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The A La Carte Method: Use Psychology Against Yourself to Save Money

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I was thinking about my friend who spent 30% of her income on subscriptions, and I wanted to share a method to dramatically cut down on unneeded subscriptions that you currently pay for.

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These subscriptions might include:

  • Netflix
  • Tivo
  • Gym
  • Cellphone
  • Internet
  • Cable
  • Amazon Prime
  • Magazines

Subscriptions are a business’s best friend: They let companies make a reliable, predictable income off of you — with no action on your part. Without doing anything, you invisibly pay money each month.

There’s a convenience to this, of course — I set up as many automatic subscriptions as possible — but there’s a significant cost: When was the last time you scrutinized your monthly subscription and canceled one?

Probably never. Yet compare this to any recent time you went shopping. When was the last time you saw something you liked, but decided not to buy it?

In the above paragraph — read it again! — is the key to cutting your spending on subscription items. I’ll show you how.

The A La Carte Method

The A La Carte Method takes advantage of psychology to cut our own spending. As Richard Thaler, a professor at the University of Chicago, illustrates in his excellent book, Nudge, we are much more likely to do things when no involvement is necessary.

Do you contribute to your 401(k)? In one study, 49% of employees contributed when they had to complete forms (i.e., actively take action) ….but that number skyrocketed to 86% when they were automatically enrolled in the 401(k) plan, not requiring them to take any action. (Of course, they could always opt out.)

401k2.jpg

Participation in 401(k)s before and after automatic enrollment.

Here’s how you can use the A La Carte Method for yourself. Cancel all the discretionary subscriptions you can: your magazines, annual Rhapsody plan, cable — even your gym. (It would be totally ridiculous to cancel your Internet, though. I’d cry like a little girl if I couldn’t get online from my house.)

Next, buy what you need a la carte:

  • Instead of paying for a ton of channels you never watch on cable, buy only the episodes you watch for $1.99 each off iTunes
  • Buy a day pass for the gym each time you go (around $5-$10)
  • Buy songs as you want them for $0.99 each from Amazon or iTunes

Why does this work?

The A La Carte Method works for three reasons.

1. You’re probably overpaying already. Most of us dramatically overestimate how much value we get from subscriptions. For example, if I asked you how many times a week you go to the gym, chances are you’d say, “Oh…2 or 3 times a week.” That’s BS. In fact, in one remarkable study of three health clubs, two researchers from Stanford and Berkeley showed that gym members overestimate how much they’ll use their gym membership by over 70%. In fact, members who chose a monthly fee of ~$70 attended an average of 4.3 times per month. That comes out to over $17/visit — when in reality they could have bought a pay-as-you-go pass for $10. Because these people are overly optimistic about how often they’ll use the gym, they lose over $700 over the lifetime of their membership. BAD MOVE.

2. The Method forces you to be conscious about your spending. The second reason that the A La Carte Method works is that it forces you to be conscious about your spending (like my friend who spends $21,000/year going out). It’s one thing to passively look at your credit-card bill and say, “Ah, yes, I remember that cable bill. Looks like a valid charge. Tallyho!” It’s quite another to spend $1.99 each time you want to buy a TV show — and when you actively think about each charge, you will cut consumption. As one of my mentors, Stanford professor BJ Fogg, wrote in his book Persuasive Technology, tracking is one of the most effective persuasive methods.

3. You value what you pay for. The third reason it works: You will value whatever you’re buying if you’re actively spending out of your pocket, rather than an invisible subscription.

The downside of the A La Carte Method

The big downside is that this method requires you to un-automate your life, which is the price you pay for saving money. I encourage you to use this if you find yourself short of cash and wondering why you can’t save more money each month.

Or give it a shot for 2 months and see how it feels. If you don’t like it, go back to your old subscription method. It can’t hurt.

