Coffee heat rising

Budgeting

Credit cards, debit cards, cash cards

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Good grief! Rousted out of the sack at 6:30 ayem by the bulk trash pickup, flashing their lights into the bedroom. I thought it was the Fire Department! Grr…I’d planned to sleep in for a while today, after working myself stupid yesterday on a horrifically mind-numbing project.

{Ugh!} Speaking of bulk trash, what do we have here but an e-mail from the sidekick reporting that our brilliant author’s 87 gerjillion ditzy boxed pullouts disappeared from the file I sent her!? How many more hours am I going to have to spend on this garbage?

Where was I? Yesterday, comes in the snail-mail a notice from Sears saying its credit-card issuer, Citibank, has made “some changes.” I’ll bet, think I. Actually, I expected the “change” would be to cancel the account, which I opened only to get the benefit of a 12-month no-interest scam on some appliances and have never used since.

No. They’re writing mostly to say they’re upping the already usurious interest rate another couple of points.

Interest on this card, in the wacko free-for-all age of the unregulated market, can go as high as (hang onto your hat) 29.9 percent! For heaven’s sake. And this is on a card for Sears, a joint commonly patronized by folks who never spend their time swimming in money. Is that or is that not the most rapacious thing you ever heard?

Over at Consumerism Commentary, Flexo has a discussion going about the merits of debit cards vs. credit cards. I’ve never used a debit card, partly because I have enough numbers to memorize, thank you, without yet another PIN, but mostly because I think they’re dangerous. If someone steals it, he can not only empty your checking account, he can drain it to the bottom of your check-cashing credit line. In my case, that’s $3,000 plus whatever cash is in the account at the time.

I realize they’ve changed the law since these things first came out, so that you do have some protection from rip-off artists. But the fact remains that you may not realize what’s happening until the account is already bouncing EFTs. So even if the bank reimburses you for the stolen money, you still are faced with the enormous hassle trying to explain to all your creditors that you’re not, no indeed not, a deadbeat. Your credit could be damaged, and who has time to run through every punch-a-button maze for every faceless corporation with which we all have the pleasure of doing business? That’s a nightmare scenario that I’ve preferred to avoid.

A credit card—providing you pay it off on time—has many advantages. First, most credit card issuers back you up to some degree in a dispute with a merchant. Second, many credit card issuers provide insurance for products that are lost, damaged, or stolen shortly after the purchase. Third, many credit cards give you kickbacks in the form of cash or “rewards.” And finally, you make only one transaction a month in your checking account, rather than a score of them. This allows you to keep your money in a money market account, which earns a sou or so more in interest than a checking account does.

There is, as many PF bloggers note, the risk that you’ll spend more money when you’re waving a card around than when you’re forking over cold, hard cash. Personally, I have the opposite experience. Cash disappears out of my purse like water flowing through a pipe. Put $100 in my hand in the morning, and by evening it will be gone and, more to the point, I’ll have no idea where it went!A credit card statement gives me a paper trail, so at least I know where I diddled away the money.

And as a practical matter, I don’t diddle it away with a credit card. I budget a specific amount each month that can be charged to the credit card. The credit union automatically transfers that amount out of my paycheck into a money market checking account, from which I pay credit-card bills. Using an Excel spreadsheet, I enter each transaction as a debit against the budgeted amount, so that at any given time I know exactly how much remains to spend. I also know when I’ve spent it all, and so I know when to stop charging stuff.

This works effectively to keep me from spending more than I have.

Recently, however, American Express, which issues the card I use most, changed the closing date on a billing cycle. I dodged an overcharge only because I was ill and so didn’t make it out to buy groceries on the extra day that appeared in that cycle.

Needless to say, I was less than pleased. Because I was running pretty tight on the budget, had I bought the groceries I needed that day, I would have had to raid savings to pay last month’s bill.

