Cutting the cord

In the last post, I shared how I optimized my monthly mobile phone costs. Looking at my current utility bills, I have no choice of providers for any  of my other utility services as we have only one electric, energy, water, waste and internet and Cable TV service provider in our area.  Although competition allows consumers the ability to shop for a similar service at a better price, lack of competition does not necessarily mean these costs cannot be optimized.  Let’s talk about my Internet and cable TV service costs as an example. I have a bundle of Cable and Internet service through Comcast  and although it sounds $80 for this bundle as compared to $70 for internet service alone is a good deal but as many things in life- The devil lies in the details.  Here’s a quick rundown of my last bill

Line ItemAmount
TV and Internet bundle$79.99
HD technology fees$10.00
Additional oulet$3.99
Broadcast fees$5
Regional sports fees$3
Taxes and other fees$5.78

The total damage comes to around $117.  Please note that I own my own internet modem and router so the equipment fees listed above are limited to my TV set-top box. I would strongly recommend looking at this cost in your monthly bill and in most cases, buying your own internet modem and router should come out to be much more cost-effective. Read here for more details.  I am also surprised by fees such as paying for equipment that can play HD content and then on top of that paying additional fees to access HD programming.  Both of these come to about $10 which is similar to what Netflix charges for monthly on-demand access to HD programming.

Now, here is the mental model I use to decide while trying to optimize costs – I want to be frugal but not cheap. I am happy to pay for services that deliver happiness but need to ruthlessly cut out items that don’t add any incremental value. Applying this to my internet and  TV service – I hardly use my TV service and initially signed up because of the sales pitch of a small difference of $10 between the bundle price and getting  Internet alone.  The only programming I use my TV is to watch Premier League soccer matches. Now, do I enjoy watching soccer matches? – Absolutely.  Do I value them at $62 a month- Hell No. Now, how did I get to the magical number of $62?  You see my bundle of TV and internet for supposedly $80 covers for internet speeds of 150 Mbps. That’s a lot more juice than what I need.  They offer a basic plan of 50 Mbps at the price of $50.  WIth estimated taxes of about $5 on top, I should still be able to save $62 per month. That is more than enough to purchase access to world sports package offered by sling TV for $10 making the decision to drop by TV subscription and dropping my internet speed to a lower tier a no-brainer.

I understand this analysis is specific to my preferences and may not apply directly to you. But here are some takeaways you should consider: 1. Dont consider lack of option in terms of service providers prohibit you from trying to optimize your costs and 2. With more options such as Netflix, Amazon Prime, Sling TV etc, there may be other cheaper service providers that can get you access to the programs you need at a fraction of a cost.

This post is part of series  Stop bleeding where I am documenting how I am looking at my current spend and optimizing it to a more frugal lifestyle.


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