Comments on: Put Your Finances on Cruise Control, But Stay Alert

By: Ed

Ed — Wed, 03 Aug 2011 10:41:37 +0000

Credit Card users!!! Did you know how your credit card purchases make the prices go up on every products and services you pay with your plastic? It’s true, you get that Airline ticket for free, or some other staff for free, But, that is nothing, comparing with what the seller has to pay to Visa and Amex just because you want those miles.
I am a small business owner and here is what I do. We are in a service business and we get paid per hour. Lets just pretend that we are rich, and we charge $100 per hour. We don’t just shoot rates out of our heads, we do calculations. This 100 includes our operating expenses, taxes, fees and of course the profit. This 100 also includes anywhere from 1.9% to 3.5% credit card charges that I have to pay to credit card companies just because you paid by card.
Now, you might say that “come on man, that just a buck or two, get over it” . Well buck or two, but there are Billions of dollars being spend on credit cards everyday by buying goods and services, which adds up to Billions of dollars paid to credit card companies like Visa and Mastercard.
Basically, to be short. Credit Card companies pay you to use your card, then they charge me the money they paid you plus their own profits, then I charge you the money I paid them. So At the end of the day, you bought the product or services and paid a little more than it cost.
As a business, I did not lose anything, YOU lost it and the credit card company made a huge profit.
Lets see… how many miles or points do you have to have to qualify for a $350 ticket? At some point I heard you must have about 55,000 points, right? I love math, wanna see how much You really paid for that ticket?
55,000 – 2%=1,100.
Guess what? YOU just bought a $350 worth of ticket for $1,100. Congratulations, You have saved -$750 Now go and spend some more on your credit card… collect those points!

By: Doctor S

Doctor S — Fri, 20 Nov 2009 19:27:04 +0000

I have automated the majority of my bills now and I must say it has been a huge stress relief. My car payments and one of my debt payments are no on autopilot. The only thing that is not is my credit card debt and student loan. The credit cards will be at $0 by year end which will make paying my student loan every pay period so much easier.

Next step…. integrate automating my savings!

By: vcmcguire

vcmcguire — Fri, 20 Nov 2009 16:21:03 +0000

I used to have almost everything automated, but we just moved, and I haven’t re-automated our utilities yet. It’s sort of a nostalgic pleasure, sitting down with the checkbook to pay the bills.

One advantage to having paper bills come in the mail–it’s easier for my spouse to take over managing the money if I’m out of town or sick or something. If everything’s coming to my email and I’m the one who knows all the passwords and due dates, it’s harder to share the tasks.

By: Jon

Jon — Fri, 20 Nov 2009 14:15:06 +0000

I’ve had most of my finances on auto pilot for quite a while now, using bill pay at my bank. I’m not sure how much time it’s saved me, though, as I still check on it compulsively, and spend time entering transactions into MS Money for all my accounts and investments. I do know it’s saved me some money, as I haven’t had to buy a stamp in ages.

By: Flexo

Flexo — Fri, 20 Nov 2009 04:40:23 +0000

Eric and Erica — you are both right, of course. Just one of those things I haven’t gotten around to yet. It’s one of those things I’ll do as I have more than one reason to call customer service and sit around on hold… No option for changing this online as far as I can tell.

By: LeanLifeCoach

LeanLifeCoach — Fri, 20 Nov 2009 03:02:23 +0000

Flexo, I’ve taken it one step further, complete automation via…. the wife!

Seriously, we work as a team and she is a great teammate!. Everything that can be automated is from direct deposits of paychecks to transfers into investment accounts, retirement and even the kid’s college funds.

To your point, you must verify each transaction every month. In the last two years we have had one mortgage payment and one paycheck fail. In the case of the paycheck there was no big deal we still had more than enough liquidity to cover everything. But with the mortgage payment, if we didn’t check it could have been a blemish on the credit reports.

By: Eric

Eric — Thu, 19 Nov 2009 19:50:21 +0000

^Ding ding! I was gonna say the same thing as Erica. One of the first things I do when I get a card.

By: Erica Douglass

Erica Douglass — Thu, 19 Nov 2009 16:53:51 +0000

“The payments are due at different times of the month.”

You know you can call and change the due date, right? :) It’s the first thing I do when I get a new card.

-Erica

By: Dan

Dan — Thu, 19 Nov 2009 16:06:18 +0000

I was about to write that I still pay most things manually, but after starting the comment, realized it’s not true. I’m not totally automated, but don’t think I want to be either.

By: Lulu

Lulu — Thu, 19 Nov 2009 15:18:52 +0000

I have my finances on cruise control now and I am so bored. I do not have to click or write checks or do anything. I do log in every day just to see that everything is going as planned and to have something to do.

I am twiddling my thumbs now because my automated finances have left me with nothing to do. Hee hee. Your plan sounds like mine, direct deposit for paycheck, automatic transfers for savings and push payments from ING to cover credit cards (4 times a month) and all bills paid on credit cards (earning some rewards baby!!!!).

By: Rob Bennett

Rob Bennett — Thu, 19 Nov 2009 14:55:29 +0000

I see a big problem with the idea of putting your investments on “cruise control,” Flexo. Valuations change. A stock allocation that is just right for you at the valuation level that applies in Year X might be wildly over-risky for you at the valuation level that applies in Year Y. I think the goal should be to keep your risk level roughly constant. That means paying enough attention to changes in valuation levels to know when to lower or increase your stock allocation.

Rob