Are Your Monthly Subscriptions Getting Out of Control?

Monthly subscriptions, monthly subscription cost

Monthly Subscription Based Economy

Subscription based companies are growing from 5-9 times faster than traditional companies.  Many traditional companies are now playing catch-up to regain some of the market share they have lost to these services.

DirectTV Now (Netflix)

Gillette Shave Club (Dollar Shave Club)

AMC Stubz (Moviepass)

And many more.

All of these traditional companies are trying to avoid what happened to Blockbuster.  (Did you know that Blockbuster had an opportunity to buy Netflix for $50,000,000 in 2000?)

As a result, more companies are competing for just a few bucks a month of our money.  And we are handing over more every year, from $57M in 2011 to $2.6B in 2016.

Monthly subscriptions, monthly subscription cost

I’m Not Innocent

I’ll start out by saying I am guilty of making several subscription-based payments every month.  They key into my pecker tendencies (a pecker is someone who spends a little bit of money at a time, which slowly adds up [I explained here].)

Monthly subscriptions, monthly subscription cost

The monthly subscriptions are such a small amount of money that, even at their most expensive, are just an hour or so of work.  However, when adding them all up, they can consume a considerable amount of money, multiplied over time.  Which can equate to thousands of dollars in future money.

I really want to analyze the true cost of my monthly subscriptions and decide if that cost is worth the (future) money.  First, I need to figure out which subscriptions we have and their monthly cost.  For this exercise, I’m going to exclude subscriptions that are “required” (mortgage, cell phone, etc.) include tax, and round to the nearest $1.

Netflix – $12
Amazon Prime – $11
Spotify – $11
Gym Membership – $54
Beachbody On Demand – $9
Consumer Reports – $3
Naked Wines – $40
Lawn Care – $58

“Only” 8 subscription services, it doesn’t seem too out of control.

Next, I am going to calculate each what each subscription service would be worth if it was invested into a low-cost S&P 500 index fund (7% returns) for 30 years instead of spent how it currently is.

Netflix – $14,738
Amazon Prime – $13,510
Spotify –  $13,510
Gym Membership – $66,323
Beachbody On Demand – $11,054
Consumer Reports – $3,685
Naked Wines – $49,128
Lawn Care – $71,236

If you want to know how much your monthly subscription actually costs, multiply the monthly cost by 1,228 and you’ll know the amount you would have if you invested that amount each month and earned 7% for 30 years.

This can be expanded to include ALL monthly payments: cell phone bills, mortgage, cable bills, etc.  (If you want a quick guide to cutting cable read my previous post about how.)  For now, I am going to stick to the 8 above.

Are The Monthly Subscriptions Worth It?

Monthly subscriptions, monthly subscription cost

It’s a question that you’ll have to figure out for yourself for each monthly subscription.  For us, some of these subscriptions are worth it.  Conversely, some of these subscriptions overlap and may not be worth the money spent.  I’ll break down which I think (my wife may think differently) are “worth it.”

Netflix -$14,738

This amount is pretty reasonable for the amount we use Netflix.  In the evenings, we usually watch an hour of TV and 90% of the time it is from Netflix.  However, there is some overlap with Amazon Prime, which also offers TV and Movies in their subscription.  Also, eventually Disney will launch their streaming app and, assuming they will have EVERYTHING available, it will be a no brainer for us to buy.  I have been using Netflix for well over 10 years.  My family used it in the early days of the company.  Nonetheless, I could see us getting rid of it in the future, exchanging the monthly payment for another.  We simply use it too much.

Verdict – WORTH IT (for now)

Amazon Prime – $13,510

Amazon has quite a bit of “stuff” wrapped up into its services.  2-day shipping, TV, movies, music, cloud storage (underrated), and seemingly more every month.  I have been a Prime member since 2007, and ordered 754 items since then.  If I guess that 2 days shipping saved be $10 for every order, I’m already in a place where this monthly subscription has been worth it.  Additionally, when I’m not listening to podcasts, I am listening to Amazon Music at work.  We are also watching more Prime TV content at home, still not much, but it is increasing.

Verdict – WORTH IT

Spotify –  $13,510

This might be the first monthly subscription that my wife and I disagree on.  We pay for Spotify so we can listen to any music that tickles our fancy.  We keep our Google Home in the kitchen and listen to music when we cook, to relax, or just to have a dance party with our toddler.  My wife loves their playlists and works out to them.  To me, paying that money when we could use Amazon Prime’s free music library, or just put any song we want on YouTube and listen that way, makes me feel that this is money could be better spent elsewhere.

