Episode 90 - Subscription Creep: The Hidden Budget Killer

Ever wonder where all of your money is going? Do you think there could be too many holes in your budget where money seems to leak out every month? You are not alone. And, there is hope. Let's talk about Subscription Creep and how it is The Hidden Budget Killer.

Transcript

0:00

Paul, Welcome to Catholic money talk, where we talk about all things money and finance, and we try to do it through a lens of being Catholic, where our ultimate goal is to one day be in Heaven with the Lord. I am your host. Paul Scarfone, thank you for being here today. Hello and welcome back to Catholic money talk. Today, I want to talk about the hidden budget killer subscription creep. And then, well, that was my, my poor attempt at like, like, that horror music kind of thing, right? The anyway we're going to talk about subscription creep, right, and why I believe that is a hidden budget killer that happens to a lot of us. But before we do that, let's say a prayer in the name of the Father and of the Son and of the Holy Spirit. Amen, Heavenly Father. We thank you for this day. We thank you for all the ways that you love and bless us. Lord, we know that you have an awesome plan for us. Help us to surrender our plan to your plan. Lord, you know our needs. You know all the different situations we find ourselves in. Lord, just give us the strength, give us the grace. Allow us to tap into that. Allow us to grab onto you. Lord, we know you are close to us. We know you are beside us. Continue to walk with us. Lord, lead us to you. We ask all this in Jesus name, amen, in the name of the Father and of the Son and of the Holy Spirit, Amen. So what is subscription creep? Well, before we talk about that, I just want to talk about another topic really quickly, and we're going to start with lifestyle creep. This is a common challenge, lifestyle creep. This is what happens when our income increases and we allow our lifestyle to slowly consume that increase, right? It's when we allow expenses to slowly grow and take up more and more and more of our income. Right? Typically, it's our monthly income, and this happens to all of us, and the sooner we can identify it and address it, the better off we are, and the better off we'll be at handling our finances and achieving our goals. Lifestyle creep is what happens when we don't have a plan that we're faithfully executing and managing. And this is so common. This is why two of my first three podcast episodes ever, right? If you look to the beginning of my podcast, I had intro to Catholic money talk. The next two episodes were about lifestyle creep, how to identify it and how to address it. It's so important, it's it's also one of the most downloaded topics, right? Having a few different episodes, but those, when you add up those, all those are like the most popular downloaded episodes that I have, because we all struggle. This affects so many people, and it affects so much because it has the ability to quickly snowball into bigger and bigger and bigger problems. Let me give you a very quick example. 22 years ago, when Tara and I were first married, our household income was 45,000 a year. That was the total between the two of us. And I remember thinking that when our household income would reach 100,000 a year, we'd be loaded. We would have so much extra money. Well, 10 years into our marriage, our household income, it was 100,000 and we felt more broke than ever. And when we began to look into it, we found that we had said yes to so many things and not really prayerfully discerning anything. And the cost that we were saying yes to slowly started to add up and add up, and they snowballed until we had found ourselves in just an untenable situation, and that's when we realized that we had to get the money stuff figured out and under control. And so this idea of this slow creep, it can happen to all of us, and if we aren't mindful of it, it can easily consume a big chunk of our finances. Okay, so that's lifestyle creep. So what is subscription creep, and why am I calling it the hidden budget killer? Well, let's first talk about subscriptions. Right? Subscriptions, you're probably familiar with the term a subscription is something we sign up for because we experience or we anticipate that we'll receive some value from it, right? Right? We we sign up to pay for the service, usually on a recurring basis. Maybe it's monthly. Sometimes it could be annually. And some of the most popular subscriptions their video, music, streaming services, shopping, retail services, maybe food or meal delivery. We're surrounded by them, right? Think Amazon Prime, Spotify, Netflix, right? I could go on and on. Hello, fresh. There's so many things. There's tons of them, and most of these, this subscription problem, it's relatively new, right? Let me give you an example. Back 100 years ago. No, not that far. Oh, maybe 30 years ago. Yeah, if you wanted to watch a movie, right? You're sitting at home, just finished dinner. You're like, oh, be great to watch a movie tonight. We don't own any of the movies we want, right? They're not on our bookshelf in the VHS cassette or the DVD. So you have to get in the car and drive to Blockbuster, right? Or