(Prosperity - Laura E Kirkpatrick)
Once upon a time there was a savvy princess named Suzanne*. Suzanne seemed to have it all together – a pretty, professional blonde with a great job (she traveled and worked from home) - and she used to be a ski instructor. Men swooned as she walked by.
But what people didn’t know was that all was not as it seemed in Suzanne’s world. No, she wasn’t an ogre, she was just completely overwhelmed. She’d just gotten a divorce, moved back to the East Coast from California and started a new job. Living this brand-spanking new life, not to mention working hours that demanded she strategize just to pick up her dry cleaning, left Suzanne very little time for the mundane – like paying bills. Soon the bills piled up almost as fast as her frequent flyer miles.
When credit card bills are paid late, or go unpaid, they’re scarier fairy tale villains than any wicked witch. Not only are most credit card fees $29 or greater, but credit card companies talk to each other. “Universal Default” means that late payments on one card can lead to a higher interest rate on that card, and also on cards issued by other banks.
Suzanne was late three months in a row, which cost her roughly $90 in fees. Plus her credit cards began charging her higher interest rates. If she carried a balance on those cards each month, it could add up to hundreds of dollars in interest.
Liz Pulliam Weston, author of Easy Money: How to Simplify Your Finances and Get What You Want out of Life told US News and World Report's Alpha Consumer that, at the very least, fairy princesses like you and Suzanne should set up automatic minimum payments to their credit cards from their checking accounts. “You can (and should) always go in later and pay the rest of the bill, but the auto payments make sure you won't get dinged.”
Automatically paying everything from your electricity bill to your credit cards is fast, easy and will save you postage, which, if you’re paying the national average of 12 bills a month, will save you $60 or more a year.
One night as Suzanne was relaxing in her new apartment, three wise friends showed up at her door bearing gifts-a letter opener and a couple of bottles of wine. A little later, not only were all of Suzanne’s bills automated, but she was now set up to pay herself too. Her friends had arranged for automatic payments to her 401(k), IRAs and/or other retirement and savings accounts.
Most banks, the friends pointed out over a fine Malbec, let you automatically move money from a checking or savings account, and most employers have a simple form that allows you to divide your paycheck across several accounts to different banks and brokerages,
With a plan, a few sips and a couple of clicks, Suzanne went from overwhelmed to super organized. The happily ever after? Well, like the rest of us, she’s still working on that.
* Not her real name.