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The Perils of Automatic Payments

Automatic payment systems are convenient, but convenience always has a cost. It is essential to audit your automatic payments regularly, or you may get an unhappy surprise.

I noticed a charge on my PayPal account. An email arrived confirming I had made the payment. I investigated and saw it was for a service I no longer used. The email concerned me, as I don’t particularly appreciate squandering my income.

The convenience of this service is obvious. You have a fire and forget system that makes sure you pay your bills on time. The problem I have run into is with PayPal. I have not managed these payments. Operator error is the main issue here, not the services offered by PayPal.

PayPal allows you to set up automatic payments to various services. This capability is very convenient, but it also offers the ability to Manage Automatic Payments. You can find it in the Menu for Payments.

automatic payments

There were many automatic payments on the list, and some were payments dating back over ten years. I busily cancelled all the transactions I didn’t recognize. There were payments from demised companies like TigerDirect.

Perils of Automatic Payments?

If you do not cancel these payments, companies can take your Paypal payment without notice. You permitted them already. It is possible to recuperate if payment is taken (via PayPal’s resolution process), but your money may not come back.

Are there companies that snap up demised companies’ assets and PayPal accounts? Do these companies maybe try to withdraw money when they shouldn’t? I hope not, but I would not be surprised.

Remember that phishing scams can be hidden in emails that look like automatic payment emails.


You Are Spending More

Stats Canada published a very interesting report last week, Survey of Household Spending, 2015, which on first read sounds obvious.

Canadian households spent an average of $60,516 on goods and services in 2015, up 2.5% from $59,057 in 2014.

If we remember inflation in 2015 ran at a slim 1.6%, which means that Canadians spending increased 0.9% (after adjusting for inflation).

Of this spending the breakdown of what we bought is fascinating as well:

  • Food 14.3%
  • Shelter 28.9%
  • Transportation 19.4%
  • Household operations, furnishings and equipment 10.9%
  • Clothing and Accessories 5.6%
  • Miscellaneous (?) 2.8%
  • Education & Reading Materials 3.0%
  • Alcohol, tobacco and games of chance 2.5%
  • Recreation 6.6%
  • Health and Personal Care 6.0%

Your Household Spending

Why is this of interest to you, and your personal finance plans? Do these numbers reflect your spending? Are you an average Canadian ? You don’t know? I think  you should. If you cannot compare how much you spend to these numbers, you are not in control of your finances.

The other thing is, that if you don’t have these numbers at hand, go with the assumption that you are close to these numbers. If you make that assumption, you can:

  • Start tracking your spending from this point (so you can figure out where you spend money)
  • Use these numbers to try to lower your overall spending

Some areas where you might try to lower your spending are hard to change (Shelter is the big one, it is very hard to lower your rent or mortgage (you can, but it is hard)).

Finding Savings in Data

In my opinion these areas scream out as being areas where you could start trimming spending:

  • Transportation, if you have a car, could you use public transit ? Can you afford your car? Insurance on your car?
  • Clothing and Accessories, this is an area where there are countless great web sites (e.g. Squawkfox) that can help you control your clothing spending.
  • Food , no I am not saying buy cheap food, but maybe going out for dinner is essential ?
  • Alcohol and games of chance, seriously? If you smoke, stop, and games of chance are not going to get it done either.

Those are a simple overview, I am sure if you looked closely and started tracking things, you’d find many more places to save money.

More Data is a Good Thing

Collect the data, however you like, but with more information comes a better understanding of where you are spending your money.

Neat Infographic From Stats Canada

Spending Infographic
Nifty Infographic


Little Known Secrets of Financial Planning

Yes, this is the new hack writer trend out there. What is worse is those terrible articles that you find on major sites that are links to horrible, ad laden (and most likely malware laden) sites. Sometimes it even takes you to the Motley Fool!

Little Known Facts about any topic (especially secrets of financial planning) end up being a simple rehash of things that most folks have already heard. Worse they are unsubstantiated rumours about it. With that in mind, let us delve into this important topic

The other important point is that the article always has a “click here” thingy to force you to click (and God knows what you are downloading when you click it), so here is mine (I promise it is simply a link to the rest of this terrific piece of writing).

💰Click here for a sure fire money tip💰


Lotteries are not a Financial Service

Just a quick one that I noticed, it seems our friends at Red Flag Deals (I do like checking there to see if something I need to buy is on sale) have become a little confused. Lotteries are not a financial service.

This week they are offering OLG: FREE Watch ‘N Win Lotto eCoupon, OK, I guess folks that play lotteries like freebies as much as the next person (note I have not made that an active link, you can go find it on the Red Flag Deals web site yourself (I am not in any way espousing you go buy lottery tickets)).

Cash Cows the Album
My Favorite Cash Cow

What worries me about this coupon, is where this coupon was came from.

Pardon me? When did a lottery become a Financial Service?!?!? Very bad form Red Flag Deals, create a new class like:

  • Stuff you are never going to get your money back from
  • Tax on the poor
  • Home -> Not a Deal -> Lottery

Any of those is better than Financial Services -> Other !

Wow! Lotteries are not a financial service, or a retirement plan! No matter what on-line coupon or deal companies think.

Rakuten Kobo Canada


In-App Purchases and the New Economy

You may not be aware, but one of the biggest ways to make money online is by making “free” games. How can you make a bloody fortune online with a game that costs nothing to buy? The game is free, but to do things inside of it can cost the player money (now known as Freemiums). This is replacing the chocolate bar at the grocery store check out, as kids’ impulse purchase item of choice.

in-app spending
In-App Purchases, the NEW Money Magnet?

How big are Freemiums (aka in-app purchases)? Both Google and Apple were forced (or thought it was a good idea?) to add an option to STOP in-app purchases (or at least force the user to input a password to do it), that is how much money it made in the early days of “free” apps. This was only done after many horror stories of folks (some kids, but many adults as well) rolling up over $100 worth of purchases on these apps, before realizing they were spending “real” money.

The games themselves don’t call their currency Dollars, Pounds, Yuan or Yen, they call it “money”. You need “money” to buy the good things to make your “gaming experience better”, which seems to suggest they might worry that if you called it Dollars, folks might tweak in that this is REAL money, but maybe not.

I play Simpsons Tapped In™ from EA Sports. This game looks like the Golden Calf for EA sports in terms of income numbers. I have actually “bought money” once when it was “on-sale” (odd idea, money being on sale) but I have mostly steered clear of paying for anything. My son plays many (many) games on his iPad that have in-app purchases. The option to do in-app purchases is turned OFF on his iPad and many times he has wanted to “buy money”. We have not relented on this rule.

Money no longer grows on trees, you simply twiddle some bits.

Helpful Video

There was a South Park episode about this very topic “Freemium Isn’t Free“, which sums things up nicely. It compared freemiums to alcohol, in that freemium apps keep saying, “ask your parents about purchases first”. They compared this to the Alcohol industries, “drink responsibly” program.

In-App Freemiums

Be warned, the following video is INCREDIBLY NSFW (it is South Park after all), but it does sum up the business of Alcohol Advertising:

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