30 - Financial Spring Cleaning: Scrubbing Subscriptions

Is "subscription creep" draining your bank account? In this episode, Daniel and Shanna help you perform a "Financial Spring Cleaning." We explore the rise of the subscription economy, the psychology of "Dark Patterns" designed to keep you paying, and why "ghost subscriptions" are so easy to ignore. Tune in to learn how to hunt down hidden charges in your app stores, the secret to consolidating family plans, and how to negotiate a better rate on your internet or cable. Plus, get our simple "30-Day Scrub" tip to give yourself an immediate raise this week.

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Transcript

Shanna Browning 0:00

Hey Daniel. So this weekend was a good one, but I'm looking at my online banking, my transactions, and I had a financial jump scare. I see a charge for $14.99 for a streaming service I haven't opened since last fall, October, Halloween, Thanksgiving. I don't know.

Daniel Hill 0:18

Oh, it's that classic ghost subscription. It's the $15 that just vanishes into thin air every month. It's like a tiny digital ghost haunting your checking account.

Shanna Browning 0:31

That's exactly what it's like. And it started out as that, you know, little seven-day free trial. So I could watch, you know, a specific documentary about national parks, which I love, or listen to music or a podcast. And then I just forgot for six months. That's nearly $90. I basically just threw that money out the window, Daniel. I could have bought a lot of things, not a ton of things, but a lot of things for $90. Right.

Daniel Hill 0:59

And you know, you're not alone in that. Recent studies have shown that the average American underestimates how much they spend on subscriptions by over $100 a month. Most of us think we're spending maybe $50. But when you actually do the hard math, it's often closer to $200 or more.

Shanna Browning 1:22

Which is crazy. Crazy. And it's like a slow leak in a tire. You just don't notice it immediately, but eventually you're gonna be sitting on a flat. So today we're gonna help our listeners, you all, find those leaks, understand why they happen, and most importantly, we're gonna show you how to patch them up for good.

Daniel Hill 1:47

This is Making Sense of Your Cents. I'm Daniel Hill.

Shanna Browning 1:51

And hello friends, I'm Shanna Browning, and we are right in the middle of May. And while most people think of spring cleaning as, I don't know, raking leaves or cleaning out that junk drawer in the kitchen, we're gonna talk about your digital garage.

Daniel Hill 2:05

And we're talking about subscription creep. In a world where everything from your music and movies to your doorbell camera, your gym, and maybe even your heated car seats can be a monthly fee. It's incredibly easy to lose track of where your money is going.

Shanna Browning 2:24

And so today we're gonna walk you through a 30-day scrub. We'll show you how to hunt down those hidden charges, how to decide what stays and what goes, and why really cleaning house on your bank statement is the fastest way to give yourself an immediate raise. So let's start, Daniel, with the why. Why has this become such a massive issue or problem today? Like 10 years ago, we just had a cable bill, a phone bill, maybe a gym membership. Now everything.

Daniel Hill 2:53

Yes, everything. It's the shift to the subscription economy. Companies realize that it's much more profitable to charge you ten dollars a month forever than to charge you a hundred dollars once. It's called low friction spending. Ten dollars feels like a small number, it's less than a lunch. So we don't think twice about hitting that subscribe button.

Shanna Browning 3:19

Perfect way to say it. And that's so easy to sign up, right? Usually it's just one click with your thumb on your phone, but when you try to leave, whole different story.

Daniel Hill 3:29

Oh, yeah, yeah. You're touching on what we call dark patterns. They're intentional design choices by websites to make it confusing or even difficult to cancel. They'll hide the cancel button in a sub-menu of a submenu, or they'll force you to call a customer service line that's only open during work hours.

Shanna Browning 3:48

So rude, so rude. They are banking on inertia. They know that if they make the cancellation take 10 minutes of effort, most of us will just say, I'll do it tomorrow. And then another month rolls by, and then you get another $15 charge. It's a psychological game that drains your budget ten dollars at a time. So if someone's listening and they suspect they have a leak, where's the first place they should look?

Daniel Hill 4:17

Well, step one is the visual audit. You have to look at your actual bank statement, your e statement that you're getting every month digitally. Not just the total balance, but the line by line transaction. Look for anything that might say reoccurring or monthly or subscription.

Shanna Browning 4:37

And don't forget the app stores, because that's a big one. If you have an iPhone or an Android, a lot of those subscriptions aren't billing through the bank directly. They're bundled under one single Apple or Google Charge.

Daniel Hill 4:51

Now that's a pro tip. If you see a charge for $42.97 from Apple, that's most of the time not one app. That's probably three or four different things combined. You have to go into your phone settings, click on the name at the top, and look at the subscriptions tab.

Shanna Browning 5:08

So I did that recently and found a photo editing app I used once for, I don't know, a wedding three years ago. I've been paying $4.99 a month for three years. Goodness, Shanna. I know, I know. That's nearly $200 for an app I don't even remember having.

unknown 5:28

Man.

