Cutting the Cord: Cancel Cable to Improve Your Monthly Budget

The Wall Street Journal reported on June 17, 2015 that Hulu had received another influx of cash from their investors (investors should be read as: TV networks) to compete for content, and Hulu has done just that. They are beating out Netflix on content bids for some very popular shows i.e. Seinfeld, The Deadliest Catch and Empire. Netflix loyalists, don’t panic, Hulu will only spend an estimated paltry sum of $1.5 billion on content as compared to Netflix’s $3.3 billion this year.

“Interesting” you say, but what does that have to do with Making Dollars Out of Sense? As the television networks move into the online streaming market, and more of the content you enjoy becomes available through these avenues, we want to talk to you about canceling that expensive cable bill and only using streaming services.

According to International Business Times, the average household pays $64.41/month for cable, and cable bills have been rising at a higher than inflation rate. That means your television bill is taking a larger chunk from your budget every year.

Similarly, if we look at Time Warner Cable’s earnings report for 2014 we can see that the average household’s internet bill has been rising at a rate of 9.5% for the two previous years and their customers were averaging $46.92/month for internet.

There is no end in sight for these increases, so what can we do to lessen the impact on our wallets? Well, I would encourage you to eliminate the cable portion of your bill, keep the internet portion and ad a streaming service. I’ve been a huge proponent of streaming services for many years, and I use or have used Netflix, Hulu, iTunes and Amazon. I’ll give you a run down of my opinion of each service and finish with how each would look on your monthly budget.

I’ll start with the biggest: Netflix. Netflix is the original company to offer streaming services, and they have the most content available. You could never run out of things to watch on here. They have a great selection of Indie films, classic movies and shows, and plenty of newer, mainstream stuff too. I really enjoy British television so I never run out of things to watch, however, others in my family prefer to watch shows without subtitles (I’m not joking, they have to turn subtitles on to understand these shows). And, they complain that Netflix doesn’t have the newest broadcast shows and newest movies.

Personally, I don’t mind having to wait a while to see a new movie or show, but I understand they wanted to be able to continue watching what they’ve been watching on cable. So, enter Hulu, Amazon and iTunes. I subscribed to Hulu simply to gain access to some of the shows that are on broadcast television. Hulu is owned by the major networks and they have advertising, so many times they will have the most recent show a week after it airs on broadcast.

On the downside, you will have to watch commercials on the new shows. About every 10 minutes or so an ad will run with a countdown in the corner. I appreciated the countdown so I knew how much longer I had to suffer through a commercial, but what drove me absolutely crazy was it was the same commercial every time. I guess its a small price to pay if you have to see the latest episode of Empire.

Amazon is great for newer movies and is included in your Amazon Prime membership, which certainly pays for itself at my house with the free shipping.

Finally, iTunes is where I rent movies when I just can’t wait to see it on the other services. It’s only about $4.99 for a high-definition movie, and I can pause it if I want more popcorn. I’ll take that over the movie theatre any day.

I also want to mention Sling, as this is where you can pick and choose what cable channels you would like to receive and you can also add on a sports package. This is a great option if you’re not completely convinced you want only on-demand television, or you absolutely have to have ESPN or HGTV.

So, here is the monthly budget breakdown…

Netflix $7.99
Hulu $7.99
Amazon $8.25 (charged annually $99/year)
iTunes $4.99 (varies)
Total: $29.22 if you used all these services.

In the past couple months, I have cut my monthly bill to $18.74 on streaming services. That’s a $45.67 savings per month on the average cable bill. I take that and throw it into my financial plan, and I’m one step closer to financial independence. How much of an impact can $46/month have on your plan? Well, at an 8% hypothetical growth rate over a 30 year period that’s $68,556. Not too shabby.

If I’ve managed to convince you to take the plunge and cancel your cable then the next step is for you to buy a device that will allow you to stream to your television, unless you already have a TV with apps. I’ve used the Roku and the AppleTV. The Roku will stream all of these services. The AppleTV will stream Netflix and Hulu, but not Amazon. I’m sure there are plenty of other options out there, but these are the two devices I currently use and I’ve enjoyed both. I know I didn’t cover all the options out there, but my goal here was to show you a quick place to find $50 in your budget and how that can have a real impact on your financial plan. Happy streaming!

Not ready to cancel? Check out this article on How to reduce your cable bill?