It’s complicated

November 30, 2011 · 38 comments


Let’s get right to the point today shall we? I go out of my way to ensure my personal finances are significantly more complicated than they should be. In fact, I’d even go as far as to say that I sleep better at night because of it. No, I haven’t lost all my marbles, I just hate the idea of automating my finances.

I know I’m probably in the minority here, seeing that numerous personal finance blogs preach the wonders of automating your finances. I won’t try to convince you my way is better (even though it is), but allow me to at least explain myself further. First, I’ll list off all of the regular recurring payments I have each month.

  1. Rent- $1,175 (all utilities are rolled in to this one payment, including cable/internet)
  2. Cell Phone- $60
  3. Car/Renters Insurance- $180
  4. Credit Card(s) – Varies depending on balance (usually around $1,500)
  5. Charitable Contributions – 10% of gross income
  6. Storage unit – $65 (storing our baby grand piano)

I may be forgetting one or two other bills, but for the most part I think that about covers it. I could theoretically set up an automatic withdrawal from my checking for each of these bills, allowing the companies access to my checking account. As the bill comes due, the company would pull the money from my checking account.

Now, I don’t know about you, but that totally freaks me out. Getting married and sharing a checking account with Girl Ninja was scary enough, I couldn’t imagine giving a bunch of random strangers access to my account as well.

I’ve read horror stories about people who thought they set up a $200/monthly payment and were shocked to find out $2,000 was withdrawn instead.

Or how about the person that had their car payment scheduled for the 8th of every month. Well it just so happened that on the night their account was to be debited, their bank was beefing up security protocols and restricted all customers accounts for a few hours. As a result, the payment never processed. But because it’s suppose to be automatic, you never think to check and make sure everything went smoothly. Thirty days later you are dealing with an angry Toyota representative hounding you for being one month past due.

No thanks. Automatic payments don’t sound worth it to me. To be perfectly honest, I actually enjoy manually paying my bills. It reminds me how much money comes in and out of our account each month, but more importantly it makes me want to continually shop around and make sure I’m getting the best deal possible. It essentially keeps me intimately involved in our personal finances. And I need not remind you, making love with money is my favorite kind of romance.

Do you automate your finances? Why or why not?

1 StackingCash

At first I thought I did the same as you, no automation. Then I realized that there are several bills that get charged to my credit card automatically. Cell, water, satellite, and home security are those auto charges. I’m comfortable with these things being charged to my credit card because it is a buffer to my checking account. I can dispute those charges on a credit card easier than on my checking account IMHO. I also earn a cash rebate on that card to boot. I actually wish all my bills were able to be charged but most companies despise the credit card surcharge and don’t allow it. I also agree that too much automation can lead to problems and I would rather monitor my money on a regular basis to make sure all is well with my money.

2 Cherleen @ My Personal Finance Journey

I don’t trust automatic payments either. I do my payments online but I would rather do it manually so that I can check my bills before paying them and track my expenses as well.

3 Jessica

When we lived in the States we did everything manually! No automatic payments, I hate them…however now with living in Japan and the different currency, we kind of have to have automatic. We go through a company that most military families use and they receive all your bills (no bills come to our house) and they pay them for you. They take out the money 2x a month (1st and 15th) from your account. I kind of hate it, but I would hate withdrawing all that cash (about $5000/month) and then exchanging it into Yen and then go to about 6 different places here (can’t pay online since our original money is in US Dollars, so we have to pay IN PERSON) it would literally take us a whole day to pay our bills that way. So I sucked it up and gave one company our account number…still makes my tummy cringe!

4 Tanner

At first I thought you were talking of something else, ha. I do not like automatic bill pay either. I have to say that perhaps I will try it once I am more stable and have some significant buffer in my checking account, but other than that, no. I’m still at that stage where I check my bank account every morning and every night. Call me paranoid,but I’d venture a guess I’d be the one automated customer that pays the bills 3 days in advance and checks online anyway to make sure it all went through. (which sort of defeats the purpose if you ask me). I am also very pleasantly content with a manual bill pay. I mean, there’s only 2 days a month I pay bills, so why not do it manually. Makes me feel I’m in control of something.

5 slug | sunkcostsareirrelevant.com

I have automatic bill pay set on 7+ credit cards, my mortgage, and every utility that will let me. If you don’t set it up like a moron, you’ll be fine. The anecdotal evidence you submitted is just that and is only representative of a small set of outliers. You don’t hear the story of the millions of citizens who use it successfully all the time.

The opportunity costs of time spent setting each account to pay every month is a ridiculous thought to entertain. Additionally, the stress of wondering whether I forgot to set one would nag me.

Automatic payments, I love them!

