I was bent over my desk, studying, when I heard a muffled laugh from my roommate. The shifting glow of her screen lit up her face when I looked over. It was freshman year and we had just moved in, so our friendship was in the early stages: tentative but pleasant. She told me she was watching something on Netflix. Just a few weeks later we were more comfortable with each other, and I joined her on her bed. We watched Friday Night Lights (FNL), passing a pint of Ben & Jerry’s between us.
Netflix started glitching and acting really slow, Coach Taylor’s speech stuttering to a halt. It turned out she was using her relative’s account, who was watching a different show at the same time. At that time, multiple people streaming on the same account slowed the service. We waited it out and finished out Coach Taylor’s (very moving) speech a couple of hours later. It was my first exposure to Netflix, and also to the commonality of Netflix account sharing. An estimated 35% of Millennials with Netflix share their passwords, compared to 19% of Gen X and 13% of Baby Boomers.
The Rise of Subscription Services
Every month, resurrected bills rise from the ashes to haunt us. Subscription services sneakily drain our wallets while we patter around unsuspectingly in our homes.
The Waterstone Group predicted that people underestimate how much they spend on subscription services– services like a mobile phone, internet, Amazon Prime, music streaming, subscription boxes, mobile apps, and food delivery. They surveyed 2,500 people to find out if consumers could estimate their monthly spending on recurring payments.
The results were startling. People guessed average spending of $79.74/month, but their actual spending was $237.33/month, triple their initial estimate. To put that spending in perspective, if that money was invested in the market at a 7% average interest rate, in 30 years each person would have an extra $289,535 in their pocket.
Eliminating these costs isn’t always realistic; for many people, a mobile phone and home internet are essential. However, even halving the bill would make a huge difference in spending.
My monthly spending on all of these categories: $0.
It is impossible to ignore the lack of certain line items on my expense reports, like internet and Netflix, or any subscription service, for that matter. I’m writing this blog post on my home WiFi after watching the first episode of “Tidying Up with Marie-Kondo” on Netflix, so what gives?
|Bill to Pay||How Much I Paid Then||How Much I Pay Now||How?|
|Internet||$7/month ($30/month split between 4 roommates)||$0||Public hotspot nearby|
|Phone Bill||$35.75||$0||Covered by Work|
|Netflix||$0||$0||Family Plan – Allows up to 4 devices|
|Spotify||$0||$0||Family Plan – Premium allows 5 members|
|Amazon Prime||$0||$0||Family Plan – Household Plan allows up to 10 people|
A Late-Majority Adopter
Netflix had already hit their stride when I was living in the college dorm, but you should know one thing about me: I am not an early adopter. I am no trendsetter. It’s 2019 and I only just started considering buying a pair of Birkenstocks after decades of them going in-and-out of style. Netflix was like a pair of Birkenstocks—everyone had them, everyone loved them, but I wasn’t ready to pay for something I didn’t really need. So I happily continued our weekly FNL-watching tradition but did not use Netflix myself until a family member generously supplied me access to their account.
One argument I often hear for having your very own account is that you are properly “adulting,” as if paying more equates to a certain amount of maturity. Subscribers say, “Suck it up! Be a grown-up and pay for what you use!” If no one pays for content, then people won’t continue making content. Why not use your money to support the entertainment industry that made you gasp at Stranger Things and wonder at Sherlock? Cutting corners financially is not a good thing; it is about doing something the quickest, easiest, or cheapest way—often at the expense of doing something correctly (or by ignoring the rules). A simpler way to say it: “Don’t be so cheap.”
Tag-alongs ask, “What’s the real harm in sharing an account across the family?” If a group pitches into a plan, sharing can benefit everyone. Besides, artists profit from the number of streams and downloads. This means that if I listen to a Muse album on repeat on my friend’s account, Muse makes more than if I had not listened at all. Avoid mooch-status by offering to pay your fair share. If one person shoulders the costs, faithful family and friends should be sure to reciprocate in other ways such as taking them out for a nice dinner or pet sitting while they are out.
I Wouldn’t Pay For A Subscription, Period.
I joined the 12% of total Netflix users who are not paying for the service, opting to save money by using a password of friends or family. Various family members supplied Spotify Premium and Amazon Prime subscriptions, and I will be on my parent’s healthcare insurance for another few months before being unceremoniously booted when I turn 26.
I can hear the accusations now: “Financial Mechanic is only frugal because other people pay for the stuff.” Just another entitled Millenial killing industries left and right.
The thing that complaint misses, however, is that I would not subscribe to these services should the shared accounts stop. I would not pay for Spotify or Prime or even Netflix (okay, I would pay for Internet and I will pay for healthcare in just a few months). They are convenient and free for me now, so I use them gratefully. However, I would rather head outdoors or pick up a new book, which I really ought to be doing anyway, than pay out the subscription fee. In 30 years, that $289,535 equates to 7 fewer years of work, assuming I spend $40,000 per year, double my current spending.
What Does Netflix Say
While sharing logins is often technically illegal, many companies are not worried. They have a chance to gain more subscribers down the line, and more people are exposed to their advertising. In fact, Netflix’s CEO Reed Hastings says, “We love people sharing Netflix.”
Many subscription services have plans to allow streaming on multiple devices at once. The premium Netflix subscription, for example, allows you to watch from four devices at the same time for $3 more per month.
Creative Ways to Save on Monthly Expenses
Sometimes going extreme is necessary for getting out of debt or getting to a financially secure position. Oftentimes the community is willing to help– as long as you reciprocate. I applaud those who get creative to get high-returns of value on less. Most people know about saving by going to the library or doing yoga at home, but I asked Twitter about how people ‘cut corners’ with their spending.
EconTeach pays for the workout class she truly values and also participates in free community classes to save:
Kiwi and Keweenaw borrowed a friend and parent’s car for their car-free year:
Michelle from Frugality and Freedom takes advantage of TV streaming trials and uses her neighbor’s WiFi in exchange for a bottle of wine per month! If you have the right relationship with your neighbor (and they don’t seem like a criminal) sharing WiFi is a creative hack.
Sometimes offices provide perks to take advantage of, like free food and beverages. In my case, work pays my phone bill. In Confessions of FI’s case, frozen burritos and hot pockets are covered:
Sometimes I wonder if I am a frugal fraud for excluding these expenses every month. I am lucky to have family members who are generous enough to share. Otherwise, I would bear the Spotify ads, extra days of shipping through Amazon, and Sherlock-less days, content with the knowledge that those resurrected payments can finally meet their end.