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Why do I not sign up for a gym membership and not sign up for cable?
January 17, 2010 by Leave a Comment
Some people sometimes ask me if I sign up for a gym membership or cable TV. It may be fairly surprising, but the answer to both of these questions is “no.” Let’s tackle the reasons one at a time.
1. Why do I not sign up for a gym membership?
Personally, I believe that investing in yourself and your health is one of the best possible things you can do. It is something where you are guaranteed a return on your investment by longer life, more happiness, and better health. Therefore, I feel that making sure that you exercise is a crucial part of life. For most people, this is through the outlet of having a gym, usually through a monthly gym membership payment.
For me, however, not having a gym membership forces me to get outdoors and exercise, even in the cold winter months. Once I get over the mental block of getting out in to the cold, I am always glad that I went. Also, at my work, there is a free small gym that I use when it is raining or bitterly cold outside. It doesn’t have EVERYTHING you need, but it has the essential items such as a treadmill, free weights, and elliptical machine.
2. Why do I not sign up for cable TV?
This is somewhat more of a straightforward answer – it is due to TVM (time value of money). Let’s look at an example.
A typical cable TV subscription generally costs $40 per month. My Netflix subscription costs $15 per month. Let’s assume that I continue to pay for Netflix instead of cable from now (Age 24) until retirement at Age 65. Each month, I will take the cost differential ($25) and invest it in a general market index mutual fund, assuming a 12.4% return annually.
What would the balance of the account be at the end of that time period? If we do the math through the use of an Excel spreadsheet, we find that the value of the account becomes $290,000 at the end of the time period.
This is definitely food for thought when thinking about how much you get out of cable TV…..
Keep on learning!