How to implement the A La Carte Method

1. Target 1-3 discretionary subscriptions you have. I recommend any music subscriptions, Netflix, and the gym. (But don’t let the gym membership be your excuse to become a fat ass.)
2. Calculate how much you spent over the last month on these subscriptions.2
3. Cancel the subscriptions and begin the A La Carte Method.
4. In exactly 1 month, check and calculate how much you spent over the last month. That’s the descriptive method.
5. Now, get prescriptive. If you spent $100, try to cut it down to $90. Then $75. Not too low — you want your spending to be sustainable — but in this step, you can control exactly how many movies you rent or how many magazines you buy, since each one comes out of your pocket.

Remember, this isn’t about depriving yourself. The minute your personal-finance infrastructure becomes oppressive is the minute you stop using it. The ideal situation is that you realize you were spending $50/month in subscriptions on stuff you didn’t really want — and you’ll consciously reallocate that money into something you love, whether it’s the gym, travel, or investing.

Good luck.

[Update]: Here’s a detailed writeup on implementing the A La Carte Method.

* * *

The point of this article is to challenge the assumption that “subscriptions always save you money.” If you liked this, you may want to check out my takes on why we’re all hypocrites about our $28,000 weddings and why I bought a new (not used) car.

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77 Comments on "The A La Carte Method: Use Psychology Against Yourself to Save Money"

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Chris McCarley
8 years 1 month ago

Thoughtful advice as always, Ramit.

A couple of comments:
– I consciously stuck with Netflix because it saves me on late fees (which were not always under my control) and theater movies.

– I love magazines, but I got my subscription costs down to zero by getting free trade magazines and using a few of my frequent flyer miles (Delta) to get other magazines.

B Smith @ Wealth and Wisdom
8 years 1 month ago
Ramit-Interesting concept. I think the key is to think deeply on each expense. Do you actually use it? What parts do you use? How often? I don’t think I’ll abandon the time savings of automating my expenses as time is too valuable. The key is to eliminate or reduce unnecessary or excessive expenses where you can. Take a gym membership for example. My family had a membership to Lifetime Fitness. We liked the amenities like the pool and the rock wall. My son and I used the racquetball courts at least 3 times a week, but we used the other… Read more »
April
8 years 1 month ago
“But don’t let the gym membership be your excuse to become a fat ass.” I never type “LOL” because I doubt people really “LOL”ed every time they use that acronym, but I seriously almost spit out my green tea latte when I read that. We don’t have many subscription services, but I think we might be able to cut back on NetFlix (go with a smaller plan). We don’t have TIVO or cable, and I’m BAD at returning movies on time, so I can’t let go of my NetFlix all together. I also might try a pay-as-you-go phone. I have… Read more »
Paul Singh
8 years 1 month ago
I unconsciously did a similar thing when I moved across the country last year. When we were leaving the DC area, we killed every subscription we had – Netflix, magazines, newspapers and gym memberships. Without realizing it, we ended up paying “a la carte” for nearly everything here in SF while we were getting settled and made the realization that we got more value out of 4 high-definition Apple TV movies (@$2.99-$3.99/each) than we did out of our previous $18/month Netflix subscription. (Besides, I can watch regular TV shows on my Apple TV and never have *any* commercials to skip… Read more »
JIm
JIm
8 years 1 month ago

@April: I doubt most people drink “green tea latte’s” … LOL. LOL.

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Adam
Adam
8 years 1 month ago
good advise, but, as long as you’re honest with yourself, I think subscriptions are largely still the way to go. Magazines are cheap enough under subscription that even if you wouldn’t buy half of them you still come out on top! And t.v. shows from itunes can be more expensive than cable! For instance, if I have 5 shows that I watch regularly my itunes bill could be 40-50$ whereas basic cable will cost me 30. I think the lesson here isn’t canceling subscriptions but checking every couple months to ensure those subscriptions are really saving both time and money!
GS
8 years 1 month ago
Netflix definitely saves me money. Between late fees, the fact it would take so few “a la carte” movies to make it worth it a month, and the fact I no longer feel the need to buy movies because – I have at my disposal an infinite selection of movies that are really only 24 hours away (and I have dvd ripping software….) I go to the gym 5 days a week at the minimum – whether it’s for pick up basketball or the sauna or a full fledged work out. I think the a la carte method would detract… Read more »
Jen
Jen
8 years 1 month ago

Buying magazines? Who buys magazines? That’s what the library is for. Why buy it when you can get it free?

