Healthy Living

Why it pays to cut the cord

It’s a fact of life; our lives are filled with expenses.

Many of those we need, like a house, car and food.

While there are some ways to save money on those things, you generally can’t cut them substantially. That’s not the case with secondary areas like cable TV and cell phones.

Cutting the cord on high-priced contracts for both of those services is one of the best ways to free up money in your budget to help you accomplish your goals. If you want to cut the cord on one or both of these budgetary dead weights, here are some things to keep in mind.

It’s the Easiest Way to Save Money in Your Budget

We commonly see cutting things as negative when it’s cutting something we enjoy or use on a regular basis. We think it’s too much of a hassle to go through, not realizing the huge opportunity facing us. This is the case with both cable TV and a high-priced cell phone plan.

Consider for a moment the average monthly cost for both items:

Depending on where you live, or what service you have, you may be paying significantly more for service – and much of it you may not even need or use. Instead of ignoring the costs, they should be the first thing you look at in your budget.

“It’s one of the things that comes up with almost all my young clients who are looking for places to cut in their budget. More often than not, I’m working with young individuals or couples, and they’re looking for ways to save so that they have more dollars available for longer-term goals, like retirement or children’s education. Cable is almost always on that list,” says Ryan Frailich, Financial Coach and Planner with Deliberate Finances.

Given the wide number of discounted options available, both cable and cell phone service are one of the easiest items to slash from your budget.

What Providers Are Available?

There has been significant growth in no-contract providers in the cable and cell phone industry over the past few years. In the case of cable TV, you can often replace, or come close to replacing what you lose when cutting the cord. The same holds true for cell phone service.

Here are just a few of the popular providers that help you save money, first with cable:

  • Netflix – plans start at $7.99 per month
  • Sling TV – plans start at $20 per month
  • DirecTV Now – plans start at $35 per month
  • Hulu – plans start at $7.99 per month
  • PlayStation Vue – plans start at $24.99 per month

There are new providers coming to the market on a regular basis, all with unique offerings, allowing you to save significant money.

If you want to cut the cord on your high-priced cell phone contract, here are a few of the top options:

  • Republic Wireless – plans start at $15 per month
  • Straight Talk – plans start at $30 per month
  • Cricket – plans start at $30 per month
  • Metro PCS – plans start at $30 per month

Many of these carriers operate on the same networks as the traditional providers do, which means you often have the same quality of service.

Be Careful in Cutting the Cord

Cutting the cord is obviously a great way to save money in your budget. There are many options available, which is good for the consumer. However, there is one small problem to avoid – upgrading services with a lower cost provider and, thus, eat into your savings.

With cable options, for example, it’s easy to get into plans that cost $60 or $70 per month, such as is the case with PlayStation Vue and DirecTV Now. The best way to avoid this is to assess what you truly want and don’t go above that. Yes, you won’t have a contract, but you still have a higher bill than you might want.

Many of these providers also offer free trials to try out their services. Try a few of them out and choose the one you like best.

Long-Term Impact of Cutting the Cord

Cutting the cord on one, or both, services can have a great impact on your financial life. After potential one-time costs, like buying your own phone or a digital antenna, you can easily save $100 or more per month.

When used wisely, that can be life-changing savings. That’s money you can use to:

  • Pay off debt quicker
  • Save for retirement
  • Save for a new house
  • Save for your children’s college fund

Taken over the course of years, these savings can do great things for you. Consider a client Frailich met with recently, “Let’s take an example recently with a 35-year-old man who was paying right around $100 per month for cable. This person is also behind on many current retirement metrics, so we were looking for ways to allocate savings to that area. He is a big sports fan and wanted to keep ESPN and associated channels, so he got set up with Sling TV, and their sports bundle, for a total of $25/month. This left $75 per month in new money, so we upped his savings to his IRA by the same amount.

Assuming he works 30 more years, keeps sending the $75 per month and earns a conservative average annual rate of 6%, this decision alone will put almost $76,000 into his retirement account.”

Your particular situation may be different, but the fact remains that significant savings like that can have a great impact on your financial life.

Cutting the cord may seem scary. It really isn’t. With a little work, you can save significant money each month and sacrifice very little.

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