It occurred to me that I could get around this problem by purchasing cash cards at Costco and Safeway (which collect most of my money) in the amount that I normally spend at those emporiums each month. This would set my budget in stone: run out of cash on a card, quit buying. It would moot any cute little changes designed to trip up credit-card users. But if I charged them on my AMEX card, I’d still get a bit of a kickback (not as much, because the Costco gasoline purchases get a very nice kickback, but something). It would also mean that if I had not used the entire balance on such a card, that much more would be available to spend the following month.

Let us ruminate…

If indeed I have not spent a month’s alloted budget at Safeway, so that I have, say, $150 left over at the end of a budget cycle, then the only place I can spend that money is at Safeway. Wouldn’t I rather have that money in the money market account, where it’s earning a little interest and where I can spend anywhere? While it’s true that the next paycheck puts another $150 spendable dollars in there, if the leftover cash remains in my account, the account contains 300 interest-bearing dollars rather than only 150 of the same.

And if a debit card is risky, how much riskier is a cash card? Anyone can use it, and as far as I can see, there’s no protection at all if you lose it or if it’s stolen. With a debit card you have a hassle. With a cash card, the money is already spent (effectively), and it’s as stealable as cash itself. Bad.

Costco’s cash card can be used to buy gasoline as well as food and household products. Costco will not take cash or checks at its gas pumps, which consistently underprice all other gas stations: you have to use an AMEX or a Costco card. If AMEX continues to close its billing cycle on unpredictable days, a cash card in the amount of $50 or so would allow me to buy gas near the end of a cycle without worrying about whether I would overrun my budget. While gas prices are low, it would even leave enough to buy a day’s worth of groceries. The theft of an entire month’s food budget would of course be a disaster, but fifty bucks wouldn’t break the bank.

It would be convenient to have a cash card to buy food and gas if, as happened a few months ago, the AMEX card mysteriously quits working. On the other hand…cash would serve the same purpose and need not be carried around in a wallet, where it’s infinitely vulnerable to diddling way, theft, or loss. It probably would be better to stash a hundred bucks in a file folder and use it as a small emergency fund.

Overall, then, pretty clearly a cash card has no advantage over a debit card and no advantage over cash. For those of us who need to see actual dollars in order to keep a grip on them, a cash card poses the same budget-busting risk as a credit card. In stop-loss terms.the debit card has only a slight advantage over cash should you lose it or have it stolen from you.

IMHO, the credit card has got it all over either a debit card or cash, assuming you can exercise a modicum of self-discipline. It’s safer, it lets you see where you’ve spent your money, and it gives you a kickback.

So… In the past I’ve made the day before and the day of the AMEX billing cycle end date “no-buy” days, to be sure all payments clear on the statement I’ve budgeted for. Now I’ll also refrain from spending on the day after the billing cycle is supposed to end. That should obviate any repercussions from this new “gotcha.”

Monthly budget updated; enforced “retirement” planned for

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Well, I’m managing to stay on budget, despite a $300 reduction this month. Last week’s $223 hit from the vet will be covered by the monthly savings fund, which is fairly flush now that the Renovation Loan Payoff is fully funded and the money I was embargoing for that can go elsewhere. Right this instant I’m $26 in the black—just about the price of a gas tank refill. And I just may be able to squeak by without having to buy more gas until after this week’s mini-budget cycle ends, on the 13th.

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Along about the middle of last month, I decided that I’d better start getting used to living on less than I’ve been accustomed to, just in case the rumored Christmas layoffs actually happen. So I cut my weekly allowance from $375 to $300, just to see if I could do it. In November, that worked fine: came in $2.29 in the black at the end of the third week (because I’d had an unexpected bill of $225 the previous week) and $75.19 at the end of the fourth week, for a $349 underrun of November’s$1,500 budget. This month I’ve budgeted $1,200, and it remains to be seen how that will go.

Actually, it’s going better than it looks. Tomorrow I will return a $50 space heater to Lowe’s, having found a much better model at Costco. That will put this week’s budget enough in the black to handily afford a tank of gas. And then some.

