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Don’t Be a Slave to Recurring Expenses

By Debt.ca on December 21, 2013 No Comments

Pre-authorized payments have made paying your monthly bills easier than ever. No fuss, no muss – your balance owing is automatically debited from your bank account, so you never have to worry about paying your bills late again. Although this is a blessing, it can also be a curse. As companies push their customers to switch to e-billing, it’s easy to adopt an “out of sight, out of mind” attitude and forget about your bill payments. Not only can this leave you open to being overcharged, but you can also find yourself paying for services you don’t even use. Here are some tips to avoid being a slave to recurring expenses.

Watch Your Bills

Even though you may no longer receive your bills by snail mail, it’s still a good idea to take the time to review your bills each month. Compare your current month’s bill to the previous month to see if there are any changes. If you’re being overcharged, it’s a lot easier to rectify it for one month than an entire year. If you find yourself not bothering to check your bills online, it may be worth switching back to receiving your bills from Canada Post. You probably aren’t as likely to ignore an envelope that arrives over an email.

Avoid Pre-Authorized Payments

Pre-authorized payments have made paying your bills a breeze. Here’s how it works: the funds are debited from your bank account on a specific day each month (for example, the 15th of the month). Some companies are going as far as offering a chance to win cash prizes just for signing up for pre-authorized payments. Do you really think companies would be pushing you so hard to sign up if it didn’t benefit them? If you’re been overcharged for something, it’s a lot harder to get them back if the funds have already been debited from your bank account. The best the company can probably do in this situation is to offer you credit. If you plan to cancel the service, you may not even be able to use the full credit, leaving your hard-earned money in the pockets of large corporations.

Contracts

More than ever service providers like Rogers are pushing their customers to sign long-term contracts for instant savings. Although you may save money short-term if you only end up watching 20 channels out of your deluxe 500 channel package, did you really spend your money wisely? Worse yet, if you run into financial distress (for example, you become ill or lose your job), you’ll still be on the hook for paying for the duration of the contract. Think twice before signing a contract to make sure it’s worth your while.

If you signed a contract and money is tight, you can often scale back your services. For example, if you have cable you may be able to downgrade to basic cable. Although you’re still paying something, it’s a lot better than paying full price, especially when you’re out of work.

Review Your Sunk Costs

Investopedia.com defines sunk costs as “a cost that has already been incurred and thus cannot be recovered.” Sunk costs can represent a significant portion of your household’s budget. Some common examples of sunk costs include home insurance, gym memberships, and mobile phone contracts. With New Year’s right around the corner, gyms will be looking to lure new customers looking to get in shape. Think long and hard before signing on the dotted line to make sure you’ll get your money’s worth.

You may not use your gym membership year-round. If you plan to take the summers off, you can often put your membership on hold. That way you can save your visits to the gym when the weather is dismal outside and not spend your money on services you don’t need.

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