Have you ever wondered how cell phone companies can afford to give “free” cell phones when you sign up for a service plan? It’s simple. They know that few people subscribe to a plan for 1-2 years, if they paid $ 150 for a cell phone.
When you are evaluating different service offerings and ask, “How much does it cost me a whole year.” It is easy to see a low monthly payment savings, especially on large items, when in fact it is a terrible deal.
Cars are a good example. Paying $ 250 a month to rent a good car does not seem much but when you consider that is $ 3000 per year going into a vehicle you do not, it does not seem like a great offer especially when you consider that you can get a reliable used vehicle for $ 4,000 to $ 8,000 you can drive for several years and then sell for thousands of dollars.
Affiliate programs are another area where spending is easy to spend much money. I was looking at a health club membership this week and was about $ 80 per month per person. So for two people who come to $ 1,920 per year? Now, if you spend five or six hours per week in the gym using the equipment, swimming, tennis, etc., it can be a good deal. But many people would be better spent on a stationary bike or weight home in September.
For the evaluation programs for membership like this; I suggest looking at how much you’re paying by the hour. If you pay 80 per month for access to the gym and you go for an hour a week, you’re paying $ 20 per hour to use the gym. To me it seems a bit high. If you’re spending an hour a day, the cost is $ 2.66 per hour. To me it seems much more accessible. I’m not saying you should not go to the gym, but make sure you know how much it really cost.
Let’s look at another plan membership with popular DVD rental. DVD rental have plans to rent the DVD where sending DVDs by mail. You see them and send them back. The most popular plans cost around $ 17 a month and let you have three DVDs checked out at a time. They advertise that you can have “unlimited rentals.” Of course in practice can only watch so many movies a week and takes time to get the DVDs sent back and forth.
If someone watches two movies every week they will end up watching 8 per month. This puts the cost at $ 2.13 per movie. Where I live video rental stores have several days a week, where you can rent two for one and load is usually $ 0.99 to $ 2.50 to $ 2.13, is not that big of a deal . If you watch more movies per month, you can start being a better deal, but do not know until you look at your actual usage. What may be a good deal for someone can be a bad deal for you?
On the other hand, if you sign up for a DVD rental membership and cancel your cable subscription for $ 50 per month, you’ll be saving a significant amount of money. $ 50 per month works out to $ 600 per year. The association of DVD rentals will cost $ 204 per year, but you have to choose the movies you want to see and spend much less time watching commercials.
I’m sure you can think of many other monthly payments that may or may not be good business. Just make sure that you evaluate your spending based on the total cost over time and actual usage.
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