Cord Cutting Could Help You Save Over $10,000 in 10 Years

74 5 minutes read

Cord Cutting Could Help You Save Over ,000 in 10 Years

The final straw in giving up on cable and becoming a cord-cutter was when the cable box I paid $10 monthly to rent — on top of my $100 monthly bill — had fuzzy reception. To get a clear image, I had to use the cable company’s app on my smart TV with an internet connection, rather than going through the cable box itself.

That made me think: Maybe I could save even more with cheaper, alternative services for cable.

After comparison shopping, I now pay $40 monthly for mostly the same channels through the Sling app, which includes digital recording, on-demand programs and a great channel guide. And it works while traveling, except for local stations. It was half the price of YouTube TV – and DirectTV was even pricier.

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After shopping, I was able to get all services, including internet, streaming services and my cellphone, for $150 per month, adding up to $100 saved monthly. Plus, I can watch programming on any device without paying rental fees for cable boxes in different rooms.

My cord-cutting savings aren’t uncommon. Eighty dollars is “the minimum that I’ve been able to save people,” says Ray Gustini, a CordSlayer cord-cutting consultant. He helps people save money by planning equipment purchases, figuring out what services they watch, and when to rotate services by sports season or series start and end dates.

He recommends the following steps to save money by cord-cutting:

1. Get a digital antenna for free services

With just a digital antenna in an urban area, you may be able to get free over-the-air channels such as FOX, CBS, ABC, NBC, and dozens to over a hundred local channels, depending on where you live. “It’s not like back in the day where you’d get eight channels; there are hundreds of things you can pick up locals from a big variety of places,” says Gustini.

Digital antennas cost under $50 if you install it yourself or can be purchased for as little as $50 with easy installation. A digital antenna can be “screwed into the back of your TV,” says Gustini.

Just don’t expect them to work well if you don’t live in a densely populated area. Jason Haviland, a Cottage Street Advisors senior partner and certified financial planner, lives 50 miles from Boston. He was too far away from TV towers near the city to get free channels with a digital antenna, so he spent several hundred dollars on a physical antenna installed on his house rooftop — only for new neighborhood trees to eventually block his signal, leaving many channels pixelated.

Thus, he has to use paid apps for some channels, but his strategy is still cheaper than cable TV services. He estimates he’s saved up to $250 monthly by cutting the cord.

2. Explore free services on your smart TV

(Image credit: Getty Images)

If you have a smart TV, it likely comes with its own set of free programming. Samsung devices and smart TVs come preprogrammed with hundreds of channels, including networks you know. Channels currently include Movie Favorites by Lifetime, PBS Kids and MSG Sports Zone.

Other TVs have their own preprogrammed free TV, including LG Channels, Vizio WatchFree+ and Google TV Live, which is available on a variety of brands.

3. Don’t pay for services you don’t use

Eliminating services you never use or rotating services for sports or seasonal series can save hundreds of dollars per year. I signed up for Sling because I was used to having cable.

But I realized I only watch one TV channel beyond what I stream with Amazon Prime and Netflix. Instead of paying for Sling, I can get an app for that channel and save $25 per year – or $300 annually.

“You can toggle stuff on and off,” says Gustini. “That’s a big thing, not rotating your subscriptions.”

Three generations of a family sitting on couch, watching streaming services on tv.

(Image credit: Getty Images)

Set reminders for when the show you are watching ends to cancel your subscription. Free trial end dates also need reminders.

For sports, look at what you need to purchase to watch the games you like. “You can still get a lot of those games with a digital antenna, because you’ll be getting whatever’s on CBS, NBC and Fox.” Then, you can supplement with an ESPN standalone or a March Madness package, he says.

For services you do use, look out for regular deals and sales, like around Black Friday or Amazon Prime Day.

Let your cord-cutting savings grow

Now that you’ve started making choices that save your monthly spending, you should put those savings to work.

Whether you want the safety of a high-yield savings account or to invest your money in an S&P index fund, you can easily save up over $10,000 in 10 years — and potentially over $70,000 if the investments perform well.

Let’s say after cord-cutting, you’re saving $75 per month. That, on its own, adds up to $9,000 over 10 years.

Now, if you take your $75 monthly savings and invest it, you could attain a total of over $11,200 or even upwards of $15,000 depending on what you do with it, thanks to growth and the power of compounding. And if you invested $75 monthly for 20 years, the base $18,000 could grow to $28,000 or even up to about $75,000, depending how you invest it and other factors.

The wide earnings difference depends on whether you invest your money in a savings account with a high interest rate (high-yield savings account) or an S&P 500 indexed fund (an investment containing stocks in the largest 500 publicly traded companies).

High-yield savings accounts have variable interest rates, so the actual growth of investing $75 per month over 10 years will vary, but you can currently find accounts with rates over 4%. They differ from, say, a certificate of deposit (CD), which might have a higher interest rate but doesn’t allow for adding new investments on a monthly basis like a savings account does.

The S&P 500, meanwhile, may sound like a “boring” way to invest in the stock market, but it’s also one of the more lucrative options. Historically, the S&P 500 has returned about 10% per year, or around 6-8% after inflation.

Haviland, the Boston-area financial planner, also suggests you could invest the extra savings in Treasury bills, an investment by the U.S. government that often has higher returns than the average high-yield savings account. Like a CD, though, those have set schedules of how you can invest.

This is a good reminder of a few important personal finance facts:

Recurring payments add up over time, so one of the most effective ways to adjust your budget is to try to cut recurring payments, like cable bills, down.
On the flip side, recurring savings add up over time, and a little goes a long way, especially over longer periods of time.

Seemingly “small” decisions have major impacts on your financial life — and these savings might make you smile a little extra the next time you sit down to watch your favorite show.

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