We can all agree that handling finances is not a favorite pass time of the human. I don’t even like it, i would rather be spending my money than allocating it to the correct accounts.

This is where Automation comes into play. Imagine you have your Checking account, then a savings account, then your 401k, also coupled with a Roth IRA, a Brokerage, and a Online Purchasing account. That is a hefty amount of accounts. The average American has 5 Credit Cards in their wallet, that is just cards! Imagine Accounts!

I know having a lot of accounts can get hectic. This is why i just recently Simplified my account structure. Having too many accounts can make automation frustrating. So before you do any automation simplify your structure. Get rid of any unused Checking accounts, savings accounts, or Brokerages. I highly suggest you do not Close any Credit Card accounts for the reason that it can negatively affect your score. Unless you are determined to get rid of the card keep it, and never carry a balance.

The first step of automation should be Direct Deposit from your employer. If your employer does not offer Direct Deposit, Quit because a company that cannot grasp simple efficient technology is doomed. Just kidding. My last employer did not offer direct deposit so what i did was asked my boss to mail my check to my bank with my info written on the check so it got deposited.

Here is where it gets tricky. Once the money arrives in your Checking Account (This is where i recommend your check gets deposited into) you then will want to fund your Retirement accounts (401k or Roth IRA) and your savings. These things you want to do first so that you do not get tempted to spend it.  Say for example your Deposited check arrives the 5th of every month. Set up automatic transfers to Retirement accounts and Savings for the next day, to allow for any delay of funds.

This step is taken care for me automatically. My companies direct deposit structure allows me to make Allotments to other accounts then have the Net deposited into the Checking account last. I automatically invest and save before i even see my check. That way the money i get in my checking account is solely for Debt Bills, and guilt free spending.

One more step of automation you can make which i have failed to do so far. Is automating Bill Pay. To do this you will need to work with your bank, usually the online website. Look for a section that says bill pay. It should be free. If not, switch banks and Stop using Bank of America they are evil. Automate your cable bill, phone bill, utilities, or any other bill you are not billing to your credit card.

I highly recommend you DO NOT use credit cards for your bills while you are trying to get out of debt. Use your debit card, it works great for paying bills online. Then use your banks FREE bill pay system where you type in who it goes to and the amount and they Send them a check. Pretty slick eh? Toss your old check book and get with the times. You can use Plastic as long as it is debit, and the online features of some banks are getting so advanced you can even email pictures of checks to banks and have them deposited! ( i am impatiently waiting for my bank to start that, and for the Application to come out for the Hero!)

I hope this helps some of you! i will get into more detail in the future.

You may have noticed the NetworthIQ Badge i have on the right hand side of the home page. I just recently added this as a feature. I feel it is a nifty idea and a great way to track debts/assets. I highly recommend you sign up for the service, it is free and is non intrusive.

I also have been updating my Credit Score almost monthly and will continue to do so. I use www.CreditKarma.com (The link is in the Side Bar) because it is free and has great features to help with understanding how a credit score is determined. This is for the sole purpose of demonstrating that making payments on time, lowering my Credit Utilization Ratio, and getting out of debt is overall beneficial.

I apologize for the lack of posts in the Month of December. It was the busiest time of the year for my Company. I will start posting more frequently. I will be getting some more Interviews, Debt Stories, and Payoff Plans in the weeks to come!

If your car crapped out on you today would you have enough liquid assets (cash or as good as cash) to get it fixed immediately? The average cost of major car repair was $6,880 in 2000. I sure as hell don’t have that kind of money in cash. Sure i could sell the car to pay the cost but that doesn’t solve the problem. I strongly believe in Saving while In debt for the reason that if an emergency came up, i would rather pay for it with cash than credit.

The question i brought up is one everyone should ask themselves. This is true for any major emergency, tragedy or accident. For instance, car accidents. Yes you have insurance but what about time missing work? Will you lose money by not being able to work? Do you have cash to sustain yourself for a month or more? Heaven forbid the house burns down, or you lose a loved one. This is the financial version of “Worst Case Scenario”

Having Cash on hand or in high interest yielding savings accounts is considered Liquid Assets. Owning cars, homes, or other valuables would be assets but because they require selling, are not liquid.

This brings me to my second point, Do you have enough assets to meet debt obligations? You can find this out simply by subtracting your total debts from your total asset value. Say you have a car loan for $8000, and a credit card with a balance of $5,000. Then your assets are the Car, worth $5000 if you sold it now, and nothing to show for from the Credit Card debt. This puts you in a pretty bad place of being -$8000 if you sold off all your property.

If you are in the negative do you know why? Do you owe more than your car is worth? Did you Max out your card and have nothing to show for it?(nothing to sell off to pay off your card.) If you have a valuable with a loan attached to it, will selling the item fully pay the loan?

When was the last time you over heard someone say “Invest or Investing”? Was it at a fancy restaurant? Was the person chatting on a Smartphone while sipping red wine? Well unless you go to fancy places that wasn’t the case. Maybe the person you overheard was just talking about something they bought recently that they consider and investment, a house, a car, or other merchandise ( i do not consider these investments). Chances are the person was talking about an actual investment. You are thinking Stocks.

Here is where a lot of people get the wrong ideas about investing.  Investing is not all about Stocks. That is the big idea around investing, stocks, wall street, and the recession.
Doesn’t mean i don’t use them.  Sure i have a few, mostly just for fun.

Here are some other ideas of places to invest  a 401K, your work doesn’t offer one? open up a Roth IRA, or Traditional IRA. These are both great retirement accounts that will help grow your money over a very long time. They are also very tax advantaged. For Example a ROTH IRA is funded from money that was ALREADY taxed so when it comes time to withdraw for retirement the money is not taxed. So after that money has Compounded and Grown you get to keep all the rewards.

Those are very good choices.  Bonds, CDs, Money Market accounts, or personal loans are all ways to invest.

The funny thing is, people think its expensive, or that it’s too hard, when it really is not.

One of my favorite places to invest right now is at www. lendingclub. com
It is a Peer to Peer lending site, where you get to choose where you invest, personal loans for example.  The borrowers get a great deal by getting a good interest rate, and the lenders get a great deal by getting a good interest return.

You would think your bank would want you to know all the rules they use right? Unfortunately it is the exact opposite. I was in my local credit union the other week, depositing a check and paying bills.(Yes my old employer is still in the stone age and does not offer direct deposit.) Because i was getting paid Bi-Weekly my paycheck had arrived the day after my credit card payment was due.

So i asked the kind Pawn working at the bank if a late fee would be incurred or if it would be reported to the Credit Agencies and affect my score. She answered, “We don’t charge late fees anymore, and we don’t report a late payment until 30 days after the due date.” hmmm this is strange, I do not remember being notified of a loan policy change. I didn’t receive an annoying automated phone call, letter in the mail, hell not even a robotic-ally constructed email.

I wonder why the credit union did not inform me of the change. Why the change to begin with?

Do you ever get hit with fees or something changes and you wonder where it states the bank has the authority to do that? A good place to look is your loan contract, but what if the ordeal has nothing to do with a loan? Where are the banking rules?

If you look at a loan contract you will see some guidelines. Note i called them guidelines. You will also see all over the page the words subject to change, and can be changed with or without notice. So in most cases the Contract is not a contract but a ill worded statement saying they can do what ever they want. They can change what they want. A few things have laws on them like Maximum APRs, but things like fees arn’t regulated (until Feb 2010).