Know Your Automatic Withdrawal Schedule for Safety's Sake
As many of you will know, I have been challenged by some large, unexpected expenses over the past couple of months. I think that I may still have one more to go, but the worst seems to be over for now, however the whole experience made me aware of how rapidly things can be shifted and unsettled financially.
I have had to move money around a few times in the course of dealing with this and I realized that it is a really good thing that I know where all my accounts are and what current cash is available. It also made me wonder about putting your finances on automatic. I only have a small number of automatic bills - my mortgage being the largest - and while this certainly has a lot of benefits there are also dangers. Namely, if you truly forget about the bills, you may not have funds in the account to cover them.
I think that automatic payments should only be used as a time saver, not as a way to forget about your bills. In fact, I would suggest making up a list of all your automatic payments so that you know at what points each month the withdrawals are happening. An ounce of prevention really is worth a pound of cure in this case. If you are on top of this, you will not have deal with overdraft or bounced payment charges, negative points on your credit score, and the general hassle of dealing with it after the fact.
Do you have any tips for managing automatic payments? I would be interested to hear them!
12 comments:
I just put them on my Microsoft Outlook calendar, helps to plan......
Microsoft Money offers alert that will give you the upcoming bills at any time of the month. It avoids any bad surprises.
For those who are not to good with computer reminders and to good with calendar either, I strongly suggest to link your bank account to your line of credit. You will pay transfer fees but at the very least, you will avoid NSF charges!
Cheers,
FB.
I'm pretty anal about my mortgage payments and the account that feeds it. Mainly because I'm on a 26payment/yr plan, but work pays me on a bi-monthly(24/yr). Twice per year I have to be concerned of the double payment and that I have funds to cover.
In January I build a spreadsheet of when paychecks will enter and when mortgage payments will exit. I highlight the doubles in yellow, and I check my actual funds against projected every paycheck.
Sounds like a lot - but it's maybe 20-30 minutes in January, and 5-10 minutes every payday. I get a lot of piece of mind from it.
We've made everything automatic, including credit card payments. The amounts are similar month to month except for the credit cards, for which there are monthly statements. If the bills are larger than usual, I'll make sure there's enough money in our chequing account several days before the due date.
There's some inefficiency since there's extra money in our chequing account earning low interest, but there's convenience. And no risk of missing a payment.
All of my payments other than my mortgage come off my VISA automatically. That way no need to worry about anything.
Accumulate points that way as well.
Wow, the calendar idea (of comment above) is a good idea. Mine are in an Excel spreadsheet. Since I have an unlimited chequing account and a savings account I will move the money into my savings account each paycheque and then schedule the money to be moved back into chequing the day before the payment. Maybe a lot of work :) But necessary while trying to get my finances back on track.
I have reminders go off in Quicken, three of four days before the auto payment is set to deduct out of my chequing account. And then, once I receive that message, it looks like the money is already out of my account in Quicken. That way, I know how much money I have available to me to spend, as opposed to how much money I have in my account.
I still use an old fashioned cheque book register and at the beginning of the month (when I have money), I immediately deduct all payments due, no matter what day of the month their due...works for me...ciao
I've got my mortgage payments and property taxes deducted automatically from a chequing account that I never let drop below a minimum threshold. I'm a big fan of safety factors and buffers, so there's enough in there to cover a few mortgage payments in the event I find myself suddenly unemployed.
For everything else, there's VISA. Or I pay via internet banking. That way, I'm forced to look at the statements to see what I'm actually paying for. Collecting points on the VISA card is a bonus too.
Just consolidate all your accounts into one...instead of having several accounts at several different institutions, just have one account at one institution and have all your payments coming out of the one account (preferably where your payroll directly goes into) Also, if you're trying to avoid any NSF charges, FB offers a good advive to link to your line of credit or apply for overdraft protection to cover shortfalls between paycheques and bill due dates.
I like the looks of the manulife one account just so you don't have to worry about crap like this. If rates were better on it, it'd be REALLY attracitive (its too expensive for me right now)
To avoid having more than one or two a month, I put all my bills on my credit card, so that's taken care of. My one pre-authorized debit is my car payment, and that one's marked on the calendar. This way I only have to make two payments a month, and then my bills are never late.
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