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Putting Our Finances on Automatic

By JLP | November 4, 2006

One of my personal goals for this year was to get my finances on automatic so that I wouldn’t have to spend a lot of time each month paying my bills. I divided my bills up into three categories:

1. Variable payments – things like gas bill, electric bill, phone bill. The amount of these bills fluctuates each month.

2. Fixed payments – things like tithe, car note, mortgage, cable bill, and charitable giving. The amounts of these bills do not fluctuate from month-to-month.

3. Retirement contributions and savings accounts – this is a no-brainer but I listed them because they are on automatic.

As a general rule, I don’t like giving an entity the right to take something out of my bank account. I made exceptions for my variable payments and set each one up so that it is automatically drafted from our account each month. For the fixed payments, I set up our bank account so that these bills are paid automatically each month, including our tithe.

I gotta tell you, this year has been NICE! Our tithe is current and none of our bills have been late due to my forgetfulness. I HATE paying late fees on something that I “thought” I already paid (we’ve all been there haven’t we?). Now I don’t have to worry about that.

Now, before you run out and do something like this, let me warn you:

Make sure you have a cushion in your bank account to do something like this.

Why? Because some banks may change the date that they withdraw funds if the original withdrawal date falls on a holiday or weekend. I don’t think they would withdraw money before the original date, but you never know. Be sure to read the agreement to find out what the procedure is. Also, you need a cushion just in case one bill turns out to be more than you expected it to be (I’m thinking about the phone bill or electric bill). So, it might be wise to have an extra $500 – $1,000 in your checking account for unexpected expenses.

One last thing: for those accounts that you have given permission to debit your bank account each month, remember that they usually require notice in advance if you decide to quit the program.

So, if you are thinking about goal-setting for 2007 and simplifying your finances is one of them, then I urge you to put your finances on automatic and then cruise through 2007.

Topics: Banking, Budgeting | 8 Comments »


8 Responses to “Putting Our Finances on Automatic”

  1. We’re In Debt » Day 178: Auto Pilot Says:
    November 4th, 2006 at 11:28 pm

    [...] JLP at All Financial Matters has a great post on setting your finances on auto pilot. We went through a similar phase early on, where we made an effort to simplify our bills. One thing that I have been working on since then, is making an effort to relinquish control over the the finances and allow for some companies to automatically deduct our bills from our accounts. [...]

  2. Foobarista Says:
    November 5th, 2006 at 2:31 am

    We have pretty much all our monthly bills paid this way. If you make frequent overseas trips, you have to do this.

  3. » Weekly Roundup on Blueprint for Financial Prosperity Says:
    November 5th, 2006 at 3:50 pm

    [...] JLP puts his finances on autopilot. [...]

  4. Silicon Valley Blogger Says:
    November 6th, 2006 at 1:41 am

    Gosh I always wanted to set up auto-pilot payments. But what kept me from doing so is the concern that there could be mistakes albeit rare, with double billing which I may not even catch! Or perhaps if you needed to cancel something at some point, it’ll be a headache as some companies are a challenge to work with (cancellation or reversing payments could be a bear). I’ve had some friends tell me they’ve had trouble of the sort. But I could just be paranoid. So i’m picking and choosing what bills I do this for.

  5. Dimes Says:
    November 6th, 2006 at 12:51 pm

    I prefer to put them on a credit card instead of right out of the bank account, whenever possible. That way if they overbill us, we have some recourse BEFORE the money goes away.
    Also, even if you automate the process, you should check the bill anyway, because sometimes errors happen and if you just assume everything is OK you may not catch them in time.
    Great article!

  6. Dogberry Says:
    November 8th, 2006 at 3:21 am

    I have wanted to get my tithe set up to be autodeducted but have not heard of anyone in our rather small church doing that. Guess I need to talk to the bookkeeper and see how I can set it up.

    Dogberry
    Money & Investing Dogberry Patch

  7. Day 178: Auto Pilot | Were in Debt - Personal Finance Blog Says:
    February 19th, 2009 at 12:46 pm

    [...] to my RSS feed. Thanks for visiting!JLP at All Financial Matters has a great post on setting your finances on auto pilot. We went through a similar phase early on, where we made an effort to simplify our bills. One [...]

  8. News about Finance and related topics » Comment on Putting Our Finances on Automatic by Day 178: Auto Pilot… Says:
    February 20th, 2009 at 7:56 am

    [...] Blueprint for Financial Prosperity created an interesting post today on Comment on Putting Our Finances on Automatic by Day 178: Auto Pilot…Here’s a short outline[...] to my RSS feed. Thanks for visiting!JLP at All Financial Matters has a great post on setting your finances on auto pilot. [...]

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