For every minute spent in organizing, an hour is gained. Anonymous
My system consists of two simple parts:
- Automated clearinghouse (ACH) debits and credits
- Overdraft protection
For each recurring credit or debit in my life, I signed up for "direct deposit" or "automatic debit" directly from the company involved. This includes my:
- Federal Tax Refund
- State Tax Refund
- Cell phone
- Internet Service Provider
- Auto Insurance
- Saves time. There are no trips to the bank and the post office. No time is spent writing checks. No time is spent scheduling the payments. It also allows me to block together all the record keeping to once a month, which is also a more efficient process.
- Saves money. I probably save about $50/year in postage. There are no bounced check fees ever. There are no late fees ever. At nearly all times, there is very little in the checking account. Instead, the money is earning much higher rates of return elsewhere. And of course the big bang for the buck is with the opportunity cost - the ability to have the time to make a substantial difference in income through focus on one's career and investments.
- Reduces Stress. There is no need to remember payment due dates. There is no worry about any of this when you are sick or on vacation or swamped with the occasional 65-hour work week. There is no fear of embarrassment from possibly bouncing a check, and no worry that somewhere in one of the piles of papers there is a forgotten monthly bill lurking.