However, I still watch TV. Only now, I watch it for free from the set-top antenna I bought. I also subscribe to Netflix, which is great for catching up on old season’s of TV shows and movies. Lastly, I often check out hulu.com for shows, but I’m not sure how much longer that will last now that Comcast has taken majority share of NBC. For now though, it’s a great place to find a lot of popular shows that are carried on cable!

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.

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.

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!

As a side note, would love to know what mutual fund they are investing in that gets them 10% year over year for 25+ years!

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.

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.

That said, I agree they may be perfectly willing to trade those 60K future dollars for 20 years worth of Desperate Housewives (or 30 Rock).

Based on the examples given, I interpreted “paradebt” to mean any cost that’s essentially on autopilot — you’re paying X dollars a month for something that you may or may not actually be using. If you’re not using it (or if its value to you is less than its cost), that’s bad. To borrow a term from the energy hounds, maybe this recurring delta between cost and value could be called “vampire cost”?

Now seems like an excellent time to review the monthly bills, and if you find something that’s no longer worth it to you, make it a New Year’s resolution to cancel it or switch to a cheaper alternative.

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.

Folks, the hyperbole in the comments on this post depresses me. This post is not about cutting cable. That’s just an example! Nobody is suggesting that you cut cable or eat dog food or anything else. If you think that’s what this post is about, you’re missing the point.

Yes, wealthy people really are concerned about frugality. Every wealthy person I know (those who actually have money, and don’t just flash it around) is frugal. No joke. They pinch their pennies. Why do they do this? So they can invest for later in life.

I feel like GRS features plenty of articles about investing, but really, my investing philosophy just isn’t sexy. How many times can I say, “Make regular investments in index funds. Don’t touch the money.” ??? I’m always looking for new ways to write about this, and will continue to do so in the future…

IMHO, it is time that JD turned the corner with his readers and feature fewer debt/eat-dog-food-to-wealth strategies and start focusing on investing strategies for all of that money liberated from the cable company.

Most PF advice stops at “invest xx%”. Does anyone really believe investing is as simple as sending xx% of your hard earned money to the wall street folks? Maybe some non-salesman financial advisors would like to guest post? Or, as Tyler K alluded, find the millionaire next door who wants to go over how she turned $100/mo into $132K without simply getting lucky in the dot-com boom.

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.

Every recurring expense you cut is less income you need in the future. If you’re spending $100/month on cable, you need about $30,000* saved assuming the standard 4% safe withdrawal rate. For some folks, that could be an extra 2 or 3 years of working and saving. Ask yourself if that is a good trade off – a few hours of TV per week vs. a few years working. I’m not suggesting cutting everything, but it’s a worthy exercise.

*Calculation $100 x 12 = 1,200. $1,200/0.04 = $30,000.

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

I think you would enjoy reading Money Reasons’ dividend stock lunch money experiment:

http://www.moneyreasons.com/2010/12/dividend-stocks-free-lunch-experiment-6/

He decided to experiment with turning his latte factor into an income producer.

You’re right, putting that all together would make a great reader story. (MR, you should totally do it.)

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.