Great Savings 3: Cancel Unused Services

 

Cutting the cost of automatic subscriptions.

Without realizing it, we set ourselves up to automatically spend hundreds or even thousands a year. Do you know how much you're spending this way?

As we continue updating our Great Savings Tip Series, today we begin looking for specific areas of savings. Let’s start with all those subscription and membership fees.

 

Great Savings Tip #3 - Cancel Unused Services.

It All Adds Up

 

Subscription and membership fees come in all shapes and sizes. They include everything from money spent on magazines, newspapers, gym memberships, cable service, smart phone or “pad” apps, wine clubs, garden clubs, investment advisory services, and so on. Over the past several decades companies have learned to build revenues by convincing customers to buy into automatic paid subscriptions for their goods and services. These fees add up.

 

A YMCA membership.

I wasn't using my membership. My wife was. We took me off and saved $30 a month. That's $360 per year!

Take that smart phone service as an example: An $80-a month contract works out to $960 a year or $9600 over the next decade. That’s no small chunk of change. And yes, you may need that phone to stay on top of your job or to stay current with all your friends on Facebook. The only question to be asking is whether you’re really getting your money’s worth. If not, check around—there are lots of alternatives.

 

Smart phone applications can cost more than you think.

How many automatic monthly charges are now a part of your phone bill?

What Should I Consider Giving Up?

 

Only you know whether a particular service you’ve signed up for is a necessity or not. As an example, many people would consider their gym membership absolutely necessary to help maintain weight and reduce stress. Others might find free alternatives like walking a great substitute. Which way do you see it? Have you really looked at the alternatives? If not you might find our recent post on walking an interesting read.

 

Lots of companies set up to charge on a automatic, periodic basis.

Renting a movie is less than going out to one. You need to decide whether the experience of going to the theater beats watching on TV.

As you go to improve your finances, start by identifying the ways you spend money automatically and then ask yourself if there are less expensive or even free alternatives. You could end up saving thousands (even tens of thousands) over the long run, and that’s money you can put to use paying down debts or saving for college, retirement or otherwise.

 

Action Item: Scan your credit card and bank statements for all automatic charges and then make a list of them on a sheet of paper. Include the amount you’re spending in each instance and then multiple as needed to get the annual amount you spend. This allows you to better compare values. Now, rank each item according to how important it is to continue using the service. Certain items like utilities should naturally float to the top—you won’t be able to do without them. However, a cable bill might contain lots of extra options like special movie channels, or a phone bill might contain lots of unused minutes. Are you in a position to change your current contract? If so, split out the amount you consider “necessary” from any sums that go to pay for these extras.

 

Look for hidden fees.

Some automatic fees are buried. This cable modem generates a $5 a month rental fee on my cable bill. I could buy a modem and skip the monthly fee.

By all means, if you find services or extras you aren’t using, cancel them. Or if you just want to cut back, start by canceling the least important services on your list. Now, work you way up your list and start making changes to the way you spend your money. If it helps, it might be useful to imagine there’s a pick pocket that drops by your house and steals money out of your wallet each and every month. All you’re doing here is trying to wean him from his habit. And as you go, you’ll soon discover he’s been taking much more than you realized.

 

Stay tuned. There are more updates to our series coming your way.

 

 

You may also be interested in:
4 Simple Steps To Limit Unconscious Spending

 

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