My $132,683 Comcast Bill

Find me a guaranteed rate of return of 10% over 20 years and I’ll show you a pig that can fly.

I think it’s good to look at recurring expenses (not just monthly ones, but all recurring expenses) regularly to be sure the value you obtain from them is at least equal to the money you exchange. Otherwise, what’s the point?

I pay $80 per month during the winter for oil painting lessons, and it’s well worth the price. But even at free, I wouldn’t want cable TV. It’d still be Netflix all the way for me, even though there is a monthly charge for it. Why? Because it’s worth it to me to NOT have hundreds of channels of crap to filter through.

And like others have said, it depends what else you have going on in your life too, and what you might otherwise do with the money.

Let’s go ahead and take this a step further…

I pay my electric bill each and every month, must be paradebt. Let’s cut that out, then, in retirement, I could have enough money to run thousands of light bulbs and appliances.

I pay my water bill each month also. Must be paradebt. Why drink water now when I could drink an unbelieveable amount of water in retirement? Maybe fill my entire house with water…

After reading this article, the expense I might consider doing away with is my internet bill – god forbid I have to continue to read articles about cutting out every possible thing from my life now so I can be sitting on $50MM bucks at retirement.

If I 80 years old and retired, and I’ve been a cheap ass all my life…why would I even need a huge retirement account?

Thanks in part to this website my wife and I decided to seriously evaluate our reoccurring monthly expenses.

We canceled Direct TV and replaced with Netflix and free services online. Direct TV was $780 annually whereas Netflix costs us $108 per year. Savings $672 annually.
We also took our cell phones and converted them to a prepaid option. ATT was costing us $900 annually. We changed some of our cell phone usage habits as well. Prepaid cell phones cost us $100 last year for a savings of $800 annually. (Couldn’t be prouder of my frugal wife)

We also switched our home phone from the local carrier to a VoIP service. Qwest was costing us $480 annually. Our VoIP service is $102 annually for a savings of $387 annually.

We have made other changes as well which have overall lead to $200 of found funds per month.
I am a numbers guy it’s hard not to imagine those funds in a retirement account. Given we strongly buy into paying ourselves first (and do so monthly) we have the option to invest these funds or buy experiences. Personally, I find it easier to sell frugality when the rediscovered funds buy meaningful experiences.

$20 a month less by cancelling one of our netflix accounts (we each had one), $300 a month by eating more at home, $1000 by moving in together (although the money saved wasn’t the reason for this of course

2011 is shaping up to be a good year for our finances…

We got an antenna and we have netflix. That was enough of a fix for us.

This article a nice way of looking at it for people who are out of debt. But for those of us living paycheck to paycheck (in a sense) cutting cable really could save more than $132,000 if that all goes on a credit card with a 20% interest rate every month!

Also, just think of the money you’ll save on junk after you quit watching so many tv ads. A reason why I don’t like hulu, etc.

Tyler, #49, said: “I’m tired of these ridiculously over-the-top numbers like this. Someone else did a similar one a while back where they claimed an iPhone actually costs you a quarter million dollars or something. They’re pretty much preposterous sensationalism.

I would *love* to see even a single anecdote where someone contributed $100/month to a savings account for 25 years and had a $132,000 balance at the end.”

I think this too misses the concept. You don’t necessarily take that direct savings of $100 and put it directly into some vehicle every month like clockwork. However, if you consider that every $100 you save is another $100 you have available to invest, then every time you find a good investment you have $100 x [however many months since the last one] more to invest than you would if you hadn’t cut out some recurring expense.

I don’t think its just about “how much can you give up.” I think a big part is just changing habits. For some people, watching cable is just a habit. Netflix and Hulu could be just as good (or better, I hate commercials), but it requires a change of habit, which is always painful for a short time.

The same thing is true of getting a prepaid phone, or learning to cook at home, or cloth diapering, or carpooling, etc. Once the new habit is established, it isn’t painful anymore. Its the transition that is difficult.

I confess we’ve got a lifestyle at this point that includes cable, a landline, and cell phones. For various reasons, we’ll be keeping all of them for the forseeable future, although I suspect our landline is on its last legs.

One thing that should be mentioned though is you may be able to keep everything you’ve got and still get the price knocked down. For instance, we kept our exact phone/internet/cable service – which includes 2 DVR’s – but they knocked $60 a month off the bill. It helps that we’ve got the option for Verizon or Comcast in our neighborhood so I just called and asked if they could match their competitor’s introductory offer. And they did.

the F.R.E.E. substitute for most of this stuff is the library. Yes, folks, that place your parents took you when you were little. I’m older probably than most of the readers so when I was a teen, I LIVED there as I liked to read. However, these days, I can download an ebook on my ereader (free), get music (free), get DVDs of your favorite TV shows and movies (free), read magazines (free), conduct research on any number of subjects including saving money, all for f.r.e.e. Like most people, I rediscovered this wondrous place when I was cutting expenses, and now I wouldn’t go back for the world, even if I could afford it. Brings me right back, however, there’s no cute guy in a Karmann Ghia waiting to pick me up for a ride…sigh.

