Big Budget Destroyers are Little Expenses

Once upon a time, businesses sold you goods and services. You paid once and then used them until they wore out, broke, or no longer served your needs. Then, you went and bought something new. This works pretty good for customers, but can be hard on businesses who have to constantly come up with new ways to sell you something. These days, business has found a better way to consistently fund it’s profit and loss statement, but it may have ruined its customer’s budgets along the way.

Little Subscriptions

When you make your budget for the month, chances are you properly account for those standard monthly bills like electricity, phone, cable, HOA dues, car payments, rent / mortgage, water, heat, and so on. Chances are also good that these payments eat up a fair amount of your budget.

But, are you accounting for all of those little subscriptions out there?

If you try replacing any of those above services, chances they come with different monthly subscriptions. Cutting the cord on your cable company? Netflix, or Hulu Plus are monthly subscriptions. You can also subscribe to Amazon Prime on a monthly basis. If you want to replace your DVR, Tivo wants a subscription fee equal to what Comcast charges to rent it’s DVR.

Lately, it seems like everyone wants to charge you monthly. At first blush, this can seem like a good deal, but these expenses come quick and easy, and can add up to a lot of money along the way. Like music? There are some free services, but if you like your music ad-free and with the ability to skip (or never hear) all the lame songs you want, you’ll need the premium version. Cost $9 per month.

It’s only $9, right?

True, but these days, there are A LOT of things out there wanting to use the subscription model.

I’ve had the Adobe Creative Suite for a long time now. I have version 4. That is no where near the current version, but it still does everything I need it to do, and best of all, it doesn’t cost me any money. If I want to upgrade though, Adobe wants me to SUBSCRIBE to the Adobe Creative Suite. I can get all the Adobe stuff for a whopping $30 per month, or just the photography stuff for $10 per month.

Again, it’s only $10, right?

Of course, I can do the same thing with Microsoft Office. Personal version is $7 per month, or I can install it on up to 5 PCs for $9 per month.

It’s still only $9, right?

The funny thing about the software, is that everyone has added it up and decided it’s a good deal. After all, it works out to the same cost, or even less, if you buy a full install version every time a new upgrade comes out. But, the catch is that most people don’t buy software every time a new upgrade comes out. They wait until they need new features, or their old version breaks down. It’s been years since I’ve paid a penny to Microsoft or Adobe, which is exactly why they want subscriptions.

More Monthly Charges

Software and music aren’t the only places you’ll find this new drive for subscriptions.

There are monthly subscriptions available for legal services, video games (World of Warcraft), online services for calling, sharing, or storing.

I used a Groupon for a massage last month. It was a good enough massage, but the business model of the place is for me to sign up for a monthly massage, even though I don’t usually get a massage every month.

In a lot of ways, these new subscriptions are like those coupons that offer you $1 off when you buy 4. Normally, you’d only buy one box of cereal, but you can save by buying more. I’ve noticed this seldom works out better for me. But, if I would like to increase the rate at which I get massages, I can get one a month for cheaper… I think… maybe…

Budget Those Little Monthly Charges

The most important thing is to make sure that you track and budget all of these monthly charges and make sure you are covering the cost. Seeing what they all add up to each month might also make you reassess the value of that “only $9 per month” charge you signed up for.

Sample Budget of Little Monthly Charges

  • Microsoft Office $9 / mo.
  • Adobe Photography Suite $9 / mo.
  • Spotify $9 / mo.
  • World of Warcraft $15 / mo.
  • Hulu $9 /mo
  • Tivo $15 /mo
  • Massage Place $49 / mo
  • Legal Services Plan $15 / mo
  • Investing Plan $15 / mo. (or percentage of your 401k?)
  • Carwash Subscription $11 / mo

And so on…

The list above runs $156 every month. That’s on top of your regular bills.

The key to getting these subscriptions right is to understand how you use these items and services, not how THEY show you they can be used. If you get your car washed once every 6 weeks, does a cheaper wash every 4 weeks save you money, or just make you wash your car more often?

In my case, buying Adobe on a Black Friday special deal every five or six years is clearly a better deal for ME and paying $10 every month, is clearly a better deal for THEM.

I guess maybe I’ll figure out how to use a different program… and I’ll definitely get my massages somewhere else, without a subscription.

 

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