I will admit that “trashy” TV is one of my guilty pleasures. After a busy day at work, sometimes all I want to do is unwind with an hour of Dexter or the Bachelorette. I would say that I watch an average of 5-10 hours of TV per week, which I guess isn’t that bad considering that the average American spent 2 hours and 50 minutes per day watching TV last year.
However, the cost of my cable bill really got me thinking about whether it’s worth it to keep this habit going. I have been a loyal customer of my (to remain unnamed) cable company for 8 years now. Yet, while my bill is currently $120 per month, new customers are awarded a much lower rate (at least for the first two years -- until they're hooked). I did a little calculation about the lifetime cost of cable, and it really made me sick:
Average cable cost per month: $100
Total cost per year: $1,200
Conservative Lifetime Total: $70,800
(Assuming you start paying for cable at age 21 and live to age 80, without any increase in your cable cost over that period of time.)
All that just for cable.
To put that in context, if you had saved that same $100 per month in your 401(k) or IRA instead of spending it on cable, you would have over $400,000 by the time you reach age 80 (assuming a 5% return per year). Even with a more conservative assumption of 4% earnings, you would still have over $275,000 at the end. Those are big numbers.
So is it worth it to cut the cord? There are so many alternatives to cable (and I am sure many more to come), that it makes sense to me to at least explore your options to save some serious money.
Solutions to Your Cable Addiction
FREE Network TV
All the local networks are free over the air and you can pick them up with an antenna. Also, a lot of these networks, such as CBS, ABC, FOX, etc. have all the episodes of your favorite shows online, and you can watch them for free on your home computer/iPad/etc.
FREE Online Content
Even a lot of the cable networks are starting to put their popular shows online where you can watch them for free. Check out TBS, AMC (for all you Breaking Bad fans out there), Comedy Central, to name a few. You can also go to hulu to watch some shows online for free, or for $7.99 a month, you can go to huluplus and get access to more content.
You can stream TV shows and movies through your account for $7.99/month. If you are unsure whether you want to commit, you get the first month free and can always cancel. Another alternative is to have the DVDs mailed to your home if you prefer not to stream.
Amazon Instant Video
As an Amazon Prime member, I get access to a lot of the content for free. But there are also a lot of movies available to “rent” so you can watch them on your home computer or stream them to your TV.
These devices make it easier to stream your Netflix, Amazon Instant Video, Hulu Plus, etc. straight to your TV. After you buy the device, there are no additional costs. You can also stream many other additional channels for free.
But What About Sports?
The major complaint from sports lovers is that there are not any great alternatives to cable when it comes to watching live sports. But depending on your interests, there are a few options out there. For fans who love their local teams, those games are often aired on network TV so you can get them over the air for free (see #1 above).
If you have an Xbox 360, you can buy a Live Gold membership for $59.99/year and get access to other sporting events through ESPN.
If you decide not to go all the way, one approach you can take is to call your cable company and see if they are offering any incentives. Like I mentioned above, the price really jumps after you are a couple of years in. It might make sense to switch to another company and get their incentive pricing for a couple of years. Your current company won’t want to lose you, so when you call to cancel they will likely make you an offer to stay. It’s at least worth calling to see what you can get by negotiating. You don’t have anything to lose.
Have you cut cable? What are some other options you have considered?