The concept of paying bills automatically goes back a lot of years. In the past there was only one way of doing it, that being to set up a payment plan with whomever you needed to pay bills to and allowing them to automatically draw money from your bank account.

lots and lots of bills
Sarah Gilbert via Compfight

For some things that’s still the only way you can go. For instance, life insurance payments have to come out of your checking account and some car loans do the same based on the organization. Luckily, these days it’s not the only option; you can also set up bill payments through your bank.

The question is which way is better and why, and do you want to do it in the first place.

My wife and I both have careers that sometimes leads to being away from home for periods of time. That can make it difficult to make sure all bills are paid, especially for her because she can be gone up to 3 months at a time, whereas I get to come home whenever I want to. This has led us to explore these options, and we handle them differently.

The way I handle most of my bills is to set up accounts online so I can pay them when I want to. Instead of giving them my bank account information, I use my bank debit cards, all of which are Visa, and set them up that way instead. I always know when my bills are due and you get at least a one day leeway so this works perfectly for me.

My wife isn’t so tech savvy, so she set everything up through her bank to pay the bills on a certain date every month and for specific amounts. This way she doesn’t have to look at any of the bills and, for the most part, everything’s taken care of without her having to run interference.

The only time this doesn’t work is when we’re paying something jointly. For instance, we split the mortgage, but the mortgage company won’t let each of us pay separately online. This means I pay my half in person while she pays her half via her bank.

That one works out okay but when it comes to our car insurance, they won’t accept payment from her bank if it’s not the full payment of what we owe. Therefore, she deposits money in one of our joint accounts and I write a check for her amount and another check for mine and pay in person.

As you can see, we’ve chosen a different route than setting up accounts to automatically with the companies we owe money to. It might be a convenient way to pay one’s bills, but it comes with complications.

One, you can only set it up to pay exactly what you owe. I like to pay a bit more than what I owe because sometimes it lessens how much I owe later on, in case I need that extra bit of cash in a crunch.

Two, there’s no way to account for times when your incoming pay might be late. That happens when you’re a contracted worker every once in a while, and if you haven’t built up your bank account amounts yet it can cause you double banking fees and an immediate increase in your interest rate; that’s never fun.

Three, it’s sometimes hard to stop those automatic payments from coming out even when you don’t owe them anymore. My wife bought a new car but for some reason the company she’d been paying the warranty to on her previous car continued taking the money out for 4 months, even though they knew she didn’t have the vehicle anymore. Even when they finally stopped doing that, it took another 2 months to get her money back.

Can you tell I’m leaning towards telling you about using your bank for automatic payments? As I said, I don’t use it but my wife swears by them, and here are the reasons why.

One, if you want to you can go in and change the amount your bank will take out of your account to pay your bills as often as you like without a penalty. Obviously the amount owed a creditor each month isn’t always the same, so having this kind of flexibility is nice.

Two, you can suspend payments every once in a while and, once again, no penalties. This has benefited her when we’re way ahead on a bill and I can tell her she can skip a payment for a month and use that money for something else.

Three, it’s easier for her to manage her account because when there are discrepancies she can contact the bank and easily take care of issues more quickly.

Four, these types of bank transfers are more secure than giving your bank account number to other parties. These days when so many companies seem to be getting hacked, this is probably the safest way to set up your automatic bill paying process.

If you’re someone who forgets to pay bills on time but you’re confident that you’ll always have enough money to pay them, using one of these methods makes sense to help protect your credit rating. At least now you have the information you need to make the best decision for yourself.
 

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On another blog, I wrote an article titled 7 Financial Issues To Discuss With Elderly Family Members. Although that article was specific to elderly family members, truth be told some of those issues are the same that couples or those who are thinking about becoming couples need to think about.

couple
by Désirée Fawn

Unfortunately, not everyone who gets married stays married, and these days even people who don’t get married but decide to live together as a couple end up having to deal with financial decisions on the back end that they never considered. It rarely ends pretty, so thinking about things like what’s below makes a lot of sense before mistakes are made that can’t be fixed.

1. Joint Checking & Savings Accounts

Many married couples will have one checking or savings account that they share. That makes life pretty convenient, and protects one or the other long term in case something happens to the other… until it doesn’t.

The smart thing to do would be to have one account that’s a joint account where both parties put in enough money to pay bills and add a little bit extra for shopping and family life, while keeping their own checking and savings accounts separate. That way, each party can have their own money to do whatever they want to with, and if something happens in the future and they separate, each person will already have an established account to draw money from, just in case things end badly and one party decides to take over the joint account and close the other one out.

2. Make Sure Real Estate Is In More Than One Name

Each state addresses community property laws differently. Some states will divide assets in half no matter whose name is on it while other states recognize that if only one person’s name is on something they’re entitled to full ownership.

The last thing either party wants to have to deal with is finding out they legally have nowhere to live when things are contentious. If you get married, unless you have a pre-nuptial agreement, both parties should have their names on the deed of the house. Love isn’t forever for everyone but protecting oneself is.