I guess I’m confused by the whole concept of paradebt. Does it mean monthly bills that aren’t debt payment and have no end point? By that definition, then yes, my electric bill and water bills are also paradebt. Does it mean discretionary spending that comes as a monthly bill? Then yes, it’s only my cable bill and Netflix. Overall, I really don’t understand based on the original article what paradebt is supposed to be, although I suspect it’s decretionary spending that comes as a monthly bill.

I find the concept useful as a way to quantify discretionary spending, particularly if you’re having a hard time with overspending and need to cut back, but it’s only an illuminating concept, not something that’s practical to implement. Similar to the idea of “If I make $10 an hour, I have to work 3 hours to cover this DVD I want to buy.” It’s a helpful idea for controlling spending, but I’m not actually going to go home on Friday at 2pm instead of 5pm just because I put the DVD back on the shelf. So if someone finds this way of looking at monthly bills a helpful tool and it encourages them to cut expenses and save more, good for them. But I don’t think it’s meant to be taken literaly as a plan to implement.

paradebt sounds to me quite a bit like the concept of “opportunity costs” which is a price of NOT doing something, or a price of the time wasted http://en.wikipedia.org/wiki/Opportunity_cost

i’ve been tv-less pretty much all my life, and the only thing i truly miss are hockey and football games (but I just use them as a reason to spend the money i save on not having tv on going out to a bar to watch the games). Netflix is great.
Another place that’s surprising for video entertainment is craigslist. You can barter dvd’s with people

Reoccurring payments are akin to debt in that you are compelled to service it on a monthly basis and can adversely impact your ability to get traction in terms of fiscal goals.
I was involved in a long distance relationship – a mobile phone was of paramount importance. As the relationship blossomed, we opted to marry and reside in the same locale. We could care less about a mobile phone because we so infrequently used it. Eventually, we mutually decided to cancel our mobile phone contract and with it the burdensome $150-$175 monthly bill. We now have prepaid and its working just fine and saving us goo gobs of $$. That’s the application of that para-debt concept.
Cable is something we continue to pay for because we enjoy it. Regardless, every once in a while I will call to take off the “bell and whistles” to save money and take advantage of service promotions that don’t affect how many channels we get at all. Once I got lucky, and got 50% of our cable bill for six months. Fabulous stuff!
For me, the point is to just be mindful, discriminating, and astute when it comes reoccurring expenses.

This is a great exercise, and, though we probably won’t get a 10% ROI, one can say that there are areas we can “sacrifice” to help us increase net worth. Take for example, a $2.00 coffee at Sturbucks–that’s $730 a year that we could be saving by simply making our own coffee at home; minus $284.25. ($120 coffee machine plus .45 cents per cup of coffee). That equates to $13,372 in 30 years. But, we like the simplicity and the ability to mingle. The same could be said about watching a game at the local pub when we could possibly watch it at the gym while exercising. Thus we save on the drinks and increase our health while watching a football game “free.” Speaking of the gym: I pondered on the idea of investing the $80 a month membership. I counter that I’m investing in my health — granted, I go to the gym at least three times a week.

This $132K figure is actually quite incorrect. Merely adding together the face value of the currency used to pay your cable is the wrong way to add up money over a long period.

By this reckoning, the $6 I spend on milk per week will cost me $31,843 over the same 25 year period. Should I not eat cereal?

The correct way to do the calculation is using TODAY’s dollars.

This is a blog about money, so I would kindly recommend learning about the time value of money.

When you are 65 years old that $132k might be enough to pay for a months worth of cable TV given the rate of inflation for cable.

Honestly, I don’t understand how people think the author is “smug” or “depriving” himself. I didn’t think the article was condescending or haughty in any way. And in terms of deprivation, with the exception of premium channels and sports, almost anything you watch on a TV can be found online, legally, for free. If you like HBO, you can check the boxed sets out of the library. If you like on-demand movies, try using the streaming function on Netflix or check some DVDs out from the library. If, like me, baseball is your obsession of choice, there’s an online streaming service for the games that’s around $100 a *year* (for over 2400 games).

If watching football or basketball every day, or HBO and Showtime shows the day of, is of significant value to you and brings you happiness, then this isn’t the solution for you. But it would work just fine for a lot of people. Maybe you won’t find somewhere to invest the money at that rate of return, but you can invest at a lower return or use the space in your budget for something else that would make you happier while keeping your savings rate the same–the occasional designer coffee, if it really does make you happier than a plain cup at home, or saving it up toward an extra vacation or a home improvement project. It’s not about depriving yourself totally; it’s about cutting back on the things you care less about so you can have more, either now or in the future, for the things you care more about.

