Ahhhh.... this is one of the easy ones! =) Don't get me wrong it's difficult to do but in the last 10-15 years living without cable has become much easier. Also I know there are many guides or experiences written out here on the internet -- I know I'm not new with this idea! So because of that I will share a few well written links and then share my experiences =)
a great guide & info with a nice chart to help out =)
Here at our house we use alot of different options all at once. First of all we have 2 traditional put on a pole outside antennas. We put one facing one direction and the other facing perpendicular. This means we have to have converters on any tv that we want to make use of this but most new tvs have it built in so it's not too difficult. (we also have a dvd player that we use on older tvs because it has a built in converter) Worst case scenario we'll get 0 channels but usually 2 -- best case scenario we can get 15! It really depends on your area, a good antenna does wonders though. Here's a website to check out whats available in your area http://antennaweb.org/Address.aspx If you've checked this site in the past and it didn't seem like there was much available, try again. I've checked just last year and there was only 1 channel available in my area and I just checked today and now there are 3 available! I think various stations are starting to add boosters to their antennas (?) and slowly are making them accessible at further distances.
We also have in the past made use of the local library and it's selection of dvds (or vhs back in the day!). Currently we make use more of free movie websites, youtube, and network tv websites. I don't want to share the sites we visit for fear of bad traffic to my blog here.
One of the biggest things we do for entertainment is watch one of the 1000+ dvds we own lol Seriously! If you'd like to browse through our dvd collection then look here -- http://www.invelos.com/DVDCollection.aspx/kingdarkside
We also own 2 ps3's and a roku (1st ed since then I can hook it up to older tvs). With both of these devices we are able to make use of our Netflix and Amazon Prime accounts. Also with shows or movies we have ripped into our computer or downloaded we can use PS3 Media Server to play them on with the ps3. It works really well for all our needs and it's free. (PS3 Media Server can be found here - http://www.ps3mediaserver.org/)
As for Netflix and Amazon Prime. Netflix is cheaper to get started but Amazon Prime is a better buy IMO. Since Amazon Prime is a one time a year fee once you have that taken care of it seems like nothing to pay out the monthly fee for the Netflix.
When it comes to living without cable it really is a personal preference of what direction you want to go in. With the internet and an internet capable device your costs can be $0 a month and it's possible to spend out untold amounts depending on how much or kinds of devices and options available today. The main thing to remember is you don't have to do without entertainment in today's world.