Let Automation Help You

One of the best and easiest things you can do to help you pay down debt, save or invest is to automate the process.

Many people already do this in some form, probably without knowing that they have already taken the first step in automating their financial lives. I'm talking about their 401(k), where money is automatically taken out of your paycheck and put into the investments of your choice. But this is only the first step. By using an on-line bank it is very easy to open sub accounts for various savings goals and use automatic bill pay to automate your investments.

Here is an over view of how I automate my finances:
Every two weeks my pay gets direct deposited (after my 401(k) contribution is automatically taken out) into a checking account at a traditional bank (I use a traditional bank here for easy cash withdrawals), two days after the direct deposit money is wired to my checking account at INGdirect.

From my checking account I have money that is automatically transferred into savings sub accounts for git giving, travel, savings, and taxes as well as $416 sent into my ROTH IRA to make sure it is maxed out and money sent into my regular brokerage account. Without me actively doing anything all of my savings and investing will automatically happen. And that is powerful. Why? Because the less that I have to actively do, the less chance there is that I'll forget to do and the more I'll save and invest.

This can be taken a step further so you automate your bill paying as well. For example my cell phone bill is automatically charged to my credit card as are various other bills. The only bills I have to actively pay are cable/internet, rent, utilities and my credit card.

Not only do I save and invest more money but there are also less things I have to worry about each month - a true win/win situation.