Comments on: Automating Your Finances is an Expensive Mistake

By: Noffsing

Noffsing — Mon, 04 Oct 2010 19:02:42 +0000

I have recently discovered that my DISCOVER credit card has been debiting my account which is on AUTOPAY 5 days before the actual due date. I called and asked about this practice and was told that they have always done this. My question is why should they get a 5 day float with my money. All my other autopays debit on the actual due date. I think Consumer Protection should look into this practice.

By: pete samuels

pete samuels — Wed, 10 Feb 2010 06:16:01 +0000

Automation with control is fine with bill payments, as long as it’s done well. I’ve been using billstrust.com as a complete way to not having to remember due dates or paying bills. You can auto pay any bill in essence by the due date. It works off paper bills, acknowledging that most people still prefer to get them that way and stick them on the fridge.

Just stick on a qr code sticker that they send out and then fax or scan/email the bills away – you get an SMS when the bills are paid or can view them all queued up online. Great for people/business wanting to manage cash flow and just to free up time by not having to enter all the bill info and manually pay – but want control of their bills at the same time

By: Joe

Joe — Thu, 04 Feb 2010 04:23:37 +0000

Within the last year and a half the company that financed my car has been bought and sold twice. Both times they have failed to notify me. I am active duty military and stationed overseas. My allotment to the original finance company was sent back and now I have learned the new finance company is trying to reposes my vehicle. What can I do?

By: Nick

Nick — Mon, 04 Jan 2010 23:55:35 +0000

For automatic payments into a savings account, you can also take advantage of direct deposit. It may vary by employer, but mine allows me to deposit predefined amounts into 4 different accounts with each paycheck.

I’m already using this to pay into my Roth, where $192 (=$5000/26 biweekly paychecks) is automatically transferred with every paycheck. I never get confused by extra money in my checking account because it never gets there.

When it comes to rebalancing, I just have Google Calendar remind me every 6 months. I also keep a spreadsheet which does all the math for calculating my desired allocation across the Roth and 401k.

However, when it comes to paying bills, especially ones that could vary month-to-month, I prefer paying those manually (through online billpay), just so that there aren’t any surprises. Besides, given how bad utilities/cable generally are with their billing, I don’t trust them with a direct tap into my checking account.

By: Shock

Shock — Mon, 04 Jan 2010 04:55:22 +0000

I do the exact same thing. Great minds think alike!

By: Shock

Shock — Mon, 04 Jan 2010 04:51:00 +0000

This is my method. All my bills are paid through online banking, making them centralized. I set up alerts to tell me when I get a new bill. I put all my bills on my Google calendar to keep track. I use “You Need A Budget” a.k.a. YNAB to budget my money. I invest in a target date fund in my 401k so that rebalancing is done automatically.

By: Georgia

Georgia — Mon, 04 Jan 2010 00:03:37 +0000

I automatically pay my utility bill (all but phone & cable on it & it is level pay) and one donation. My bank sends out checks on the date I picked. It has worked wonderfully. I have several payments automatically deducted from my cc’s, but I don’t automatically pay the cc’s. When the cut off date each month occurs, I balance and then set up a payment to pay the total amount. I check my checking & 2 cc’s each day on the computer. The reason I do this is below:

In Jan of 09, I found one cc had been hijacked. Someone had charged 3 flights on a cc I use only on the computer. I called Citicard and they cancelled it immediately and sent me a new one. Luckily it was in plenty of time so I could reset my number with my automatic payments. Total cost – 0. All went smoothly, but from then on I checked daily.

In this last week or so I found a very bad mistake made by a bank and they took care of it immediately, before I checked on it. I had sent a $50 check for a Christmas present. She cashed it and somehow 6,000 got added in front of the $50. My balance was a -598,+++ balance and a $1.50 NSF fee. Wow!!!! But it was taken care of. Checking every day is a bonus and it is so easy to do. Takes about 3 min. unless I find a mistake and that is extremely rare.

