Step 4: All About Automation

Sorry for the late post - I ran my first 5k this weekend and posting got pushed to the side. Check back for the next Monday Money Savers post later today!

Banks do whatever they can to make money, and they have no qualms about charging you $40 here or there for minor mistakes.

In Step 1, you listed all of your financial accounts. In Step 2, you checked this list against your credit report, and found any late payments you might have made. In Step 3, you came up with a budget or spending plan. Now, in Step 4, you will set up your accounts to function automatically so you don't waste money on fees and penalties.

It may seem like a minor step, but doing this can potentially save you hundreds of dollars over the course of a few years

If you use debit cards instead, and you overdraw your account one day, you can rack up $40 fees for each purchase you make. You may think you have enough money to buy the coffee in the morning, and then overdraft for a larger purchase in the afternoon - but banks can and do reorder your purchases to make you go over the limit faster, so you can potentially rack up fees on each purchase. That $4 cup of coffee just cost you $44.

The easiest way to avoid these problems is to automate your accounts. To start with your debit accounts, check with your bank to see how they handle overdrafts. Some banks and credit unions will not charge you to transfer money from your savings to checking automatically to cover your purchases. Others will. Other banks use your debit account as a sort of credit account - charging you fees and interest until you pay back what you have 'borrowed'. The easiest way to avoid these fees is to do some research and find a bank that won't nickle and dime you. It may take some time up front, but it will save you time and headaches down the line.

For credit cards, utilities accounts, and other debts, many of the fees and penalties will come from late payments, rather than 'overdrafts'. The easiest way to avoid these is to automate your payments, so you never have to worry about missing the due date. I like to use the direct debit method of payment, set up through online banking, that allows monthly payments to be automatically deducted from a checking account. In my checking account, I always make sure to have at least the minimum amount required to meet my minimum payments.

Let's say I have 2 credit cards, a cell phone bill, and an electricity bill due every month (for simplicity's sake). If each credit card has a minimum payment of $15, and each bill costs approximately $50 per month, I need to make sure my account has a minimum of $130 at all times. This amount should be an emergency amount, and should be replenished if you do end up needing to use it. By keeping this buffer, you won't have to worry about overdrafts or late payments, and you'll save both time and money.

The other thing I swear by is the "alerts" feature at Like I mentioned in my previous post about Mint, they have a feature that allows you to set alerts for different events. If you go over your budget in one area, it can send you an alert. If you have a credit card payment due, you can set an alert. Use these automated features to your advantage. Set it up to remind yourself 2 weeks before your bill is due, so you have time to transfer money if you need to.


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