To avoid money problems with a mobile phone understand what you are getting into. Read the network service connection agreement (contract) before you sign it and don't sign anything unless you understand your obligations under it.

If you don't feel sure about signing up with a network provider for up to 2 years then try the pre-paid services first. At most you will be stuck with a particular service until the recharge card runs out. When this happens you can choose to stay with that network service provider or try another. It's a good way of trying different call plans and assessing costs associated with these plans.

If you have mobile phone bills mounting up and you need some help budgeting or calculating your repayments or even understanding your obligations under a service connection agreement then contact a financial counsellor. Financial counsellors provide free, confidential services and are available through Credit Helpline, Anglicare and community legal services.

Sam's deal – a case study

Sam purchased a mobile phone for $1-00 at a shopping centre. He signed a contract and was told how much the rental and calls would cost. He knew it would be around $30 per month. Sam's first bill came to $70 for the month and he had trouble paying it. The second bill was worse and the third bill came a week after he lost his part time job. Sam couldn't pay the bill so he didn't, he just assumed that the phone would be cut off.

One morning a Sheriff came to Sam's door and gave him a document from the Court advising that payment of $500 for the mobile phone was required. Sam couldn't believe it, he had only missed paying one month's bill of around $80. How did he now owe $500.

The $500 debt covered the contract which required that Sam pay $30 each month for 12 months and included fees charged by the network provider's solicitors to prepare the court documents.