Nick Pennebaker cut the cord three years ago when he moved into a new condo. The results? He’s saved a bit of money but hates to endure the frustrations that come with streaming, most notably the frequent buffering, those annoying interruptions that come when you rely on alternatives like Roku, Amazon Fire TV or Google Chromecast to stream TV.
In the final analysis? Pennebaker, digital marketing manager for Denver-based Northstar Commercial Partners, isn’t sure the savings he’s realized, about $30 a month, is worth it.
“Cutting the cord has been fine,” Pennebaker said. “It’s completely adequate. But I’m not sure the savings have been worth the frustration of a constantly buffering TV, especially when it comes to watching sports.”
Cutting the cord and going cable-free sounds like a good financial move. Consumer Reports earlier this year reported that most cable providers were raising their rates again in 2018, usually in the 3% – 4% range. And that doesn’t include the add-on charges these companies are levying, such as regional sports fees, that further boost the cost of cable.
But as Pennebaker says, cutting the cord isn’t quite that simple. Yes, there are more streaming options than ever. You can find most of the shows and other content you want through services such as Netflix, Amazon Prime and Hulu.
How much you can truly save, though, and how much you’ll enjoy watching TV after going all-streaming, will vary depending on your viewing habits. If you love live sports, the buffering that comes with streaming might outweigh the cost savings. If you spend too much on additional channels such as HBO or Showtime, your savings after cutting the cord might shrink.
That’s why you need to consider everything from the cost of high-speed internet in your area to your viewing habits before making the decision to cut the cord.
J.R. Duren, personal finance expert at HighYa.com, says that it’s more difficult for people to truly cut the cable cord today because so many of us rely on high-speed internet, and we usually get this service directly from cable companies.
“You aren’t really cutting the cord because you’re still paying those greedy cable companies to get your internet,” Duren said.
What might work, though, is to pay your cable company for Internet access and the most basic of TV packages that it offers. You can then rely on the streaming sites such as Netflix and Hulu for the programming that you can’t access through your basic cable package. Those streaming sites, of course, will be powered by the internet service you order from your cable provider.
Whether this approach is the best move financially depends on how expensive your cable provider’s more advanced TV packages are and whether you’ll blow your TV budget each month by ordering too many new-release movies through services such as Amazon Prime.
Duren goes this more limited route, getting his internet from his cable provider along with its most basic cable package. This has, he says, saved him the most money, but only because he doesn’t care about most of the channels that his cable provider offers in its premium viewing packages.
“Cutting the cord became a thing because people were making poor financial decisions and paying hundreds of dollars a month for bloated cable plans that offered hundreds of channels, of which subscribers only watched a handful,” Duren said.
Duren recommends that consumers make a list of their five must-have TV stations and then find out which streaming services offer them. You’ll have to consider, too, whether your cable provider offers free Showtime or HBO when you sign up for a cable/internet package and whether you need to watch live sports.
Once you’ve considered this, add up the cost of all the streaming services you’d need then add that number to the cost of a basic cable/internet package.
“Is it more expensive than what you’d pay to get all those channels via a cable package? If so, cutting the cord isn’t the best choice.”
If cutting the cord after this analysis does make financial sense, it’s time to do your research.
Alex Haslam, streaming expert for Salt Lake City, Utah-based HowToWatch.com, says cord-cutters need to know exactly what they need to access the content they watch on a regular basis. They then shouldn’t pay for anything more than that basic minimum. Otherwise, they won’t realize enough savings to make cutting the cord worthwhile.
Haslam recommends, too, that those who want to completely sever their relationship with their cable provider invest in a digital antenna. These will provide cord-cutters with access to plenty of local and regional channels.
“It’s one of the best ways to save money because you can get tons of channels for free every month,” Haslam said.
Cord-cutters will have to factor in the cost of high-speed Internet, too. You can’t stream without it, and you’ll have to pay someone for internet service. If internet service costs you, say, $40 a month, include that figure in any cost-savings calculation you make.
Haslam recommends, too, that consumers not try to replicate their cable package when cutting the cord. Doing this will result in consumers buying so many streaming services that they won’t realize the savings they expected.
“Only get what you need and will use,” Haslam said.
And if cutting the cord isn’t the smartest move now? That doesn’t mean it won’t be in the future.
Makenzi Wood, author of the Picky Pinchers money-saving blog, said that she expects more consumers to move toward streaming in the future.
“It’s no secret that cable companies provide horrible customer service and try to bleed customers dry,” Wood said. “Why would anyone stay in a bad relationship like that? Tech-forward streaming is the way of the future unless cable companies wise up.”
Finally, if you do cut the cord and realize savings each month, be careful not to blow them. That’s the mistake that April Caldwell, a financial planner based in Jacksonville, Florida, said she sees all too often.
“The biggest mistake I see when people do this is not assigning that money saved to something else,” Caldwell said. “It gets rolled back into the checking account and spent without thought. People need to give the saved money a job such as debt repayment or building an emergency fund.”
Have you cut the cord? What’s been your experience? Let us know in the comments below.
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