Monthly Subscriptions Are a Modern Day Micro Debt
Big purchases aren’t always the primary cause of debt. In fact, many people fall into debt because of repetitive small purchases made over time. Spending $5 here and $10 there each month doesn’t seem like much, but it adds up to hundreds or even thousands of dollars by the end of the year.
One of the latest forms of micro debt is monthly subscription programs. These range from TV services to beauty boxes, identity theft protection and more. The subscription beauty service Birchbox reportedly has one million monthly subscribers and four million total customers. The streaming service Netflix has a staggering 118 million subscribers, 24 million more than cable and satellite TV providers.
There is nothing wrong with subscribing to a few of these services, as long as you go about it in the right way. Here are some tips to help you avoid excessive debt:
- Do not justify a subscription because it is “just $10 a month.” That is money that could go toward food, utilities, debt and other expenses.
- Cancel subscription services you no longer need or want. Do not continue paying for a service even if it does not cost much.
- Factor your subscriptions into your monthly budget. Do not assume you will have enough leftover to pay for the service because of the small fee. Make it a part of your expenses so you can see how much you’re spending each month for subscriptions.
- Pay for subscriptions using a credit card or debit card you check frequently. If you consistently monitor an account, you are more likely to notice when a subscription fee hits, thereby reducing your risk of overspending.
- Keep track of all your monthly subscriptions, including free trial offers you sign up for. If you need to cancel the service before the trial period is over, set reminders to do so before your first charge.
To help you with this process, there is a new program available called TrackMySubs. It allows you to keep track of all your monthly subscriptions in one location, and provides detailed reports for your expenses and payment due dates. You can organize your subscriptions into folders and schedule reminders for contract expirations or billing dates.
Subscription services spend millions of dollars each year developing new ways to get more money from their consumers. TrackMySubs’ founder Gabe Alves says, “Paying customers should be aware of these techniques. They need to understand what is happening, so they can make clear choices instead of being influenced by addictive behaviors and clever tech.”