The Board of Regents met on Thursday and Friday. We are told this was the Fateful Meeting in which Our Beloved Leader was to faze his plan to declare a financial emergency past the citizen bosses. If layoffs are going to come down soon, they should be announced by the 15th. So, I figure if I still have a job by the end of this month, I’m probably good through the end of June, when my contract runs out.

One way or another, the exercise of trying to live on a reduced budget should serve me well. If I escape the predicted layoffs this time and find I can live on less without much pain, then I’ll continue to do so and bank the extra $300 a month in the emergency fund, the better to have something to fall back on if future rounds of layoffs catch me in their net. At that rate, in five months I will have set aside the equivalent of one full paycheck.

Since December of 2007, I’ve lost over $100,000 from my retirement nest egg (that I know of: I still haven’t seen my 403(b) statements). A 4 percent drawdown from what remains will generate $18,748 a year, of which $9,600 goes toward servicing a mortgage, leaving $8,878 to supplement Social Security of $12,480, for a projected post-layoff gross income of $21,258 a year. I probably wouldn’t owe much tax on that, and so we could think of that as pretty close to net.

My net income right now is about $39,700.

If I earn the highest amount allowed before Social Security starts to penalize you ($13,500), I could bring my total gross to $34,758. State and federal income taxes would take about 20 percent of that, leaving me with about $27,800 to live on: an $11,900 cut in net income!

If I succeed in reducing my budget by $3,600 a year, that will supplement the $6,888 I can cut out of the regular monthly savings set-asides I’m making now plus the $170/month I’ll recover from no longer having to pay the loan, for a total cut in spending of $10,488. So…that will cut my living standard by a de facto $1,412 a year.

And I probably can live with that. Elsewhere, I’ve estimated that the minimum annual net I’ll need for bare survival is about $25,980. It’s going to be a challenge, and it will mean that I will have to teach miserable composition courses and generate income from freelance editing until I’m 66, when I can turn back the amount I will have collected from Social Security to the feds and reset my SS payments to the “full” amount, which is about $25,128 a year.

Assuming I don’t lose an awful lot more in the market, though, these desperate straits will only last for 29 months, until I reach age 66 and am eligible for so-called “full” Social Security entitlement. At that time, I can go back and raid my savings again to repay the $30,160 I will have collected between ages 63 1/2 and 66, which will permit me to reset my Social Security payments to the “full” amount of about $2,094 a month. This will give me a $16,408 drawdown from my reduced savings plus a $25,128 annual Social Security income, for a total gross of $41,536. Suck 28 percent out of that, and you have a net of $29,905, still not a comfortable income by any means (especially given that Medicare will cost nine or ten times what I’m paying for health insurance now), but livable. There’s some chance, though, that my tax rate may not be quite that high, since Social Security is taxed with byzantine complexity—the only way to know what it will be is to have my tax lawyer figure it out, which I ain’t a-gunna pay for until the time comes. Butof course, there’s also a chance that taxes will actually be higher in two or three years, given the bailouts and other extravaganzas our nation is financing.

Time will tell.

Battening down in the hurricane

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It’s probably a bit late to batten down the hatches, since the perfect storm has already made landfall. On the other hand, I wasn’t really expecting to get laid off, and now that looks like a strong possibility. So, today I’m taking a series of steps to help weather bad times. Some of these, I think, apply to just about anyone in most situations. Here’s some plywood to nail over the windows:

1. Pay off or be in a position to pay off debt

My strategy: Prepare to pay off $21,000 Renovation Loan

This is a second mortgage, not an equity loan, but because it is a loan against my house it does put me at risk of foreclosure if I can’t make the payments, which I will not be able to do if and when I lose my job. I already have $11,000 in cash savings snowflaked for this purpose. Along these lines, I moved $5,500 out of short-term corporate bonds and $5,000 out of Vanguard’s Wellington fund, the two non-retirement funds that are losing the least.

