If you've ever signed up for an introductory trial offer or thought a trial subscription that was cancellable "at any time," was too good to resist, chances are you also know that dangers lurk around the bend. Seemingly low-cost subscriptions, especially when the first month or two are offered at a discount, can be traps that add up to big bucks each year.
Whenever you're faced with the temptation to sign up for a monthly payment subscription, it helps to figure the actual cost on an annual basis before you grab the "opportunity." While a few dollars each month seems reasonable enough, the yearly cost might be cause to pause.
Online subscriptions, payable through automatic recurring charges to your credit card or checking account, can be especially difficult to cancel unless you're very organized and keep impeccable records of sign-up dates and billing schedules. Too many people forget to monitor the charges and find that canceling is too much hassle.
Before you know it, those ‘few bucks a month subscriptions’ are costing you hundreds or even thousands a year. You’re signed up for Netflix and Hulu for movies and tv shows, Pandora Plus and Spotify for your music, you have the premium version of MyFitnessPal, you’re subscribed to Audible for audiobooks, you’re signed up for a dating site and who knows what else. Pretty soon, you have five or more $5 - $10 monthly subscriptions going at once!
It’s an easy trap, and businesses know this – which is why most are switching to subscription pricing models. You see this trend everywhere, from Adobe and Microsoft software to shaving and personal shopping companies.
Analyze the Good
It can help to keep a spreadsheet of some kind so that you can track how much you actually use the service. Whether you're paying a monthly fee for access to movies or music, a membership fee to a health club or dating service, or subscribing to a discount dining card, track your usage and weigh the benefits of continuing your subscription.
When you face the temptation to sign up for a subscription, simply figure the monthly cost times 12. If you then balk at the yearly expense, pass on the deal.
Special offer subscriptions can be budget killers if you're not careful.
How to Avoid the Trap
Financial advisors recommend setting a budget that will allow for some flexibility, but by annualizing expenses, you'll find it easier to resist those seemingly reasonable, overly tempting subscription offers.
While it may be that an extra few dollars each month aren't worthy of concern, it's when the little expenses add up that you can be in for a real surprise at the end of the year. It really doesn't take too many $10 bills to add up to hundreds of dollars. The important next step is to consider how you might better use your money for something you consider more important.
Set Your Priorities
Just as most people understand how easy it is to spend cash, if you are conscious of the way small subscriptions add up to major expenses, you'll learn to "just say no" to your impulses. Most special offers will still be available, so think seriously about the pros and cons.
While there is nothing wrong with enrolling in a monthly payment subscription, do it with your eyes wide open, preferably after you have checked competitive offers and settled on the best option for your personal needs.
You want to know the total cost rather than the monthly outlay when you buy a television, a car, or a house, right? In the same way, just take a few minutes to think about the yearly fee when you're tempted by the next low-monthly-payment subscription.
If you just say "no" to some of them, you might even find room in your budget for a special vacation. Now, that would be a real deal!
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If you have questions on budgeting or need assistance getting the most out of your accounts, stop by or give us a call at (409) 899-3430.
