The great and wondrous tales of Frugal Man

It’s an affordable bird, it’s a reasonably priced plane, it’s FRUGAL MAN!

Hey everyone, I’m Frugal Man. It’s a pleasure to meet you. I’m sure my renown has reached your ears already but just in case it hasn’t, allow myself to introduce….myself.

I am Frugal Man, the economical super hero. I am spartan, prudent, thrifty and prudent. That’s double the prudence baby!

My enemies may call me cheap but they’re just jealous of my perfectly chiseled features. They also won’t forget my perfect physique and my world famous ability to save money; it’s enough to drive anyone green with envy.

You can see it all in that picture at the top. I am handsome and I have a dollar sign on my chest which means I am good with money. That’s because the dollar signifies money in case you’re not from around here. It was I who said the famous quote “there are four certainties in life – death, taxes, and the fact that Frugal Man is handsome and good with money.”

Frugal Man’s powers are many but the most important is making the most out of every dollar. And yes, another one of my powers is that I often talk about myself in third person. Such is the way of Frugal Man.

How did I get these powers? It’s two things. First, I was involved in an accident as a child in which I was covered in nuclear waste but emerged unharmed. After said accident, I did 100 push ups, 100 sit ups, 100 planks and ran 10 miles every day without pause. Second, I grew up poor and my parents taught me the value of money. Now, I am the strongest being in the universe and also reasonably frugal.

Those that call me cheap or a miser simply do not understand. The essence of frugality isn’t hoarding money and avoiding buying things at all. It’s actually about making sure that your money goes towards things that bring you happiness and help you hit your future goals. That is what Frugal Man is here to teach you.

How do you know that you can trust me? First of all, have you seen the dollar sign on my chest, my rugged face and my excellent physique?

If that’s not enough to convince you then just look at the picture up top and notice something you surely missed before. After all, you were transfixed by my charming smile. The thing to notice is that I didn’t even splurge on color. How could a man such as I be OK with a colorless picture? Well, it’s because I knew that color would bring low incremental value but cost quite a bit.

If I can get 90% of the result for 20% of the cost, why would I spend the extra money? That’s not the Frugal Man way.

Plus without color, it looks more vintage and that’s hip these days. Frugal Man likes to be hip.

No color was a good decision, that’s got the Frugal Man guarantee. You can also trust me, that’s got the Frugal Man guarantee too. After all, super heroes such as I cannot tell a lie. That’s true because it rhymes.

I am Frugal Man; I know these things. Frugal Man knows many other things and I’m here to share them with you. In this issue of Frugal Man, we’re talking about cable modems.

Renting your modem

If you’re in your computer room right now then look over at your modem. Look back at the screen, now back at the modem, now back at the screen. OK, good you’re listening, Frugal Man has got you mesmerized!

The modem is the big plastic thing with magic inside that allows you to access the internet and all its wonders.

Does your modem say Comcast on it or does it have the name of another internet provider? If it does then you might be getting ripped off!

Frugal Man will not stand for that!

We all have to access the internet. Even Frugal Man needs to get on to surf the worldwide web from time to time to do some research. The only difference is that I actually surf it like it’s a wave because I’m a super hero.

Comcast, like many evil corporations, actually doesn’t give you that modem for free just so you can use their service! You have to rent it from them! Often, you do so unknowingly since they’re the ones that installed it and likely didn’t tell you there was an extra fee for it.

I know, it’s outrageous but it’s true. You would think that the high monthly fee would be enough but they want more!

While more revenue for Comcast is good for their shareholders, it’s not good for the customer(that’s you) unless the rental fee is fair.

I know what you’re asking in your head. You’re saying, “Frugal Man, please use your super powers to tell me if it’s fair, please.”

I shall.

Well, let’s take a look at what Comcast charges. The rental fee is $11 per month in 2019(up from $10 last year!). Using the power of mathematics, that adds up to $132 per year.

Is that fair?

It is not! In fact, I would call that a ridiculous charge considering the equipment provided by Comcast isn’t even top of the line.

You might say, it’s only $11 per month, what’s the big deal? That’s where Frugal Man comes in to hit you with a punch of financial knowledge.

The Frugal Man convinces you to stop renting your modem

It doesn’t make much sense to rent a modem if you can buy one. Here’s why!

Have you heard about the 4% rule?

That simple rule is used by retirees to figure out how much they should withdraw once they retire to keep their cash from running out. If you’re paying your internet provider $11 per month to rent a modem, that means you need a constant flow of cash to support that habit if you wish to keep your internet forever.

