The other day, I learned a valuable lesson: automatic withdrawals may make paying bills easier, but they can really turn your life into a financial nightmare. So I'm sharing my little tale of woe, in hopes of inspiring anyone else out there to stop and think before they agree to an automatic withdrawal.

I've been writing about bank fees for WalletPop quite a bit lately (like in this post and here), and while the fees themselves are egregious and punitive beyond belief, it is helpful to remember that quite often, the reason the fees are being lodged is that the bank user screwed up.

In my case, I knew something was up with my bank account when my wife called me from her cell phone and asked: "Did you know our checking account was $50 in the negative?"

From the agonized scream that followed, my wife said, "I'm guessing not."

I mumbled something about needing to have a nervous breakdown, hung up and checked my bank web site. My head was spinning because I had received a paycheck in the mail the day before but hadn't gotten around to depositing it in my account. While I normally rush to the bank to deposit any cash on hand, I hadn't, knowing full well my account was well padded.

And sure enough, it would have been, except there it was: $119 automatically withdrawn from my account. One year ago, when paying for an online newspaper archive service (handy for journalists, or at least this one), I apparently had clicked an "automatic withdrawal" box. What I was thinking, I'll never know, although I suspect it was some sort of optimistic belief that went along the lines of: Oh, that's a year away, and by then, the public will have noticed my book, and it'll be a runaway best-seller, and $119 missing from my account will be no big deal...

Whatever I was thinking, I wasn't thinking.

In this instance, I lucked out. What sent me into the negative was a car payment I had scheduled to go through on Tuesday, and after talking to the bank teller, I quickly learned that if I took my check to the bank that day, I'd avoid any overdraft fees. And so I avoided my nervous breakdown and managed to get through the day without any bank charges. But, boy, if there had been bank charges, and from what I can tell, there would have been quite a few of them, I would have been furious -- and would have had no one to blame but myself.

And so my mini horror story got me to thinking about the other automatic withdrawals I have coming from my account. I still subscribe to a print newspaper (somebody has to), and The Cincinnati Enquirer withdrew its money from my bank account a couple months ago, and since I had completely forgotten that was coming, the missing money momentarily gave me a near heart attack. Around Christmas, my wife signed my kids up for some online computer game web sites that wound up doing automatic withdrawals near the end of the month. In the beginning, I forgot about those, and so that threw me a little.

Then, of course, I have my car insurance payment automatically withdrawn each month, which I see as a smart move, and our family's YMCA membership is yet another monthly automatic withdrawal. And as automatic withdrawal gets more popular, especially if you forget that you've agreed to have some money disappear from your account once a year, or three times a year, things can get complicated.

Even if you do remember, it gets complicated. I'm starting to wonder what was so wrong with the old-fashioned way of budgeting the old-fashioned way and paying bills on my terms, rather than another company's.

Obviously, businesses have a vested interest in convincing the consumer to agree to an automatic withdrawal. It ensures that the company will have a regular customer who pays on time. I have no problem with that when it's a vital service like my car insurance, but much as I like the newspaper archive service that I pay $119 a year to use, I would have lived had there been interrupted service for a few days, or even a couple months. It's a nice service that helps me do my job, but it's hardly a crucial one.

The more automatic withdrawals I wind up accepting, in order to make things easier, the harder I'm finding banking to be. I plan on taking another look at just what's coming out of my bank account and withdrawing a lot of my automatic withdrawals.

Geoff Williams writes a lot about banking and other money issues for WalletPop. He is also the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale).

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First of all, your paycheck should be on direct deposit. This is not only the fastest way to get money in your account, but it reliably deposits on the expected date.

A colleague of mine has been in and out of work so much that he and his wife are nearly bankrupt. With a large amount of credit card debt, they set up each card to automatically withdraw the minimum each month. That way, they never missed a payment. Their mortgage did not offer this option so they created an automatic payment to ensure they'd never be late.

Now all they have to do is monitor their bank account to make sure there is enough money to cover their minimum debts. If short, they get funds anyway they can, such as no-interest payment plans from debt collectors, retirement withdrawals, etc.

The wife works but makes too little to pay the debts. Obviously they gotten rid of all non-essentials, like cable TV, their fax line, etc.

Periodically the husband does find work. Unfortunately it tends to be contract rather than permanent, but he makes enough that they begin to grow their savings first, then start paying off debts, the highest interest first.

Of course the real problem is over the last two decades, corporations and the wealthy have make substantial profits, but have yet to reward the 98%, whose income has remained FLAT for the same two decades.

This is why "trickle-down" is a joke. The term was never an economic theory, it was invented around 1930, by a politician!

It still befuddles me why Americans think the country is going in the wrong direction. President Obama has an impressive record. He reversed a global economic depression (much larger than the 1930's stock market crash), corporations and the wealthy are doing very well, unemployment is under 6%, the deficit has been halved, and the government is smaller. (Note the very popular President Reagan actually made the government larger.)

These are all things conservatives were complaining about. Now Obama says he wants to prevent money from influencing politics. This would be the single most important accomplishment any president could make. They only people against it are the wealthy and those foolish enough to believe them.

December 18 2014 at 4:25 PM Report abuse rate up rate down Reply