Posts Tagged ‘debt reduction’

How I Create Snowflakes From My Monthly Bills

An easy way to create snowflakes for yourself is to use a cash back credit card. I use mine for all of my monthly bills, so that I only have to pay one bill a month instead of 4 or 5 spread throughout the month. That’s the only thing I use this card for, is my monthly bills, and I earn a tiered cash back amount depending on the amount I spend in a year. I’m normally not a fan of the tiered cash back, as it essentially encourages you to spend more on your card, to spend more than maybe you can afford, but since I only use this card for my monthly bills, it’s money that’s already in my budget, so I’m comfortable doing that.

Some cards give you a cheque once a year with your cash back amount, others ask you what you’d like to do with it (get a cheque or apply it to your balance), and others simply apply it to your current balance. My card applies it to my balance once a month, in January. So this year I earned $112.43, which is great! It gets applied to my card, which means that it pays for almost all of my cable bill, or insurance bill, or, well, you get the idea. It decreases the amount I have to spend on my monthly bills this month, PLUS, I can then take that $112.43 and put it down on one of my other debts.

How’s that for a snowflake?

Why Pre-Authorized Payments Aren’t Always Good

For the longest time I have had most of my monthly bills (cable, internet, cell phone, etc.) on a pre-authorized payment plan. If you don’t know what that means, here’s the low-down: you provide your payee your credit card number or bank account information, and you agree to let them charge (or withdraw, in the case of the bank account) the amount of your monthly bill. Nice and easy. I’ve always used the credit card option for this program, because I don’t like the idea of these companies having their fingers automatically in my money, you know? And I started using this program because I missed a few payments. I found it quite confusing to have the bills arrive at different times during the month, and then having them be due at different times. Setting them up as as a pre-authorized payment meant I wouldn’t have to worry about missing the due date, AND I would only have to pay one bill a month, AND I might earn some points or cash back depending on the credit card I was using.

In a post she wrote this week, Krystal talked about how she didn’t like pre-authorized payments because it meant “once you pay your invoice, you have acknowledged and agreed to the charges on the bill.”

Hmm, very interesting.

I had never thought about it that way, but I realized that she was quite right. There’s always the fine print on these types of agreements, and the fact that you might be agreeing to all the charges on your bill when the company automatically withdraws the payment is a little worrying. I was debating this week whether I should stop my automatic payments simply because I had wanted to stop using my cards completely this year, but Krystal’s post has definitely gotten me thinking. I’ll have to weigh the pros and cons again before making my decision, adding this one into the mix.

How about you, do you have any of your payments on pre-auth? Why or why not?

Why Inclusive isn’t always the Cheapest Option

In my apartment hunts over the years I’ve come across the “all inclusive” option for rent. This means that the rental price includes utilities, or cable television, or other extras like that. This can mean that you’re either saving money each month, because you can use whatever the extra is for as much as you like, or it means that you’re getting ripped off because you’re paying for your neighbour’s usage.

My utilities are not currently included in my rent, however I split the hydro bill with my landlord. This bothers me somewhat, because it’s not really accurate of my actual usage. Because I don’t have a separate hydro meter on my apartment, I just end up sharing in the usage of my landlord and her family. This bothers me because in general, I am very contientious of my use of hydro, so I don’t like paying for what I don’t use, you know?

In my search for a new apartment this winter, I came across a property management company that has both types of arrangements for their apartments. I find this a little intriguing that they would have both options, but regardless, I seem to have some choice on that front. So I crunched some numbers…

And found that if I go with one of the non-inclusive apartments, I end up saving $50-100 a month. That is wonderful news! That means that I could put that extra money towards my debt repayment and even savings. This is even considering the fact that my parking bill will go from $10 a month to $85. Don’t get all excited to hear that I’ll be paying $85 a month for parking….that’s for underground parking. Those of you in Toronto will understand why this is exciting news to me. For those of you outside the Toronto area: we got 26 cms of snow dumped on us in one night (that’s about 10 inches.) That meant 60 minutes of shovelling the driveway and digging out my car. Not fun at all when it’s -8C outside.

The rental company tells me that hydro costs for these apartments tend to be in the $25-30 range, but the thing I like about the whole arrangement is that the cost is controlled by me. If I want to save more money, I can just turn off the lights, the tv and the computer. I don’t have to rely on a price adjustment by the management company every year, you know? This is something I can control, and something that I will control. I am quite pleased at this prospect.

I’ll be meeting with the rental agent later on this week, so wish me luck with the visit! I’m hoping to have everything settled by the end of the week, so that I can concentrate on packing, hiring movers, changing my address, and all the other related moving tasks.