3. Create A List Of Debts To Pay Off

This one is slightly different than in the other article because instead of assets we’re talking debts this time. I know few couples that are ready to get married who have full knowledge of what their potential spouse might own on bills. Sometimes even within married couples one person might not know that the other is creating a mountain of debt that both of them will be responsible for.

The joint checking account is great for paying off consistent bills, but a real discussion needs to be had about outstanding debt with the intention of getting rid of as much of it as possible. This is why I’ve always recommended it’s smarter to pay off debt before investing too much money because percentage rates on debt are higher than the interest on returns from investing.

4. Get A Lawyer, Set Up Wills

Trust me on this one; you and your spouse need a will to not only protect each other but detail what’s supposed to happen to the estate as it regards other family members, friends or charities. Most people balk at this one; I waited until I was close to 50 before I would even entertain the idea, and realized after I did it how stupid I’d been.

If one or the other is a business owner, there’s going to be the need for another lawyer to handle the business decisions, especially if other employees are involved and you want the business to continue once you’re gone. It’ll also be a good time to talk about whether the business should be incorporated or not for long term protection, which also becomes family protection in case the business is ever sued.

5. Children

This last one could be the most important decision of them all. It’s predicted that the total cost of raising a child in America to age 18 is approximately $304,480; that’s around $17,000 a year… per child! It’s one of the reasons for paying down as much debt as possible as well as looking forward as it concerns both your income possibilities and health insurance costs (which are higher for children because they tend to need to see health providers more often).

Although the numbers are growing, the overall percentage is still pretty low, only at 23% of single child families in the country. Since financial distress breaks up more families than anything else, and the impact on children is worse than on adults, it’s a very important topic to discuss beforehand because waiting might be too late to get a handle on it. It’s unfair to bring children into the world if you can’t afford to take care of them.
 

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A couple of years ago I was traveling a lot by airplane. During that 18-month period the federal government instituted something called TSA Precheck. In essence, it allows you go to through a pre-approved line where you don’t have to take off your shoes, remove things from your laptop, and a host of other things while going through a special line that gets you through the entire process much faster than the norm.

TSA Precheck process

At that time they were giving out random free prechecks to frequent flyers and every once in a while someone else would get a surprise or two. As time has progressed they’re doing that less and less, and since I’m about to go on a trip to a convention I decided it was time to go ahead and pay for the service. This is my description of the process.

The first thing should have happened before I went to the airport. I’d read an article about signing up for the precheck but there was nothing saying that we should make an appointment online first before we go. The reason you do that is because when you show up at the TSA counter, the first two things the person will say to you is how long your wait is and that anyone who had an appointment will come before you, no matter how long you’ve been sitting there. I got lucky that no one had made an appointment around the time I got there, so I lucked out on that one.

The article also said we needed to have a passport, birth certificate and driver’s license. It turned out that all I really needed was my passport since that’s what I had, which means the 45 minutes I spent looking for my birth certificate was a major waste of time. My driver’s license wasn’t needed, but that’s probably because the passport has a picture on it. So if you’re going with your birth certificate your license will probably be used to verify that it’s you.

They put your full birth name into the system, and it turns out to be a very important thing for you to remember. Because the TSA precheck number will be aligned with your full birth name, any airline reservations you make need to be made in your full name. This means if you have an airline rewards card or an account on something like Orbitz you need to go in and update your information if you don’t have your middle name listed.

You have to answer a series of questions verifying your demographic information and your citizenship. These were standard questions most of us have answered multiple times, but in this case everything’s on the computer instead of your having to write anything down.

After that it’s fingerprint time. I wanted to balk at this except I remembered that my fingerprints are already on the passport and, being a military kid, the federal government already had them as well. However, instead of an ink pad, now they use an electronic scanning device. The lady had to do mine a couple of times to get it to take, finally wiping off the screen because others had used it before me, and asking me to wipe my hands with a wet napkin she gave me.

The final thing is paying $85 for the right to be a precheck member. I showed up with $100 cash, but it turns out they don’t accept cash, only credit cards. That wasn’t a big deal so I went ahead and put it on my AmEx card to make it easy for my accountant to catch it come tax time next year.

That was that… except when it was over, I was sent to the airport security office where, by showing my receipt, they validated my parking pass and, for the first time ever, I got my parking for free.

Supposedly within a week or two I’ll receive a letter with the TSA precheck number that I’m supposed to give out or add to any airline reservations I make online. They don’t send you a card, so you’ll have to notate your number somewhere so you’ll be able to access it easily enough.

That’s the process. It took about 15 minutes but it lasts for 5 years and it’ll make flying so much easier. In my opinion, paying for that little perk is worth the money if you’re going to fly a lot, or even just once a year.
 

Digiprove sealCopyright secured by Digiprove © 2016 Mitch Mitchell

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