6 AMD @ amomsdime

I’m like Stacking Cash. I don’t like the idea of giving out my bank info to make automatic withdrawals from my account. However I do like automation through the credit card, for her same reasons-it’s easy to dispute with a credit card company if a charge isn’t right, plus I get my points which is a bonus. To be honest I don’t even like writing cheques to people (I prefer giving cash) as I don’t like not having control as to when they’d cash them. I very much like control over my actual account!

7 Mo D.

We have a few monthly items that are set up for automatic withdrawls:
Mortgage, Property Tax, Condo Fee, Car Lease, Car/Condo Insurance (these amounts do not vary from month-to-month, so I know exactly what’s being debited from the account, and when)

Stuff we pay via online banking:
Cell phones, Cable, our 2 Visas

Because all utilites are included in our condo fees, we only get 1 bill in the mail (cable); we’ve had to dispute our cable bill a couple of times (once for internet service that disrupted for 3 days), so I’m leary about having it set up for automatic withdrawl.

8 Jen

I love automatic payments. I get discounts on my student loan interest rates for using automatic debit, which will end up saving me thousands of dollars by the time I pay them off. I would set them up via credit card for a little extra protection, but the fee for using a credit card to pay would cancel out my discount.

Sometimes having it set up makes life easier. When the direct loan website changed recently, my automatic payment went through like it normally does. My husband pays his bills manually though, and he couldn’t log in for quite a while after they switched it over. He would have been late paying if they hadn’t waived the late penalties that time around (since so many people had trouble).

Generally I just check in once per week to make sure everything has gone through as expected, and I only keep enough cash in the account to cover my bills plus a little cushion – so if it accidentally got wiped out it wouldn’t devastate us financially.

9 Ryo Vie

No, no, no. I will never auto-pay my bills. Mrs. Vie loves it, I am scared to death of it. Too easy for hacking, identity theft, etc. Yeah, I may be a Henny Penny, but that’s all right. I do automate my finances in having X amount go to savings and X amount go to 401k. That’s enough automation for me!

10 Donnie

I automate as much as possible. I think this is actually safer than manually scheduling payments.

Example: My wife’s student loans were set on auto-pay at $60/month. Everything was running along smoothly. We decided to pay it off, to save ~ $30 in interest. I used the wrong checking account when manually sending the payment, and as a result, got hit with $56 in fees.

Had I just left the auto-payment alone, there would have been no issue.

I use Mint to monitor all my accounts semi-daily, so I would know if an automatic payment was missed/late.

11 StackingCash

Ohhh, Mint! Now that is scary!

12 Kathy

No autopayments for me, thank you. I guess I’m “old-school” and don’t like the idea of a company having access to my bank account. I admit to doing all payments through online banking, though.

13 Emily @ evolvingPF

We pay all our utilities automatically, but they all go on one of our credit cards – like StackingCash said, there is a bit of a buffer. We pay our rent manually and have an auto-payment set up for our credit cards but we always pay off the entire balance during the month we made the charges (not waiting for them to come due) so we never actually need the auto-payment but it’s there if we make some sort of mistake.

I have had problems with automatic withdrawals for our tithe. The system our church uses apparently isn’t very good/transparent because it’s taken me six months, trying once per month, to switch it from coming out of one checking account to coming out of another. If I haven’t fixed it this month I’m going to call them (I say that every month).

14 Alice

If your BANK has an automatic bill pay feature, then you won’t be giving out your information to anyone at all. You’ll be giving your *bank* your account numbers to your creditors. I don’t see a problem with that, given that they already have your cash sitting there.

The credit union that I use has a bill pay feature that I love and use faithfully. I only get paid once per month, at the end of the month. I have my recurring bills set up to be automatically deducted and they send the check. There is also an email notification feature that sends me an email the week before the payments are to be made, reminding me that a payment is going to be withdrawn for $xxx.xx amount and on xx/xx/xx date. I check my bank account like it’s my job though, so the emails are simply a back-up system. For the non-recurring bills I have that account information entered as well and just log in and enter the amount to be paid each time. The bank sends the check. The way I look at it, I’m saving ~$3 a month just in postage.

I know that this won’t convince you to change your ways, but as much as you believe your way is better (and therefore it is – for you), I believe that my way is better – for me.

15 Larry

Why have a baby grand piano if all you’re going to do is store it?

16 StackingCash

Family heirloom from grandma, I think. From the looks of his tiny apartment, he has to store it until they buy their house. I’m surprised that his family, immediate and extended, do not have extra space for that piano. Then again, I barely have space in my home also…

17 Larry

Maybe yes – but: is the piano being maintained? If it’s a decent instrument, it has to be tuned at least twice yearly to prevent the sounding board from ultimately cracking, and otherwise the best treatment would be to play it, and often.