We’ve been analyzing our memberships lately, and man, the cell phone has got to go. Trouble is, it ain’t mine. 😉 Cable could go altogether too… but the gym membership stays. I’m there at least four days a week. More sometimes. And always for classes, which I can’t do on my own. But it’s good to be aware of what can go and what is essential.

Natalie
Natalie
8 years 1 month ago
I’m constantly trying to trim down and this article just reminded me to do it again. I always end up agonizing though. The only subscriptions we have that are excessive are cell phones and cable (internet is not excessive but we do have low-bandwidth option with TWC). We are about to move so its again perfect to recheck everything. The cell phones will become pay by the minute (really trying to research who has the best deals) and we’ll probably try MagicJack since its so cheap for our house line. But what to do with cable?? My husband loves sports… Read more »
Bill
8 years 1 month ago
Great post, great advice, as always! I think I’ll try this, as my cable and cell phone bills are higher than I want them to be (wish I could do this with my PG&E bill!). The other thing that at least the commenter before me hinted at, is trying to bargain with those subscription services…like the cable bill. Recently, kind of perturbed with my Comcast bill (cable TV and internet), I called them and told them I was going to switch to DirecTV and AT&T for DSL (I really wasn’t; I hate AT&T and don’t want the hassle of switching).… Read more »
Gerard
Gerard
8 years 1 month ago
Magazine subscriptions are far better than buying issue at a time. I pay $10 a year for MONEY magazine. $10 a year for FORTUNE….on and on. One issue of either one of those is half the yearly subscription price. Magazine subscriptions work for me. Netflix…..the Instant Viewing is worth the price. They have added so many movies to that category and TONS of documentaries. That’s before I get three movies out at a time. The subscription model works for me there. I can’t get my favorite shows from iTunes – or anywhere else. I can’t miss Keith Olbermann and Hardball… Read more »
Josh English
Josh English
8 years 1 month ago

I do this with bus tickets. I could buy a pass for $76, but I only need to ride the bus 32 times a week. That’s 2.38 per ride. A ticket only costs 2.05, and I can buy them in groups of ten.

$4.10 a day beats $14 in gas costs any day

Nathan
Nathan
8 years 1 month ago
“I wish there was a cable service that let us get a sports package and thats it, nothing else. ” Not only that, but how much do people spend on HD cable, just for sports….40-50 a month easy. I went without cable for almost 8 months before I caved, and it was 99% due to not being able to watch any sports. Everything’s on cable now. A La Carte cable would kill profits. I agree that if you’re honest with yourself, there is no “best practice” applicable to everyone. For as much as I go to the gym, ironically I… Read more »
Derrik
Derrik
8 years 1 month ago
sorry. maybe there’s some merit but the cable tv thing makes no sense. There are tons of things you can’t buy without subscribing to a cable or satellite provider. Live sports rights aren’t all sold to itunes and many networks don’t have an online distribution platform at all let alone one that delivers 1080p HD picture. What about live news coverage. Where do i go if sometime tonight if find out someone’s on Leno and i want to see Leno all of a sudden? In HD? What if there is someone like a presidential candidate who needs to speak right… Read more »
April
April
8 years 1 month ago

@Jim: Green tea is good for you. I also doubt you were really LOLing. So there.

Tage
8 years 1 month ago

I really like the idea of cutting cable, and just buying shows individually. I personally did not have cable in my house before I moved out. I found that I watched much LESS TV when there was no cable, and now that I do have cable, I spend too much time on the couch, even if I am just surfing channels.

