This is a guest post from Carl Hendley of The Motley Fool. He’s substituting for Robert Brokamp, the adviser for The Motley Fool’s Rule Your Retirement service. Brokamp generally contributes one new article to Get Rich Slowly every two weeks, but he’s had the audacity to take a vacation over the holidays, so Hendley is filling in.

$132,683 — That’s how much I’m paying for cable. Now, I do have HBO, Showtime, and 386 other channels of digital bliss, but $132,683!? Please. Is this a billing error? Not exactly.

I recently came across Jon Hanson’s Foolish book Good Debt, Bad Debt. In it, he notes:

If you are forty years of age, every $100 a month you continuously burn costs you over $132,000 at age sixty-five. Said differently, invest $100 a month for twenty-five years (ages forty to sixty-five for example) in a mutual fund or other investment at only 10% and you will have $132,683…Is it worth $132,683 for cable TV with all the premium channels?

Now for the record, I really like The Walking Dead, Boardwalk Empire, and (I can’t believe I am gonna cop to this) The Real Housewives of Orange County, New York, or any other municipality that celebrates elective surgery and afternoon cocktail parties. But do I like them $132,683 worth? I think not.

J.D.’s note: Good Debt, Bad Debt (and thus Hendley’s article) assumes a 10% investment return. That’s the long-term historical average for the U.S. stock market as a whole. I know (and so does Hendley) that average is not normal. Please don’t get hung up on that 10%. The point is still the same, even if you assume 8% or 7% or 6%.

Paradebt
My monthly Comcast bill is just one example of what Hanson labels “paradebt”. This is debt that’s outside of the traditional “borrow now and pay back later” variety such as a Visa bill, car payment, or student loan. Hanson writes, “paradebt or ‘almost debt’ is the cumulative effect of all your nonessential monthly spending.” Sure, these are services you can cancel, and yes, these paradebts don’t come with an interest rate, but they do come at a cost. Debt is debt.

But what about the Housewives? And my health?
I’m not saying I plan to do away with all of the items that make up my paradebt. I pay $33 a month to go to the gym. Yes, this is paradebt, and yes, I could get the same benefits with a pair of Nikes and a chin-up bar. Nevertheless, I want to stay healthy and maybe live a few years longer. (Plus I’m single and drive a 1995 Civic with 170,000 miles and a broken door — I need all the help I can get.) So, I choose to allocate my money towards the folks at Fitness First.

The key is that I’m consciously deploying that capital. I know that my $33 a month membership will cost me around $40,000 at retirement if I can achieve a 10% return on my investments. That’s okay. I’m willing to spend $40,000 to feel better and maybe live longer. Watching housewives go shopping for $130,000? That’s a different matter entirely.

Under the knife
Now, I’m no doctor but I am reasonably certain that the Real Housewives are no strangers to the scalpel. (For those of you unfamiliar with the show, this isn’t a reference to their abilities as physicians.) And while I’ll let others judge the results of their time under the knife, I will note that we could learn something from their efforts in trimming the fat.

With the New Year just a few days away, I’m in the process of setting my financial goals for 2011. Just like the Housewives, I too plan to make some cuts. This need not be major surgery. I’m just looking to better deploy a few dollars here and there. Since I don’t owe anything on my credit cards and my car is paid off (it’s a 1995 Honda Civic with a busted door, remember), I’m tackling my paradebt, starting with that $130,000 Comcast bill. Not only is $130K a lot of money to me, it turns out I can get it without doing anything other than calling my cable company.

Even if Jon Hanson is wrong and I don’t make 10% on my money, it’s still a great proposition. If I only make a 5% return on my cable savings, I’d still net $60,000 at retirement. Not as much as $132,000, to be sure, but that’s still enough to make me give up a few dozen channels of Law & Order reruns.

Next on the list is my AT&T bill. Yes, unlimited text messages are great, but methinks I could do with fewer LOLs in my life.

Finally, I plan to look at all of those subscriptions that automatically renew every year. The stack of Economists, New York Times, and New Yorkers that show up at my door every week may make me feel smarter (even as they go largely unread), but the costs add up.

And the trade off? I figure that switching out cable for Netflix, dropping unlimited text messages, and doing my reading online will free up about $100 a month — or as Jon Hanson would put it, $132,683 for my retirement.

What say you? How might you trim your own paradebt in 2011? More importantly, any suggestions for coping with my upcoming TV withdrawal?

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