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Controlling the bills has nothing to do with being poor or living paycheck-to-paycheck.
Most of the poor probably don't control their bills or budget spendings. They don't care or don't know how.
Wealthy people are wealthy AND stay wealthy because they understand and pay attention to their bills (or have people doing it for them).
With exception of some new-rich who feel "privileged" not to care about their spendings till their comfortable financial cushion is gone...
What does any of this have to do with auto-pay?
I have my whole universe configured to auto-pay in full. I maintain a spreadsheet and track what's going to hit my household checking account to the penny. I review every bill. I review every credit card statement.
Pulling up my spreadsheet, I have a credit card bill auto-paying today. I have electric bill and city gas bill auto paying on the 11th. I have another small credit card bill auto-paying on the 19th. I have a few recurring charges like my cell phone pointed at my primary credit card. I have unlimited service so the bill is constant.
I know how much I'm using my credit cards. Wealthy people get wealthy by spending less than they make. I imagine pretty much all of them have a good handle on their spend.
I had my natural gas bill on ACH (bank debit) autopay at my previous home in Connecticut. Usual winter bills were $500 or so for heating. Summer bills around $30 or so.
One autumn day, I noticed the gas company truck out front, and I gently asked what they were doing. Installing a "smart" meter was the answer. Somehow, the final reading from my old meter was not recorded in their billing system, so the new reading (starting at 00001) was instead used to calculate my usage, implying that the whole series of meter counters had turned over, like an old odometer (a huge amount of gas). I was unaware of any of this at the time, because I also was enrolled in paperless billing -- didn't even open the electronic invoice until the following happened....
Several weeks later, I'm at an ATM, taking out some cash, and I notice my balance is WAY below what I expected. I phone the bank, and they tell me that the gas company had recently debited my account by twenty something thousand dollars!
My Eversource city gas bill is emailed to me around the 25th of the month and it auto-pays on the 11th. I read the email, post it to my personal finance spreadsheet, and track that the auto-pay happens as expected. Ditto my Eversource Electric bill and Green Mountain Power Electric bill. On the 1st of the month, I can tell you to the penny everything that is going to hit my household checking account that month. I've reviewed all the credit card statements. I know the auto-pay amounts. I also track the online payments and paper checks I have to write manually in the spreadsheet so I'm not late with anything. All my bills in life are recurring. I look at last year's online bank statements to project my spending.
I don't understand how someone can get surprised by a mistake like that. It's a recurring bill. I know the day of the month that bill happens and I'm looking for it. I have ample time to correct an error.
My Eversource city gas bill is emailed to me around the 25th of the month and it auto-pays on the 11th. I read the email, post it to my personal finance spreadsheet, and track that the auto-pay happens as expected. Ditto my Eversource Electric bill and Green Mountain Power Electric bill. On the 1st of the month, I can tell you to the penny everything that is going to hit my household checking account that month. I've reviewed all the credit card statements. I know the auto-pay amounts. I also track the online payments and paper checks I have to write manually in the spreadsheet so I'm not late with anything. All my bills in life are recurring. I look at last year's online bank statements to project my spending.
I don't understand how someone can get surprised by a mistake like that. It's a recurring bill. I know the day of the month that bill happens and I'm looking for it. I have ample time to correct an error.
Calamity Gerania knows how that can happen. I've learned that I'm one accident or illness away from everything going to hell.
I don't have my cable or electric bills on auto-pay. Cable because Charter is sneaky about throwing in rate increases, and has snuck a modem rental charge (Though I have owned the cable modems since I signed up for their high speed internet 20 years ago) onto my bill several times.
It's easy to forget about a bill when it's on auto-pay, or to overlook errors if you're not paying close attention (or if you have so much money it's a drop in the bucket). Maybe YOU are infallibly meticulous about tracking every dollar, and know exactly when/how much to expect for each bill; but I assure you that isn't typical, as most people aren't that attentive.
Also, regardless of how much money you have, sometimes people switch primary accounts or have unexpected expenses that drain one... and if you have a large bill coming out automatically, it might be too late to change/delay that bill in these circumstances. I mentioned the SNAFU with my Apple Cloud subscription, which turned a $0.99 charge into $105. That is why auto-pay can be dangerous, as I forgot that charge even existed (when I switched everything else to my new checking account) since it's so tiny.
