Are Technology Costs Killing Your Budget?

Technology is embedded everywhere, and often hidden from view. The costs are, too.

Android and iOS developers are among the fastest-growing jobs out there.

Android and iOS developers are among the fastest-growing jobs out there.

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Cheaper technology is creating better cars, phones, televisions, online services and a ceaseless flow of improved devices, including the new iPads unveiled this week. But too much high-tech can be bad for your financial health.

How much can it add up to? Americans spend the equivalent of 17 percent of their monthly mortgage or rent on technology, according to a study by the American Institute of Certified Public Accountants released last year. Technology experts say that may not even account for all of the gadgets and services you use. The survey data mostly reflects the high-tech spending on discretionary purchases.

"The total keeps creeping higher because people get in the habit of using things like satellite radio in their cars or more add-ons for their cable service, and all kinds of options," says Jordan Amin, a certified public accountant and former head of the National CPA Financial Literacy Commission. "It's easy to spend money."

Much of that spending goes to obvious places: high-speed Internet connections, music downloads and new computers and devices. A rough calculation of AICPA data shows tech is 5.5 percent of total discretionary spending – more than the estimated 4 percent of personal income people save each year. (About one third of people's income goes to housing, on average.)

[See: 10 Digital Utilities You Need Every Day.]

Hidden costs could pad the total spending even more, says Rob Enderle, a computer industry veteran who heads Enderle Group. "It's like a secret tax, all of the money folks spend on technology that they might not be aware of," he says. Technology is sticky, and as with income tax, what you pay never seems to go down. The "flypaper" that catches users often comes in the form of low-cost introductory offers, bundled services and free apps that stay with consumers as costly monthly expenses. Indeed, bargain hunting might be the biggest of all buzzkills for people who want to be thrifty.

"It's hard to keep the costs under control," says Amin, who participated in the AICPA study on tech costs. He says a regular check on what you spend for technology is a worthwhile exercise. He suggests creating a separate budget to track such items and even a special credit card account that pays the expenditures.

Here are seven widely used technologies that can be serious budget busters, plus some simple savings ideas:

High-speed Internet and cable. It's not really hidden. Everyone knows they pay more each year. But it's becoming a big budget item, so it can be a big a cost saver as well. Consumer laws require a breakdown of expenses for all cable and telephone services. But you need to check bills closely. It can be confusing. For example, Comcast, the largest U.S. cable operator recently began offering two versions of plain vanilla, "limited basic" and "expanded basic." The Federal Communications Commission says the law requires "clear, non-misleading, plain language in describing services for which you are being billed."

What is the average cost? According to data consultant Gigaom, basic U.S. broadband Internet service is $528 a year. A cable bundle (including Internet, telephone and television) is more, $128 per month, based on a 2011 report by SNL Kagan, and prices have risen since.

As a result, a growing number of people are cutting the big wire entirely, and cable hookups are declining steadily. Consumers are choosing "a la carte" direct programming subscriptions to their favorite shows or Netflix, using inexpensive devices like Apple TV or Chromecast that connect easily to new high-definition televisions. Subscription video use surged 35 percent in the first quarter of this year, according to NPD's VideoWatch VOD Report. High-speed Internet outside of the bundle starts at about $20 a month, and basic cable is $25 to $50 a month. This approach can be less than half the cost of a full package, although it won't satisfy television "power users" who find value by using the host of choices that broadband packages offer.