How We’re Saving $20,000 by Kickin’ Cable to the Curb


Before we accepted fabulous teaching jobs in Echols County, Georgia, we worked and lived in LaGrange, Georgia for seven years.  Like most people we blindly subscribed to cable television and internet from our local provider, Charter Communications.  Over the years we started feeling a general dissatisfaction with the service; there were frequent internet outages, increasing fees, endless TV commercials, and terrible customer service.  In 2009, our monthly cable and internet bill was $130 a month.  Sometime around 2005 we started using Vonage for our house phone for the seemingly low rate of $33 a month for unlimited U.S calling.  While we were satisfied with Vonage’s service, it further added to our bloated monthly expenses.  Here is a breakdown of what we used to pay:
Old Services
Cable & Internet
Vonage Phone
For nearly two grand a year we expected to get a lot more satisfaction from our phone, cable and internet services.  When we decided to move to Echols County, I had to return our cable boxes to Charter in order to cancel our service.  I will never forget how happy and relieved I felt as I handed the cable boxes to the Charter rep; I remember thinking to myself, “Why am I so happy to be canceling this service?”  It felt like the euphoric liberation you suddenly feel when you break up with a psycho…there’s an analogy that both males and females can appreciate.
As soon as we got settled in our new house in Echols, I started looking for more cost-effective options for our cable, internet and phone needs.  I remember telling my wife that we were never going to find ourselves in another fee-bloated cable-internet-phone scenario again, and she fully agreed that we should go “low-end.” 
The first thing we did was sign up for internet services with AT&T for $45 a month.  The service allowed us to stay in touch with the world via email, Facebook and Skype.  While using Skype one day, I stumbled over Skype’s subscription information.  I was surprised to learn that for $30 a year we could get unlimited U.S. and Canada calling and for another $30 we could get a phone number that would operate with my Skype account.  So, for a total of $60 a year (5 smackaroos a month!) we had an unlimited calling plan with a “real” phone number.  We decided to give the Skype subscription a try, and to this day we still use it as our home phone.   The only phone expense we had was a Phillips travelphone for Skype that we got for $8 at the electronics clearance section at Wal-Mart.  After one week in our new home, we were very happy to be paying only $50 a month for internet and phone services.

