The money traps to avoid (II)

The most common money trap is interest-free months, as we discussed in the first part. But it is not the only one. There are other more sophisticated ones, designed to keep part of our money. Some are legal and some are not. Let’s continue with the first ones.

2. “Free” subscriptions or trials. In the last few years, many applications, products and services have moved to a subscription model that always starts with a free trial that requires our payment details. When the test ends, the automatic charges begin, which are generally monthly, although there are other periodicities. The vast majority of people forget to cancel before the trial period ends, so at least the first charge is almost always made. In this sense they are a trap.

I have to clarify that subscription models work very well for companies and sometimes make a lot of sense, especially when it comes to software development. Instead of having a one-time sale that can fluctuate a lot in the future, they ensure a recurring income that benefits them because it gives them stability and the ability to continue to maintain and evolve their products and services.

However, I have seen that people pay, in pure subscriptions, a good part of their monthly income, not only in streaming services (music and video) but also in multiple applications and games that have a “freemium” model.

Remember that many applications are free but in a more limited version. If one wants additional features, some of which may be important to certain people, then a subscription must be purchased (before it was a one-time upgrade, today it is a recurring charge).

I’ve seen people even “forget” they have those subscriptions and keep paying for things they don’t really use. Do you really need all the ones that you pay for and represent a priority for you?

3. Timeshares, a trap that many upper-middle-class people fall into because they have very aggressive sales techniques that start with a “profit”. I have been in several of them, I have never bought because I know what they are (my parents bought at least three different ones in their life).

One travels to a hotel suddenly they offer us a coupon of $ 300 for the spa if we attend an invitation to have breakfast, which will take an hour of our time. Sounds good but the idea is to get into a room with other “guests” and with “hosts” who will tell us about an opportunity to guarantee our vacation for life.

Anyone who has had this experience will know that the toughest sales techniques are handled and a terrible pressure to achieve the “closure”. In fact, every time you say “no” someone else comes in with a “special offer just for us”. Each “no” implies the arrival of an even more experienced salesperson and the offers become more “attractive, until they reach the” lowest price they can offer us and that will never be offered to anyone else. “

Timeshares are a trap because one does not actually own a partial property, but rather a “right” in that property that is also subject to a maintenance payment each year, whether or not you use it. This “maintenance” is not very different from what a hotel week is worth in low season. There is the possibility of an “exchange” with other hotel properties or even with companies such as RCI, but subject to availability and with the charging of a respective additional fee. If you do the math, a timeshare adds very little value and, on the contrary, generates an annual payment obligation (the maintenance fee).

In the next two installments we will talk about traps that are illegal to steal our money and that unfortunately abound today.

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Coach in Personal Finance

Heritage

Senior executive in insurance and reinsurance with strategic business vision, high leadership, negotiation and management skills.

He is also a Personal Finance columnist at El Economista, Personal Finance Coach and creator of the page planeatusfinanzas.com

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