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One common budget leak are late fees.  The good news is that this is a money leak that can easily be plugged with a little bit of planning and automation.  Even though I teach financially literally, I was recently hit with two late fees.  Most of my bills are automatically deducted from my checking account, but I don't automatically pay my cable or electricity bills because of a bad experience where too much money was mistakenly deducted from my account.  Thus, I took those bills off of auto-pay in order to first approve the monthly amounts and, if necessary, resolve the issue before any money is taken from my bank account. 


The challenge is that this creates a manual process where I have to remember to pay the bill every month.  For two months in a row I noticed a mistake on my cable bill, but every time I called to get the bill fixed, the office was closed.  I was so focused on correcting the bill both months that I forgot to pay the bill!  This resulted in a $10 late fee each time, for a total of $20!  Luckily I was able to get one fee waived, but I had to pay the other fee.  That’s when it really hit me how much late fees can destroy a budget.  

Being late paying your credit card balance is even more dangerous and expensive.  The CARD act of 2009 limits first time late fees to $25, however this amount increased to $26 in 2014.  Each subsequent violation within 6 months costs $37, and each month you don’t pay your bill you will continue to be hit with a late fee.  Think about what you can do with an extra $25-$37/month?  How would that affect your monthly budget?


Being late paying your credit card balance is even more dangerous and expensive.


The other problem with being late paying your credit card balance is the impact it has on your credit score.  Payment history comprises 35% of your credit score.  According to Credit Karma, one 30-day late fee paying your credit card balance can decrease your credit score by 80-110 points.  This is like the not-so-great gift that keeps giving, because your credit score determines your interest rate.  This means that if you want more credit to buy a car, or finance a purchase, you will pay more money in interest than someone else.  If that’s not bad enough, your credit card can raise your interest rate and all of your other credit card companies can increase your rate, even if you paid their bills on time, because you are now considered high risk.   Scary, right?

But fear not, there is hope!  You can avoid late fees by practicing my following 3 tips for never paying late fees again:

Set up automatic payments

This is the easiest way to never miss a payment because you can set it and forget it.  However, you must ensure there is money in your checking account to pay the bills because you could be charged an even higher fee by your bank if you pay with insufficient funds.

Explore new payment dates

If you have a bill due every month that is challenging because of the due date, call the company to see if you can change the date to better align with when your paycheck is received.

Set a reminder

We're human and we get busy.  If you have a recurring payment you can’t pay automatically, set a calendar reminder, subscribe to account alerts, or create a spreadsheet that allows you to keep track of your due dates.  Even if you have a memory like an elephant, try to avoid relying on your memory for payment dates, because we are human and we forget.

I hope these 3 easy to implement tips will help you to manage your payments better and allow you to put more money aside towards your financial goals and also treat yourself to a little somethiing something that brings you greater happiness!


Aisha Taylor is a #1 Amazon Best Selling Author of the book '5+5 FNPhenomenal Ways to Save $100 This Week Without Killing Your Lifestyle,' and the Founder of FNPhenomenal (Frugal –n- Phenomenal). FNPhenomenal helps women break the vicious cycle of making money, but not keeping it. FNPhenomenal provides education about money management, empowers women to take control of their lives, develop a healthier relationship with money, and pursue being phenomenal.

Visit Aisha online at www.FNPhenomenal.com
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Download your copy of our free audio series - 5 Simple Steps to Save Money and Get Phenomenal, and a subscription to our newsletter at FNPhenomenal.com.


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