By: Jackie W

Jackie W — Thu, 31 Dec 2009 19:38:35 +0000

Automation is okay on some things. Like mortgage. My mortgage never changes. I know exactly what it will be every month so I pay it via automated payment from Wells Fargo. Not only do I get to break up my mortgage into 2 payments by paying on the 1st and 15th I’m also paying my mortgage off early. Doesn’t sound like much but for example Dec. 15th I pay 1/2 of my Jan. 1st payment. Then on Jan. 1st I pay the other 1/2. So from Dec. 15th to Jan. 1st I haven’t paid any interest on about $700. Not bad! Doesn’t sound like much, but just by doing this I will save a couple of thousand and pay my mortgage off years early and I haven’t spent an extra dime! Automated is okay for certain things, but I agree with you, not for everything! My theory is, if I would pay this bill no matter what happened (job loss, death, etc) it can be automated. So I automate my electric & mortgage. Pretty much everything else I pay via Billpay. I love USAA!!! Thanks for your blog. Good reading…

By: Elizabeth

Elizabeth — Thu, 31 Dec 2009 13:35:05 +0000

I don’t let vendors pull from my account, for the reasons outlined here and more. But I do use a different type of auto-pay, using my bank’s online payment service to schedule payments for an average amount of variable bills. I find it’s an effective safety net to ensure that bills are paid on time, even ‘stuff’ happens. Occassionally, a bill has been lower than usual and I’ve overpaid one month, or higher, and I’ve had to tack on an additional payment a few days later. But overall, it’s been peace of mind when on vacation or when I’ve misplaced bills.

By: Kim

Kim — Thu, 31 Dec 2009 11:20:03 +0000

I think you are absolutely correct. i’ve always thought the push towards total automation was risky.

By: Sara

Sara — Thu, 31 Dec 2009 02:54:13 +0000

I auto-pay every bill I can, including credit cards, but almost everything that can be automatically paid allows you to get a reminder as well. For example, my Chase credit card takes the full balance from my checking account on the payment due date, but I also get a reminder e-mail 10 days before the due date, which gives me plenty of time to sign into my account and look over the bill.

My utility bills are also on auto-pay, and they e-mail my bills, so I can just open the e-mail to see if the amount looks reasonable before the bill is paid. The other thing that helps is keeping a big cushion in my checking account (at least $1000 more than I normally spend in a month), so unless I make an unusually large purchase, I don’t have to worry about being able to cover it.

By: eric

eric — Fri, 25 Dec 2009 22:21:45 +0000

yay return of the devil! i like automating up to a point. i still don’t pay most bills automatically because i like to see the charges each month and manually pay them online.

By: vtomar

vtomar — Thu, 24 Dec 2009 16:30:20 +0000

I agree with Dave’s comment!

By: Dave

Dave — Wed, 23 Dec 2009 16:27:58 +0000

An excellent Devil’s Advocate Post. Automation as an excuse not to pay attention to your finances is dangerous! For example, it is good to automatically have money taken out of your check and put in a 401(k) but you have to adjust and rebalance once in a while or things get out of whack. I pay many of my bills on-line but I do not automatically have them taken out of my checking account every month for the reasons listed. What if something comes up where I have to put off paying a bill for a week or two? I would rather have control over that than not.

By: Jessica

Jessica — Tue, 22 Dec 2009 16:55:58 +0000

Another thing to be careful of when automating bill pay and tying it to a credit card is having the credit card company turn off that card for whatever reason and then getting dinged with late fees when the bill doesn’t get paid.

This recently happened to us. We have all of our bills we can set up on auto pay and when we took a 40 day honeymoon, we prepaid all of the bills that we can’t autopay, set up auto transfers to pay the minimum balance on our cc’s while we were gone and didn’t worry about the rest, figuring autopay would take care of it while we were out of the country. On the second day of our trip the bank shut off the cc we use for auto pay (even though we notified them of our travels) and since the transaction that triggered the shut off went through we had no idea. We got on a cruise ship later that day for the remaining 37 days where that cc was no longer used. We came home to late notices and fees for practically every one of our bills because the cc couldn’t be billed to, in some cases we were late for 2 months worth. We were not happy campers. In most cases we were able to call and explain the situation and the fees were removed. It still sucked to have to take care of things we thought would be seamlessly taken care of while we were gone.

Of course this is a unique situation and it’ll never happen again since I don’t see any more 40 day vacations in our future for a looooooong time. I know we absolutely would have caught this if it happened under normal circumstances and it would have only been a minor annoyance but I think it still applies to Jim’s post.