Stay Aware of Monthly Fees

Posted by Julian Ramirez :: October 11, 2007 @ 9:57 am

The easiest expenditures to overlook when thinking about finances are recurring monthly fees. You probably only think about them briefly when you go over your monthly bank statements, but these transactions can be a large drain on your finances. The small membership fees add up over the course of a year, and you may also be surprised at how much you spend on subscriptions that you don't value.

A 3-movie-a-month Netflix membership runs $15 a month, which doesn’t sound that bad until you realize it adds up to almost $200 a year. A $45-a-month gym membership will cost you over $500 for the year. Thinking of these two memberships as a $700 annual fee might provide more motivation to return those DVDs promptly and to stick with that gym schedule.

As ridiculous as it sounds, it's important to remember that you do pay for memberships. If you use the gym every day, it can be easy to focus on your workout routine and forget that you are paying to be able to use the machines and facilities. Here are some suggestions for keeping track of your memberships:

• Keep a small sheet of paper in your wallet with all the monthly fees you currently have. Whenever you sign up for something new, add it to your list. It might be beneficial to keep other monthly expenses that you often forget about written down there as well (such as student loans, insurance payments, etc.)

• Once a month, go through your list of memberships and write out a check for the cost (be sure to write VOID across it) and keep it filed with the other expenses for the month, even if they are paid on a credit card automatically. If you’re like many people, the act of writing things down will help solidify this information in your mind

• Track the per-use cost of the membership to evaluate its usefulness. If a gym membership costs $45 and you use the gym 4 times a week, then each visit to the gym only costs you $2.81, which is a great deal. On the other hand, if you only go once a week, it costs $11.25 a visit... not so hot of a deal

Every few months, evaluate your memberships and decide if you are still enjoying and using them. For example, you may no longer need a gym membership if you start bicycling and had only been using the membership for cardio.

One potentially large and easy to forget expenditure is a storage unit. Indeed, the very concept of a storage unit for most people is a place to put extra junk to forget about it. Unless you’re in a situation similar to a college student and need a place to store things temporarily, you should give a very critical review of everything in your closets if you hit the point that you need offsite storage. Honestly go over everything you've been storing. If you are keeping things because "you never know when you might need one," chances are by now that you probably never will.

You might also want to drop-off the items at a donation station and go for the tax deduction rather than trying to organize a garage sale. You'll save yourself time, hassle, and spare yourself having to wake up early on the weekend. Additionally the tax rebate is probably worth more than you would've made at the garage sale anyway.

If you cancel memberships and/or part with your storage unit, you will hopefully find that you have some extra cash on hand. Try investing in some P2P loans on Lending Club to put that money to work for you. Bonus: there are no dues when you join this particular Club!