Setting Up Automatic Bill Pay: Clarification

My friend Texy and I were chatting via IM about my Help I’ve Fallen In Debt And I Can’t Get Up! post and she had some great comments and pointed out some places I was not as clear as I could have been. Her points were important ones so I wanted to get them up for folks to consider.

Step 1. Set up all bills you can for electronic payment (and make payment automatic).
It’s significantly faster and easier to pay bills online. And if you can make the payment automatic, perhaps simply paying the minimum amount due. This will help you to avoid late fees which , I’m sure you are already aware, are incredibly painful. This first step can help you from falling deeper into a financial hole through late fees.

I should have been more clear about what type of automatic payment I was talking about. I meant that if your bank supports electronic bill pay you should configure your payments within your online bank account settings to automatically pay the minimum amount on the due date. With my bank, I am alerted when the bill comes in, I quickly review the total and if it is in line with previous months I do nothing else. If it were way out of line, I would review the bill to make sure there was nothing else added to it. Ideally you would review all of your bills to make sure there were no erroneous charges on it. But when you’re drowning in debt you take baby steps.

Setting up automatic payment where your payees automatically withdraw money can lead to trouble. If they bill you incorrectly or continue to bill you after you’ve canceled an account, getting things  straightened out can be a nightmare. Texy made this point loud and clear to me.

She also pointed out that you should check to make sure your bank doesn’t charge a fee for setting up electronic payment or receiving ebills. My bank doesn’t, so the thought hadn’t crossed my mind.

Side note: One of the great things about having started 60 Second Finance is I’m now talking more than ever about financial topics with my friends and family. And it’s discussions like this one that help me to improve my own thinking about money matters.