2. Identify all potential cuts in budget and prepare to implement them.

My strategies:

• Pay off the Renovation Loan, to save $374/month (the regular payment plus payments toward principal made to eliminate the loan by the time I intended to retire).
• Cancel the newspaper, cell phone, DSL (good-bye Funny about Money!), long distance service, and monthly yard clean-up. Savings: $139/month.
• Cash out the whole life policy. Savings: $30/month. This also yields $23,000 less 28% tax = $16,560 in cash, about six months’ worth of living expenses.
• Quit putting $200/month into a savings account for casual expenditures. Cut all indulgences to zero.
• Cut back budget for all other living expenses that are not regularly recurring bills.

These maneuvers will cut my monthly recurring bills from $821 to $482 a month:
1010DepressionStrategy1
As a practical matter, I probably will not cancel the DSL, since I need it for my freelance editorial business. Also, Funny is now getting about 6,000 hits a month. It may be worth monetizing it. If I did that, I would have a good argument for deducting the cost of DSL from my income taxes. It’s not much, but every little bit helps.

I could, in theory, cancel my homeowner’s insurance, saving about $65 a month. However, that’s a risky move. We’ve already seen that the minute I jacked up the deductible I darned near set fire to the kitchen. Murphy’s Law suggests that if I cancel the $780/year hit for homeowner’s insurance, a gigantic storm will come through, blow off the roof and, in a single lightning strike, burn down whatever remains.

With the monthly self-escrowing for principal payments and the monthly $200 general savings gone, monthly savings set-asides drop from $704 to $300.
I budget $1,500 a month for nonrecurring living expenses. If I’m very careful, do not indulge myself in anything, have no vet bills, and have no repair bills for the house or car, this amount can be as much as $300 more than needed. So, I’m figuring about $1,200 is what I will need each month to live on, above and beyond the costs of running the house.

3. Figure how much will be needed to live in reduced circumstances.

My strategy: Add up projected reduced savings, monthly bills, and budgeted “other” living expenses.

1010DepressionStrategy3Okay. That’s better than the $3,000 a month I’m spending now. Over a thousand bucks a month better.

4. Try to figure out where the money will come from.
At the rate the market is going, I’m assuming there will be nothing left in my retirement savings. If I use the $23,000 that will come from cashing out my whole life insurance policy as an emergency fund to cover such things as veterinary, car, and house repair bills and to cover the $5,050 a year cost of COBRA, then I’m left with this:

My strategy: add up the next year’s sources of spendable income.
1010DepressionStrategy4

This assumes the tax on Social Security will only be around 20%, but it may be significantly higher, since I will have earned my regular salary for ten months of the 2008.

The RASL (amount GDU has to pay me for accrued sick leave) and vacation pay figures are net.

As you can see, even with the RASL pay and the one-time vacation time payment, I’ll come up short at least $6,600 in my first year of enforced retirement. It’s possible that I might be able to net that much with freelance income—a typical freelancer earns about $10,000 a year, working full-time.

If I don’t get a job, I am going to be in deep trouble. But I probably can get something working at a WalMart or even cleaning house. The rich will always be with us, and they’re always in the market for servants to do their menial work.

5. Consider whether there are any other options

My strategy: Figure what happens if I try to live on cash savings for the next couple of years.

If I don’t pay off the Renovation Loan but instead use the $21,000 cash savings and the $23,000 that will come from cashing out my whole life insurance policy, then we come up with a survival fund of $44,000. We have to add $170 a month back into the monthly cost of living. RASL is good for three years. The vacation pay is a one-time thing, affecting income in only one year. Without vacation pay, my shortfall will be around $10,000; without RASL and vacation pay, it will come to around $14,000.

1010DepressionStrategy5
As strategies go, living on principal is less than ideal. I suppose I could do it if I were pushed to the wall. But selling the house and living out of the back of the van would keep me going longer.

6. Count blessings.

My strategy: Quit focusing on the tsunami’s roar and pick flowers by the roadside.