Note: Most networks allow you to stream the last few current episodes for free. Not as “cool” as TV, but free is cool… right?

Jason
8 years 1 month ago

Here’s another idea on cable … track how much time you watch the non-cable channels that you can get with a plain antenna. For most, I bet you’ll be suprised at how much you’re paying for something you could get for free!

gertie
gertie
8 years 1 month ago

My husband and I hung on to our online weight watchers subscription, because we used it to look up recipes. We don’t even weigh in any more, but I wanted to make the dieting process “painless”. Even if we use one new recipe a week, that makes the cost over $4 per recipe. We’ve been doing this for eight months, until today. Should have just bought a cookbook.

Reg
Reg
8 years 1 month ago
Good ideas – I agree with the principle. Two details I wanted to mention, though: 1) The reason I use Netflix is because there’s no other way I know of of getting the WIDE variety of films I want to see. I watch everthing from 40’s Cary Grant classics to Bollywood musicals to Hong Kong action flicks to serious dramas to documentaries to old TV series that are finally on DVD. No way a local rental shop covers that kind of inventory for me. So, granted, Netflix is a luxury item. 2) For those of us who care about magazines,… Read more »
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[…] expenses can tear a huge hole in your budget. Ramit at I Will Teach You to Be Rich has a solution. Use psychology against yourself to save money, he says, by going with the a la carte method. Instead of subscribing to magazines, to Netflix, to […]

linda brown
linda brown
8 years 1 month ago
i’m pretty good at wrangling free magazine subscriptions and then canceling them as soon as the billing kicks in. and like chris, we might as well use our american miles to get our magazine subscriptions now anyway since who’s going to fly them now that they’ve instituted that ridiculous $15 to check your FIRST bag fee!?? (oh, that’s another blog, sorry!) i switched to a new health insurance that included free membership at the Y so i cancelled my gym membership. i never joined netflix to begin with cause i get my movies free at blockbuster with my mypoints points… Read more »
Stephen
Stephen
8 years 1 month ago

In general, a good idea. However, Netflix is like your choice of crack cocaine, wine, crystal meth, heroin, weed, or fine cuban cigars daily for a few bucks a month. There’s just no way to compete with that.

Alex
Alex
8 years 1 month ago
I agree with one of the above comments; there is a great deal of content that we watch on cable that, in all honesty, can be viewed over the air for free. In addition, broadcast HD signals often look far superior to their counterparts on cable or satellite systems. Another interesting thing, if Verizon internet access is available to you in your area, they have a deal with ESPN and a website called ESPN360.com that streams live games that air on any ESPN station or one of ESPN’s pay game-plan services. The variety available through this service is impressive, and… Read more »
trackback
8 years 1 month ago

[…] topic has popped up twice in the last few days.  First at I Will Teach You To Be Rich and then again on Ask MetaFilter (via Lifehacker).  Coincidentally, Lifehacker also linked to […]

MagReader
MagReader
8 years 1 month ago

Over the last few years, I’ve saved a respectable deal of money by getting magazine subscriptions off mycokerewards.com and other such sites. I collect the caps from around the cafeteria and then redeem them for yearly subscriptions!

Lo. Price
8 years 1 month ago
Good post, but I share some of the sentiments above. I don’t use Netflix, but especially now, I think Netflix is a great deal. Ideally, I guess it should be used certainly in place of other DVD renting but also in place of going to the theater. I am sure you are right that most people with a gym membership don’t take advantage of it, but going ala carte is not the answer there. The key is to either eliminate the membership because you don’t use it, or (even better) start taking advantage of it. Magazine subscriptions can regularly be… Read more »
RobCurie
RobCurie
8 years 1 month ago
Does anyone here have an Audible subscription? I signed up a couple months back with their introductory rate at $7.99/mo. for two months, but from the third month it became the normal rate of $15/mo. I live abroad and it is difficult to get English books around here. I thought it was a great deal to get an $8 audiobook each month, but now I’m wondering if their regular rate is even worth it. Ramit’s post has nearly convinced me to drop this subscription, but the only thing keeping me on is the fact that I have few other options… Read more »
Rick Brewster
8 years 1 month ago

