How to stop subscription creep from taking over your budget
Pop quiz: Guess how much you spend each month on Netflix, Spotify, cable TV, Internet, cell service, and monthly product subscription deliveries. Then go back and compare that number to your actual bills. (Note that this is not as easy as you’d think it would be.)
How did you do?
If you’re like many people, your initial guess was way low. A survey by the Waterstone Group found that most consumers initially underestimated what they spend on monthly services—those products above plus Hulu, cloud storage, recurring Amazon or Target deliveries, Blue Apron, Birchbox, and the like—by around a third. As one observer wrote on Twitter, “We are frogs boiling in subscription water.”
Earlier this month, Netflix hiked its prices. Just received notification that my Amazon Prime was renewed at a higher price (announced last year).
We are frogs boiling in subscription water
— Lauren Goode (@LaurenGoode) April 24, 2019
You might find yourself wondering how you wound up with so many subscriptions to begin with—a condition that’s become known as “subscription creep.”
“It’s easy to lose track of how much recurring charges are going to add up,” said Susan Grant, director of consumer protection and privacy at the Consumer Federation of America (CFA). “It doesn’t even seem like real money.”
Fortunately, there are steps you can take to stay on top of subscription creep—while still feeling like you’re not missing out.
Keep an inventory
Go through your bank statements (using a spending tracker helps) and note all your recurring subscription charges, including things that are billed once a year. (The Waterstone Group offers a useful rundown of the kinds of subscriptions to look out for.) Calculate the cost per year of each item. This number will give you a more realistic sense of what you’re coughing up than will the relatively low monthly figure.
The CFA’s Susan Grant keeps a spreadsheet in which she logs recurring payments. “I’m just trying to keep track of what I’ve committed to and when the renewals are,” she said. “It can get away from you.”
With the inventory complete, proceed to digital detox mode.
“A lot of these things are not necessities. They’re discretionary purchases,” Grant said. “You need to assess whether you can afford them and whether they are worth it.” For example, you may find that you don’t drive enough to justify a satellite radio subscription. Another example: You might have had admirable ambitions when you subscribed for a monthly delivery of fresh produce. But if your lettuce often winds up wilting in the fridge, consider cutting your losses, canceling your subscription, and buying fruit and veg like you did before you decided to get fancy.
NerdWallet suggests identifying redundancies and dialing down the add-ons as you purge. Do you really need Netflix and Hulu and Amazon Prime and premium cable? Can you subscribe to them one at a time, instead of all at once? Note that services sometimes offer an entry-level package alongside a more expensive premium subscription. See where you can downgrade to the basic plan without pain. Your local library might even offer a free subscription to a video-streaming alternative like Kanopy or Hoopla Digital.
It also pays to compare. Look around for better deals on things like cable, Wi-Fi, and cell service. Sometimes you can use a competitor’s offer to negotiate discounts from your current service provider.
If you’re on the fence, just cancel. You can always sign up again if you get back into meditation (hello, Headspace), and you might even snag a better offer when you re-up.
Keep it skinny
Now that you’ve purged, and your budget is light, keep it that way. Don’t let your guard down when a new (or former) subscription lures you with a free trial. If you must add a new subscription, make sure you can cancel it down the line without any financial penalty if you change your mind.
And repeat this process regularly. “People’s incomes sometimes change, as do their expenditures for things that are necessities, like housing and auto payments,” Grant said. “With this discretionary stuff, you need to pay attention and cancel things” as they become less useful or less affordable.
What do you do with all the money you’ve saved? Go ahead and reward yourself—within reason. A movie night can be a nice pat on the back for having hacked your budget. But avoid the temptation to throw your extra cash back into the general spending pot. Instead, consider putting your windfall into your 401(k) or IRA, financing a retirement during which you can binge-watch Netflix to your heart’s content.