Doing a Subscription Detox Could Plug Monthly Budget Leaks

When Sarah Pekkanen let her son sign up for a free trial of an online educational subscription, she figured she would cancel the subscription before charges began and in the meantime, her son, now 12, would learn math. She forgot to cancel and soon, the charges began piling up.

“I paid for something that we never used,” says Pekkanen, a novelist in Chevy Chase, Maryland. Pekkanen finally realized the charges and attempted to cancel. It took several hours, over many days.

With the rising popularity of subscriptions for streaming services, monthly product boxes and more, Pekkanen’s experience is increasingly common. UBS Group, a financial service company, predicts that the subscription economy, which targets consumers and businesses, will experience an 18% increase rate and become one of the fastest-growing industries by 2025.. Subscriptions that auto-renew can lead to consumers spending hundreds of dollars each year on services or products they don’t use.

Try a subscription detox

To put a stop to that kind of waste, consider a subscription detox: Eliminate every subscription from your budget as soon as you are able so you can determine what you truly miss.

“When you cut out all of them, then you can pick and choose what you add back in,” says Allison Baggerly, founder of the money-saving website Inspired Budget and a Houston resident. It is important to take the time to unsubscribe before you sign up again.

Zina Kumok, a certified financial health counselor and money coach based in Indianapolis, likes conducting that kind of financial spring cleaning once a quarter.

“The best way to combat inertia around auto-renew is to build awareness around what you’re actually using and enjoying,” she says. Kumok signed up to a subscription for makeup, but she realized that she didn’t use the products. She cancelled her subscription.

It’s also worth calculating what monthly subscriptions are costing you per year because it adds up: A $10-a-month subscription might not sound like much, but you might rather have an extra $120 in your bank account at the end of the year instead.

A less radical approach can also work

If a total detox sounds too extreme, then you can try a more gradual method: Carefully review every subscription you currently have and cull the ones you no longer want.

“Go through your card statements and figure out how much you’re actually spending,” says Delia Fernandez, a fee-only certified financial planner in Los Alamitos, California. She also suggests looking up your subscriptions on the app store on your phone and, if you’re an Amazon customer, looking for subscriptions like Audible or Amazon Music.

The next step, she says, is to manually check each subscription to figure out when it auto-renews and how much it costs, then cancel it if you don’t want it anymore. Fernandez also mentioned that certain apps like Truebill or TrackMySubs can do this work for you but that they may charge a fee.

Letting go of a subscription can be especially difficult when it’s tied to the way you see yourself, such as a fitness-related subscription, says Bobbi Rebell, host of the “Money Tips for Financial Grownups” podcast.

“You want to be the person who uses them, so you don’t want to cancel them. She says it’s an admission to failure. She suggests that you cancel subscriptions that haven’t been used in the last month and then add them back sparingly.

Be careful when signing up for free trials

“Have a high standard for when you’re signing up for a free trial,” Baggerly says, and be sure to put a note on your calendar ahead of the auto-renew date so you have time to cancel. Annual subscriptions can be difficult to cancel because the renewal date is far away.

Baggerly signed up for a geocaching app that her family used a handful of times, then forgot to cancel, only to be surprised by the renewal charge a year later. She suggests calling the company to request a refund if you miss the cutoff. Many companies will offer this service.

Ira Rheingold, executive director of the National Association of Consumer Advocates, says that as companies become more sophisticated in their marketing around subscriptions, many are using what’s called a “negative option,” where the consumer will be charged a recurring fee unless they specifically opt out. Many consumers may not be aware that they have signed up for a subscription. He also said that if you have a credit card you can request support in order to avoid being charged .

As for Pekkanen, while she eventually canceled her educational subscription, she says she learned her lesson: Now, she says, “I’m really wary of free trials.”

This article was written by NerdWallet and was originally published by the Associated Press.

Kimberly Palmer, https://www.nerdwallet.com/article/finance/doing-a-subscription-detox-could-plug-monthly-budget-leaks
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