Hollywood Video, there were so many video rental places, right? But you you drive to Blockbuster, you walk up and down the aisles, right, looking at all the VHS or DVDs, right? And then you find the one you want to pay. You want to rent. You pay for it, you drive home, you watch it, then you had to bring it back within a certain period of time, or there could be late fees or other penalties. I remember when Taryn and I, when we first got married, Netflix was new, and it had just come out with this service, you could sign up and you would get a DVD in the mail, and whenever you mailed it back in, they would send you a new DVD from the list from you would create, like a list that you wanted to watch, and they would send you the new one. And there were different levels of service of their membership, right? You could, you could have one DVD at a time, and then you could have two DVDs at a time, or maybe even up to three DVDs at a time. There was another one red box video that had popped up that was like a vending machine, kind of standalone kiosk. You'd see them outside grocery stores or other shopping centers, usually in higher traffic areas. You'd walk up to it, you'd literally browse through it to see what DVDs they had in this machine. You'd pick one, you'd rent it, you take it home, watch it, then you'd have to bring it back to any red box location to return it right. Both of these examples, you had to physically get there. You had to get in the car and drive to it. And you might only rent one or maybe two videos a week, because it was a lot of work to go out, get it, bring it back. Not super convenient, right? So, so fast forward several years. Now we have video streaming services. You can pay a monthly fee and have access to as many videos, movies as you want, whenever you want. You don't even have to get up and drive there, right? You could. You could be laying in bed. You just click, click on your phone, and you're watching a new movie and you want the the next one in the episode or series. Boom, you got it right there, right? And so for this ease and convenience, you pay a subscription fee. It's usually monthly. Maybe it has a discount if you pay for an entire year in advance, but it's super convenient. And you know, my example, it's just for videos. But the same is true with music and so many other electronically delivered things, and there's many more, right? Amazon Prime, it offers fast shipping, certain deals, free digital content with the Amazon Prime subscription, there's food subscription services, whether it be grocery delivery, prepared meals, you know, meat, meat boxes, you can get clothing boxes. You get all these things, these subscription services where stuff just keeps showing up at your door. You don't have to go anywhere, and sometimes you can return it pretty easily if you don't want it, right? Sometimes. But people are spending more and more for these the convenience of these services, and there's so many other subscriptions as well, right, new sites or other content we're interested in, you know, news, video games, sports, Fitness, Health, some of them have their own apps, and you download it on your phone, and we pay for the service. And in the moment, we might find that we really feel we have a need or a great desire to have access to this content or service, but maybe a couple weeks, months, days, maybe even just hours removed. We're like, I don't think I really need this, but there's so many other subscription types out there. You get the point. We find there's a convenience or a need for a particular service. They sell it via subscription. We sign up for it. So why do businesses offer it this way? One, it gives them great, consistent income, right? If you just think of you like getting weekly or bi weekly or monthly paychecks, right? Businesses love to have recurring revenue, right? So that's one of the reasons they do it. They're trying to make money a monthly subscription. It breaks down the cost with smaller amount, making it appear easy for us to pay for it. And many times, you can pay through a linked payment service, right electronic wallet, a saved card on file, or maybe through a financial service like PayPal, they make it super easy to pay. So we have a thought. We need it. We see the cost. It doesn't seem significant. It's easy to complete the purchase, and we now have access to the content or service we wanted. But now we've also signed up for a new subscription. Some of the you know, one of the the marketing that these companies will have also be free trials, right? However, we still need to put our financial info in so that they can start charging us after the free trial, if we forget to cancel, if we decide we don't want the service. Now, I am not against subscriptions. I just think you need to be careful to only subscribe to the ones that you're actually going to use, the ones that you actually. Actually feel are a priority to you that align with your goals and the ones you feel you're actually receiving good value from. And that should all be decided within the context of your prayerfully discerned budget. Because here's the problem, if you aren't careful, right, this this becomes that hidden budget killer. You'll