Ever wonder how much cable really costs? If you said a crap-load, you’re right. Watching television is essentially a tax on the middle class.
Okay, before we dive in, let me clarify. This article falls under the “spend less” category of the fight towards financial independence, or F.I. for short. When we consider watching TV, it’s important to understand that you lose money from the actual cable bill, as well as the opportunity costs associated with the time spent watching TV.
Opportunity cost, for those unfamiliar with economics, is the cost of an alternative that must be forgone in order to pursue a certain action. In this case, the opportunity cost is the benefit (potential earnings, time with family, etc) that could have been achieved had you not watched TV.
Time spent watching TV is growing
The average American watches just under 5 hours of TV per day (35 hours per week, or 1820 hours per year)!
On average, we spend 76 days out of every year plugged into the TV. Let that sink in for a minute…. 76 Freaking DAYS!
Almost daily I hear friends and colleagues complain that they don’t have any savings, are in debt up to their eyeballs, or don’t spend enough time with their family. One reason is that they watch way too much TV. Don’t get me wrong, I like the occasional football game and get sucked into Breaking Bad like the rest of you but after keeping a time journal and realizing that I wasted so much time, my wife and I decided to cut the cable cord.
How much does TV actually cost?
Cable is a slowly dying giant. If it weren’t for big sports contracts, the decline would probably happen more rapidly. When we had cable (about 3 years ago now), we paid about $70/month for just the basic TV portion of our Comcast bill and about $30 for the internet portion. After cutting out cable, we re-upped for only internet at a lower rate ($19.99). We also have Netflix.
I know that some of you likely pay more than that for a premium cable subscription that comes with ~5,000 channels. Why would you ever need 5,000 channels anyways?
Let’s assume you save $50/month after switching from premium cable TV to only internet and Netflix. Remember, you can still get local network channels if you put up an antenna and Netflix and Hulu offer great content. That would equate to about $840 savings per year. This is money that could be used to pay down debt, save for Financial Independence, or simply reduce your monthly expenses to free up cash.
Assuming you invested that money in Index Funds, your savings would equate to $166,649.97 after 30 years with a 10 percent interest rate! Yeah that’s right, investing your TV expense could yield the same amount that current Americans in their 60s have saved for retirement.
These numbers are big, but what if you started a side-hustle and made extra money instead of watching all that TV, which has no positive impact on your life? Let’s assume that the average American reduced his or her TV consumption by 25% and worked during that time instead. This would provide 455 hours of extra work time per year. With a minimum wage job (~$12/hour), approximately $5,460 could be added to the yearly budget to help pay down debt or build wealth. Investing this money similar to the methods outlined above would provide over $1 million dollars after 30 years, and that’s at minimum wage! Imagine if you made more than minimum wage or worked more than 25% of the newly freed time!
Perhaps working more doesn’t suit you. Another major benefit of “cutting the cable cord” is time spent with friends and family. While we can’t evaluate dollars with this benefit, the amount of increase in quality of life would be priceless. This extra time could also be a great opportunity to volunteer for an organization such as Habitat for Humanity.
BUT I FREAKING LIKE TV!
I know, I know… The thought of missing your favorite MLB team play across the country makes you break out into a cold sweat. Here’s an alternative: go to a restaurant or bar to watch the game, or just decide to make cuts in order to increase your life quality.
Besides, you can still consume content via YouTube or Netflix. As was stated above, simply plugging rabbit ears into your TV will give you most of the local sports games.
Financial Independence usually requires that you don’t get to do everything you want to do. You have to delay gratification now, so that you can be truly free later. Unfortunately, many Americans won’t give up anything and as such will have to work as a Walmart greeter into their 80s.
Have you been able to cut the cord, or do you think this is a bad idea? Share your thoughts in the comments below!