I canceled my cable TV a loooong time ago. There are so many better ways to get TV shows now. I also switched to the 1-at-a-time plan on Netflix … I found the discs were just sitting on the coffee table for 2 weeks at a time, and I returned half the movies without even watching them. I haven’t had a landline in 4 years — although my iPhone plan costs more than I want 🙁

Rita
8 years 1 month ago

I’ve thought that for years about health clubs, and how much it costs per visit if you average it out. We bought a hottub when we built our house and I didn’t want it because it’s very expensive and I thought we’d never use it. Sure enough, in three years we’ve used it exactly three times. I tease my husband when he uses it that it was a thousand dollar bath he just took.

Beyond Paycheck to Paycheck
8 years 1 month ago
Great idea to review automated expenses the same way you should periodically review automated revenue (your job). Still, the same way you may choose to keep on working at a job you love that may pay a few dollars less than another one you feel you’d like less, there will be times when we each can profit by staying with a subscription. Being honest with yourself is the key takeaway with most spending decisions. Making these decisions repeatedly (a la carte) rather than all at one time (subscription) means you have more opportunities to choose “no.” But there will always… Read more »
LA
LA
8 years 1 month ago
Helpful reminder to look at those “under the radar” expenses we get used to paying month after month without giving them a second thought. Thanks! I will be canceling my Audible account–love it, but have fallen way behind in listening to the books, besides, our good ol’ libraries have lots of books on CD, FREE. iTunes has lots of FREE intellectually stimulating and entertaining material as well. Storage fees! Another monthly subscription-like expense I didn’t see mentioned that might be helpful for others to reconsider. We’re spending $100/month storing “important”, “meaningful”, “maybe we will need it some day” things. Time… Read more »
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[…] Inventory of My Subscriptions Jun.06, 2008 in Uncategorized Okay, instead of just reading a post (The A La Carte Method: Use Psychology Against Yourself to Save Money), I need to get into the habit of using this blog as a […]

Brandon
8 years 1 month ago

Great advice. We share similar ideas on our blog of how to penny pinch and make sure every dollar we make is working hard for us. I definitely will be coming back and checking up on your posts more often.

http://www.onechancetolive.com

Bill (that mystery writer)
8 years 1 month ago

I’ll be a contrarian and actually recommend that you DO buy magazines via subscription. You’d be amazed at the prices you can get via reputable dealers on eBay.

I got a 3 year subscription to “Vegetarian Times” for $4.99.
A 3 year subscription to “Mac Addict” with the CD for $5.99.

Always check feedback, as there are some fly by nights on there also.

trackback

[…] that you currently pay for. These subscriptions might include: Netflix Tivo Gym Cellphohttp://www.iwillteachyoutoberich.com/blog/the-a-la-carte-method-use-psychology-against-yourself-to-s…Village of Homewood Heritage Committee The Times of Northwest IndianaHeads swivel when an antique […]

Micah
8 years 1 month ago
I am testing this out with a pay-as-you-go cell phone plan. I pay $42/month for 450 minutes with AT&T but, on average I use less than 300 minutes/month. Most months are closer to 200. I have over 1900 rollover minutes in the past year. I end up paying about $0.15/minute plus $0.10/text. Net10 costs me $0.10/minute and $0.5/text I just have to use at least 300 minutes ($30) every two months to not waste any minutes. Let’s see for $30/month (300 minutes) vs $42/month +/- $2 for texts (450 minutes of which I only use 250)
no to debt
8 years 1 month ago

Good post. It’s a great reminder to look at all the little reoccuring expenses for 5-15 bucks a month. Those quickly add up to 100 a month in no time.

bunny
bunny
8 years 1 month ago

“(But don’t let the gym membership be your excuse to become a fat ass.)”

wow. i feel like someone just punched me in the face.
i won’t be reading yr blog any longer. hate speech is so last century.

