We are truly fortunate that we can set many of our financial transactions up to happen automatically.
Most of us have 401k contributions come out of our paycheck before we even see it. You can’t spend what you can’t see.
My utility bills go on a credit card automatically which–you guessed it, gets automatically paid in full each month from my checking account.
When I was working, I had an amount automatically sent from my checking accounting to my investment account each month.
Now that I’m retired, my investment account sends money to my checking account–automatically. It feels like I’m getting a paycheck–even if it is just from myself!
These automatic transactions are great when they help us achieve our financial goals–forced savings and simplification of routine bill paying are fantastic.
But automatic transactions can also derail us from reaching our financial goals.
If we’re paying for things that we don’t value or don’t use, we aren’t able to have something we value more. You could be missing out on a possession, an experience or a feeling like financial freedom provides.
I have one magazine subscription and it renews automatically with the charges going to my credit card. I’m about six months behind reading that magazine, so I wouldn’t have renewed it if it wasn’t happening automatically. A $15 expense that isn’t adding much value to my life–it should be turned off.
We can also get off track if we aren’t paying close enough attention to the automatically paid bills.
Each year, XM radio charges me a ridiculous amount for the renewal of my car radio. I call, threaten to cancel, and end up with a more reasonable rate. This year, the renewal went from $25 a month to $5 a month just by making a phone call. Yes, the annual phone call makes me crazy and costs me an hour of my life. But I saved over $200! That’s an hour well spent.
We visited our desert home’s cable/internet store this week to review our billing. It had crept up by about $10 a month from what we agreed to a few months ago. Unfortunately, I found out there weren’t any promotions we weren’t already taking advantage of so we were stuck.
But this visit did start conversations between me and Mr. Ms. Liz about how we could access our home TV service in our desert home. We may have a solution to a bill that seems too high. And we think it may make sense to have a hot spot rather than pay for internet in two locations.
At least twice a year, we should review our automatic financial transactions.
Could you increase your retirement contributions? Bump it when you receive a salary adjustment and you’ll not even notice the difference.
Could you set up more automatic transfers to help you reach your savings goals? Even a small amount, transferred to savings regularly, could make a big difference in 10 or 20 years. Invest $50 per paycheck this year, increase the $50 by 2% each year with a 6% return and in 10 years you have close to $18,000 and in 20 years you have over $53,000. Start when you are 20 and at 70 you’ll have close to half a million dollars!
You should call your cell, telephone, TV and internet providers to make sure you are receiving all available promotions. You may need to threaten to cancel your subscription to get their best deal. Check out this post by Physician On Fire with the entire script that got him huge savings on his Dish TV bill. The script is similar to the one I use when calling XM Radio.
Periodically, you’ll want to review the offerings of the lower cost cell phone companies. Check out how Mr. 1500 reduced his cell bill to 17.89!
How about fees charged on your bank and investment accounts? Could you change your account type or increase your balance slightly to reduce your fees?
Fees for ATM cards and ATM transactions are my personal pet peeve. Open a Charles Schwab checking account and they reimburse you for all ATM fees–even international ones! My friends who travel a lot tell me this is the best deal ever–travel to a country and get their local currency at the best conversion rates available with no ATM fee. And they are able to withdraw small amounts of cash frequently–reducing the risk of loss. But be sure to cover the keypad when entering your PIN!
For gym memberships and subscriptions, ask yourself if the service is adding value to your life. Are you using the service/reading the magazine/listening to the music? Are there alternatives that would be less costly? Could you share the plan with someone else to save a bit of money?
Make sure your autopilot is set to get you where you want to go!