If experiences appreciate and things depreciate, is there a way for us to separate the experience of a thing away from the thing itself? Of course there is – rent it. If we’re going on vacation, it makes perfect sense for us to rent a car rather than buy it (though in places in Europe, for long “rental periods,” you actually buy the car and sell it back) and we don’t think anything of it. So why don’t we do it for things we use only infrequently? We don’t realize it’s an option.

Whenever you consider the financial trade-offs between buying something and renting something, it really comes down to a few a few factors and here’s what I think they are.

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As I explained in my Netflix review, one of the reasons why I became a Netflix convert was the streaming content they had available to XBox 360 owners. For $8.99 a month, you had access to their entire library of online streaming content at your fingertips. From my point of view, I saw that as the real reason to subscribe to Netflix and getting one-DVD out at a time was just a nice side benefit.

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Want to find a hundred bucks a month in savings without giving up all that much? Cancel your cable television service. That sounds absolutely crazy, right? When people look to trim the fat from the budgets, they often don’t think to cut out their cable television because it almost feels like a utility. Along with your electricity, your water, and your telephone is your television and internet. Who can live in this day and age without those necessities?

But it’s not that crazy. It’s not that crazy and thousands of people are doing this because of all the free video content on the Internet. Forget the homebrew shows that had their start on the Internet, I mean major broadcasting networks putting the shows on TV for free.

In this post, I’ll describe an approach to finding out if canceling your cable TV service is the right move.

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Whenever someone talks about frugal expenses, Netflix always seems to be the popular example held up as the sacrificial lamb to the frugal gods. I think it’s a popular target because it’s so easy to attack. Subscribers pay a flat monthly fee to watch movies, a pure discretionary entertainment expense, and so many times our lives get in the way. Movies sit on the table unwatched, unreturned, and the only cost is a flat monthly fee. It’s all too convenient and so it makes an inviting target.

Before I was a convert I had no idea why people signed up for Netflix and took my fair share of shots at Netflix. So what changed my mind?

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How many fixed expenses do you have each month? We have about half a dozen – mortgage, utilities, cable & internet, Netflix, insurance, and the gym. Of those, three are mostly non-negotiable (mortgage, utilities, insurance). For cable & internet, Netflix, and the gym, we’ve considered downgrading our services to reduce their expense.

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As a fairly frugal person, it wasn’t until recently that I opened an account at Netflix. Maybe it was the monthly fees or the fact that I saw stacks of the same movies week after week on my friends’ coffeetables, but I never really got why people loved Netflix so much.

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Did you know that you could pause your Netflix subscription?

We’ll be going on vacation for parts of July and August and won’t be able to take advantage of our Netflix subscription. Rather than canceling the subscription, Netflix offers an option where you can put the subscription on hold for 7 – 90 days. During that time, the subscription will be suspended, you won’t be able to watch anything, you won’t be sent any DVDs, and you’ll be required to return any rented DVDs within 7 days or be charged for them.

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We have a lot of subscriptions in our household. We pay to subscribe to several magazines (Real Simple, Wired, Portfolio). We are members of our local gym and we have Netflix. We both have cell phones (hers is through her company) and we both have E-ZPasses in our cars. All together we probably have at least a dozen “monthly” services that we pay money for, all of which made sense at the time we subscribed. As our needs and our routines change, some of those services may not longer make much sense.

The idea of subscription optimization and per use cost is very simple. For a month, track how often you use a subscription and calculate the per use cost. If you pay $60 a month for a gym membership and go thirty times a month, that’s a per use cost of $2. Then compare it with the a la carte cost, or how much it would cost if you weren’t a member but still used the service. If it’s cheaper to go a la carte, cancel the subscription.

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