Finally, we decided to solve our cable TV “problem” by eliminating it completely.  Instead, we bought a pair of $10 digital rabbit ears at Wal-Mart, and to our surprise we instantly got seven local channels.  Next, we expanded our entertainment options by renting videos and DVDs from our public library.  Later, we found even more entertainment on the internet at Hulu, Youtube, and ESPN3.  Instead of making our TV the focal point of the living room, we put our computer in front of the sofa and reclining chair.  Last, I signed up for a trial subscription to Netflix, and the entire family loved it.  A few months later we bought a $60 Roku to stream movies and TV shows from our computer to our bedroom TV, and suddenly we had more entertainment than we could watch.   Here is the breakdown of our new “cable TV” expenses:
“Cable TV” Expenses
Digital TV Antenna
Plus $8 a Month for Netflix
While we love the extra programming that Netflix provides us with, the spousal unit and I love the fact that there are NO COMMERCIALS!  We refuse to pay for a costly cable TV plan that includes the perpetual brainwashing of commercials.  Our son has never had cable TV and thinks that everyone uses a Roku to access Netflix.  The other day he heard me mention “cable TV” to my wife and he asked, “Dad, what’s cable TV?”  It is true that our current TV set-up is not equal to the infinite programming options of full-price cable TV, but for us it is more than good enough…all for $8 a month!        
During our three years in Echols County, we spent around $700 a year for “cable,” internet and phone.  That was roughly a third of what we previously paid in LaGrange.  Here is what we paid in Echols:
 Services in Echols
In June of 2012, we moved back to our home in LaGrange fully committed to keeping our “low-end” services going.  We got Charter internet at $30 a month which I later learned was only a promotional rate.  After the promo rate expired, I had to wrestle with Charter to get a different promotional rate of $40 a month.  While I was not happy with the price increase, Charter wanted to increase our rate to $52 a month…a 72% price increase!  As before, we still use Skype and Netflix for phone and “cable.”  After reading an article recommending Pandora, I decided to subscribe at the price of $36 a year.  So far, we have enjoyed our Pandora subscription.   Here are our current expenses in LaGrange:    
New LaGrange Services
These days we are paying a lot less for cable, internet and phone.  Here are the numbers:
Monthly Expenses
Old LaGrange Services
New LaGrange Services
Difference of:
Okay, you’ve read this far, so thanks for reading about our bills.  Now, you’re probably wondering about that $20,000 amount in the title of this article.  Here we go!  After reading yet another excellent article from Mr. Money Mustache*, I learned of a simple rule of thumb to quantify the long-term impact of monthly expenses.  According to the ‘Stache, you should multiply any monthly expense by a factor of 173 in order to determine its 10-year cost.  Read that sentence again and let it sink in.  For example, over ten years our Skype subscription of $5 will have a total cost of $865 ($5 * 173).  
The factor of 173 uses a 7% rate of return to determine the true cost of an expense.  As we all know, rates of return of investment portfolios vary and are unpredictable.  The best we can do is to take a look at historic averages and make a guesstimate.  According to this site, the long-term rates of return range from 5.5% to 10%.  John Bogle, the founder of Vanguard, has suggested that future stock market returns will be around 7%.  I think that using a 7% rate of return is a reasonable assumption, so I feel comfortable using the factor of 173 for my monthly expense rule of thumb.  Now take a look at our monthly expenses using this nifty rule of thumb:  
10-Year Cost of Monthly Expenses (factor of 173)
Old Lagrange Services
New LaGrange Services
Difference of:
Wow, a difference of over $18,500 just by trimming our expenses by $107 a month.  By using this rule of thumb I can instantly visualize the long-term impact of a monthly expense…awesome!  While the figure comes up short of $20K, I’m sure, thanks to Netflix, we’ll save another $1,500 over ten years by eliminating our exposure to TV commercials.         
Finally, if you think a 7% rate of return is wildly optimistic or fearfully pessimistic, use a different rule of thumb to determine YOUR 10-year cost of monthly expenses.  You can use these factors based on differing rates of return:  
Rules  of Thumb for
Monthly Expenses
at Various
Rates of Return
* If you haven’t read Mr. Money Mustache, you are missing out on a personal finance revolution.  I assure you that you will never think about money the same way again; read him now!
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Phone Options:  My wife loves her $10 a month plan at Republic Wireless (new plans now start at $15 a month).  I had the same plan and liked it too, but unfortunately I broke my phone in Mexico.  I currently use a WiFi-enabled phone at a cost of $0 a month thanks to three Google apps: Voice, Hangouts, and Hangouts Dialer.  We also have a Skype subscription with its own number for unlimited U.S. calls ($80 a year).
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  1. If you fall in the 3% SWR camp as I do then you also saved yourself from having to save an additional $42,800 for retirement to generate the extra $107 a month!

  2. Nice Post. I especially liked the “we’ll save another $1.500 over ten years by eliminating our exposure to TV commercials” ideology.

  3. Woohoo. Our expenses are about the same as yours. We’ve been without cable for 5 years now and don’t miss it one bit. Like you, we use:

    1. Netflix
    2. Free programming on the Internet
    3. Library rentals

    We ditched our landline for Skype and smartphones years ago as well and don’t miss it one bit.

    Happy future savings!

  4. Eli, our son misses out on a lot of the commercial brainwashing that most kids are exposed to. I’m certain that saves us money.
    Free, it’s amazing how we don’t miss: cable TV, a normal” land-line house phone, and an expensive long-distance phone plan. There is no going back for us.

    Thanks for reading you two!

  5. I use Skype maybe once a year for video calls, but I didn’t realize just how cheap it could be as a home phone! My husband and I currently have cable because it was on deep promotion when bundled with our internet, but otherwise, we’ve spent the last 6 years without cable and have been quite happy to go without.

    • Ed Mills

      We’re in year six of a Skype subscription. It’s not perfect, but it works for us.

  6. Seth Buitendorp

    (Late to the party). Our household uses Obihai / with Anveo service and it plugs directly into your old home phone and routes calls through your wifi. There are several perks, such as forwarding voicemails to email, etc. I currently pay less than $7.00 a month with all extras included.

    We keep a “home phone” so our parents or a babysitter have some type of phone to receive phone calls from us or to make calls out, especially in an emergency.

    • Welcome Seth,
      There are many ways to skin this cat. Currently, we have 1 Republic Wireless cell phone (on $5 a month WiFi plan). My main phone is throw-away Android that I only use on Wifi; it’s linked to my Google Voice number. We also have a Skype subscription for a real phone. Our cable and Wifi are included in our rent here in Mexico. Thanks for the visit. Ed

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