Wednesday, July 11, 2012

Kneecapping Your Television

Today, I read some story in the news about a spat between a wealthy cable company and a wealthy content provider that resulted in people missing out on a bunch of channels for a while.

Yesterday, I read in the Wall Street Journal that Comcast's CFO is the most highly-compensated CFO playing in the Bigs, with an annual take-home pay somewhere in the neighborhood of $20 million.

I've also been hearing about more and more people taking the step of flat-out canceling cable.  Not ready to quite go all the way towards killing my television (hey, there are some things on there I like) I recently called Comcast to talk about my bill.  It turned out to be a great move that's going to save me just under $1k annually. 

I was able to keep the news and family-oriented cable channels, plus all the basic channels, and I had to cough up the DVR that I've never used even a single time and would have about as much luck programming as I would engineering the space shuttle.  It came with some big starter package a few years ago that is designed to balloon your costs up in a stealthy enough way that if you've automated your billing, or just don't pay close enough attention, squeezes bigger money from you down the road as you blithely trudge along, helping someone buy his third island.

I'm proud to be putting the money back in my pocket (especially considering I'm about to go WAY into hock, in the hopes of fortune to come 20 months or so from now).  Meanwhile, I'll continue to enjoy direct Netflix for less than $10/month.  No, I didn't kill my television, but I can confidently say I maimed it for the equivalent of a free month's worth of day care each year in return.  My buddy Ramit Sethi, who I've known since before either of us was legally old enough to drink, would be proud, too.

Ramit is the author of the book "I Will Teach You to Be Rich," which is geared towards 20- and 30-somethings.  He breaks away from the standard financial advice about the future value of a $3-a-day latte habit by talking primarily about two things: (1) Conscious Spending; and (2) Big Wins

By paying an outsized cable bill each month that was far greater than it had to be, I was guilty of not being conscious about my money (I'll take a half-mulligan on this as I was actually away when the bill size changed, but now that I've been home five months, that excuse has lost most of its steam) and by flipping $80 a month back onto the positive side of my balance sheet, I scored a Big Win.  

Yes, yes, yes, you could say that $80 a month would be just about the equivalent of a once-a-weekday latte habit, but one is a waste and the other isn't.  As an economist would say, when you exchange money for a good or service that provides you with utility in return, you haven't wasted it.  However, when you unwittingly pay for things that don't provide utility in return, you have.  

The biggest culprits in people's lives are the subscriptions, memberships, and other recurring costs that sap their money away in small enough chunks not to be noticed in the way a major car repair or tuition bill would be.  It's reduced liquidity by a thousand cuts, or something like that. 

Just as automation is the best friend of anyone trying to seed a 401k, IRA, college savings, or other account, it can be the worst enemy when it's put in reverse.  

Raising your spending consciousness is good advice for anyone, and it has nothing at all do with having less fun, going out less, tithing less, traveling less, or any of the above (at least, not necessarily). Big Wins such as major cost savings, negotiated raises, or significant debt reduction strategies are can pay off in a way that small acts of privation just won't.  

Call it the oddest mix of Buddhist philosophy (heighten your consciousness first) and sybaritic hedonism (don't stop if it feels good) that you've heard of, but if you get the mix down in the right way, you may wind up in far, far better financial shape in the long run.

...And all it may cost you is the space-age looking paperweight flashing 12:00 just south of your television.  

2 comments:

kad barma said...

Corey S linked this one for me: http://www.theatlantic.com/business/archive/2012/07/the-11-ways-that-consumers-are-hopeless-at-math/259479/

Much along similar lines, including the sinkhole of subscription spending.

The New Englander said...

Great article there, and a wee bit of irony to this, I must confess -- the Atlantic is one of three magazines to which I subscribe. If I were to honestly assess how much content I really read from each of the three, and weigh that against the cost, I would cancel all three.

But I refuse to, because my predictably irrational self thinks that at some future point in time, I will not only resume regular readership, but also catch up on the back issues.

The one hope I have is that next month starts the daily two-train commute each way...don't know exactly what I'll be reading, or what podcasts I'll be listening to, but I'm looking forward to taking advantage of the time.