Automatic draft: I love it and you do it. It’s a great way to pay for just about anything – utility bills, magazine subscriptions, donations to your favorite charity, and even everyday products from Amazon. Automatic payments drafted from your account are one of the best ways to organize your expenditures. When part of a careful budget, you can start to get a focused understanding of what you pay to live your life each month. The problem is, many of us aren’t the most careful of budgeters.
Because so many physical and online retailers are offering subscription payment options, it’s easy to sign up for these kinds of deals without actually being prepared for what they entail. Some of us just get a little excited about the idea (“I’ll never have to go to the store to buy toilet paper again!”). The problem occurs when we buy things we don’t need, stop using them, and fail to cancel the automatic draft/subscription. Here are a few examples of common products associated with this problem.
- Gym Memberships. We sign up for gym memberships with the purest of intentions, but oftentimes we don’t stick with it. This can feel kind of embarrassing. Even if we know in the back of our minds that we’re NEVER going to set foot in our gym again, we keep paying for the right to go, month after month. Sometimes we legitimately forget that this $50-100 is being sucked out of our bank accounts each month. You’ve got to cancel this sucker immediately, as long as you’re sure you’re not going to be hitting the gym more than never.
- PPI. Though our American readers may not be familiar, this has been a huge problem in England, and will stand as a cautionary tale for readers everywhere. People wondering Have I Got PPI? will do well to understand the problem. Many people in Europe who signed up to borrow money from large lending institutions accidently signed up for Payment Protection Insurance, or PPI. PPI is a legitimate product made available for people who want to make sure their payments are covered in case of loss of job or personal injury. The problem is, people didn’t know they had signed up for it, and only noticed the mistake when they saw the payments being autodrafted from their accounts.
- Subscriptions. Whether you’re subscribed to HBO Now in order to catch the latest Game of Thrones and Silicon Valley, or you’re signed up for monthly deliveries of soft cat food, subscriptions are a big part of most of our lives. The problem is, because they’re very trendy right now, it’s really easy to sign up for too many of these subscriptions, then forget about them. When that happens, we pay for services we’re not even using. This is obviously a waste, but it’s only noticed if you budget and pay attention to where your money is going.
Pay attention to where you money is going. The unexamined financial life is not worth leading!