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Blog: Can We Have Some Order Here?
Using Technology To Simplify Your Finances -- Part 2

Last week, I talked about the benefits of online banking -- and there are many! This week, I'd like to share the bill-paying side of the equation with you -- including an explanation of the system I set up for my client to save time on managing his finances.

Check-Writing Woes

While instant access to your accounts is a big plus, I think the most significant time and money savings related to online banking come from automated electronic bill-pay. A recent study showed that using an online service (rather than writing and mailing checks) will net the average consumer $6 in stamps and about 4 hours per month. And that's not even taking into account the penalties charged a tardy payment. How often have you been hit with a big fee for being past due -- not because you lacked the funds, but because you forgot to mail the check on time or even misplaced the bill in a pile of clutter on your desk? There's no excuse for a "late fee" anymore with electronic payments -- but you have to choose the right method for your situation:

  • credit card charge (I personally prefer to pay as many bills as possible with a Visa or Mastercard -- it gives me the power to dispute the charge if there is a problem, there's no worry about a transaction causing an overdraft, and I earn cash-back for every purchase -- I've set up a recurring payment schedule with each individual vendor and given them my credit card number -- those bills are automatically charged to my account every month, and then I pay the credit card with an electronic bank draft -- in a few instances where a vendor only accepts Paypal, I still set up the recurring payment to charge my credit card, so I have the same protections -- it's as if I had walked into the company and allowed them to swipe my card, but without all the hassle)
  • electronic check (when a vendor won't accept a credit card or charges an extortionate "convenience fee" for doing so, you can just have your bank cut an electronic check -- after entering the company name and address in your system the first time, you can issue a check to anyone in your "vendor list" with the push of a button -- just tell your banking system the amount and date you want it sent, and they'll mail that person a check -- you may get a certain number of payments free a month, or there may be a fee -- be sure to ask before you sign up for online banking)
  • electronic funds transfer (sometimes an electronic check isn't going to work -- you either need the payment to arrive more quickly, or you need more immediate proof from your bank that it was sent and received -- you can initiate an EFT and have the cash instantly paid to the vendor of your choice -- however, this only works with individuals who are willing to provide you with their checking and routing number, or companies that have the proper technology in place to link your bill with your bank's automated system -- this may be harder to set up with your financial institution, and there could be significant fees attached)
  • direct debit (direct debits should only be for companies who do not accept any of the other payment options I've discussed -- this is much like an automated credit card charge, except that you're giving the company your checking and routing number -- any time you do this, you open yourself up to more risk than with other payment methods -- so this should be reserved for companies you really trust and with whom you have a significant long-term financial relationship -- and regardless, you must make sure to closely monitor your balance for errors)

Of course, the biggest concern with online bill-pay is security. You should never engage in a transaction over the internet without a secure connection, firewall, and password protection. Your financial institution will do the same -- as well as use special encryption which scrambles data in transit between your browser and the bank's server. Consumer Reports will tell you that breaches of security are rare -- but if something does happen to your money, it would be replaced by the bank the same as if it were stolen during an armed robbery. And really, is sending your account information and signature on a check through the mail more secure? Wink

My client's other worry was whether a bill might slip through the cracks and not be automatically paid and he wouldn't know it until later. Certainly, delegation of the responsibility for paying does not equal abdication! The system I set up for my client is fairly simple. We created a spreadsheet listing all of his monthly bills (and he's got a lot!) -- each includes the web link, the due date, what method is used to pay the bill (credit card, auto draft, electronic check, etc.), and his login information. We also set up a folder in his Outlook for monthly bills and statements (along with "filters" that tell the computer to immediately route any emails from those companies into the appropriate folder.) And finally, we created a home on his hard drive for storing statements after they are reconciled (one folder for each company) -- as well as a naming convention for individual documents (name of company, type of account, month, and year.) His monthly routine is as follows:

  • go through the spreadsheet and make sure a bill was received for each account
  • go through each electronic bill and review it for errors
  • check online credit card accounts to make sure all payments have cleared
  • check online bank accounts to make sure all payments have cleared
  • issue any electronic checks and manual payments

Now, instead of an entire day each month, it takes my client about 1 hour every 28 days to get his finances in order. Not bad!

read the original post of this blog

posted on: 8/11/2011 11:30:00 AM by Ramona Creel
category: General Organizing Tips

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Can We Have Some Order Here?

by Ramona Creel

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About Ramona:

I have been a Professional Organizer for more than 10 years, I am a NAPO Golden Circle member, and I was the original founder of OnlineOrganizing. I have worked one-on-one with scores of clients and have trained dozens of newbie organizers as they got started in the industry. I provide both hands-on and virtual coaching to help clients improve their organizing skills and simplify their lives. I invite you to visit my website at http://www.RamonaCreel.com, and I challenge you to find one new idea that you can put into practice in your life, to help you become better organized, starting TODAY! I am passionate about coaching folks toward a more balanced, productive, and enjoyable life -- and I firmly believe that if I can do it, so can you!

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