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Tip #8: Implement the A La Carte Method

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This is Tip #8 of the Save $1,000 in 30 Days Challenge.

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Today, we’re going to implement the A La Carte Method to save money on the subscriptions you’re paying for.

People spend an enormous amount on subscriptions without ever realizing it. Not only are the payments automatically sent, but it takes active effort — and acknowledging that you’ve been paying for something you don’t need — to cancel a subscription…which means it’s easier to do nothing than to cancel the subscription. Here’s a very conservative estimate of someone spending $1,824/year on subscriptions.

I’ll tell you guys about a subscription I had to a marketing service. I signed up for it about 4 months ago to get the free trial and see if it was worthwhile, and it was pretty decent — but it cost $100/month. After about a month, I knew I wasn’t getting the value I needed out of it — but I couldn’t bring myself to cancel it. I put it in my calendar to cancel, but the day would come and go and I just didn’t do it. Then I would see a new email pop up in my inbox about some new stuff they had added, so I filed it under “Toread,” thinking I “really should” check this out. You know how you feel when you know you should do something, but just can’t bring yourself to do it? That’s exactly how I felt — until 3 months later, when I finally canceled it. Even though it cost me $300 more than it should have, it was a lesson well learned.

Today’s tip, the A La Carte Method, is a way to avoid just that:

The A La Carte Method takes advantage of psychology to cut our own spending….cancel all the discretionary subscriptions you can: your magazines, annual Rhapsody plan, cable — even your gym.

* 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

Read about the A La Carte method in detail.

Here’s what to do: Today, cancel enough subscriptions to equal $50. If you can do more, great. Here are links to common subscription items to target:

Netflix: http://www.netflix.com: $9/month for basic unlimited. Downgrade to $5/month. Savings: $5-9/month.

Tivo: http://www.tivo.com: $13/month.

Cellphone: http://www.att.com/wireless or http://www.verizonwireless.com or http://www.tmobile.com or http://www.sprintpcs.com. Most people probably won’t cancel their phone, but as an example of optimizing your existing spending, you can save $20/month by going from Verizon’s second-lowest plan ($60) to their lowest plan ($40). We already talked about how to do this earlier in the challenge.

Cable: http://www.comcast.net or http://www.timewarnercable.com or http://www.dishnetwork.com or http://www.rcn.com (Don’t want to cancel everything? At the very least, cancel the Premium channels and get basic cable.). Savings: $50/month for Time Warner Digital Cable.

Amazon Prime: http://www.amazon.com (cancel Amazon Prime – plus, it will make you buy fewer books) – $79 annually or $7/month

Magazines: Look in them and cancel them. Buy them off eBay or get them at the library.

Other online services: http://www.audible.com or any other online services. Can you live without them?

“But Ramit…!”: Common arguments against the A La Carte Method
1. “I already paid to buy a satellite dish! It will be a total waste of money if I cancel now.” That’s a sunk cost, so ignore it as much as possible. Cancel it for this month only. If you decide you really want it back, you can always re-initiate service in December. (Yes, you may have to pay an initiation fee if you actually restart the service. But I’m willing to bet that after you hit your financial goal this month, you’ll be extremely careful in adding expenses back to your life. Plus, you can probably get the fee waived.)

2. “I don’t have any subscriptions like this!” First off, I bet you do — just check your credit card statements. But if you really don’t, well, then this tip may not be right for you. But think how you can apply it elsewhere: Are there areas where you pay automatically, without thinking how much it costs you? This is a huge area to save money since monthly subscriptions add up quickly: One of my readers canceled one $30/month subscription and saved $360/year.

3. Any other concerns? Please read the full A La Carte Method first.

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Last thing to do
Leave a comment on this post describing how much you’re saving with this tip and any unusual techniques you use to make this tip work.

If you liked this tip, check out my Premium tips — one long, tactical tip per week. Save money or get a 100% refund.

scrooge

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78 Comments

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  1. I seriously can’t cancel my cable TV ($23/month) because if I do, my bundled internet ($19.99/month) would skyrocket to $60/month. So yeah, canceling the tv would COST me an extra $20 per month. Silly, right?

