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We all love it when there’s an option to set up pre-authorized payments, it makes paying those pesky monthly bills so much easier. It’s so easy in fact you don’t even have to worry or think about it, your bank account gets automatically debited and your bills get paid. While online banking, e-billing and preauthorized payments are definitely great financial tools and can often make life a lot less stressful, they also may be contributing to your financial issues. Having preauthorized payments means you never really have to look at your bills or double check that you’re paying the right amount. Furthermore you could potentially be paying for services that you never use. We want you to learn how to manage your bills, use preauthorized payments to your advantage and avoid becoming a slave to your recurring expenses.

Keep an Eye on Your Bills

While you probably don’t actually receive any paper bills through the mail anymore you should still be keeping track of any monthly bills you have to pay, including:

  • Phone bill
  • Internet
  • Insurance
  • Car payments
  • Satellite or cable bill

Pick one day every month (you’ll probably need less than an hour) to sit down and double check all your bills. Finding any issues right away will make dealing with them a lot easier than finding one after months of paying too much or not enough. The thing about paper bills is that you’re confronted with them in person; this typically makes you deal with them right away or at least on a more regular basis. Electronic bills are way easier to ignore and therefore are more often simply forgotten about.

Use Pre-authorized Payments to Your Advantage

Avoiding preauthorized payments altogether may be a good idea if you feel like they have a negative impact on your finances or are making you over spend on services you don’t need. But the reality is the convenience of preauthorized payments is just too great to give up. So we suggest that you start using preauthorized payments as a financial tool to help you handle your finances properly and responsibly. To use preauthorized payments to your advantage you need to manage them on semi regular basis and only authorize this type of payment for services that are absolute necessities.

Starting now you should do a kind of inventory of all your bills, take note of all your monthly bills and then make sure the amounts are correct and that you actually need to be subscribed to the service. If you’re unsure of any of the services you’re currently paying for, cancel the automatic payment, this way you’ll have to think about whether or not you want to continue paying for something every time you receive a bill.

Rethink Your Contracts

Signing long-term contracts for services that you aren’t one hundred percent sure about can end up costing you a lot of money and potentially hurt your finances. Companies often advertise signing a contract for their service as a way to save money in the long run, but more often than not our preferences change before a contract is up. Or, in a worst case scenario you might lose your job or become ill, thus making is hard to pay for the services.

While you might be required to sign a contract for certain services we suggest that you do your research and make sure that it’s for something you need and can afford now and in the future. Rethinking your contracts is a great way to cut back on monthly spending and can help you save up for the future.

Do You Know What a Sunk Cost is?

Have you ever heard of a sunk cost and do you know if you currently have any? A sunk cost is an expense that has already been incurred and therefore can’t be recovered. A large portion of your monthly expenses could potentially be sunk costs, meaning that if you were to experience a reduction in your income or even lose your job you’d still have to pay for these expenses even though you may not be able to afford them anymore.

Some of the more common sunk costs are gym memberships and phone contracts. You still have to pay for your gym membership even if you never go and your phone contract will still cost you ever month even if you never use all of the features. Trying to keep your sunk costs to a minimum will help you manage your monthly bills and keep your spending under control.

Get Organized

Everyone has monthly bills, it’s a part of life, but it’s up to you how much you spend on those bills. Don’t let your recurring expenses control your finances, get organized and take back control of your bank account.

Caitlin Wood, BA avatar on Loans Canada
Caitlin Wood, BA

Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.

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