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Jan
15
budgeting tip: make it automagical
Filed Under budget
Making it automagical has got to be my favourite personal finance tip of all time. Prior to my conversion, I was often late with bills, not because I didn’t have the money, but because I’m a born procrastinator. Why do today, what you can put off until tomorrow? They’ll charge you for it, that’s why.
In my new system, every thing that I possibly can gets put onto direct debit or standing order (automatic bill pay, and automatic money transfer). All my bills, all my savings, all my investments, all my donations, and now all my spending monies.
It’s been a personal finance revolution. I rarely have to write cheques. I haven’t missed a bill in months. I have no need to worry about my cashflow situation, I’ve set it all up so that everything gets moved or paid as soon as possible after pay day.
What about you? Do you like to make it automagical? Or do you prefer to pay your bills individually each month? Let me know in the comments.
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15 Responses to “budgeting tip: make it automagical”
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I haven’t paid a real bill in years. It’s great, but be wary that you might not be on the ball when do do get the occasional bill- I got lumped with a late payment charge when I set up a new credit card last year and didn’t remember to factor in enough time for payment.
It’s also meant I’m a bit lazy about knowing how much is in my current account and moving surplus across into savings- but that’s probably just me.
I try to do this, but I have to be so creative with our finances (making up our budget shortfall) that for now, I set asid the 9th and 25th of every month to go through all our bills and make sure that everything is paid. . .somehow.
Hi Plonkee - I try to do this as much as possible too - although in some cases (like car insurance?) I believe you can end up paying more if you choose direct debits rather than paying in a lump sum, so it’s not always the cheapest option (although admittedly, for some people it might be better to pay a little more but spread over twelve months, rather than having to cough up a lump sum once a year).
I agree! Automatically billing has been a lifesaver. Even my bills that have to be paid by writing a personal check are set up so my bank automatically sends a check out on my behalf every month.
It sure has saved me a lot of time, and never have to worry about it.
Automatic probably is the way to go. But for me personallly I like to pay it myself. It reinforces that I am paying Real money for Real things.
Completely agree. I love automagical. By the way, I don’t budget because all the bills are already paid and savings are already done by the time I get to the money.
I have had great success with this as well. I am trying to get my mortgage set up to do this, but I always pay it during the “grace period” after the due date because of where my paychecks fall, so in order to set it up I’ve got to get ahead by one mortgage payment (they won’t allow me to autopay after the due date - although I could do it via my bank…hmm…). Working on that.
I’ve set up auto payments to my two savings accounts (one and E-fund one an ING Fund) for transfer from my paychecks. My mobile and internet bills are auto debit (same amount each month) but I agree with Racer X, I like paying Real Money for Real things. I like to go to the bank and hand over my mortgage payment each month. Plus I one time had an auto pay go bad and my account was debited three times (causing major head ache and overdrafts until it was sorted) so I like the control of me writing the checks for the bigger bills.
What are your thoughts on the security of giving out all your personal banking information to bill companies? Do you do this, or are you able to just auto pay from your bank account?
I think it’s great how everyone does what works for them.
@bouncing betty:
Honestly, if I had to actually visit a bank branch to pay something, that would never happen. I’ve had cheques lie around for weeks waiting to be paid in because I never get round to going.
@PT:
Well, some I push the money too - they don’t get to know the account number. Others pull the money from me, they need to know my account number and branch name and address and so on. But, over here, we’re covered by the direct debit guarantee which basically means that if there’s an error, my bank will pay.
I have some things automagically charge my credit card, but most everything that comes from my checking account is paid manually. I do it all online, of course, it’s just that I like control over my checking account.
I do have a couple investment auto-debits set up , but they’re small.
I prefer to automate my payments simply to save on postage costs.
At this point none of my bills are set up for autopay. My mother is adamantly opposed to doing such a thing, even though she’s not great at keeping track of when things are due, and I guess I’ve absorbed some of her attitude.
There are some downsides to automating everything. Most of my grandparents’ bills were in my grandfather’s name and came out of their joint account. Now he’s in a nursing home, and it became necessary due to Medicaid regulations to pay household bills out of an account in my grandmother’s name only. He has suffered from aphasia and been unable to write since his second stroke over a decade ago so he can’t request these changes himself. It has been difficult to get some of the autodebits switched, and getting the direct deposit of his military pension to go into a new trust account has thus far proved impossible even though my mother has power of attorney.
I’ve only recently begun setting certain bills to be paid automatically, but so far I love it. One less thing for me to think about.
The only drawback I can see is if there’s a billing error, it might be harder to catch and correct.
I pay everything I can with my credit cards, which are issued by the two banks where I have accounts (I love the reward programs!). I have online banking, and I look at my accounts and credit card accounts daily to make sure there are no unauthorized debits. While I am there, I transfer payments to the credit card and to savings accounts.
I have insurance debited from one account (luckily, I do not pay extra for this), and I only have to write two or three cheques in any given month.
I set up an investment account where I can control the transfer of money from the bank account into the investment account. It is not on automatic, as I transfer different amounts each week. I have online access - very convenient!