There was once only a few major cell phone providers that ruled the market. Depending on where you lived, you were forced to go with one or two providers if you wanted any reliable service. These companies knew this and took advantage of you by charging outrageous prices. I know some people who pay over $150 a month for one cell phone! They give you a free smartphone when you agree to pay them for the next two years in which they then add on a majority of hidden fees, and if you miss any payments go over your allotted usage, then you are charged an outrageous fee.
Instead try one of the many new cheap cell phone plans. These days there are so many competitors dabbling in the prepaid cell phone market. Just about all of these companies rent service from the major cell phone towers like AT&T and Verizon, so their service is pretty comparable and wide-ranged. Usually, you need to pay full price for the phone upfront that can range from $60-$500 depending on what type of phone you want. That doesn't sound as attractive as the major cell phone companies that off phones for free, but the service can be as cheap as $10 a month. With that kind of monthly savings, your phone will be paid for the first year in savings.
Say you got a free iPhone that would be $499 from AT&T, but they charge you $80 a month after all fees. You will pay $960 in 12 months. Instead, go buy an iPhone for $499 and pay about $45 a month for unlimited everything and no contract. You will pay $540 in 12 months, saving you $420. You will spend almost the same the first year but then save $420 every year afterward. Take the additional savings and have it moved to a separate Christmas fund, and now you have free money for Christmas shopping each year that you would not have if you had stayed with a contract cell phone provider.
Tip: Look on Craigslist or eBay for half-priced smartphones. If you don't care for a smartphone you can find cheap flip phones for as low as $15 bucks.
Here is a list of some cheap cell phone plans with no contracts.
Straight Talk: I currently have an iPhone4 on the straight talk plan that is $45 unlimited everything and after-tax in New York it is about $49.50 a month. It also runs on the At&T towers, and I have never had a problem with the service.
Republic Wireless: $19/month
Boost Mobile: $50/month
Go Smart: $45/month
Freedom Pop: $10/month