited talk, text and data plan JUST IN CASE I need it.
2. I buy a bigger car JUST IN CASE I need to pick up some dry wall from Home Depot and to take some friends around town when they visit me

Do we really need to pay for JUST IN CASE for the JUST IN CASE?

How many people do the above? My idea is that as long as the things we need are available, even at a higher one-time cost, would be better than paying for it regularly.

For the cell phone example above, on average if one talks on the cell phone for 700 minutes a month and he have a choice between a 900 minutes-a-month plan or an unlimited plan, a lot of people would opt for unlimited because they want the ability to talk more JUST IN CASE they actually need to talk more. If you look at the price differences between the two plans you will likely fine them at about $10 - $20 per month more for the unlimited if not more.

But don't forget, if your average usage is about 700 minutes, you have 200 minutes to spare before going over the limited, and each minute you go over can cost you anywhere between 10 cents to 30 cents per minutes. How many minutes do you have to "go over" to reach $10 per months? AND, how often do you go over? Once a year, twice, may be three times? As long as your answer is NOT more than six, you should not opt for the unlimited plan because you are paying for it every month.

Similarly for the bigger car, you can rent a van or truck ONLY when you need it, not something you are stuck with (and pay for) for a long time.

Just some thoughts.


  • Jun 4 2013: The example you illustrated is actually very close to the principle of insurance. The insurance company just figures out what is your risk of a house fire, or a flood damage, etc.,for your homeowners insurance. And similarly, your risk of illness or injury for your health insurance. One takes these insurances for "just in case" events if they happen. But even when the insurance co using lot of theories to arrive at a rate of premiums, they are not always accurate because of random occurrence of the insured events. In free market societies, they would lose money, but sometimes they are allowed to increase premiums after a year of severe losses. There are also some "mutual Insurance cos" which will lower the rate when there were less loss claims during the previous year, as a "refund".
    In your cell phone example, that's somewhat different then the insurances mentioned above. First, they are not random in the use of texting or data use times for the customer. However more importantly for the wireless service providers, they have to consider certain kind of customers who will subscribe to the infinite data plan, then use the smart phone almost indiscriminately/carelessly, some times even left the phone on while nobody is watching it. So for some company, like AT&T, who has a shortage of bandwidth, they purposely jack it up to a very high rate for the unlimited data users just to discourage these users, so that they can maintain a wireless service smoothly without too many dropped calls due to the severely crowded usage during certain times of the day, or certain days of the week/month, or in certain regions. For this reason you can't demand the high rates for unlimited data plan to be lowered. However, for any conscientious user, it would be a no-brainer to subscribe to the lowest premium plan which allows just enough data limit and prepare to pay the excess charges for the "just-in-case" occasions.
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    Jun 3 2013: This is one of the sustainability keys! The amount of wasted consumption due to the "Just in case" scenario is massive and thats without even having to do any research to back up the statement.
    It is, a mixture of many things, marketing and business profits included, however you have identified the need for a tool to help people make more informed choices about what they do.
    As I write this, dare I say apps are being developed to help consumers make better choices. This whole process is slow and incremental, though I believe, changes are underway, as they enevitably will need to do so in any case! :D
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    May 30 2013: Economics:

    The study of scarce resources that have alternative uses.

    Everyone's perspective of what is valuable is different, and they are all studying this question every day to the tune of what 10 to 50 times a day, more if you are a woman , times 7 billion = 350 billion decisions per day.
  • May 29 2013: Risk, etc. There are choices we make, etc. It's a question of judgment.
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    May 29 2013: Could I ask for clarification? It makes a lot of sense not to procure permanent excess capacity that one almost never needs when there is the option of acquiring that extra capacity on demand. For example, people do not own moving vans but rather rent them when they move.

    But are you saying renting the moving van should then be free? What is the logic of this proposition?
    • May 29 2013: Hi Fritzie.

      No, sorry, may be my wording is a little odd.

      Some people/family out there would buy a minivan saying when family comes over they can take them around... but may be they come only once a year, so if I buy a minivan just because of the once-a-year event, then I am actually PAYING for something just in case it happens. (but it may also never happens!)

      I like your word "permanent excess capacity", you are exactly right, I'd rent a van if I have family over and that should not be free, it will even be a little bit more costly because you are going to have two cars at the same time, but this overlapping period is short and one-time only, so it will cost you less in the long run.

      What I mean by "FREE" is that JUST IN CASE I need a van, I have access to it, it will not be free when I need it, but it's free when I don't need it. This is what I mean by "JUST IN CASE" should be free.

      Let me give an example of when "JUST IN CASE" will NOT be free... Home phones / Cell Phones, a lot of the people gets a cell phone for JUST IN CASE something happens (ie. my parents), they never really need a cell phone, but why do they still pay for it and I actually agree to it? It's that they have nothing to fall back onto if they are stuck in the middle of nowhere and need to get a tow truck. In this case, yes, we are paying for it, but we look for the cheapest plan available (ie. pay-as-you-go), this is what I mean for it should be cheap if it's not free.

      So if you have something to fall back onto for free (ie. car rental company doesn't charge monthly fee), go with the free option, if not, choose the cheapest option available.

      Hope this clarifies!

      Thank you!