If you are willing to watch TV online, then it’s completely possible to cut the cord and ditch cable or satellite TV.

Dropping your cable provider may seem scary at first. After all, you’ve probably lived your whole life with cable TV. But never fear: there are plenty of ways to get TV online without paying out the wazoo.

This guide is intended for those people who are on a budget who are willing to put in a medium-sized initial investment ($160-$460) but keep monthly costs low.

Step 1: Get an OTA HD antenna ($100-$400)

So wait: the first step in watching TV online is to go old school and buy an antenna?

Yeah, that’s right.

The Winegard GS220 is perfect for picking up OTA HD signals in urban areas.

Once you drop your cable or satellite company, you should get a digital over-the-air antenna (OTA) installed. After all, you don’t want to be completely cut off from the world.

An OTA antenna will allow to receive free, OTA broadcast television signals. If you have an HD television, you’ll be shocked at the picture quality. You’ll be able to pick up your favorite networks like CBS, NBC, ABC and FOX in sterling high definition. OTA HD offers some of the best picture quality around since it’s broadcast by your local TV affiliates uncompressed. I’ve had several cable and satellite companies over the years, including Time Warner Cable, Dish Network, DirecTV and Verizon FIOS, and I can say the only picture quality I’ve seen rival OTA HD is from Verizon FIOS.

The amount of money you spend here really depends on a variety of factors, including your technical abilities and where you live.

If you’re like me, and lack the technical know-how to install a television antenna, it’s probably best to leave it to the experts. I spent around $300 getting mine installed. If you’re able to have it installed, your installer will recommend an antenna type and placement. For example, I have a two-story home, and my antenna is installed in the attic, away from the elements. Sometimes they may have to be installed on your roof outside.

One other tip: if you’re unsure of where to find someone to install an antenna, try searching on a website like ServiceMagic.com.

If you’re a do-it-yourself type, you’ll need to read my full guide to OTA HD. If you are able to install the antenna yourself, which I again wouldn’t recommend unless you really are an expert, you’ll probably save anywhere from $200-$300 depending on costs in your area.

Step 2: Buy a Roku ($76 on Amazon)

This is your other up-front cost. The Roku is a small streaming box that bridges the gap, bringing TV online to your living room. It connects to the Internet either via Ethernet cable or over your wireless network, and streams a variety of content straight to your TV.

If you don’t have another device that already streams internet content to your TV, this is a MUST-HAVE.

I recently purchased the mid-level version of the Roku (the Roku 2 XD) and I love it. It’s actually my second Roku. I’m able to stream Netflix, MLB.TV, and a variety of other private channels on the Roku. There are a multitude of streaming devices out there right now, but in my opinion, Roku offers the most bang for your buck.

For more information, see my full Roku 2 XD review (coming soon).

Step 3: The King of TV Online: Netflix

Netflix is currently the best way to watch TV online, but it does have a recurring monthly cost: $7.99. Of course, if you want to, you might add on the option to receive Netflix discs, but I’m perfectly happy with the streaming right now because I’m able to watch a variety of movies and full seasons of TV shows.

The one thing to know about Netflix streaming is that not all movies are streamable. More likely than not there will be new movies you want to watch that won’t be available on Netflix streaming. If there’s something you really want to see that’s new on DVD, you can always scoot down to your local Redbox or video rental store and pick it up. Or even better, just head on out to your local movie theater and check out a new release.

One other note: if you’re not sold on Netflix, they allow you to browse their selection before you sign up. If you’re interested in their streaming-only package, remember when browsing the selection to look at what’s available only in “Watch Instantly.”

You’ll be able to stream Netflix to your new TV via your new Roku. If you own an iPhone, iPad, or other Netflix supported device like an XBox 360, you can stream to that, as well.

Step 4: Watch Free TV Online

So here’s where the proverbial rubber meets the road. Maybe some of your favorite shows aren’t on local broadcast TV, or even if they are, maybe sometimes you miss those shows and want to watch them later. There’s a variety of television networks that allow you to watch TV online, not to mention some other websites that broadcast those same shows.

Here’s a quick rundown:

1. Hulu: This is probably the most well-known streaming site outside of Netflix. The great part about Hulu is that you can watch TV online from a variety of networks including ABC, NBC and Fox. Hulu streams in standard definition, and from the major networks you’ll only get the last five episodes of each show. If you pay $7.99 a month, you’ll get full seasons of several current-run shows and the ability to stream in HD to a variety of devices. Of course, if you’re on a budget, the $7.99 price tag may not be worth it.
2. TV.com: If it’s not on Hulu, it might be on TV.com. TV.com is CBS’ answer to Hulu, so you can watch some of their shows on here, as well as various other clips.
3. ABC, CBS, FOX, NBC,TheCW: All of your favorite broadcast networks stream recent episodes of their television shows for free. Can’t find it on Hulu? Go straight to the source. For example, if you’re interested in the hit TV show “Two and a Half Men,” you can watch it on CBS.com. Want to watch Gossip Girl? Head on over to the TheCW’s website. You get the drift. If it’s broadcast TV, you can find it for free.
4. Comedy Central, FX, History Channel, MTV, National Geographic, Spike, etc.: Yes, your favorite cable channel may be streaming TV online for free on their website. This is by no means a complete list. If there’s a show you can’t live without, just Google the channel it’s on, and see if they stream full episodes.
5. ESPN3: This one comes with a catch. ESPN3 is GREAT for sports fan, as you can watch live football, baseball, basketball, soccer and any other sport you can think of. It’s free, but only if your cable provider ponies up for it. Right now, that means it’s only available to people who have certain cable/internet providers. If you’re not on the list, you can watch it.

Conclusion

So there you have it. Four easy steps for ditching cable on a budget and watching TV online. Your start-up costs are somewhere between $160 to $480 dollars, but that pays for itself in a manner of months. Your only recurring monthly charge is $7.99 for Netflix. I’d say that’s a pretty good deal regardless of whether you simply want to stick it to the cable/satellite companies or if you’re just trying to cut costs.