Posts Tagged ‘debt’

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?

Beware the Pitfalls of Being Eager in Your Payments

After spending the morning doing a bit of organizing around the house, I thought I’d check out my finances and see if there was anything I could organize there. I saw I had $550 in my chequing account, which surprised me, but I remembered I hadn’t paid one of my credit cards yet, so I thought that must have been it. I also realized I hadn’t yet withdrawn my Money Jar money, so I pulled out a pad of paper & pen, and did some math to figure out how much of the $200 I hadn’t spent yet. Number in hand, I transfered that amount to my other account and was about to log out when a thought struck me:

My car payment!

That’s $519, and it comes out on the 8th. Oh crap! *smacks head against keyboard of computer*

I had taken out enough money to put me below the $519 amount, and I didn’t have enough room on my line of credit to top the chequing account back up. Double crap. So I went over to my TV savings fund and pulled the money out of there. No problemo, since there’s no way I’m going to be buying a new TV any time soon, and I figured the money could be put to better use.

Phew, crisis averted.

Then I looked over at my line of credit, and saw that I was $33.17 over the limit. Thankfully my bank doesn’t charge me for going over on that account, but still, I found it strange that: a) I’d gone over, and b) that the bank let me go over. I clicked over to the account to see what was going on, and saw that a cheque I’d written last week to cover my rent increase next month went through. (I had to update my deposit amount.) Dang it! And the pisser of this one is the fact the top-up wasn’t due till Feb. 1! (I found the paper work again this morning when I was organizing the pile of papers on my desk.) Son of a #$%%^#!

Have any of you ever gotten eager in your finances and then had to scramble to cover them?

To Consolidate or Not, that is the Question

I’ve been pondering this past week whether or not I should consolidate my debt and get a loan to pay it off. This would accomplish several things for me:

1. I would only have one payment to make every month, which is kind of nice. It’s a bit of a hassle dealing with debt payments that go to several different places at different times of the month.
2. I would be able to cancel the Evil Line of Credit, lower the amount on my Nice Line of Credit (this would be my backup emergency fund, and would be immediately un-attached from my banking card.), and cancel two of my four credit cards.

The biggest reason why I’m hesitating doing it is because I would definitely lose out on the interest savings I’m getting with my debt on a couple of the credit cards right now. Remember, I’ve got a balance on one that’s at 0% till the end of the year, and then another that’s at 3% till November. My two Lines of Credit are in the single digits interest rate-wise (around 8% each), so I’m not paying huge amounts of interest there either. If I did a consolidation loan, I would probably have a similar rate (just above or below 10%, I’m guessing), which still is better than credit card regular rates, however I’m not sure if that’s the right move for me. I’d be missing out on a lower rate on almost half of my debt (that’s all on one card right now.) But considering that rate expires at the end of the year anyways, it might be just worth it to wait till the end of the year, then call up the credit card companies and see what they could do for me. If they can keep the rate lower than say, 5%, it’s worth it to leave things the way they are. But if they’re going to raise it into the 10% range anyways, I might as well do the consolidation loan as at the very least life would be a little easier, right?

What do you think? Do I investigate this option now or wait till the end of the year?

Come on Mr. Taxman, Let’s Have It

In mid-March I prepared my 2007 taxes and Netfiled them to the Government of Canada. Typically it only takes three weeks before I hear back from them, since my taxes are usually quite simple. Except two weeks ago I received a letter from the government asking me to send in my T4s (those are the slips that your company sends out stating your income for the year.)

GULP

I don’t know about you, but I always get nervous whenever the government asks for “proof” of anything, whether that’s at a border crossing and they ask for my passport, or when someone asks to see my photo I.D. But this, this could be extremely nerve-wracking!

But since I knew that the real reason they were asking for the proof was that I had made more last year than the previous year, what with my raise, my severance pay and my new job, I knew I would be all right. And sure enough, I was!

How was I all right?

I actually got my income tax return last Thursday. Yes, for one glorious day, my bank account was doing the Happy, Happy, Joy, Joy song. The planets even aligned last week so that I had both my income tax return AND my bi-weekly pay deposited into my account on the same day. Oh, it was a heady time, seeing all those numbers in my chequing account. I admit that I left all the money in my account for a day just to see all those numbers.

Of course reality set in the next day when I had to disperse all the money:

1.  10% went into my fun money savings account (either my travel fund, or my new tv fund, I haven’t decided yet.)
2. 90% went into my debt repayment, divided up between a couple of the accounts.

How are you going to use your income tax refund (if you’re getting one)? Are you going to be bad and spend it on something frivolous that you haven’t been able to buy? Or are you being responsible and paying off some of your debt?