Debt Guide – Step 4 – Set Up Automatic Payments and Transfers

Most of your monthly expenses can be paid via automatic monthly withdrawal. Take advantage of this. It’s great for

  • making sure you always make payments on-time (to avoid late fees),
  • spending less time counting your money (budgeting), and
  • making sure your money goes to the correct savings categories.


You can do this step whenever you like. However, if you have an irregular pay schedule then you’ll want to have a large emergency fund in place before beginning.


In this step, set up automatic payments everywhere possible. This will be all credit cards, mortgages, car loans, the electric company, the phone company, the cable company, etc. (everywhere). If there happens to be a business that cannot accommodate automatic monthly withdrawals, then it’s time to look into a bill pay service. Your bank may offer a bill pay service, otherwise there are a number of other options out there. If not through your bank, then I suggest Paytrust.

  • Make sure your paycheck is automatically deposited into your checking account (instead of your employer handing you a check).
  • Call every company where you have recurring charges and
    • set up automatic payments for all of your bills,
    • change the billing date (withdrawal date) to be 4 days after your pay day.
  • Schedule a repeating transfer of $100 per month to go into your emergency fund savings account (if it’s not done already).

If for some reason your paycheck doesn’t arrive when it should, setting the automatic payments to happen 4 days afterwards gives you a little time to figure out what happened and perhaps move some money around. If you have trouble spending your money before paying bills then changing the withdrawal date is an absolute necessity because it means your bills will always be paid and you don’t have to worry about it. If you don’t have trouble spending your money before paying your bills, you should change the dates anyway, because you’re already contacting each company to set up automatic payments and it won’t take much more time to change the billing date.

Irregular Pay Schedules

If you have an irregular pay schedule then you should still set up automatic withdrawals, but you should have a large emergency fund in place. Also, keep a cushion of extra money (separate from your emergency fund) in your checking account so that the automatic payments don’t overdraw your account.

You’re Done When

  • All of your bill payment has been automated.
  • You’re transferring $100 per month into your emergency fund savings account.

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