Do You Spend Less than $2,000 Annually on Internet, TV, Cell Phone Service, and Video Games?

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If so, you’re in the minority. All of these expenses traditionally fall into the entertainment category, as “discretionary” spending. But more and more, they’re viewed as indispensable, right up there with electricity, water, and food.

The NY Times provides some numbers:

It used to be that a basic $25-a-month phone bill was your main telecommunications expense. But by 2004, the average American spent $770.95 annually on services like cable television, Internet connectivity and video games, according to data from the Census Bureau. By 2008, that number rose to $903, outstripping inflation. By the end of this year, it is expected to have grown to $997.07. Add another $1,000 or more for cellphone service and the average family is spending as much on entertainment over devices as they are on dining out or buying gasoline.

And those government figures do not take into account movies, music and television shows bought through iTunes, or the data plans that are increasingly mandatory for more sophisticated smartphones.

All told, it’s not unheard of for a family to drop $5,000 a year without really purchasing anything they can touch, smell, or taste. It’s all digital content and the cost of simply being connected.

Your reaction might be: Well, that’s the cost of living today. That’s how to remain functional and in the loop in the 21st century.

Another reaction is: This is ridiculous! There have got to be ways to cut costs without entirely dropping off the grid. And there are. The first obvious step a large number of folks have taken is to drop their telephone land lines. A recent survey said that 21% of American homes were wireless only, up from 15% in 2007.

Dropping a land line is pretty easy when you already have a cell phone. Dropping cable, satellite, or other pay TV services while still getting your entertainment fix takes a bit more effort. But there’s an undeniable movement to cut the cable cord, which will save the average subscriber about $75 a month. That’s $900 a year. How-to guides that demonstrate ways to watch shows and movies via the Internet or streaming services like Netflix are popping up everywhere from PBS blog posts to conversation threads in online forums like Reddit. From the latter, here’s a comment describing one reason there’s such a backlash against cable:

Watching advertisements is why I left essentially. I was PAYING to be advertised to. I figured since 30-40% of what is on TV is ads, I figured 30-40% of my 70 dollar bill was for me to be whored to. No thanks.

The Times’ story notes that many people actually justify paying their hefty monthly bills because they believe, in the long run, that it’ll save them money:

Most people think home entertainment is cheaper. “Every time I want to go to Fenway Park or see the Killers in concert, I’m paying $50 to $100 each time. But once you build and install that home system, its basically pennies per minute of enjoyment,” said James McQuivey, an analyst with Forrester Research.

But they do not take into consideration the long-term economic effect — both in the maintenance and operational costs — of the devices they purchase. “A subscription model is the perfect drug,” Mr. McQuivey said. “People see $15 per month as a very low amount of money but it quickly adds up.”

If you install a home theater because you think it’ll save you money because of all the times you’ll stay home instead of going to the movies, you’re kidding yourself. But hey, if you’re happy with your monthly services and have no gripes about your monthly bills, good for you. (But really!?! Please explain.)

In any event, getting educated as to other options can’t hurt. Switching cell phones might save you $700 or $800 a year.

And as with any drug, habit, or hobby, you should be aware of how much you’re really paying. Not just for this week or this month, but in the long run. At some point, it may be time to go cold turkey.

Related:
How Bill-Paying Inertia Can Cost You Big Time

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