Subscriptions - The Parasites Sucking Life Out Of Your FI Journey

25 Jan, 2024

You may have heard this already- subscriptions are the sneaky drain on your financial goals. Subscription services have always been around in some fashion, but they’ve been on the rise with the technology boom of the last couple of decades. Many companies migrated to subscription models because Wall Street looks favorably upon “recurring revenue” compared to single/one-time payments and these companies are rewarded in their stock price. Specifically in software, Salesforce is credited with the emergence of SaaS or Software as a Service. This is where consumers and businesses subscribe to a service rather than pay a one-time fee for access. Some of you may be too young to remember this but the Microsoft Office Suite (Word, Powerpoint, Excel) released a new version every year and you could go to your local Circuit City to purchase the CDs to install on your computer. Microsoft has since switched to a SaaS model where you pay a monthly or annual subscription to use the Office Suite and in return you get access to the latest version of the software and upgrades.

Now these businesses would argue that this model is better for the consumer since you get constant rolling updates to the software and more stable releases as well as better integration capabilities, but what we are starting to see is an intentional degradation of services in order to further extract more money from the consumer. For example look to the streaming wars where previously ad-free services like Netflix & Amazon Prime are now incorporating advertisements and requiring additional fees to opt out.

As an employee I have benefited from SaaS, working most of my career in the industry, but as a consumer I’m firm in my approach to eliminate as many subscriptions as possible. I keep a close eye on the services I use and if I feel the value provided does not exceed the cost, I don’t hesitate to cancel. Here’s a list of my current subscriptions:

These costs cover myself and my wife and in some cases we are part of a family plan in order to gain access to better discounts. Fortunately this makes up less than 2% of our HHI and I plan on keeping it that way. Play close attention to the services you subscribe to because they can easily hide on your credit card statement. Scrutinizing these services will ensure you don’t let businesses drain your financial future.