Frank
8 years 1 month ago

this is like the opposite of your also-good-advice of “subscribing” to savings (as opposed to unsubscribing to spending) by making automatic deposits in a retirement account every month. :o)

“i won’t be reading yr blog any longer. hate speech is so last century.”
:*****o(

Pierre
Pierre
8 years 1 month ago
All of the publications I read (past and present tense) became available at work (online), which meant “for free”, but as there is no free lunch, i,e the psychological cost of getting in early or leaving late, I was eventually forced to be highly efficient and exacting with my time while on the job, which ultimately made me far more productive and, as I see it, went indirectly to furthering my career. While the line-up of “reading at work is good for your career” may not be intuitive, in my case it was like most things: try it until you… Read more »
Igor L
Igor L
8 years 1 month ago

you gotta list more companies, like.. 100% American you know friendly places, not the ones you invested in.

Assetologist
8 years 1 month ago

Interesting approach. I think creating a ‘tabula rasa’ of one’s discretionary expenses every 2 or 3 years and then working back into those of most value to you is an active and potentially money-saving approach. This would work well for regular subscriptions and any other regular draws from one’s credit card.
We all get stuck in a rut and need to be active in extricating ourselves.

Check out my recent posts at Assetology..com, ‘Philosophy and Science of Wealth’.

Chad @ Sentient Money
8 years 1 month ago

I agree. Definately need to review all subscriptions, at least on a yearly basis.

Jerry Dill
8 years 1 month ago

This is a very informative article. I don’t know what I would do without my gym membership (or internet access). I do agree, though. I pay for a full line up of channels on cable and I watch tv maybe an hour/day during the week and maybe 3 hours/day during the weekend. Most of the time it is just the news that I can get on public television. I have been trying to figure out my expenses lately. I hope I can bring it down more.

J
J
8 years 1 month ago
I looked into doing this a few months ago but opted against. After reading this post I set down and came up with some numbers on the cable subscription vs. iTunes/Amazon Unbox. I came up with it being quite a bit cheaper to download and buy. So I called the cable company and went from the $55/month subscription to the $10/month basic channels. (If I had canceled TV altogether my internet would have gone up $15/month so it was cheaper to get the $10 basic). Today the cable guy calls me and from a bad storm we had in VA… Read more »
Chris from College Being
8 years 1 month ago

Hi,

This is the first story I have read on your website ever since I subscribed via RSS yesterday. I must say that this is truly unique advice. We sometimes get into a habit of things and don’t think outside of the box. If you don’t mind me sharing this with the visitors at my website, please let me know.

-Chris

Harrington Brooks
8 years 1 month ago

A very informative article about how we can save by cutting down on the unnecessary things in life. Well written.

Stephanie
Stephanie
8 years 1 month ago
I recently downgraded my Blockbuster subscription so that I don’t have the in-store swapping option. I knew that didn’t utilize that option enough to pay for it when they increased their prices and I also know that I don’t want to devote all that time to watching a ton of movies. My gym membership was a flat $150 or so for the year. I honestly don’t utilize it as much as I would like to. I am not a morning person so I don’t go before work and I usually am not motivated to be there after work because I… Read more »
Sara
Sara
8 years 1 month ago
This is a new dent in my saving mentality, but wouldn’t work for me. I bought 3 subscriptions a few years ago thru a friend working at the media conglomerate. Thus I got a 40-60% discount and bought subscriptions for the next 3 years for magazines that impact my life. My gym membership is also thru a corporate discount, and I’m physically active (3-4 day/gym + 2-3 days at other studios which are paid a la carte). I did downgrade my text messaging with TMobile from $10 for 1000 msgs to $5 for 400 (they are sneaky and do not… Read more »
Chinmayz
8 years 1 month ago

Well, ur tips seem to be uniquely valuable indeed ! I remember having read about the art of slicing (focussing on utmost important things) in the bestseller “Blink” & its so very true !!