• At least I have a roof over my head and the resources to pay it off
• No mortgager will be able to evict me from my home.
• It will take the county tax assessor two or three years to put me out after I begin to default on taxes.
• M’jihito has a job and is young enough to recover from whatever happens to this country, assuming anyone in the sub-Richistan classes can recover.
• I have a nice paid-off van with plenty of room to sleep in.
• I know how to cook from scratch.
• Beans are delicious and I know lots of ways to cook them.
• The veggies I planted have started to sprout.
• My health is good and so I at least can work, if I manage to overcome the prevailing cultural bias against older people.
• The Copyeditor’s Desk is getting steady work and could (maybe) crank $10,000 or $12,000 a year for each of its principals.
• They haven’t canned me yet.
• It’s fall and so I won’t have to run the HVAC system for another six or seven months.
• The weather is drop-down dead gorgeous.
• The dog is unfailingly cute.

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Update, December 2013: As it developed, my estimates of the taxes were overblown. My job lasted until December 31, 2009, and so salary from GDU did not trigger a tax on Social Security, which I started drawing in 2010. Only a portion of one’s Social Security is taxed, and that’s only if you earn more than a certain minimal figure. As it developed, forming an S-corporation ensured that would not happen and sheltered most of my freelance income and all Social Security income from taxes.

After the layoff finally came, more than a year after this post appeared, it proved impossible to find another job. Even had the job market not dried up in the Great Recession, my age worked against me — employers wouldn’t give an old lady a second look for positions that read like they were written with my skills and experience in mind. By that time, though, I had already paid off the loan, cut my living expenses significantly, and made arrangements with a community college to teach the maximum allowable number of courses on an adjunct basis. Although adjunct pay works out to something less than minimum wage, between that and Social Security I managed to stretch a $14,000 emergency fund to cover five years, and then some.

By staying put in the market, I eventually managed to recover most of the losses in retirement funds. Five years later, total savings (including the whole life policy, which I never did cash out) are about where they were before the crash of the Bush economy. My son and I spent several years underwater on the house he and I copurchased, while he worked a miserable job at a company that overtly abused and grossly underpaid its workers. Today his house is worth what we owe on it and mine is worth what I paid for it. He has a better job and hopes for a promotion. I will never work for The Man again, and am glad of it.

1010Obamanos

How low can I go?

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Tomorrow’s job interview is with a nonprofit organization. So neat is this outfit that I had earmarked it as the first place I would do volunteer work after retiring. The job sounds like more fun than life, and frankly, if I could I would pay them to let me work there. However, I can’t afford that: for the next three or four years, I still hafta make a living.

Because it’s a nonprofit and the ad is for someone with a bachelor’s degree and three years’ experience, I’m assuming they’re budgeted for a low salary. Of course, GDU is a nonprofit, of a sort; and what I earn is pretty middling. Others whose jobs are related to my kind of work earn more. Nevertheless, my salary is exactly at the total income for an average four-person family in Arizona—meaning, I imagine, that I earn about twice the average Arizonan’s wage, since most families have two earners.

That notwithstanding, my expenses have expanded to fill all my income’s available space. So, if this proposed new employer offers me half of what I’m earning, I can’t accept it, because I wouldn’t have a chance of living on it. However, because I’m over 59 1/2 and can draw down my IRAs, I could get by on a significant pay cut. Drawing down the amount my advisor and I had planned when I retire would make this possible. And since I could in theory retire right now, there’s a certain demented sense to the idea of taking a small draw-down to supplement a reduced salary.

A reasonable amount to expect from this source is about $10,000 a year, since I’m already using part of said planned drawdown to cover my share of the Investment House mortgage.

I figured out how much gross salary I would need to get by in several scenarios. The amount I’d need ranges from $47,000 to $50,720, depending on a variety of circumstances. Then I estimated net pay on those amounts, given that my current net pay is 63% of gross. From these estimates, I calculated how much I would get monthly, and what a single paycheck would be if paid bimonthly and if paid biweekly.