I put this all together, spend about four hours on the phone with the gas company, and get the thing straightened out. Needless to say, I could have bounced a lot of checks if I hadn't noticed this. The gas company over-nighted me a check for the whole overcharge, and I believe that in the confusion, one month of gas was somehow "written off," but the episode was a real shock.
Quote:
Originally Posted by Aredhel
^^^Your story is why I really limit autopay from my bank account. SNAFUs such as the one you are describing are more easily fixed when a credit card has been billed instead of the money withdrawn from your bank account! (Ditto getting a company to stop autopay of a service you no longer want. It's easier to cancel a credit card and open up a new one than to close a bank account to stop an unwanted auto-withdrawal for a service you're trying to discontinue.)
Bingo! My little $105 SNAFU is nothing compared to $20K, though... of course, I never have that much in my checking account, so they would've been calling me once it bounced.
But stories like this + the one I shared are why auto-pays can be dangerous. I like having more control over my charges, and the flexibility to stretch out the due dates if necessary. The only recurring bills I have that charge late fees are rent and my one (low-limit) credit card, while the others won't even notice until it's almost 30 days past due. So if money is a little tight when something's due, I can wait for my next paycheck to take care of it. Wish I had the financial cushion not to care, but unfortunately that's not a reality (yet).
It's easy to forget about a bill when it's on auto-pay, or to overlook errors if you're not paying close attention (or if you have so much money it's a drop in the bucket). Maybe YOU are infallibly meticulous about tracking every dollar, and know exactly when/how much to expect for each bill; but I assure you that isn't typical, as most people aren't that attentive.
Also, regardless of how much money you have, sometimes people switch primary accounts or have unexpected expenses that drain one... and if you have a large bill coming out automatically, it might be too late to change/delay that bill in these circumstances. I mentioned the SNAFU with my Apple Cloud subscription, which turned a $0.99 charge into $105. That is why auto-pay can be dangerous, as I forgot that charge even existed (when I switched everything else to my new checking account) since it's so tiny.
So you're telling me you don't know exactly what you have for recurring charges and the amounts? I can tell you the date and either the exact amount or a pretty good estimate for every bill or recurring charge I'll have to pay in 2019. I also track things like estimates for scheduled maintenance on my car. If you don't have that kind of handle on your spending, how can you save and invest? In my case, I'm hovering at retirement age. I don't have the luxury of not tracking it because it would be a total disaster to out-spend my savings and run out of money. If you don't do that, how do you know if you can afford some lifestyle thing or not?
I’ve had too many bad experiences with companies not canceling automatic charges to my credit card when I cancelled service to trust anyone with auto drafts. Unless you count money moving from checking to my savings, 529, and Roth IRA to be auto drafts. I don’t because it’s still my money and my accounts. I do have a few auto bills to my credit card though. I pay the card off twice a month so it’s the same as cash.
So you're telling me you don't know exactly what you have for recurring charges and the amounts? I can tell you the date and either the exact amount or a pretty good estimate for every bill or recurring charge I'll have to pay in 2019. I also track things like estimates for scheduled maintenance on my car. If you don't have that kind of handle on your spending, how can you save and invest? In my case, I'm hovering at retirement age. I don't have the luxury of not tracking it because it would be a total disaster to out-spend my savings and run out of money. If you don't do that, how do you know if you can afford some lifestyle thing or not?
I know what bills I have to pay every month, and basically how much they will cost (some vary). What I don't always know or remember is WHEN they're due, especially since some of them rotate based on a 30-day schedule - as opposed to being charged on a specific day of the month. I'm on a pretty tight budget, but also tend to be very consistent in my monthly spending. So I am fully aware of what I can or cannot afford, and still track my spending pretty closely. Paying bills manually has nothing to do with that, in fact it HELPS me to track my budget. We all have different habits and personalities, but at least for me, I'd get lazy and/or forget what was coming if I put everything on auto-pay.
I'm just saying that it's better (for some of us) to have control over exactly when a bill is paid, and if necessary, the flexibility to pay on a different day. It's also good to view the bill before it's paid, so you can catch any errors or inconsistencies ahead of time. Always easier to get something adjusted first than to ask for a refund! Once they have your money, it can be like pulling teeth to get anything back.
Have a few items on auto charge:
Netflix
NY Times
Hulu Live
WSJ
HBO
I pay some utility bills (where they charge a small per payment fee) a large amount with a credit card because I want the points. Then, each month, it shows a credit in my account.
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