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?