Charmingly Excel crashed when I tried to get rid of the page break lines in one worksheet (does anyone know how to un-show those things?). This lost all the data I’d worked on today…though I’d have sworn I saved at some point along the line. Must not have.

At any rate, if M’hijito pays $100/month more toward the Investment House mortgage (he says he could cover more than that, actually) and I pay off the Renovation Loan, I still would have enough in savings to make it possible to live on the net income from a $47,000 salary, and to do so without serious pain.

Although the Renovation Loan’s monthly payment is fairly modest—only $170 a month—during the winter months it’s my largest monthly bill, and during the summer, the second largest. In addition, I’m setting aside $204 a month to pay toward principal. I haven’t been paying it directly to the principal each month, because I foresaw something like the present chain of events and figured I’d better save all the paydown money in cash accounts to double as emergency funds. The monthly set-aside figure—the maximum I can pay after all my other bills are covered—brings the ding on my monthly income to $374, which for me is significant. It’s twice my largest winter bill and $150 more than my largest summer bill. Get rid of that, and I can live on a smaller salary.

Well, we may find out tomorrow what the proposed new employer can pay. Let’s hope it’s enough!

The Continuing Saga…

1. Unemployment for Christmas?
2. Does any of this have meaning for individuals?
3. Rumors start to fly
4. On the trail of the elusive job
5.Beating the layoff stress
6. How low can I go?
7. Interview No. 1

No-shop days boost frugality

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Despite an extravagance (bought some dishes at Pier One), it looks like I’m going to end this month’s budget cycle in the black, for the first time since the memory of Person runneth not to the contrary. All I have to do is make it to Sunday without spending any more money.

This accomplishment came about simply by staying out of stores. Every day you can stay away from a store (or a gas station) is a dollar saved. With the week-to-week budget, I’ve found that if I can avoid laying out cash in, say, week 2, there’s enough in week 3 to cover the deferred spending. Or if I overspend in week 2, I can catch up by pinching pennies in week 3.

A day or two, or even three, is not an unreasonable length of time to hold off buying most necessities. I’m completely out of onions, for example, but so far the deprivation hasn’t killed me. I’ve evaded emptying the gas tank by telecommuting a day this week; I’d planned to telecommute again today, but in fact there’s enough gas in the tank to get me to campus and back, and so I’ll probably go out there this morning. If the gauge were closer to empty, though, I could make the round trip on two gallons. Six dollars would not push me into the red this week; though in past weeks it would have.

Before the run-up in gas prices, I had to make a conscious effort to stay out of the stores where I routinely buy supplies: I’d work “no-shop days” into my schedule. But thanks to the exuberant increase in the price of gasoline, no-shop days have become habitual. Not only that, but because I now shop exclusively in stores along my commute, I no longer shop at Home Depot.

And that, my friends, generates a surprising savings.

Last weekend I needed a few things I didn’t think I could find at the Ace Hardware, plus some potting soil, which is overpriced at Ace and at the nursery. So I made a special trip up to the Depot, several miles from my house.

One bag of potting soil, three timer gadgets for the garden hoses, three $1.37 bags of plastic plugs to cut off the irrigation lines, two cheesy plastic cord reels (last time I was in there, they hadn’t had the kind of reels I needed for months—grab it while you can get it), a bag of palm tree fertilizer, and a six-pack of tiny bedding plants came to $107.

I couldn’t believe it!

The largest single expense was the hose timers: about $20 apiece. Coincidentally, the style I wanted (a thing that resembles a kitchen timer) was the cheapest available. So that accounts for $60 + 8.3% tax: $65. With any luck, that cost eventually that will pay for itself in water savings—if the plastic junk doesn’t fall apart before the timers have recovered that much from the water bill. But forty-two bucksfor a bag of dirt, a bag of nitrogen, a few pieces of plastic, and some seedlings?