As far as Magazine subscriptions are concerned, I feel that one can utilize services our the omnipresent Public Libraries – besides reading books for free (or low cost) , one can as well make many friends too.

Cheers,
Chinmayz

Michael Young
Michael Young
8 years 1 month ago
The problem I have with this is that there are many things I would enjoy as part of a subscription but that I wouldn’t feel justified in paying for individually. I used to not have a cable subscription, instead I’d order the individual shows and movies I wanted to see. I probably spent only half as much on TV entertainment as I would have if I had a subscription. Then I decided to get a subscription. Now, I watch perhaps 3 to 4 times as much TV. The difference is that since the cost of an individual show disappears into… Read more »
Kyle Maxwell
8 years 1 month ago

Depending on your lifestyle and occupation, Internet access may be far more than “discretionary” spending.

I’d also add MMORPG subscriptions, B&N memberships, and auto-reload Starbucks cards to this list

Marilyn
Marilyn
8 years 1 month ago

How would you do pay as you go internet at home?

Devin Reams
8 years 1 month ago

For those of you using Netflix, http://feedflix.com/ is a new service that uses your history (feed) to determine if you’re really getting your money’s worth…

Danny Gamache
8 years 1 month ago
Thanks for this post. For many people being stuck on subscriptions is indeed an expense worth getting rid of. However, instead of getting rid of all subscriptions, it might be worth everyone doing exactly what you did with your thoughts on the internet. Go through each subscription, and do a calculation. 1.How often do you currently use the service? 2.How much would you spend if you paid per use instead of subscription? 3. How much of what you currently use would you cut back if you had to pay per use? 4. What makes the most financial sense based on… Read more »
Kevin Cafferty
8 years 1 month ago

While I feel I get my money’s worth from my netflix subscription (particularly for watching television shows that the local video store doesn’t stock, and which are expensive to buy) this post did make me re-evaluate some of my other subscription services. I’m looking at you, eMusic.

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[…] Apply the same concept to the subscriptions you pay for, suggests Ramit Sethi at I Will Teach You To Be Rich. That includes services like cable, TiVo, cell phones and that underused gym membership. Ramit writes: “In fact, in one remarkable study of three health clubs, two researchers from Stanford and Berkeley showed that gym members overestimate how much they’ll use their gym membership by over 70%.” […]

sowhat
sowhat
8 years 1 month ago

Ramit,

have you ever been to Europe or read about how subscriptions are handled there?

In Europe almost everything – from phone contracts to gas bills – is subscription based. No one receives bills and pays them with cheques. And it works just fine.

BJ Fogg
8 years 1 month ago

Thanks for the mention, Ramit.

Keep up the good work!

BJ Fogg
Stanford Persuasive Technology Lab

trackback

[…] a la carte method for saving money Ramit Sethi has an interesting blog post, “The A La Carte Method: Use Psychology Against Yourself to Save Money.” The method, which Sethi, author of the forthcoming I Will Teach You to Be Rich, says was partially […]

Mark
8 years 1 month ago

Great post. It is to build up lots of little expenses. The phone bill, cell phone, and tv subscriptions are all out of wack.

Jen
Jen
8 years 1 month ago

Great ideas. Even if you don’t ultimately cancel any subscriptions, its important to look at your bills and see what you are being charged for and evaluate whether it is actually a savings for you. Less than a year ago I noticed my cable internet bill had charges for equipment I wasn’t renting, and had never rented. They had been charging me an extra $10 a month for almost three years! Had I been more attentive, I would have saved myself the time and hassle of fighting with the company to get my money back.

