Why not follow always the talking heads or “professional” authors advice??

I was reading an article the this morning, A financial planner recommends 7 ways to make your money easier to manage, on Business Insider.  Sometimes, they have some good advice or at least, some good entertaining articles.  I’ll breakdown my pros and cons (if any) on each one.

1) Put your bills on auto pay.  While, for most people, this is a great idea.  Set it and forget it.  However, you cannot place a bill on auto pay if there is not enough money in the account to cover the bill, you will be dinged a late fee as well as a NSF fee from both your bank and the creditor you are paying.

My take – You should use your bill pay feature inside your online bank account and pay bills that way.  All major credit unions and banks have this free feature.  Therefore, you would not be dinged with fees if you do not have enough money to pay the bill off.   In addition, it will alert you ahead of time when a bill is due and if you have enough money to pay for it.

2) Consolidate bank accounts and credit cards.  The author claims this is much easier than to have multiple credit cards and multiple bank accounts.  I disagree.

My take – What if you only had one credit card, like a Discover or American Express card, and the merchant only accepts Visa or MasterCard?  What about rewards?  Some cards pay 5%, 3% or 2% on certain charges, and others 1% or no percent.  How is it fruitful for a credit card user to only use one credit card for all purchases and only receive around in rewards?  For groceries or fuel, he or she could be leaving some serious money on the table.  If a family spends $500.00 a month on groceries and fuel, with a 1% credit card, they would only earn around $5.00 back a month, or $60.00 back a year.  Where as, if they were using a 5% credit card for groceries and fuel, they would earn 5 TIMES that amount back, or $25.00 a month.  That $25.00 a month equates to $300.00 a year in FREE MONEY for doing what you are already doing!  Doesn’t make much sense. 

The author also recommends only one bank account.  Well, there are multiple issues here.  One, NO ONE, and I mean NO ONE, should commingle both they personal and business spending in one account.  That is an accounting nightmare as well as a liability nightmare for dealing with company vs. personal debts, IRS, and bookkeeping.  How can you track where anything is going?  What expenses are business related and which are personal?  At minimum, if you have a business, you should have four accounts.  One checking and one savings for your personal account.  One checking and savings for your business account.  Why?  Well, this is pretty simple.  One, to separate your income and expenses from your business and personal (IRS requirement by the way), and you can see where everything is going.  Two, earn something back from your excess money and build an emergency fund.  Personally, I have a few accounts earmarked for checking, savings, travel/vacation, etc.  The emergency savings is at Discover Banking for my personal account earning around 1%.  The emergency savings for my business account is located at Capital One also earning around 1%.  The travel fund and investment account is at Fidelity account earning even more.

3) Consolidate investments.   This makes sense, and I agree.

4) Auto invest.  We’re in agreement with this as well.

5) Budgeting.  Well, this is a 50/50 one here.

My take – I agree on using a budget 100%.  However, this can be done in the authors way or, on a budget spreadsheet, cash method or an online service.  The point is you need to know where your money is coming and going.  I have  a post on my opinions on budgeting here.

6) Tickler system.  Really pointless for most.

My take – The bill pay feature offered by your bank or credit union does most, if not all, of this for you automatically.  Some, like from TDBank, will even import and download the bill for you when it is available.  Not only that, the system will automatically alert you via text or e-mail when a new bill has been received and when it needs to be paid by.  A calendar, or as the author calls it a “Tickler System”, is nice, but it will not help you more than your online bill payment service.  As for investing, if you are in low cost index funds, you shouldn’t need to look at this more than once a year anyway.  More on this later.  I have a proven way, time after time, that will earn dividends and growth from the market without it costing you more than your investment money and a trading fee with low risk and aggressive (at times) returns with index funds.

7. Scheduling implementation.  My take – This coincides with both # 1 and # 6.  Not understanding the point of posting this “tip”.   It really isn’t a “tip”.

 

All in all, as you can see (or read) the author makes a couple of good points.  However, the other items suggested are either nonsense or just plain wrong in my humble opinion.  The KISS method is usually the best way to go about everything in life.  More on this in another post.

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