It seems that most people are obsessed with mobile contracts and having the latest phone with hundreds of features. Ask yourself if you really need one though. You can pick up a good camera phone for less than £50. Then all you need to do is sign-up to one of the many competitive pay-as-you-go (PAYG) deals. Virgin mobile and Tesco mobile both offer good rates on calls and texts. Work out how many texts and calls you would have to make before your contract works out cheaper. If it is more than you estimate you make in a month then you can save by moving to PAYG.

Remember that a lot of the money you pay out on the contract is going towards paying for the phone. They don’t really give you it for free. If you are getting a new phone every year then your contract is probably too expensive as they are making a lot of money from you. You may have got use to a new phone every year but do you really need one? As an alternative to a PAYG plan you could try a sim only plan. If you are a big mobile user and you have worked out that you would spend more on a PAYG phone than you would on contract then you should switch to a sim only deal.

O2 are one of the best around for sim only deals. What it means is that you still get the benefits of cheap calls that you get from a normal contract phone. However you aren’t paying a premium for having a new phone every year. They won’t be better for you if you are a light user as you still have to use your phone a lot each month before it works out cheaper. It is a lot better than the more expensive deals with bundled phones though.

In summary if you are a light mobile user then ditch your contract and get PAYG. If you are a heavy user then switch to a sim only tariff and stop paying for expensive phones that you don’t really need. You just need to be careful that you are free to leave you current contract. Most of them are for 12 months and you can only leave once each year on the anniversary.