I hereby volunteer that if Ninja is willing to have the piano shipped cross-country to my address, I will keep it for him until he is ready to remove it from storage. Of course, we’ll have to work out piano-mover and trucking costs. (Never ever try to move a piano yourself; always hire a pro.)

18 Ninja

The baby grand was an inheritance when my Grandma passed away. I had professional piano movers put it in a piano storage facility. The legs are off it and it is upright in a climate controlled room. I unfortunately haven’t had the thing tuned while it’s been stored and don’t even know if they can tune a baby grand while it is put on it’s side.

My aunt just bought a house nearby and I got approval from her over thanksgiving to keep the piano at her place so I will be getting it out of storage soon and set back up as it should be. Probably get it tuned also.

It was a tough call inheriting it. Girl Ninja loves to play the piano and wants to teach our kids, but when we got it, we obviously weren’t set up to have one (too small of an apartment). Trying to take the best care of it possible without breaking the bank or inconveniencing our family/friends (that didn’t want the piano in their house).

Oh, I even reached out to our Alma Mater’s music department to see if they wanted to borrow the piano for use, which. They didn’t have space for it.

19 Larry

No, you can’t tune it if left on its side because the tuner will expect to sit on the bench in normal position to reach the strings. But if it’s been professionally moved and stored in a climate-controlled facility it’s almost certain you’re safe. The problem arises in a normal house, as the strings go flat or sharp with the change of seasons. I do know someone who left an upright untuned for 6-7 years and the sounding board cracked, requiring some expensive repairs. (I trust too you realize my offer to borrow your piano was made only in jest. I have an upright of my own, and I think down the road you’ll always be happy you’ve inherited such a valuable instrument.)

Meanwhile, this article seems to offer good advice:
http://kansascitypianotuning.com/tuner/pianomovewaitmoving/

20 Lutus

I auto pay utilities, etc.. but I do not auto pay my mortgage because it is with Bank of America and I do not trust them. I am hoping to refinance to a 15 year mortgage with a local bank soon but we will see.

21 Drew @EpicFinances.com

I completely agree with the idea of not trusting companies to automate your bill payment. I don’t trust anyone anymore when it comes to my money.

22 Brian

I don’t automate my bills. It forces me to double check them and make sure they are correct (particularly the credit card bill). In fact I am still insane and write checks for water/gas/electric and drop them off at the payment drop boxes (of course these boxes are on the way to work so its no big deal).

23 Karen

I automate my bills because only losers don’t. I mean, you do direct deposit right? This is the same thing, but the other way.

I was an early adopter–I used CheckFree in the ’80s, and got completely burned when all of my bills were paid twice, draining my account and leaving me with massive bounced check fees. It took me a long time to start trusting automatic payments again, but I did, and I love it. It makes everything much simpler.

HOWEVER–you have to check that payments are made, and that they are for the correct amount of money.

The only bills I don’t pay automatically are my mortgage, because this is my largest bill and I often want some flexibility about when it will be paid, and my credit card bills, because they are different every month.

24 Larry

Then I’m a loser.

I don’t automate bills from my checking account because, as someone says above, I often want some flexibility about when a bill will be paid. I do automate some recurring payments from my credit card, because I do have some flexibility there since the charges are floated until my statement comes due.

If I were on a monthly or bimonthly pay schedule, I’d be more likely to automate from checking since I could predict when a payment would be debited. But since we’re biweekly and I get 26 checks a year, I don’t have the same level of coordination between paydays and payment due days.

I have 6 or 7 recurring bills each month. Every pay day, it takes me five minutes to pay them online from checking. Works for me.

25 whimsical melange

I hate the idea of automating my bills. Of course, this is coming from “OMG what if I can’t cover it????” mindset. I have precisely 2 things that are automated, my car insurance (for the discount) and my gaming subscription. I’d love to take the car insurance off automation, but I like the discount a lot. I really like being in control of my money. I have a spending habit that is not fully controlled at this time, and I went into relapse after taking some Christmas spending crack. If the car insurance wasn’t automated, I wouldn’t be worried that the automated payment would bounce because I’d have already paid them. **Shakes fist at Christmas spending crack**

26 Rachel

I hate automatic payments. There have been multiple times where a company “accidentally” charged me 2x for the month (Verizon Fios), or didn’t withdraw the payment at all and then cancelled my service immediately (Health insurance).

I manually pay every single one of my bills that I can. The only automatic debits are companies that will charge more to do un-automatic billing (health insurance, car insurance, yoga membership). I try to tie all of my automatic payments to my credit card, so no one has access to my checking account.

I hate automatic billing. Hate hate hate.