    I get just about all of my magazine subscriptions for free, or for a ridiculously low price of like $5 or less for the year. I get them from sites like Adperk, StartSampling, or seek out unbeatable deals from magazine wholesale web sites.

    The one thing I could drop is my cell phone’s text package, which right now is running me $5/month. I don’t use enough texts to warrant the charge, so I’d be better off paying a la carte for these messages, I think.

  2. I don’t have $50 in subscriptions. We have basic-only Netflix and cable bundled with landline phone and internet. We subscribe to exactly one magazine, a professional journal paid by my husband’s employment. We have no online paid subscriptions. We stopped the newspaper months ago when we found we could get the info online without all the accompanying trash.

    Today’s Tip: $0
    Cumulative savings: $7.75

  3. Oh, how I wish I could get the SO to cancel cable! But since that’s not going to fly, I’m going to let my 2 magazine subscriptions expire. Since I got them super cheap, that only saves me $24 per year, but it’s a start!

  4. Great thought, but I’m too cheap to have any of these monthly subscription fees except a cell phone plan. But, I’d just like to suggest to anyone with a Netflix or magazine subscription that the library offers movies and magazines for free. I always have a queue of movies saved on my library account and while it may take a week or 3 months to finally receive my movie, it’s delivered right to my neighborhood library and free to check out for one week. Also, my library has a wide variety of magazines available, although these must be read at the library. But sitting there for a few hours after work with my boyfriend catching up on all of my favorite magazines makes for a wonderful free date night.

  5. I got rid of premium movie channels since I found out the free trial was over, and will be saving $40/month.

  6. We got a basic cable plan once we discovered we didn’t need it. Cable is $30 cheaper.

  7. hmmm… we (boyfriend and I) recently did this and were able to save about $30 a month (he saved even more by cancelling the fancy data program on his phone) by cancelling and downgrading several subscriptions.

    I’m afraid we’re at the bare minimum now, although I wouldn’t mind terribly cancelling satellite/Tivo he certainly would, and otherwise we have the Newspaper which I love too much and would really miss and our home alarm system. Boyfriend travels a lot and having the alarm on allows me to sleep at night (I get really scared by myself, I know I’m a wuss).

    I’m going to talk to him about cable though. We have dial-up so using iTunes is a ridiculous proposition timewise, but honestly we don’t watch that much TV I’ll miss Jon Stewart and Mad Men.

  8. I also don’t have $50 worth of subscriptions.

    My subscriptions:

    $9/month for Internet (my share of a DSL connection shared by five persons)
    $13/month for cell phone (my share of a family plan)
    $10/year for Wired Magazine
    $0/year for Time Magazine (received as gift)

    Total: $23/month for Internet, cell phone, and two quality magazines.

    I don’t have cable TV service. I work at a university with a library, so I don’t have Netflix or Blockbuster, either.

    I had a print/online subscription to the Wall Street Journal in college for $100/year (educational rate). I was also an eMusic subscriber for about four months, which is $15/month for 30 songs. I think both of those are well worth the price, and I’ll probably go back when I have more time to devote to newspapers and music.

  9. I think a better tip would be to use these subscriptions more wisely rather than abstaining all together. For example, if you are paying for Netflix or Premium cable, then you should sit there and actually watch it instead of going out to a movie and paying $9.50 or whatever. This tip is really about evaluating what you use and what you don’t and eliminating unnecessary expense.

    Most people try to get a good deal on their cell phone anyway when they sign up and most people bundle services to save to begin with. Personally, I’m unbundled without a landline and it’s a lot cheaper than going all-in with Comcast. I don’t pay for music (radio is still free). Savings: $0

    However, I agree canceling publication subscriptions is a good idea but it’s more of an environmental savings than a fiscal one (although canceling the Sunday paper means losing out on coupons). Also, more people should support their local libraries.

  10. I wish I could cancel my gym membership and go a la carte, but that makes 0 financial sense (for me).

    4 workouts per week * $10 per session * 4 weeks per month = $160 compared to $60 for unlimited training

    If you don’t go to the gym regularly, it might definitely be worth it. Plus you’ll be more motivated to work out hard since you just dropped actual cash to be there!

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