Day#12: Evaluate Subscriptions.

This is Day #12 of “25 Days to Healthier Finances”, a series of blog posts where Frugal Pinoy readers and myself work on 1 task a day to make our financial lives better. Please stay tuned for the next installment of this series, which will be up tomorrow. Here’s today’s installment:

We are all subscribers. Whether it’s for cable TV, internet service, magazines, or gym memberships, there’s always that extra something that we regularly pay for each month. We often think we’re getting a good deal or that we’ve minimized our expenses - until we review our subscriptions. So that’s what we’re going to do today.

Today’s Task: Evaluate your subscriptions.

Here’s a list of subscriptions you may already have (including the ones I listed above):

• newspapers
• magazines
• cable TV
• cellphone service
• internet
• gym memberships
• video rental shops (I’m sure a few of you still have these)
• online subscriptions (to certain apps, online tools, etc.)

Note how much you are spending on these things each month, and add up these monthly expenses to see how much you spend each year. If you’re spending more than you’d like, maybe it’s time to trim down these expenses.

Trimming Down Your Subscriptions

If you suspect you can cut back on these expenses, here are some ways you can do it:

Look for free alternatives. With major newspapers and magazines publishing their content online, there’s rarely any reason to buy the printed version. When I was a working student trying to make ends meet, I saw that my mom’s newspapers subscriptions cost us P750/month. That may seem like a small amount to you, but for someone who’s trying to support a small household with a part-time income, that’s a lot of money. It seemed wasteful to subscribe to them when I can get the same content for free (and with no paper waste too).

As for cable TV, if you find that the shows you enjoy are also aired in free TV channels, why pay for them? Unless you need the late night reruns or the latest episodes (which the free channels also show), there’s hardly a need to subscribe. If you’re a PLDT DSL subscriber, check out WatchPad, which allows you to watch some cable channels for free (if your internet provider has a similar service, take advantage of it).

Look for cheaper plans/providers. Canvass for options that allow you to get the same service at a lower price.

Go a la carte. Ramit Sethi discusses this in his blog, IWillTeachYouToBeRich. Basically, instead of paying a flat fee per month, try to find a pay-as-you-go model. Here are some ways to implement this:

• Instead of using a postpaid cellphone subscription, use a prepaid one.
• Instead of paying for a monthly gym membership, pay every time you walk in. People tend to overestimate the number of times they go to the gym.
• Buy your favorite magazines only when the covers or table of contents truly interest you.

Remember: the point is not to eliminate subscriptions altogether. It’s to evaluate them and see if there are ways we can cut back or be mindful of these expenses.

Postpaid subscribers spend more than prepaid ones

My partner sent me this interesting article from Yugatech, saying that Globe’s quarterly report shows that postpaid subscribers spend 7 times more than prepaid subscribers. Here’s a quote from that article:

A recent press release from Globe Telecom indicated that their average revenue per Postpaid subscriber is Php1,492 for the 2nd quarter of 2008. On the other hand, average revenue from Globe Prepaid subscribers is just Php206. TM subscribers even spend less — Php107

Why is this the case? Probably because prepaid subscribers become more aware of what they spend, since every time they need to restock their cellphone credits, they have to get cash out from their wallet.  There’s already prepaid cable TV, and the possibility of having prepaid electricity.  How will these options, especially the one for electricity, affect consumer spending habits?

Since going prepaid or doing away with subscriptions altogether generally forces consumers to spend less, it’s a method that many personal finance gurus recommend. Blogger Ramit Sethi calls this the A La Carte Method, in the article he talks about the many benefits of this method, however, he also mentions a disadvantage:

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.

Personally, I’m a prepaid Globe subscriber and I spend roughly P30 a week on cellphone credits.  I didn’t have cable TV until recently (just to watch the Olympics), but the Destiny Cable subscription is much cheaper in the long run than the Skycable Prepaid. However, I could easily go back to having no cable TV at all, since most of the things I want to watch are available through the internet and I didn’t have to follow channel schedules (I did it for over a year and didn’t miss cable that much).  How about you, how much of your expenses are prepaid?