27 Mike

I got screwed once on an autopayment that I didn’t sign up for. Once, I paid a bill with my debit card over the phone because I forgot to mail the check (it was written in an envelope on my table). The company I paid, assumed I meant that they should charge me every month on that date.

I no longer allow companies to withdraw from my account automatically. My bank’s online bill pay can automatically write and mail checks (or send electronically) because I can always cancel or edit up to the day before the payment is sent.

28 Jake

As a Retail Banker, I can assure you that the Bill Pay feature is not how you described in your blog today. Bill Pay, like Alice stated above, you are authorizing the payment to creditors. Bill Pay is not an authorizing Creditors to draft your account. You also do not have to set automated payments from Bill Pay to pay every month at the same time. You have the ability to send the payments on the dates you want and the date can be different every month, if you want. You can log in, set the amount, click the date, and submit. The method described in the sentence prior is the same as writing a unique check monthly to pay bils. This is one of the few financial products I feel that you are not up-to-date on. Bill Pay CAN make your monthly bills far less taxing.

29 cashflowmantra

I pay electronically through my bank and have the payments set to recurring. However, I do check them each and every month and track it closely. I just don’t have to redo data entry or write and mail payments. It works for me.

30 Money Beagle

I automate almost everything. I’ve never had a problem with the bank being down and payments not going through. I would expect that any bank worth their nickel these days is going to have something in place where the requests would queue up and get processed once their maintenance is done.

31 Kate

I only automate my student loan payments so I get an interest rate reduction. Like you, I don’t trust automatic payments to get it right. Either way, I check my accounts almost daily to make sure they’re correct.

32 bethh

I think you’re confusing two very different things!! It’s important to be clear when you’re talking about automatic payments:
Letting your billers auto-debit your checking account is one thing; generating a check from your bank to your biller on a regular basis is totally different.

I use USAA and the ability to generate payments makes my life very easy. I manually transfer money to my bill-paying account, and use that account to push payments out. I don’t let anyone debit me, and only let one thing charge to my credit card on a monthly basis (netflix, because there isn’t any other option).

33 Matt, Tao of Unfear

I don’t automate. That does leave some months, like this one, where I go on vacation and forget to pay my phone bill and come back to find I owe for two months. But, you know what that motivates me to do? Go in an negotiate a lower payment. And when they won’t budge because I’m still on contract? I have them put a freeze on my account so that they aren’t getting any money from me at all. I need the money more than I need their service.

The only thing that would come out automatically was my 401k contributions, but that’s all in the past now.

And personally, I keep all of my money in savings where it can accrue interest, and put all of my expenses on my credit card. Once a month I’ll make a transfer to my checking and pay off the balance on my card. It would be a huge headache to set it up to automatically transfer specific amounts from my savings to my checking, and from my checking to my various bills. Not to mention, I can only set up my credit card to automate the minimum payment. I ALWAYS pay the full balance. Automating is just no dice.

34 Jenna, Adaptu Community Manager

Currently nope, but I’m thinking about doing it for some of the rental properties I manage.

35 Kristin

When I first got my very first credit card, it was the first regular bill I ever had. I was good about paying it for a few months and then forgot it one month and got hit with a $15. After that, I set it up to pay my entire balance automatically. My cell phone bill and my second credit card I also set up to autopay the balance every month. My other bills go by check to people, not institutions or companies.

However, that doesn’t mean I let the autopay go through. As soon as my statement is released, I go to the website and make the payment. Then when the actual bill due date comes around, the autopay request goes through but it’s at a zero balance. That way, I have insurance if for some reason I ever forgot to do it. On my previous auto insurance policy, I got a discount for doing a payroll deduction, so that’s what I did. I don’t see the point in letting the money sit in my account at such low interest rates until the end of the month – I’d rather have the cards paid off ASAP so my credit utilization stays low and I just carried the habit to my other accounts. (I use cards for the reward points and when I only had one, I’d pay it off as soon as it got past 1/5 of my credit limit, even if it wasn’t the end of the month). I like this system because if I for some reason forgot I’d be covered, but I maintain my “mental control” of the accounts and bills.

I think this is one advantage to using a service like Mint. I check it daily and can see exactly when the payment has gone through and the budget bars for that bill have been filled up for the month. If something funky did happen with an overdraw, I’d know immediately and could get it straightened out quickly.

36 krantcents

I automate my savings and my mortgage payment. There are a few bills I have automatically charged to my credit card bill. It works for me.

37 Beckey & Jeff

You can setup the automatic payments from the BillPay section of your bank website. Then its just one account distributing cash instead of all those accounts taking from your bank.

38 Oldfangled

I don’t use automatic payment except for the services we use that ONLY have auto bill pay. Our Netflix and our life insurance, for example.

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