Daniel Hill 5:29

So I like to use the value per hour test. Okay. If you pay $15 for a streaming service and you watch five movies a month, that's three dollars a movie. Now that's a great deal. I mean, you can't go to the theater and watch a movie for three dollars. Nope. But if you pay fifteen dollars and you didn't watch anything last month, that's not a service. That's a donation to a large company. And you shouldn't be donating your hard-earned money to a multi-billion dollar tech company.

Shanna Browning 6:08

That's right.

Daniel Hill 6:11

Now, Shanna, sometimes we find subscriptions that we actually do use, but we're still overpaying for them. Before you cancel everything, you should look at consolidation.

Shanna Browning 6:26

So when you say consolidation, are you talking like maybe family plans?

Daniel Hill 6:29

Exactly.

Shanna Browning 6:30

Okay.

Daniel Hill 6:30

If you and your spouse both have individual Spotify accounts at $11 each, switching to a duo or family plan can save you five to ten dollars a month immediately. The same goes for phone plans and cloud storage.

Shanna Browning 6:47

All right. And what about the annual discount? A lot of people pay monthly because it feels cheaper in that moment, but the annual price is often 20% lower.

Daniel Hill 6:58

It is. And if you know you're going to use a service for the whole year, like your Amazon Prime or your local gym, paying annually is like giving yourself a 20% discount on that bill.

Shanna Browning 7:10

I like that. So one more trick I think people are afraid to use negotiation.

Daniel Hill 7:16

Oh, yes. Particularly with things like cable, internet, or satellite radio. If you call them up and say, I'm looking at my budget and this is just too expensive. I'm thinking of canceling, they will almost always move you to a retention department.

Shanna Browning 7:36

So what I'm really hearing you say is they'd much rather have you pay 40 a month than zero a month. I've seen people cut their internet bill in half just by having a five-minute polite conversation.

Daniel Hill 7:50

Oh, absolutely. And like we've mentioned before, they're not going to contact you about paying less. You have to contact them about paying less. Yeah.

Shanna Browning 8:00

I mean, it works like that.

Daniel Hill 8:02

Cleaning up those recurring costs is one of the most effective ways to free up cash for the things that actually matter to you. And we hear a lot of questions at our branches about how to manage these digital expenses.

Shanna Browning 8:14

I mean, you're exactly right. And so one question that comes up often, especially from people trying to get a handle on their budget, is is it better to use an auto-cancel app to find my subscriptions, or do I do that manually?

Daniel Hill 8:27

Well, there's a lot of apps out there that promise to find and cancel your subscriptions for you. But please be careful. Many of those apps also have a monthly subscription. Of course they do. It's a bit ironic to pay a subscription to find your subscriptions. I always recommend the manual route. It takes 20 minutes, but it's free. Yeah. And it forces you to look at your own spending habits and it builds that awareness muscle that we talk about all the time.

Shanna Browning 9:00

I mean, sometimes while we're sitting and watching a streaming service that we're paying for, look through those subscriptions and do that. So I think that's a great point. And another question we get is what should I do if a company makes it impossible to cancel an old subscription online?

Daniel Hill 9:15

And I hate to say it, but this does happen. Some companies require you to call a number and talk to a person just to cancel. If you find yourself in a loop where they won't let you leave, you can always call us or stop by a branch, and we can help you place what's called a stop payment on that recurring charge. It puts the power back in your hands and it stops the bleeding immediately. All right, Shanna, let's wrap up with this week's actionable tip so our listeners can start saving money before dinner time.

Shanna Browning 9:53

All right. Your actionable tip for this week is the 30-day scrub.

Daniel Hill 9:59

Sometime today, log into your mobile banking app and pull up your last 30 days of transactions. Scroll through every single line.

Shanna Browning 10:09

And your goal is to find one, just one subscription that you haven't used in the last month.

Daniel Hill 10:17

Once you find it, cancel it. Don't say, Oh, I'll do it later. Do it while you're looking at it. Even if it's only five or ten dollars a month, you've just given yourself an extra sixty to a hundred dollars a year for essentially zero effort.

Shanna Browning 10:33

Zero. Just a hitting a button. So I'm gonna tell you, Daniel, I feel lighter already because I know what I'm gonna do. I'm gonna go home and I'm gonna do my scrub tonight. I think I have a free trial for a cooking app that expired three months ago. And if you know me, I'm not really a big cooker, but I like those quick and easy recipes, but I don't use it. So I'm with you.

Daniel Hill 10:53

What are we gonna do with these? I know unused subscriptions.

Shanna Browning 10:58

I'm good, I'm working on it.

Daniel Hill 10:59

You know, it's a great feeling to know exactly where every dollar is going. Now, next week, we're gonna switch gears and we're gonna talk about the side hustle. We'll be joined by Chris Rhodes from Hangar37 Coffee to talk about the nuts and bolts of starting a small business.

Shanna Browning 11:17

And that's exactly what he did. If you've ever thought about turning a side hustle into a hobby that was a hobby into a business, you're gonna want to hear Chris's story. He's got an amazing story. He's got some great insights on how to grow without losing your mind. So please subscribe now so you don't miss that conversation.

Daniel Hill 11:37

Absolutely. Thanks for joining us. Now go out and make some sense of your cents.