Verdict – NOT Worth It

Gym Membership – $66,323

This is my wife’s gym.  She and I have talked at length about it and because she loves her gym and can’t do the same workouts with the same motivation at home, it is probably worth the cost.  In the future, she’d like to be a trainer at her gym.  If that works out, her membership would be free and she would earn a bit of money on the side.  Imagine turning this $66,323 loss into a several hundred thousand dollar gain.  Maybe in that sense I can accept her gym membership as an investment instead of a fee…  OK, I’ve convinced myself.

Verdict – Worth It

Beachbody On Demand – $11,054

We’re only a few months into this membership.  It basically gives us a lot of workouts we can do at home from an App that runs through our Fire TV Stick.  All of the Beach Body, P90X, etc. workouts are available with the subscription.  It is a subscription we believe we will use several times a week once we finish turning our basement into a home gym.  It remains to be seen if this subscription is worth the money.

Verdict – NOT (yet) Worth It

Consumer Reports – $3,685

Consumer Reports offers incredible reviews and testing across a great variety of items.  It comes as a monthly magazine, but also as a digital content subscription.  We have the digital content subscription.  All of the reviews and articles are available on their website if you are subscribed.  Undoubtedly this subscription is worth it.  We used their reviews when shopping for our car, remodeling our kitchen, shopping power tools, home appliances, and many other things.  I believe the amount of money we can save by using this tool more than makes up for the “lost” money over 30 years.  Everyone should get the digital subscription.

Verdict – Worth It

Naked Wines – $49,128

This is a bit of a guilty pleasure for us.  The way this subscription works is we pay $40 per month to Naked Wines, they credit our account with $40 that we can spend on bottles of wine from their partners.  We pay lower prices for good wine and we have a better chance at keeping our stock of wine full.  However, the question isn’t “Do we like it?” (Yes.)  The question is “Is it worth ~$50,000 over 30 years?”  I think the answer is closer to Yes than No.  If we gave up the $40/month, we wouldn’t stop buying and drinking wine.  We would  probably still buy a few bottles a month (more now that my wife isn’t pregnant!)  Moreover, we can only spend what is in our account on the website.  If we go to the wine and spirits store, we can spend above our budget and are prone to impulse spending.  Also, buying our wine has kept us from going out and ordering drinks that usually cost as much as 1 bottle of wine.  Have I convinced you enough that I don’t have to feel guilty about this monthly subscription?

Verdict – Worth It

Lawn Care – $71,236

Several years ago, our front lawn was in pretty rough shape.  Grubs has started invading, the week we were on vacation was incredibly hot and dry, our lawn paid the price.  We were embarrassed because our neighbors yards were immaculate compared to ours.  It was our first home and we really didn’t know how to fix the yard.  On top of that, we were very busy with our jobs and all of the other issues the inside of our house had.  We’re a little older and wiser now, we know how to keep our grass green.  Furthermore, the amount of time our lawn service actually works on the yard is pretty low.  We end up paying about $150/hr in actual time spent working on the yard.  Obviously, we can do better than that.

Verdict – NOT Worth It

What is it All Worth?

Our subscriptions cost us an estimated $243,184 over 30 years.  That’s a nice house in a nice neighborhood.  That’s 2 townhouses that we could rent out for additional income.  However, we believe some costs are worth what we get out of the product.  I think this year will be the last year we pay for lawn care.  We will buy the fertilizer to keep our grass green and devote that ~$58/month to our college funds which are going to need all the help they can get to reach their goals.

What is crazy is the number of monthly subscriptions that are available today as boxes.  No matter what interests you, there is a box of random stuff that can be sent to you.

Want exotic meat sent to you every month?  There’s a box for that.

Are you a quirky girl with unique tastes?  There’s a box for that.

Fancy yourself an archaeologist?  There’s a box for that.

Love the taste of jerky but hate eating meat?  There’s a box for that.

There are subscriptions out there for just about anything.  For some people, the total cost may absolutely be worth the price.  While others will find the price too steep.  What is important is we all educate ourselves on what these small monthly payments really cost us, especially as it relates to our long term financial stability.

The Best Monthly Subscriptions

The best monthly subscriptions are the ones that add value to your life.  No matter what you are spending your hard earned money on, make sure it it is important to YOU.  Make sure you subscribe to yourself and your future before you subscribe anywhere else.

Of all the monthly subscriptions, my favorite one is my subscription to my 401k retirement plan.  That $1,918 monthly subscription plan looks to benefit us to the tune of $2,355,696 in 30 years.

Monthly subscriptions, monthly subscription cost
Oh baby!

We’re going to need every dollar if we plan on hitting our retirement account goal in 2030, it is 4,291 short days away.

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