Late Fees: Have you eliminated them all?

It’s not often that I deal with mundane financial stuff these days, but I was reminded yesterday that this is something a fairly disorganized person like myself needs constant practice at. You see, I received a small bill from the water utility company for about US$20 or so.

It was such bad timing that I simply filed it under “Things to Do”, and I forgot about it, until the due date had passed by one day. Woops! Yesterday I had to travel uptown to the water company to pay the bill. I noticed that in the Chinese writing on the bottom of the bill a simple statement saying that, for late payment a 10% surcharge will be added to the next bill.

Annoyed at myself for doing that , I realize that $2 isn’t big in the grand scheme of things, but to avoid late penalties, one has to be on one’s game, and organized. Still, a $2 late fee is much better than last year, when I spent six months paying a credit card bill in parts, instead of in one fell swoop. I could have saved much more than $2, more like $400; and that was despite having the money in the bank.

The root causes of late charges in my experience have been simply poor planning, and poor execution. Poor planning was looking ahead, evaluating the cost-benefit relationship between certain expenses being paid off slowly vs. quickly; and execution was failing to pay bills in a timely manner despite this being an easy and convenient thing to do.

In Taiwan, there is really no excuse for bill paying. The water bill I paid late could be paid in anyone of seven ways: at 7-11, at the bank, on MOD TV, via ATM, via credit card, standing order, and online, not to mention at the water company. Mobile phone payments will soon be possible, too. So, why did I plan poorly and execute sloppily? And how can I resolve to not do that again, esp. since this isn’t the first time?

So here are two suggestions that I have considered trying:

A. Use automatic calendaring

1. make a list of regular payments and bills and their due dates;
2. advance the date by one week or two to build in an appropriate safety margin; and
3. set up your Calendar software to remind you that it has to be paid (and the penalty, too!) for one week prior, three days prior, and on the final day!

B. Autopayments

Alternatively, set up your automatic payment so that you don’t have to remember at all. It’s quite easy to do that for all your bills! You can set up a credit card autopayment, or a standing order on your bank account, too.

So many bills: so many late fees!

Typical bills that may incur penalties or late fees include: all utility bills (phones, electricity, gas, TV, water, taxes – local and national), membership fees for schools, clubs, etc., community fees, credit card minimum payment or payment due dates, overdrafts, student loans, loan installments on houses (mortgages), car loans, secured and unsecured loans, insurance policies on property, family or cars, … the modern life includes a lot of payments that need to be made… make sure your list is complete and paid on time!

What late paying horror stories have you had? How did you manage to fix those bad habits? How much did it cost you?

Refinancing Your Home: Keep your head on!

I have a mortgage refinance story to share with you guys. One that involves a certain levelheadedness to show that refinancing CAN work, but you have to be cautious.

We lived in an area where we had purchased property about 7 years ago. Prices were in the toilet at the time, but soon they they went further down, down by 5% to 10%. We didn’t flinch we just kept paying our mortgage, and concentrated on other issues. Our house price dropped from NT$3.5 million to a little over NT$3 million.

Stupidly though we forgot to check interest rates, as they dropped. Our mortgage payments didn’t drop much at all. By then my wife and I thought it about time to buy a car. We had an opportunity to purchase a parking lot in our community as the investment company was getting rid of the stock, before being liquidated. Never occurred to me to ask why! We delayed purchasing the car for quite some time, though.

So we decided to jump: we renegotiated our house loan with the original financier. We increased the total amount to about NT$2.7 million from the total outstanding. That provided us with a check to purchase our parking lot (about NT$380K). In addition, we negotiated a new mortgage payment about 2/3 of what we had been paying before. It was a win-win deal.

Since then, we have noted that the property prices have increased here by about 50%-60% conservatively. So we benefited in a number of ways:
1. cheap property purchase
2. lower interest rate and lower monthly payments
3. increased property value
4. convenience of personal parking space

But, before you refinance, you need to make sure that you:
1. work to increase the potential return
2. take advantage of poor market
3. can handle the post refinance payments
4. your life is better as a result.

Season’s Greetings.

This posting is sponsored by Personalhomeloanmortgages.com