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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Last week, we signed up for Netflix.

Yep, even with such posts as “Why do people sign up for Netflix?” peppering the archives, we at the BFP household signed up for the $8.99 a month plan that lets us borrow one movie at a time, unlimited movies a month, plus unlimited streaming video on demand.

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We don’t use Netflix because we don’t watch a lot of movies but a lot of our friends do. One of the things I notice quite a bit, and something that my friends freely admit, is that my friends don’t watch a lot of movies either and they will have the same movies for weeks at a time.

I recognize that Netflix isn’t about watching as many movies as you can. Part of Netflix’s appeal is in their extensive library of movies, movies you would never be able to find in a Blockbuster store like indies and foreign films. However, if you’re one of the Netflix subscribers who is really into the cost benefit analysis game, there’s a website called FeedFlix that will do all that for you without any additional help. You don’t have to sign up or anything, you just have to paste in one of your RSS feeds into their box and a wealth of personalized usage information appears.

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I don’t understand why people have Netflix subscriptions.

I never rent movies and when I do, I usually turn to the $1 a night RedBox vending machine at my local Giant. For $1.05 (MD sales tax is 5%), I get a recent release that I happened to miss in the theaters (I enjoy going to the movie theater, paying $9, and watching a movie with my girl) and most of the time I can find a coupon online that gives me the rental for free. That being said, I don’t really understand why people sign up for a recurring rental service when something like a RedBox exists (unless it doesn’t in your area). And no, Redbox isn’t paying me. In fact, if you sign up for Netflix through that link above, Netflix is paying me a commission so enjoy my brutal honesty.

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The article I just read was a little dated (Oct 2006) but it highlighted a very interesting service that I think is pretty cool, it’s essentially a rental service for accessories – jewelry, purses, etc. It’s a slightly different take on fractional ownership, most common in planes and yachts where you buy the right to fly a plane or sail a yacht for a specified number of days a year, and is more like Netflix, except for high end accessories.

Bag, Borrow or Steal was started by a couple guys who saw how much time, money, and energy their wives were spending on finding purses and handbags that matched their wardrobe. You pay $10 a month and then a per-item weekly fee but you get to borrow all sorts of stuff. A quick look on their site saw four levels of membership, based on the quality of the goods (Couture, Diva, Princess, Trendsetter) with membership fees ranging from $20/mo to $175/mo.

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What’s better than saving some money? Saving money without really noticing that you’re saving money. How do you do this? Take a look at some of the less important things in your life and see if you can cut back. Or, take a look at some of the things you take for granted and cut back. Or, just trim something you don’t even use much anymore but still pay for… all these things can be removed to save you a little bit of money without you noticing one bit.

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