find yourself signed up for things that you don't really use or you don't really need. You'll be wasting money that could have been spent on other things that should have a higher priority. That's why subscription creep is the hidden budget killer. It they eat up your money, taking away from your budget. Your budget is the blueprint for hitting your goals, right? This is the steps you need to take. This is how this month needs to go with my money for me to move towards my goals. When the subscription creep, when it starts coming in, eating up our dollars, we're not able to fund the budget. We're not able to hit our goals, and it can be frustrating and demoralizing. So I'm going to give you just a quick story. This is Story. This is just last week or two weeks ago. Is a recent story about me using a subscription right in the desire for convenience and how easy it is to sign up. So a couple weeks ago, we're away for a week with friends in Delaware. And the couple we were away with, they're big, big Yankees baseball fans, and they're sitting there trying to figure out how to watch the Yankees game that evening, and they weren't able to figure out a way. So I started to investigate it. We personally the scarfones. We have Verizon Fios, so I logged into my FiOS app and attempted to view the game. But since we were out of our home market, like our local geographical area, the game was blacked out, and we could not watch it that way. So I thought, Well, I think I've seen Yankees games in Amazon, like on Prime Video. So I log in Amazon Prime video, and I see, oh, here's the Yankees game. And I click it and it says, in order to watch this, you have to subscribe to the MLB TV subscription, and you get a seven day trial for free. And after that, it's 2999 so I turned to my wife, Tara, and I said, Look, how hard is it if we sign up for this so that we can watch a Yankees game, you know, for a couple days while we're here, and then we cancel it. Like, how hard would that be? Because I don't want to pay 2999 a month. Nine a month just to have watched, you know, two or three Yankees games. And Taryn said, Oh, it's really easy through Amazon. Just go ahead and sign up and I'll cancel it today. Like, tell me when you sign up. Do it right now and then I'm gonna go right in and cancel the subscription. She says, typically, they'll still give you that seven day free trial to use it. I thought perfect. So we signed up Taran then canceled it, and we're stable, able to watch the game, right? We found we needed, we're able to use it, and we canceled it before it became a problem. But as I just kind of relayed that to you, it's a bit confusing and complicated within the moment, like it was probably more brain power than I was willing to devote to it at the time, but I knew I had to be careful. I was treading on thin ice, because I didn't want to spend $30 in, you know, that much of a second. And there's been other times when I sign up and then I see the fee come out, and I go, Oh man, I forgot to cancel it. I go in and cancel it. I try to get my money back, but it's usually gone, and it can feel like a full time job, or at least a part time job, trying to keep track of subscriptions, canceling ones we don't use, and we might not be the only one accessing it. Might our kids might have access to something, our spouse might have access something. And so we need to have a plan to like, how do we do this? And so having a conversation about it before we just sign up for a subscription is a great kind of just check right. A great moment to say, hey, is this something we really want to do? But let's talk about how to identify the subscriptions that we currently have and then discern if we should have them or not, and then cancel the ones we don't. Right? You might be surprised with what you find and tell you a little story. A few years ago, I was working with a young couple, and they weren't broke or in a desperate situation. They just felt that they weren't saving and investing enough money, or they didn't think they were saving and investing as much money as they should be based on how much their income was. And so one of the first things I had them do was to go through the last three months of spending, right? So they looked through their credit card statements. They looked through their bank statements. I reminded them, don't forget about PayPal. Venmo Zelle, they look through everything, and they started to categorize all these expenses to see what their monthly average of spending was. They found they had a lot of subscriptions. So I'm gonna give you a quick synopsis. They had three different video subscription services that averaged a total of about $55 per month. They had $20 more per month of music subscriptions, then another two subscriptions that the wife she used for health and fitness that totaled$60 Dollars a month. And he had four different subscriptions, different sports apps that he paid for annually. Right? Because they started talking about these subscriptions, he looked it up, and so he broke down the monthly cost for those four apps was a total of $33 per month. They also had other retail, shopping and home food delivery service subscriptions that totaled $200 a month. And