I met some friends at a local restaurant Monday night. While chatting, we found ourselves bopping to the music playing on the radio. For more than hour, great song followed great song: U2, Eurythmics, The Police, Elvis Costello, The Clash, New Order. But the ambient noise made it impossible to know what station we were hearing. “I have to know what this is,” I said at last. “This could be my new favorite radio station.”
I tracked down the manager. He told me we were listening to Fred on 44, a channel on XM Satellite Radio. I'd heard of satellite radio, but didn't know much about it. When I got home, I did some research.
As expected, there's an upfront cost to obtain a receiver that can de-scramble the satellite signal. Unfortunately, that's not the only cost. There's also a subscription fee of around $10/month.
Alas — a subscription fee. They're not deal-breakers for me, but they turn otherwise sure things into financial dilemmas. I don't mind one-time costs, but subscriptions make me wary.
I would love to purchase an iPhone, for example. The initial hardware cost is fine. I can justify that. But I can't justify a $60/month, two-year contract. That's nearly $1500 for a device I don't actually need. I stopped playing World of Warcraft because of the subscription fee. I loved the game, but in order to get my money's worth, I felt like I needed to play more than is healthy.
I view recurring expenses as potential money sinks. Too often I don't get value for what I spend. For three years I carried an $70/month deluxe digital cable package so that I could watch high-definition television. But at most, I was watching an hour or two of television per month! Besides, who needs to see Antiques Roadshow in high-def?
Over the past year, I've cut the number of magazines to which I subscribe, dropped to basic cable, and cancelled my Audible account. These moves have freed over $100/month. Eliminating recurring expenses has made a significant difference to my cash flow. Most of the time, I don't even miss the things I've eliminated!
Of course, we each probably have a few recurring expenses that are easy to justify due to the pleasure or utility they bring us. I'm willing to shell out for The New Yorker because even though I only read about one issue per month, when I do read it, I love it. And if I find the time to listen to audiobooks again, I'll re-subscribe to Audible — it's a good deal when I actually use it.
I can't decide whether paying for satellite radio would be smart or not. I've signed up for the free three-day trial of XM's web service. So far, I like it. I'd probably subscribe:
- If NPR were available,
- If there were some sort of device that allowed me to receive XM on my iPod, or
- If it cost less.
As it stands, am I willing to spend $10/month for XM, and then pay for a receiver? How about $8/month for the streaming web version? I don't know. For now, I'm just going to dig through my iTunes library to create some new playlists. I can probably duplicate the sound of Fred on 44. Maybe that will be enough…
Author: J.D. Roth
In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he's managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.