Graboid is good for watching movies/shows it’s not free but it’s a bargain compared to cable. It does have a free trial so you can see if you like it. Also most shows I like are on the internet (shows website)and if there not then I guess I don’t need to see it that bad. I buy HBO series DVDs used off Amazon for cheap we are currently watching Six Feet Deep series. It’s kinda fun to watch several episodes at once. I have to have some kind of tv so I have the limited channels (local channels mostly)

Justifying his decision to cut cable by inflating the reward outrageously to $132k is smug, in my opinion. It treats the readers like they are little kids, and we need the promise of big Popeye muscles in order to eat our spinach now. In reality, the benefits are much smaller. The poster clearly enjoys his shows, but wants to show us that he really would rather have this imaginary completely false $132k in the future rather than have his cable now.

This kind of personal finance is Latte Factor, give up a regular tiny expense and you’ll be swimming in cash when you’re retired. David Bach made a killing on it. I think it’s stupid and am TIRED of countless posts about it. JD’s blog is usually better than it.

Dressing it up under the label of “Paradebt” and a catchy “my 132k cable bill” doesn’t change that it’s just the same tired message of the Latte Factor.

So what’s the takeaway here? We should all live in a spartan shack in the Montana wilderness so that we can have an extra hundred G’s when we’re almost dead?

First of all, my cable bill is $60, not 100. Secondly, I earn 6%, not 10%. Thirdly, I spend several hours per month watching TV, so $60 seems like a pretty reasonable expense for the entertainment value I get from it.

I think it’s pretty silly to do without pleasures in life now for money in retirement (when it will presumably be spent on pleasures.) Yeah, make sure you’re saving enough to be comfortable and safe in retirement, but otherwise, don’t put off life to save for someday! For one thing, someday may not come! And, even if it does, I’d rather have watched shows I liked and had good meals all my life, and have a couple thousand less a year to spend in retirement. You only get one life, 80 some odd years. Why on earth would you want to spend 40 years doing without to have a little more in your last 20, when you could spread things out and enjoy yourself the whole time?

JD@82 – I’m with you, I think many folks are missing the real point. Perhaps a detailed post by you on the concept of opportunity costs of money is in order.

As one poster said, it’s about the opportunity cost of every purchase we make. It doesn’t matter whether it’s cable, cell phones, splurging on your favorite hobby or buying steak over hamburger. It’s about realizing that every choice we make, whether for necessities or “wants,” there is a future cost to that money that is being spent. Sure, spending $3/day on cable doesn’t sound like much, but if you realize that that same money invested over time can add up to six figures you may, key word is MAY, just make a different decision. For some spending that to watch their favorite shows is worth every penny of today and the future opportunity cost.

The key is to consider today’s and tomorrow’s value of the money we are spending. We realized long ago that there much cheaper alternatives than cable for the little we watch TV, same with cell phones, etc. And yes JH@90, by being frugal with things that didn’t have enough “value” to us to justify the opportunity cost and with wise investing we have become millionaires several times over.

We never felt that we were “sacrificing” for later, we felt we were making wise choices in truly enjoying today’s dollars on things that mattered to us while planning for a great future. I don’t think the OP was trying to be holier than thou in his approach, just simply sharing that cable didn’t have that much value for him that would justify the future opportunity cost of his money.

Take away – analyze the cost benefit while weighing in the future valve of your money to make your purchasing decisions of today!

Glad to see a post from Carl, sorry to see so much hyperbole in the comments. I enjoyed the post, and I get where you’re coming from.

That said, I don’t know that it’s necessarily applicable, if you are already on a good “pay your debts first” path as preached by people like The Motley Fool.

So after already storing away a reasonable amount for retirement, each month, then need is removed from the equation and it’s really coming down to time vs. money at that point. It it worth the time to do the Netflix/Hulu/network website hunt and peck to find, a few days after first-run, all the shows I want to watch or just pay a little extra to have them in a queue waiting for me the moment I am ready. Remember, you can get more money, but you can’t get more time.

Great article… I recently did some analysis of my own to make some budget cuts in my life and found that I was spending way too much on FastTrack. On my way to and from work I have to choose between the 73 (toll road) and the 405 which is always bumper to bumper. For the past few months I’ve elected to take the 73, thinking that the hour saved is well worthl $5 each way. While $5 each way doesn’t seem like much, it’s end up being $60k in 25 years… and that’s without any interest. Thanks GRS!

My roomies want the cable that costs $80/month. In my college apartment, we paid $80 for cable and internet together.

I don’t even get a chance to watch TV because they are so glued to it. I guess it’s worth it for them, but not for me. I consider it part of my rent though, because I think they’d hate me if I said I wouldn’t pay 1/3.