Think cable costs the advertised $29.99/month? Not so. The average cable bill rose to $103/month in 2016 (source), but even that number doesn’t catch what you are really paying.
First, they will tell you are only paying $29.99/month (Charter prices 2017) for cable, but only if you also buy internet and a land line ($29.99 each). If the cost of just internet is $39.99 (promotional), and you aren’t getting rid of your cell phone for the land line, that leaves $49.98 (promotional) as your cable bill (since you didn’t need the landline). After 12 months, each of those goes up by $20 leaving you with a $59.99 internet bill and a $89.98 cable bill.
Whenever you sign up with a contract you’d better read the fine print because it could be worse. Often you will be locking yourself in for 2 years, but the advertised promotional price is only on the first. You find yourself paying double for the second year. By the third year, you are used to it and have forgotten how upset it made you. You do nothing and your subscription continues. It is sneaky and upsetting, but not even the whole picture.
I like history, but not enough to pour my life energy into collecting fancy green papers with historical faces on them (see What is Your Money?). I’m not worried about losing money. I’m worried about what I could have done with that money instead.
With a cable subscription, at the end of the month, you don’t own anything and have to pay again for the same thing. You aren’t moving forward.
Where to send your money instead
Option 1: Instead, you could make a movie and entertainment budget with the same money. You could buy Disney classics, action movies, and TV series on Ebay for less than $10 each. If you really need the selection cable brings, you might borrow from friends to help while you get a stash of quality movies.
By the end of the year, you’d have quite a collection. You could keep it and keep building it up, or sell the ones you won’t watch in the next year to increase the budget. If you can avoid shipping costs by using Craigslist or your local Facebook selling page, you can usually sell it for the same price you paid!
In the end you would actually own something and it would improve every year until you really don’t want that many movies.
Option 2: That’s still a lot of money to put on passing time. Let’s say instead of putting $89.98 towards cable, you put it (or most of it) towards debt reduction.
Let’s say you have a mortgage or other debt at 4% interest and you added $89.98 extra to your payment. That $89.98 would save you from making interest payments on that little portion of your debt for the rest of the life of your loan. If you have 15 years left on the loan, that $89.98 is actually worth $163.79! That’s 82% more than you probably thought it was worth.
Imagine if you added $89.98 extra to EVERY payment. It would add up fast and knock out that debt in no time. In fact, if you would like to see exactly how fast it would clear your debt(s) with your numbers, check out this online calculator. Prepare for amazement.
If you are debt free, you have even more power over your dollar. If you believe in the 8% long-term return that financial planners say you should get, that $89.98 becomes $297.56 in those same 15 years, more than tripling in value (231% increase). If you do that every month for 15 years, you will have amassed $31,136.52, with $14,940.12 of that being handed to you in interest. If you would like to run your own numbers with your actual bill enter your email below:
Alternative to cable – Roku
But wait, cutting cable is hard. The average American adult watches 5 hours of TV a day (source). That sounds like I’m asking for some major lifestyle changes.
Well, if you are really watching that much, I guess I am. At that point, it wouldn’t be for the money, but to reclaim your life. If you are just watching daily headline news, an episode of something every few days, and your kids watch Daniel Tiger to prevent you from going crazy, you can get what you need for free or at a one-time cost.
The first purchase to make after cutting the cable is a Roku 3. With so many free channels, you’ll be sure to find something to cover all of your cable usages.
The absolute best place to get free movies is Amazon Instant video. This assumes you are among the nearly half of U.S. households that already have Amazon Prime (source). Otherwise, you’d do just as well with Hulu or Netflix for a cheaper re-occurring cost (hey, it still beats cable). It can easily be streamed on the Roku or the Kindle Fire, Wii, and Apple phones or tablets. It is fine on a computer, but I’ve had some content not work.
I use Amazon for my kids shows, TV series, and almost all of my movies. It doesn’t have every movie I want, but it does well. When I want a movie, there are so many good free ones that I don’t notice the missing ones. When I really want a particular movie, such as Disney classics (which it doesn’t have), I just go online and buy it on Ebay. So far, I’ve gotten them all for about $6 each (with patience).
Other good free movie options are likely found on your favorite TV channel’s Roku channel. The History Channel and A&E have lots of free content. The BYU channel is all free. Discovery Kids has a few free movies. TED Talks had lots of interesting content. Check out your favorites and see what it has.
Sometimes it really is best to have live TV. For sports, there really isn’t much. ESPN has a limited time trial. Fox Sports Go will let you stream the Super Bowl for free. For live news, there is Fox, NBC, CBS, and my new favorite: Newsy.
When all else fails, there is YouTube and the Roku YouTube channel. I can always find what I need there. Many of the full-feature movies are pirated, so let your conscience be your guide. You can get your fix on any topic whether it be documentaries, kitten videos, tutorials, workouts, news, or music.
If you are a business, you still don’t need cable. My doctor plays movies in his waiting room. I’ve stayed at a hotel that had movies available for check out. Just because everyone else does it one way, doesn’t mean that you need to throw your money away to meet social expectations.
The Immense Time Cost
My final idea is to cut back on your passive screen time in general. Do you really want to spend your life vegetating? Unless what you are watching is educational, pertinent to your life, and will change you in a positive way, it isn’t moving you forward. Sure there are times when you are exhausted and curling up to a movie hits the spot, but don’t make it routine.
Imagine what you could do with just a little time every day. Imagine if instead of watching The Walking Dead, you researched an interest, read a self-help book, honed a skill, served in the community, worked a side job, or spent dedicated time with someone important to you. After 365 days, what would that look like? An hour per day equates to about 15 days of around the clock work, or 45 eight-hour work days, or 2 months of 40-hour work weeks. 2 MONTHS!!! Imagine if your employer gave you 2 months every year to work towards your own pet project.
For me, it was giving up movies and TV that gave me permission to start a blog. Since I made the choice, I have only watched a few movies as family time and some news clips. When I want to watch a movie, I log into my blog instead and feel so much more powerful because of it. What could you accomplish?
Bottom line: cut the TV, save the money, and claim your life back.
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Disclaimer: I am not a licensed or certified financial coach, planner or adviser, just an enthusiast. Anything I recommend should be personally analyzed and discussed with your financial adviser.