Building wealth requires both offense and defense. When playing defense, I’m in favor of cutting the expenses that cause no pain. Today we’ll take a quick look at your cable and internet bill. You may not fully appreciate how important it is to make a change – even reducing your bill $10 a month will save $1,520 a decade.
Cable TV
The cable TV part is easy. Cancel it. You’re probably not watching that much TV in the first place since you live in the office. And what you are watching is available to consume in ways that are far cheaper than a cable TV package. I can see no reason to keep cable TV. Try to convince me otherwise in the comments.
To replace your cable TV, you’ll need a Roku or Apple TV. I’m partial to the Apple ecosystem, but have heard great things about the Roku. From there, you’ll probably want a subscription to Netflix. If you’re missing other premium channels, consider an HBO subscription or a Sling TV package. I find neither of those necessary, but it’s nice to have options. You could also buy shows on Amazon or Apple, but why do that when you watch them for free through the New York Public Library? Between it and Netflix, I find I have plenty of content to keep me happy. After several years of letting go of cable, I can’t think of anything I miss watching.
Internet modem
For your Internet connection, the first thing to trim is the cable modem. If you don’t own your modem, you’re renting one from Time Warner or Comcast. The rented modem is usually low quality and responsible for plenty of your Internet troubles and expensive. Time Warner charges $8 a month ($1,216 a decade) to lease a modem. Note that the modem is distinct from the router. I have a separate router that creates the apartment’s WiFi network.
I decided to buy my own cable modem and ended up with the Arris Surfboard SB6183. It can handle download speeds up to 686 Mbps, which means it should be good for many years. I haven’t had a single problem since I’ve owned it. I can take it with me whenever I move. I’ve long since paid for the purchase of the modem itself (which seems to have a high resale value should I ever need to get rid of it). So now, I’m saving $8 a month ($1,216 a decade) by not paying for the modem rental.
Internet speed
Time Warner in NYC offers blazingly fast internet in NYC. Unless you’re a gamer, the speeds are probably much faster than you need. Currently you can get download speeds up to 300MB. A partner once told me that he bumped up the Internet at home to the highest speed setting to improve his efficiency at working from home. At the time it made sense to me, but digging a little deeper I realized I had no need for such high speeds. The partner had bought into the fallacy that faster is better.
The FFC considers download speeds of 10MB to 25MB reasonable for streaming video. Heavy users might want up to 50MB of speed. I’ve been slowly reducing my Internet speed by downgrading plans once a month. I’ve saved $10 a month each step of the way as I moved from 300MB to 200MB to my current plan of 100MB. I’ve noticed no major difference at home, so can already confirm I’ve paid $100s of extra dollars to Time Warner over the years. I may further reduce the speed to 50MB at some point, although I’m currently happy with the $44.99 per month bill ($6,838 per decade).
If you use your Roku or Apple TV via an ethernet cord, one thing to keep in mind is that the ethernet ports in both only handle speeds up to 100MB anyway. If your Internet speed is faster than 100MB, you’re not seeing any of that benefit in those streaming devices.
Joshua Holt is a practicing private equity M&A lawyer and the creator of Biglaw Investor. Josh couldn’t find a place where lawyers were talking about money, so he created it himself. He spends 10 minutes a month on Personal Capital keeping track of his money and is always negotiating better student loan refinancing bonuses for readers of the site.
I’m still stuck on Cable, but definitely headed towards cutting the cord completely on the next cycle. I think 10-25 MBs is plenty to stream decently. It’ll definitely be interesting to see how the cable companies evolve over the next decade. Less and less people are willing to be held hostage at such expensive rates!
The cable companies are dead. Over the next decade they’ll continue the transformation into a simple utility provider (internet pipe), like natural gas and electricity. Unless you meant the content providers? They will continue to compete for our time and energy, just through different platforms.
I think you’re right about 10-25MB. I’m still on 100MB, which is probably more than I need.
I’m curious, what makes you keep cable?
I actually was planning to cut the cord during the last cycle but used this leverage point to dig in and got them to extend their initial pricing package another year… I have AT&T U-verse. We’ll see how things play out this coming year. I’d be completely happy with 25+ MB at this point.
Smart move. I’m not too familiar with AT&T U-Verse. Do you get your mobile phone through them as well? Does it qualify for the corporate employee discount? You can enter your work, government or school email address to see if a discount is available.
https://www.att.com/esupport/article.html#!/wireless/KM1001048
No, I’ve got Verizon Wireless for mobile. I would consider switching mobile though to stack discounts, but the signal where I live is pretty spotty for AT&T.
A very good call – there are usually far cheaper ways of being entertained. For Australians, we have one of the lowest data internet packages there is, yet we still only use about half of it. Infact they recently doubled our alllowance for no reason, so we probably only use a quarter to a third of it now.
We also reduced our tv package to a more basic set of channels which saved $20 a month. Australia doesn’t yet have the breadth of choice of online entertainment as USA does. Hopefully in a year or 2 it’s better 🙂
Tristan
For your sake, I hope it’s more than a decade away! Of course, I’m only half kidding, but less entertainment options sounds like a simpler life to me.
Interesting that you have a data allowance for your internet. I have an unlimited amount (there may be some theoretical limit, but I’ve never reached it). I just checked and it looks like we’re burning through about 250GB a month. I have no idea if that’s high or low compared to other consumers.
I was actually saying that we’d save a lot of money IF we could swap our entertainment option over to Netflix or something like that, but we’ll see.
Australia doesn’t have the infrastructure of American, we’re a tad behind on some things, I’m not sure if our infrastructure could handle unlimited? I don’t know.
Tristan