5 Bills NOT to Automate

Service providers are happy to give you the "convenience" of automated payments — primarily because it lets them reach into your wallet each and every month. But although autopay can be a valuable financial tool for some bills and expenses, for other types of payments, you may be setting yourself up for all-too-frequent fee hikes, surprise costs, and payments for services you never even use.
Those unexpected costs can hit you with a double whammy, says Jean Ann Fox, director of consumer protection for the Consumer Federation of America. In addition to the extra costs themselves, surprise fee hikes can bleed your account balance dry, she says — and "if you run low in your checking account, you can easily overdraw your account and rack up $35 overdraft fees."
Here are five fees to drop from your automated payment list today.
Mobile Phone Bills
Perhaps the only thing more exasperating than getting your usual sky-high smartphone bill is getting a bill that's even higher than you expect after you've exceeded your plan's texting, phone, or data limits. "If you've got kids, you've got to be paying particular attention to your bills. Oftentimes, they'll download 'free' ringtones that have monthly subscription fees buried in the terms and conditions," says Kathy Kristof, MoneyWatch columnist and author of Investing 101. "If you've automated that expense, you might not notice the charges for months."
"In-app" purchases — such as a game's additional levels, premium features, or virtual goods — also can easily add hundreds of dollars to a monthly bill.
Insurance Payments
Aggressive advertising from insurance companies has conditioned people to look for the very best prices on home and auto insurance. And you can get great deals — for a while. "I call them ungrateful service providers," says Brian Preston, wealth manager at Preston and Cleveland in McDonough, Ga., and host of the Money Guy podcast. "They give great rates to brand-new customers, but then they'll have premium creep over the years, because they hope you're not paying attention." Keep them honest by shopping the rates every year or two.
Utilities
Sitting down to pay water, electric, and heating bills may seem like an onerous chore, but those bills may be the first tipoff that something's out of whack. "If the electric bill is high, maybe it means the refrigerator in the garage has its door open," Kristof says. Big bills will encourage you to investigate problems early.
Gym Memberships
According to a study done by Stanford and Berkeley researchers, most people dramatically overestimate the number of times they go to the gym each month — in essence paying $17 a visit with a monthly fee. "One technique you can use to save money is to pay a la carte," says Ramit Sethi, author of the blog and book I Will Teach You to Be Rich. "It sounds crazy to buy a day pass each time you go, but that may actually save you money."
Other options include buying packages of passes (often found at climbing gyms and yoga studios) or using smartphone apps to support your (free) workout. The free Adidas miCoach app, for example, tracks the distance and speed of your runs while piping helpful coaching advice into your earbuds.
Cable Bills
Cable used to have a lock on the best programming, but that's changing quickly. Instead of shelling out three figures every month to get your weekly Mad Men fix, consider individual purchases from iTunes or Amazon. "When you're forced to experience the pain of paying each time you purchase a show, you might decide you don't actually want it," says Sethi. "It can also get people out of the house and off the TV."
Still want your TV and movie fix? You can add top-flight movies streamed over your internet connection from Netflix for a more reasonable cost of $8 a month and many past and current TV shows from Hulu Plus for $8 a month.

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Most & Least Indebted States

Residents of California and Hawaii are the most indebted individuals in America, but they're also among a group that are making the most progress in paying down the amount they owe, according to a MoneyWatch analysis of state-by-state debt statistics.

Overall, debt — and particularly credit card debt — is dropping appreciably as the country is swept by two complimentary trends: a new commitment to fiscal responsibility and lending restrictions that are generally keeping credit out of the hands of people who aren't committed to using debt responsibly.

"There is clearly a segment of the population that can't borrow," says Kenneth Lin, president of Credit Karma, which provided the data. "But there is also a segment of the population that is just cutting back, paying down their debts and pulling out the credit cards less often."

Credit Karma's debt data, based on the actual debt obligations held by some 200,000 consumers who use the company's site, breaks down the average amounts that residents in each state borrow via credit cards, mortgages, auto and student loans.

Over the past year, the American consumer's propensity to pay down debts has been relatively remarkable, with residents of 44 states cutting the total amount owed on credit cards, auto loans and mortgages. The only type of debt that's increased more or less universally over the past year is student loans, Lin notes. He considers that a troubling sign, potentially signalling a student debt bubble that could be far more difficult to pop than the housing debt bubble of 2008. (Related Debt in America story: Students Buried in Education Loans, coming soon.)

Student loans aside, there are only six states where residents have either increased or made no progress in paying down their debts. Those states — Montana, Wisconsin, Iowa and Louisiana, North Dakota and Minnesota, — didn't suffer as much from declining home prices, Lin says. (Of course, they didn't participate in as much of the upside of real estate's boom years, either.)

On the other hand, in states where housing prices have suffered with double-digit declines are also where consumers are making the biggest dent in what they owe.

"When you're in a market where housing prices have fallen 30 or 40%, you feel poorer and you're going pull out your credit card a lot less," Lin explains. Besides, you're less likely to have enough home equity to secure a big loan with real estate.

Where are America's most and least indebted consumers, according to Credit Karma's data? And how much progress (if any) have they made in paying off debts during the past year?

10 Most Indebted States (averages exclude student loans)

State...........................Average debt............% change

1. California...............$336,169.....................-4%

2. Hawaii....................$321,258....................-7%

3. Maryland................$263,524.....................-0%

4. New Jersey.............$257,462.....................-1%

5. Washington...........$243,758.....................-2%

6. Massachusetts......$242,111.....................-0%

7. Virginia.................$239,186....................-1%

8. Connecticut..........$229,684.....................-3%

9. Colorado...............$219,899....................-1%

10. Nevada................$218,010....................-7%

10 Least Indebted States (averages, excluding student debt)

1. Oklahoma............$126,027...................-3%

2. West Virginia.......$127,535...................-1%

3. Arkansas.............$128,460...................-0%

4. Mississippi..........$129,792..................-2%

5. Indiana................$132,618..................-3%

6. Kansas................$133,606..................-2%

7. North Dakota......$133,823..................+0%

8. Kentucky.............$136,441.................-1%

9. Iowa....................$139,415.................+0%

10. Nebraska..........$139,527..................-1%

(States that show a 0% registered at less than one percent change. The positive and negative signs show the direction the incremental change, however. For instance, overall debt dropped in Arkansas by $79 from July 2010 to July 2011, going from $128,539 to $128,460, according to Credit Karma. On the other hand, North Dakotan's added $406 to their debt burdens, with the amount they owe on credit cards, mortgages and auto loans rising to $133,823 from $133,417.)

States with the biggest debt declines

1. Hawaii...............$321,258..............-7%

2. Nevada..............$218,010.............-7%

3. Florida...............$185,518.............-6%

4. Utah..................$200,878.............-5%

5. California..........$336,169.............-4%

6. Alaska..............$211,970.............-4%

7. New York.........$201,838............-4%

8. Michigan..........$144,143............-4%

9. Missouri...........$142,174............-4%

10. Connecticut....$229,684...........-3%

This article is part of a series related to being Financially Fit

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