Quill
Quill
8 years 1 month ago

Interesting…I know I overpay for my Netflix subscription, but I keep it because I can get things from Netflix that I can’t rent anywhere else (and lots of them). Sure, I could buy many of the titles I rent if I didn’t spend the money on the subscription–but most of the stuff on my list I just want to watch, not own. Most of which isn’t available on iTunes, either. It’s worth the money to me.

Kristin
Kristin
8 years 1 month ago
Thoughts… 1. My family uses netflix constantly, but they rent movies that they would NEVER otherwise spend the money (or time) to watch… (read:Rambo). I’ve opted for the machines where you spend $1.99 the first night, then .99 cents each night after. I always watch them within the first night, so it’s reasonable. 2. As for suggesting buying t.v. shows, this is something that can be avoided. MTV.com and ABC.com both air their most popular shows FREE of charge for a few weeks after airing. I have gone without cable for 3 years now…AND I watch the shows with 3-4… Read more »
sonny624
sonny624
8 years 20 days ago
I used this philosophy to make my own change: I’ve started only buying groceries I will eat or cook in the next 24 hours. There is a grocery store on my way home from work that, thankfully, is not too busy at 10 after 5. I have always bought tons of food that goes to waste. I am eating fresher now, produce is way cheaper than anything that comes out of a box, and very little is getting thrown out. I used to spend a couple hundred dollars every week or two at the grocery store, and now I spend… Read more »
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[…] example, in early June the I Will Teach You To Be Rich blog argued in favor of cutting down on unneeded subscriptions: “Instead of paying for a ton of […]

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[…] or SMS credits on the account will save me at least $20/month. For the rest of your contracts, use the A La Carte method to save yourself some money or simply renogitiate your contracts — there’s no harm in […]

Karis Dillon
7 years 9 months ago
I agree. We often overspend on subscriptions just because of the convenience of knowing the money has gone out of out account at the start of the month (then we don’t have to worry about finding the money to do something when things get tight at the end of the month). In our experience (in the UK), if you try to cancel a membership …say to telecommunications providers….they will often offer an enticing deal to stay which saves money anyway. However, I wondered if a less disruptive way that cancelling subscriptions was to keep a log of service usage over… Read more »
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[…] Sethi in his post explaining the “A la Carte method of saving money” claims that we often overspend on services that we subscribe to as, after an initial blaze […]

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7 years 6 months ago

[…] Gyms make their profit by expecting a drop-out rate (just like rebates) which happens around 30 days and slows down at 90 days with about a 20-30% average drop-out rate. For most, it’s actually better to pay as you go. Ramit with iwillteachyoutoberich.com calls it the A La Carte Method. […]

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7 years 4 months ago

[…] The A La Carte Method: Use Psychology Against Yourself to Save Money […]

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[…] Ramit goes into lots of depth into “the a la carte method,” which is an approach to rethinking the recurring payments and subscriptions in our lives to […]

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[…] Most of the downloads from iTunes are paid, so you might be wondering what makes it frugal. For me, ordering entertainment “à la carte” can often be cheaper, especially since I’ll be careful about where both my time and my money […]

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[…] one class. It’s easy, it’s simple, and it’s highly inefficient. While there are distinct benefits to purchasing ala carte rather than packages or a subscription, when it comes to dance you can […]

suzanne lowrie
7 years 1 month ago
I swim every morning 30 days a month at the YMCA. I use Amazon prime to send gifts to my two adult children and to buy many things in addition to books. So, nope. Not canceling. However, I’m shifting to basic cable and I’m pursuing an “interest reduction” plan for my mortgage with my bank. I got a senior citizen plan for my cell phone and save $7 per month=$33. I’m replacing light bulbs with daylight flourescent. Fired the maid. I hate doing housework but if I think of housework as exercise, then OK, I’m exercising more. I’m buying less… Read more »
Edwardpa
Edwardpa
5 months 27 days ago

Hi I’m new here. I’m not certain if this is the appropriate place to post this, but I’m wondering if anyone has tested Athletic Greens for their green drink? I’m seeing that most either taste gross or cause my stomach to revolt.

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