when they added all of that up, right, 55 plus 20, plus 60, plus 33, plus 200 that's $368 that's over 4400 per year, they were shocked. They admitted that they were using them all a little here and there, but they couldn't believe the total dollar amount. And then I asked them, I love asking this question, because it makes people like if they're not feeling great, they feel a little bit worse. I said, How long do you think you've been paying for all these and they admitted that it's probably been over three years for most of them. So that's over $12,000 spent on these subscriptions. Now. Their homework was obviously going through and determining which ones of these were a priority, right? Which ones they should keep. If they should keep any of them, they knowledge that none of them were necessities and that they could cancel them all. They ended up canceling a bunch of them and changing a few others to lower tier subscriptions, right, like less of the Premium Package, or whatever it looked like. And all in all, they ended up saving over $250 per month, right? That's three grand a year they saved. Now, if you haven't done this activity, I would suggest doing it. Now, I know there's some apps out there. You know, people will tell me, Hey, Paul, we think about this app. I can plug in everything, and then it tells me if I'm wasting money on subscriptions, and that might be great or helpful, but, but I don't like to use an app to sort this out. I prefer to have people roll up their sleeves and do the work themselves. Why? Well, two things. It teaches discipline, right? It allows you to touch things and see things more, but you'll see more than just the subscriptions. So what do I mean? Well, when you dump all these transactions on the table, right, all the if you're using credit cards, credit card transactions, your bank transactions, you know Venmo, Venmo Zelle, PayPal, whatever, whatever. The all the ways you spend money. You dump one on the table, and you rake through at least three months of these expenses to find your subscriptions. You'll find the subscriptions, but you're also going to find other expenses that just jump out at you and they'll cause you to kind of re examine some of your spending habits and financial decision making. It's a great activity. It's so valuable. It's worth your time because it causes you to slow down and engages your brain into some good critical thinking and decision making pertaining to things that are very relevant and very important to you. And if you're married, do it with your spouse, you'll quickly become much more aware of your spending habits, more than you ever have. And this is the step i recommend you take. Just set aside a few hours and work on this. You can easily download most spending activity into a CSV file, right? That's like a Excel sheet or a Google Sheet. Right within that spreadsheet, you can begin to sort and organize your expenses. You might be very surprised with your spending, and hopefully you'll be excited. You'll turn into a moment of joy, recognizing that there's some areas that I can claim back chunks of my income, you know, and I can direct it within my budget, towards our goals. And if you don't have a budget, if you don't have a good, effective process for managing your money, this is a great way to identify some reasons to start. And here's what I recommend, do this activity. Once you complete this activity, you can jump back on Catholic money talk, listen to podcasts. Episode 73 and 74 right in those episodes, it's part one and part two. I give a great overview and insight on how to start creating a financial plan with the mindset of Christian stewardship. And maybe you don't want to listen to two more episodes. You're not sure if you really need to do this. Well, then stop. Go to Episode Nine. It's my most popular downloaded episode. It's titled, How to live below your means. Just listen to that. It's it'll be a great place to start, hopefully, a motivation for you to roll up your sleeves and do some of this work. But so many people that I speak to and work with, they're going through life feeling like they should be doing a little better financially than they are. And when I get to talk with them and we we touch on this topic, this right, this, the subscription creep, and I walk them through it, they start to get fired up. They want to start making some change, because they see, they actually see how this has been. Healing their monthly income. So I challenge you take a look into this in your own situation. You'll see what I'm talking about. Well, there you have it. Subscription creep, the hidden budget killer, that's it. I hope this has been helpful. I really do if it's been helpful to you, or maybe, maybe you know a friend that you think this could be helpful with. They're going through some of this stuff, or you think maybe they they need to do something about all the subscriptions they have. Share this episode with them, but I hope this has been helpful. Thank you for joining me today. God bless you. Thank you for listening to Catholic money talk. I hope you join us again next time, please click Subscribe in your podcast app to get notified of new episodes. God bless you and have a great day. You.