With subscriptions, you are paying for things you’re not using, and giving companies free money each month. It’s time to put a stop that.
There’s a famous phrase from Ernest Hemingway in one of his books:
“How did you go bankrupt?”
“Two ways. Gradually and then suddenly.”
I’d argue that, in a practical sense, the “gradually” part refers to a slow accrual of bad financial decisions, and the “suddenly” part refer to a shock that the bad financial decisions made one unable to recover from.
And it’s the “gradually” part that I believe that we have the most control over. Small decisions, made consistently over a long period of time, are the path to either financial success or financial ruin.
And these days, nothing embodies the “gradually” part of financial ruin more than subscriptions.
So it’s time to take control and put it to a stop.
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Why companies love subscriptions
Adobe is a software company that’s been around for decades. They make Photoshop, Illustrator, and a bunch of other products, and were even the original authors of PDF, the ubiquitous file format.
Historically, their products were expensive. I remember Photoshop being something like $600 in 1990’s money, which is steep indeed. (This page pegs it at $609 in 2000.)
But today, you can buy Photoshop for as little as $22.99.
There’s a catch though: that $22.99 is a monthly charge. You will pay that $22.99 more or less forever, and if you stop paying for it, Photoshop goes away.
So after a little over two years, you will have paid for the equivalent of the old Photoshop. And two more years later, you’ll have paid for it again.
You can see the appeal of what Adobe did. They took a one-time cost and turned it into a perpetual license. What’s not to love, at least if you’re Adobe?
Subscriptions are a more predictable form of revenue for companies than one-time costs. Because you as a consumer authorize a recurring charge, companies don’t need to sell as hard or as often. They have your money, month-in and month-out.
That is, until you cancel.
Why you should be wary of subscriptions
The same reasons why companies love subscriptions are why you should be wary of them.
Once signed up for, they are very easy to forget about. Especially if you’re not very assiduous in tracking your expenses (which you probably know how I feel about that) you can easily not realize how quickly the subscriptions—and the money—piles up.
But even if you don’t forget about your subscriptions, it takes effort to do something about them and (crucially) no effort to keep them going. That can lead to hundreds or thousands of dollars in services that you are not using.
Because let’s face it, you’re probably not using all of your subscriptions.
Three types of subscriptions to cancel
There are three types of subscriptions worth looking at.
First, there are the subscriptions for services that you no longer are using. Maybe you signed up because you wanted access to a special event, and now the event is over, with nothing remaining but your monthly subscription.
These should be canceled immediately.
There are also the subscriptions that you only use sparingly. I call these the “gym membership” subscriptions. You went at one point, but now it’s been quite a while.
For these, I have a mantra: If you don’t use something in six months, cancel it.
Remember that you can always resubscribe. This isn’t permanent. They’ll always be ready to take your money.
Finally, there are the subscriptions that you are using, but not at the level that you subscribed at. Usually these things have a number of tiers, and you probably aren’t using all of the top-tier services.
For these, you don’t need to cancel, but you do want to downgrade to the lower tier.
How to find out what you’re paying for
Finding out your subscriptions is actually fairly straightforward: Just open your statement and look at your charges. If you’re not sure if something is a subscription, then look back a few months and see if you see the same amount to the same place at the same time each month.
There are services that will help you find (and cancel) your subscriptions. Here are a few recommended by CNBC. I’ve never used any of them, so I can’t recommend them.
But personally, these services look like just more subscriptions to me, which is rather like using an app to reduce your smartphone usage. You can do this yourself.
Do this now
The beginning (or ending) of a year is a good time to look back at your spending to see if it aligns with your values. One value that I hope you share with me is “intentionality”, that is, doing things because you specifically want to, not because of autopilot or past decisions.
You can easily free up hundreds of dollars in a given month just by cancelling subscriptions. That’s money you get in your pocket each month to do with as you please. The same reason why companies want to keep you in their subscriptions is precisely the reason why you want to get out.