Apparently I’m not the only one who’s concluded that Home Depot cuts too much out of the budget. At 1:00 on Sunday afternoon, the parking lot was half empty. Without using my disabled sticker, I got a space right in front of the door. I’ve neverbeen able to park in front of the store; not ever. On weekends especially, the place was jammed.

No more.

The weird thing is, I’m not missing Home Depot. Its bazaar-like layout leads you to spend more than you have to on things you don’t really need. The flimsy cord reels, for example: I needed them last Christmas. Somehow I’ve struggled through nine months without them. Clearly I could have lived the rest of my life unburdened by cord reels. And had I been in Ace Hardware, I would have gone directly to the shelves that stocked what I needed and, not wandering through the electric department in search of irrigation plumbing, I probably wouldn’t have been reminded that I “needed” cord reels. Nor would I have purchased the plants, since Ace doesn’t carry them: that impulse buy would have been deferred until I could make a special trip to the nursery, at which time I’d have a list of the specific plants I needed and so would not have picked up just anything that struck my fancy.

After the $107 hit at Home Depot, I made a run on Costco for food and gas ($111), stopping by Fabric Depot along the way to pick up some yardage to make the coveted placemats ($32). This left $125 in the week’s budget—the final week in the August-September budget cycle. I did spend nine bucks on a miserable little lunch on the campus one day this week, only because I was so hungry I couldn’t go without some food, and another twenty on a few groceries. After subtracting last week’s $77 overrun, I’m still $17.51 in the black. And for the whole month: $151.99!

w00t!

The limits of automatic bill-paying

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In this morning’s New York Times, Ron Lieber reconsiders an earlier rave he wrote for “Your Money” about automating every penny you pay out. He notes that some people are wary of allowing business entities access to their checking accounts, largely out of concern over potentially costly errors. Others, he reports, have run into serious problems: one woman, for example, arranged to pay her phone bill on her credit card. Alas, when the expiration date came and went, no one bothered to tell the phone company, which soon sent a surly letter threatening to cut off her service.

While I’m an enthusiastic proponent of automatic bill paying, I do draw some lines. And I draw a wide, bold black line at charging up utilities on a credit card!

If anything happens that the card is canceled — whether to protect you from identity theft or because you decide to close the account — you are the one who gets to call every creditor and change your payment arrangements, a major nuisance, indeed. The potential hassle factor is just too high.

In fact, credit card statements are the only bills I do not have paid by automatic electronic funds transfer. Why? I just can’t bring myself to trust credit-card issuers. Those folks are not our friends. I want to see each statement and check each charge off against my Quicken or Excel records before forking over any cash.

For a long time, I felt that way about the phone company, too. Not so much because Qwest seemed untrustworthy (though a degree of incompetence presented itself, the company never seemed outright treacherous, the way credit-card lenders do), but because I’ve had people hack into my phone number and run up fraudulent toll calls. Here, too, I wanted to check the statement before sending any money.

I do authorize the utility companies, the city water department, and two insurance companies to bill my checking account directly. I did so because, before I switched my accounts to a credit union, the bank where I did business charged a fee when customers had money automatically transferred from the bank’s end but charged nothing when the creditor itself absorbed money out of the customer’s account. Why, I do not understand.

If I had it to do over again, I would go the other way around: retain control of the amount and date of payment, rather than permitting creditors to directly debit the account. This service is free at the credit union, but I didn’t know that when I made the switch. Now I’m too lazy and too busy to mess with changing a half-dozen payment arrangements.

Undoubtedly other issues present themselves. Identity theft? Seems to me you’re as much at risk of that when you send a check to some boiler room as you are when you pay electronically — possibly more so. Service snafus? They’re everywhere. Overdrafts? You need a system and some self-discipline to be sure enough money resides in your account to pay your bills…just as you do when you pay by check or cash.

Automatic bill-paying has many advantages. As with everything in life, we need to apply some common sense.