Using the 4% rule, that comes to $3300 invested in the stock market today to keep the man from cutting of your internet and taking away your rental. In essence, the value of that $11 monthly payment for the rest of your life is $3300 right now.

That means it makes sense to buy a modem if it costs less than $3300!

Do they? Most definitely.

As an example, you can get a great modem like the one Frugal Man uses. Even if you want a separate wi-fi router like this one then the combined cost of modem + router is still well below that. If your download speeds are faster than what the modem supports, you can get something more expensive like this one and still save a boatload of money.

There are also combined modem/routers that work just as well if you want everything in one box which is what Comcast offers with their rentals.

The point is that there are plenty of choices and most of them are well below $200, some MUCH lower. Even on the expensive side, you’re spending $200.

That means that if Comcast wanted to be fair then their monthly rental charge should be closer to $1. Heck, remember the little 4% rule calculation we did above? 4% of $200 is $8 per year or $.666 per month!

666 is the number of evil! Frugal Man knew he was onto something.

As a fun little experiment, let’s assume you pay $11 per month starting at the age of 25 then by the time you’re 65, you’d have paid Comcast $5,280!

That’s a nice chunk of recurring revenue for that company! Now imagine, instead of doing that, you purchase a super fancy modem yourself for $264 giving you an ever better modem than Frugal Man has.

It’s OK, you deserve it although the one I have is plenty fine!

That equals first two years of rental fees gone in an upfront payment. It hits you in the wallet more today but improves your personal cash flow in the future starting at age 27.

When you’re 27, you can instead invest that $11 per month in a stock index fund earning 7% per year. Instead of paying Comcast $5,280 by the time you’re 65, you now have money working for you starting at age 27, have a modem and a cash hoard of $22,778 by the time you’re 65.

That’s a lot of money generated for you in the long run by buying versus renting! The best part is that the modem and router you buy often perform better than what Comcast provides.

Now, there are some caveats here that Frugal Man must tell you.

Modems don’t last forever. Renting means you’d automatically get a replacement each time technology shifts or your modem breaks.

If you’re not renting then you’d have to buy one again in those situations leading to more out of pocket costs. However, if you’re investing that $11 per month then you’d still be well ahead even if you have to buy a new modem every once in a while.

Most modems now support Docis 3.0 and that will likely be the standard for a while. Future man knows some technology! I’ve had my modem for a few years now and still hasn’t had any issues. I don’t expect to replace it for quite some time either.

Another concern for people who aren’t tech-savvy is that you have to install the purchased modem yourself. Luckily this is very easy. You can either follow the directions on a page like this from your IP or just call your internet provider to give them the numbers at the bottom of your modem. That’ll activate your own modem in no time.

One thing to be careful with is returning your modem. I suggest bringing it back to a physical location for your internet provider and getting a receipt. Make sure to check next month’s bill to confirm that the rental fee is off and call if it isn’t.

Those guys have been to known to keep charging despite getting the item back!

A future problem may be the fact that your ISP can change their pricing metrics any time. It’s possible that they may start charging a service fee even if you have your own modem as some ISP’s already do that!

Most cable companies like Comcast, Optimum and Spectrum charge a fee but not all of them are $11. Still, even at $5 per month, the math still easily works out in favor of purchasing a modem.

Frugal Man defeats evil(the conclusion)

Math never lies because I punched it once. In this case, it tells you that it’s clearly more frugal and economic to ditch the rental and buy your own modem.

Most product descriptions like the one here will tell you whether a specific internet provider supports that modem but you can also check on your specific provider’s website. Since the end result is the same, you get internet, it doesn’t make sense to spend more than you need to on it.

Renting can sometimes make sense but that’s not the case with your modem. The amount of money you save seems immaterial but even a little bit compounded across the years can reap great rewards when you’re old and your bones hurt and all you want to do is sit on your butt and watch you tube videos of cats. You need a modem to do that and it’s better to have your own.

Now get out there and buy a modem and stop paying those evil internet companies more money than you need. So says Frugal Man and Frugal Man is almost always right.

If you’ll excuse me, I have to fly off and save somebody from paying too much for their mutual funds.

“Those expense ratios are through the roof friend, don’t do it!”

FIN.

Disclosure : Comcast isn’t really that evil. Their evilness is used for comedic effect. I have them, they’re pretty good. I do not own any Comcast stock nor have plans to buy any either. Frugality is cool. Renting your modem is not.