Finance and Fat » Reflecting on Stupidity

Lazy Money Mistakes and the Importance of Automation

Eden — Mon, 20 Jul 2009 15:02:55 +0000

J.D. at Get Rich Slowly recently published an interesting article on lazy money mistakes. I’ve made several of the lazy money mistakes he writes about and one in particular just about a month ago that really bugs me. I foolishly sent in a student loan payment late and lost a 1% interest rate reduction.

There is no way to explain this other than pure stupidity and laziness. I had the money in my checking account to make the payment early. I had a reminder set on my computer, as I do for all of my bills. All I had to do was write a check, put it in an envelope, and mail it. I had never been late with a payment before (as evidenced by the interest rate reduction I suppose), but life just got busy and I lost focus on my finances long enough to miss this payment. That cost me a small late fee and probably a fair amount of money in extra interest over the life of the loan.

It seemed that I had everything in place to keep making this payment on time, yet I still failed. Apparently, automation really is one of the most important things you can do to manage your money well. David Bach writes about this in-depth in the The Automatic Millionaire.

I have to admit that I never really fully bought into the importance of automation before, but I think I’m sold on it now. Of course, this particular student loan company doesn’t offer automatic payments and I have to mail in a payment coupon along with a paper check. When automation isn’t an option, I guess you have to be extra careful to make payments early and hope that the non-automated business will get caught up with technology some day. A secondary reminder system would probably have helped too. As would have writing out the checks and stuffing the envelopes ahead of time so that all I had to do was toss it in the mailbox. Oh well, nothing to do now but chalk another one up to stupid tax and move on.

What about you? Do you have any lazy money mistakes or tips for preventing them in the first place?

Lazy Money Mistakes and the Importance of Automation

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Why Pay $99 for Something When You Can Pay $120?

Eden — Thu, 06 Dec 2007 20:22:41 +0000

No, that is not a typo. That is exactly what I did. In fact, I just avoided paying an extra $30 on top of that with two days to spare.

I recently took on a new freelance project using Adobe Flex 2. I was mildly familiar with what it could do and I had known Flash fairly well (back around version 5) so I took the job and said I could do everything in Flex (yes, developers generally lie at the start of a project but don’t worry about that).

The first thing I did was some reading on the Internet and I bought a couple of books. I also signed up for Flex video training at Virtual Training Company Online (VTC). VTC sells their training sessions either for $99 per course (you own it) or you can subscribe for $30 a month and access multiple courses (you are renting). Obviously, the monthly rate is better if you are going to watch the video in a reasonable amount of time. I signed up and went through almost half of the video in the first week. Then I got busy and sort of forgot about it. When my next payment went through I remembered that I needed to finish watching the course and cancel my account in order to make this a good deal. Well, guess what, another month passed. Now I was up to $90 and I still hadn’t finished watching the course. I made a to-do item, I sent myself an email reminder and I even wrote down a paper to-do – FINISH the video before you make another payment!

I guess my title ruined the suspense…another month passed and I still hadn’t finished the video and I was now up to a total of $120. That is more than it would have cost me to OWN the video and I was still only about half way through. I should have been smart and canceled then. Instead, I wrote more reminders and promised myself I would finish it before the next renewal. Well, today I was sitting at work and for some reason the VTC payment popped into my head. I had that sickening feeling inside- did I really just blow another $30 on something I didn’t even use? I quickly logged in to my account and found that I had two days left to cancel before my next payment. Relief…I canceled and stopped the insanity.

I remember recoiling at the $99 price tag when I first looked at this training course. Now, I’ve spent $120 and didn’t even get full use of the product. I guess I’m too ‘smart’ for my own good sometimes. The only lesson I can take away from this is not to sign up for a monthly service in the first place unless you really know you will make good use of it. I am often tempted by low monthly rates only to find myself several months down the road not using the service I signed up for. Just say no in the first place!

Why Pay $99 for Something When You Can Pay $120?

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Reflecting on Stupidity – Desperate for Credit

Eden — Fri, 30 Nov 2007 13:01:46 +0000

I spent some time recently cleaning out old financial documents and I found a credit card statement that made me laugh. I guess I must have been really desperate for credit and the opportunity to spend money that I didn’t have because this credit card was just awful.

I had to pay a $70 set-up fee and $69 annual fee and the interest rate was about 23%. The limit was $600 and there were no rewards or anything else that could even remotely begin to justify those huge fees. All I can say when I look at that is I can’t believe how stupid I was. I can’t believe how much money I threw away in an effort to spend more money than I had anyway. It’s disgusting really.

Fortunately, I got at least a little bit smart even before starting my official financial turnaround because I paid off that card last year and closed the account. If you have a credit card like that or if those sound like good terms to you, cancel the account immediately! Believe me, you will regret it later if you don’t.

Reflecting on Stupidity – Desperate for Credit

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