Subscriptions and FIRE

I think I’d go as far as to say that every single adult in the UK has at least 1 subscription- as just a couple of exampes:

• Mobile phone subscription/sim only deal
• Video streaming, Netflix/Prime/Youtube etc
• Food subscription boxes, simplycook/gousto etc
• Online storage, Google/Dropbox
• Shaving clubs and more!

What do those have to do with FIRE?

Well, that’s a really good question- 2 things in my opion.

1. Money that you spend on these subscriptions, you can’t save/invest. This affects your savings rate which then in turn affects the number of years that you have to work before you can FIRE
2. They increase the FIRE number that you need to attain before you can retire.

How much are your subscriptions costing you?

I mean, sure, you know that your netflix is costing £7 a month (or, is it more because you wanted ultra HD?)- but do you know how much they are all costing you? I quickly ran through mine, and the total was more than I expected:

• Netflix, £14 a month
• Strava, £47 a year
• Mobile phone, £28 a month (free phone included)
• Zwift, £13 a month

And that’s excluding the “bill” type subscriptions that are also due on a monthly basis- like council tax, house insurance, car insurance, water, electricity/gas etc.

How much are they REALLY costing you?

If you believe that a 4% safe withdrawal is possible- which is up for debate- lots are questioning this in the low interest rate era that we now seem to be in. How much are these subscriptions really costing you? Well- if we assume the 4% withdrawal for the moment- then you need 25x your annual expenses as your FIRE number. Now- most subscriptions are monthly- so you need to multiple this by another 12!.

300 times. That’s what every single pound of monthly subscriptions is adding to your FIRE number. This is one of the reasons that the “coffee” thing that you hear about so often used by newspaper articles etc. That £3 coffee- isn’t just about the £3- its about the weekly/monthly/yearly cost. That subscription that “only” costs £10 a month? Well, that’s increased your number by £3,000! (£10 x 12 x 25)

If you are managing to save £1,000 a month, then that £10 subscription is adding 3 months to your retirement date- let alone the fact that as well as your FIRE number decreasing- your savings rate can increase by £10 a month as well. It’s a double win.

Don’t cancel everything!- just evaluate their worth

Don’t take this as an action to cancel everything that you possibly pay for monthly. What you should definitely try-

• Keep an up to date list of what you are paying for monthly
• Is here an option to convert to yearly/lower cost. Car/House insurance payments tend to be charged at 10%+ APR, so if you can pay for the them yearly (but keep budgeting monthly) then it’s a good saving.