#36 - How Saving $90/Month Can Cost $5,000
Reluctant Executor News
Autopay is a blessing and a curse.
On the positive side, autopay offers convenience and assurance. You'll never have to write a check or log into an account to click a few buttons just to pay. You're assured that you won't have late fees and service won't be interrupted.
The negative is that it might end up costing you more money. If you don't look at each bill you receive, you could miss a mistake or a change in terms. You could also get charged for an overdraft if you're not aware that you don't have enough funds in that account.
If you fall into this category and don't track your bills, how will you be able to help your parents? The elderly often fall victim to scams, fraud, or questionable sales tactics. Knowing what payments to expect each month is one of the first steps in helping to prevent your parents from being taken advantage of.
The story below dives into an experience I had with a student loan, which could have cost me thousands if I wasn't paying attention.
LinkedIn post from June 5, 2024
Saving $90/month could have cost me $5,000.
How closely do you track your own bills?
Many of us have student loans. Most student loans accrue interest daily. This means that you'll pay more interest in months that have 31 days, even if you make the payment on the same day every month.
In 2011, my student loan company decided to move payment due dates to the 28th, which was 8 days later than my original due date. The result was an extra $12.63 in interest that month. Since the total payment was the same, this extra came out of the principal portion. Over the life of the loan, this change resulted in an extra $180 total that I had to pay back.
Not that much, right?
Consider that this company has millions of accounts, possibly over 12 million.
In just that one month, they could have gained an additional $150 MILLION in interest payments, and over $2 BILLION across the life of all loans.
But wait, there's more.
10 years later this same company, on this same loan, made another change. When I checked my payment one month, it was $90 lower than normal. Knowing that I had not approved any changes, I called to ask about this. They had taken it upon themselves to extend the length of my loan, resulting in a lower monthly payment.
Many of us would be glad to see a lower monthly payment. And if you don't track your bills, you likely wouldn't even have noticed. But by saving $90/month it would have ended up costing an extra $5,000 total and over 3 years of additional payments.
I had a relatively small balance of about $10k at the time. The average student loan debt is just under $40k. You can guess how much more it would cost if this change was made on the average student loan.
Your parents may not have student loan debt, but would they know if changes were made to any of their bills?
If you need help getting a handle on things like this, I can help.
Click here to comment or like this post on LinkedIn.
Estate Organization
How do you avoid paying more than you need to? Keep track of your bills. Check your statements. Know the amount you should be paying.
Don't have time to do this? An Estate Organization Coaching session with Reluctant Executor will force you to set aside the time and hold you accountable to perform this exercise. If you know you should do this but haven't gotten around to it, schedule an Estate Organization call with me.