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I could, however, afford the $229 iPod Touch - and got it as a gift, as it happened. It has most of the same goodies: a Web browser, e-mail, YouTube. And it stores way more music than the iPhone. (Ha!)

Plus, the other day I used it to call China.

Yup, a call around the world - on a device that doesn't have a phone. A handful of applications on Apple Inc.'s iTunes store will let you do this, as long as you're in a Wi-Fi hot spot.

My iPhone complex hasn't disappeared, but at least now I have a device that looks just like it, has no monthly service fees, and lets me make free or cheap phone calls.

The best part of these applications - which require the second-generation iPod Touch that came out last year - is that they are free to download, and calls to other people using the same app won't cost you anything.

Two of the services I've tried, Truphone and Fring, will also let you make free calls to Google Talk users and type instant messages to friends online. Both automatically queue up a list of buddies from different services you might have, including Gmail chat, AIM and MSN Messenger, once you log in.

But it's Truphone's pay feature that puts it ahead of the others. TruPhone charges you to make calls to landlines or regular cell phones, but generally at better rates than most wireless carriers. And it's upfront about what you pay.

Your balance - which you can add to with a credit card, either on the device or on your computer browser - pops up with the dial screen. Calls in the U.S. are all 5 cents per minute (2 cents if you sign up to pay a $4 monthly fee).

Rates outside the U.S. vary wildly but you can check in the application before you dial. To call cell phones in China, for instance, is only 5 cents per minute, while France is 25 cents. Antarctica? A whopping $2.25.

You can make regular calls with Fring using a Skype account, but that's another layer to deal with.

The calls on these services sound pretty good, a little tinny but clearer than my regular cell phone connection. IPod Touch users will need Apple's $29 ear buds that have a tiny microphone on the back of the volume control along the cord.

The most serious drawback is the most obvious: While the iPhone uses AT&T's wireless network to provide Internet access anywhere, on the iPod Touch you'll need to stick to Wi-Fi hot spots. For rural or suburban dwellers who don't encounter lots of free Wi-Fi zones, that may very well mean limiting yourself to your house, or other places where there's a computer with the same Internet phone call capabilities anyway.

That means these apps probably won't replace your cell phone. But they can moderate your iPhone envy.

Copyright 2009 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

Credit card defaults could rise to 10% in the next quarter, as borrowers throw in the towel and stop chasing lifestyles they can't afford.

This is likely just a preamble for 2009, when default rates could spike much higher, according to Innovest Strategic Value Advisors. But even the 10% figure is much higher than previously anticipated, and credit cards could follow mortgages as the next great calamity.

The surprise is that the credit card industry's own belated attempts to whip itself into shape are causing the damage, according to Laura Nishikawa, an analyst at Innovest. She noted that credit card issuers are helping drive debtors into default by reducing credit lines, limiting access to home credit lines and, as mentioned, killing roll-overs. Nishikawa said these measures have had unintended consequences and are driving customers away from paying their bills.

Partly to blame for the upcoming correction, of course, is the credit card lifestyle. According to Innovest, since 1999, as wages have stagnated credit card debt outstanding has risen by almost 80%. It's only gotten worse as access to home equity lines have been shut down. Rather than stop shopping people have simply put their purchases on plastic.

Walter Todd, a portfolio manager at Greenwood Capital Associates was quoted by the Calgary Herald in late November, noting that there has never been this much consumer debt with unemployment nearing 8%: "It's hard to run a model because it's never happened before."

The worst is yet to come, Innovest says, because 2006's bankruptcy reforms have caused a delayed reaction in defaults. The firm expects the full tide of defaults to roll in early in 2009. Happy inauguration, President Obama.