Smart Money: Bill Paying Strategies
I'm writing this on my bill paying day, so it got me thinking. Paying bills is an important part of our financial lives, maybe one of the most important parts, so I'm wondering what is your bill paying strategy?
- Do you pay your bills right when they hit your mailbox?
- Do you have a set time every week or every payday to pay your bills?
- Do you pay them haphazardly - whenever you happen to have a minute? Or a few "extra" bucks?
- Do you pay bills on-line or through the mail? Please tell me you don't drive around town dropping payments off at various locations? My in-laws used to do that, but hey, they were OLD & didn't have anything better to do.
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Do you rely on your husband, partner, or parent to handle this little chore for you? That's certainly the easy way to do it, but if they weren't there, would you know how to take it over? Do you think they are doing a great job of it or could you do it better? I'm not trying to start any matrimonial holy wars here, but possibly your spouse might appreciate it if you took an interest in the bill paying once in a while. Legally, these are your debts too and you have a right and an obligation to know at least a bit about it. It might be a real eye opener for you.
I have to say, after many years of trial and error, I have become something of a fanatic bill payer. When we were first married, I tried leaving it up to my husband. Bad strategy. To this day, he has a very "relaxed" view of paying bills. His philosophy is that he will pay them when he is darn good & ready rather than when they are due. Uh, yeah Sparky, the world doesn't really work that a way.
He came close to ruining our credit rating during our first few married years and he used to drive his ex-wife crazy because he was perpetually late with the child support. I felt like she had a point, and she and I worked out a system of post-dated checks to make sure she always got her money when she needed it. Helped smooth over a lot of tensions for all of us that way.
Finally, I got him to realize that even though his male ego wanted to handle the money, he really wasn't the right person for the job. In my early twenties, I wasn't all that responsible either, but of the two of us, I was at least a little better at it and I gradually got better as time went on.
The best move I made was when I stopped paying my bills at the middle of the pay period, or even worse at the end of the pay period, and started paying them the minute I get paid. That works out so much better! Trust me on this one, I know.
The best move I made was when I stopped paying my bills at the middle of the pay period, or even worse at the end of the pay period, and started paying them the minute I get paid. That works out so much better! Trust me on this one, I know.
I always try to pay my bills and buy my groceries as early as I can in the pay period. That way I know exactly how much money I have left for everything else - clothes, eating out, stuff the kids need for school, books, or even frivolous stuff. Of course there are always unexpected expenses that pop up just about every pay period, but I have emergency savings to cover that. (By the way - emergency savings means doctor bills, car repairs, and unexpected school fees, NOT those cute shoes on sale at Kohl's or an unplanned dinner out with your girlfriends.)
I've paid my bills on-line for many years and I highly recommend it. Not only does it simplify your bill paying, but it allows you to pre-schedule bills on a monthly or quarterly basis that you might otherwise forget about. We have some insurance premiums, and other bills that only show up once a quarter and without this system, it would be easy to overlook those bills in our never-ending junk mail pile. But instead, I get a faithful reminder every quarter that these bills are due.
It also makes it easy to calculate your bill load each payday, so you can adjust them in a way that works for you. In my particular system, it shows my current account balance off to the side and calculates how much money I'll have left as each bill is added, which I find particularly handy.
It also makes it easy to calculate your bill load each payday, so you can adjust them in a way that works for you. In my particular system, it shows my current account balance off to the side and calculates how much money I'll have left as each bill is added, which I find particularly handy.
Are there pitfalls to paying bills on-line? Yes, there is one and I ran afoul of it just this last payday. You can overpay or double pay a bill and when you do, it is nearly impossible to get the money back, especially if it is a revolving account like a credit card bill. I accidentally paid one of our bills twice, even though there is a little warning marker to stop you from doing that. But they were paid on different dates and I didn't notice it. Fortunately, it was only $50, but still I'll be more careful next time.
And I don't have to pay postage, or lug around stamps & envelopes, and I never have to worry about someone stealing my checks out of my mailbox. Plus I have an exact record of what I've paid going back for several years. And it takes me about 15-20 minutes every payday, but it gives me such peace of mind to know that everything is taken care of for the next two weeks.
And I don't have to pay postage, or lug around stamps & envelopes, and I never have to worry about someone stealing my checks out of my mailbox. Plus I have an exact record of what I've paid going back for several years. And it takes me about 15-20 minutes every payday, but it gives me such peace of mind to know that everything is taken care of for the next two weeks.
A word about minimum payments. The word is NO. You don't ever want to pay the minimum payment on an account unless you are totally in financial survival mode. I don't know how they set those things, but if you're paying the minimum payment, you're just about wasting your time!
Even if it's not a bill that I'm focusing hard on paying off, I routinely pay at least double the minimum payment, and triple if I can manage it. That's the only way to make any progress with paying off a revolving account. Otherwise, they can easily drag on for years and years, charging you interest the whole time.
Even if it's not a bill that I'm focusing hard on paying off, I routinely pay at least double the minimum payment, and triple if I can manage it. That's the only way to make any progress with paying off a revolving account. Otherwise, they can easily drag on for years and years, charging you interest the whole time.
Me, I'm a nibbler. I like to nibble away at my debts like a little mouse. I'd rather pay a small amount every payday, than a large amount once a month. The reason I do this is to avoid the late fees. You are much less likely to have a late payment if you are paying the $15 minimum payment twice in a month than paying $30 once. And those late fees are such a killer and can even raise your interest rate to an alarming level.
Yes, it's twice as many payments to keep track of, but I don't care. Bill Pay is free, so it doesn't cost me anything. With my Pampered Chef and Stampin' Up! businesses, I throw money at them all_the_time. Every time a customer makes even a small purchase, I don't let that money sit in my account, I shoot it off right away where it can start doing me some good and eating up that debt.
Yes, it's twice as many payments to keep track of, but I don't care. Bill Pay is free, so it doesn't cost me anything. With my Pampered Chef and Stampin' Up! businesses, I throw money at them all_the_time. Every time a customer makes even a small purchase, I don't let that money sit in my account, I shoot it off right away where it can start doing me some good and eating up that debt.
So take a look at your bill strategy. What are you doing well? What can you do better? Make it a game to outsmart those credit card companies. Do like they do on TV and make a big red thermometer chart or one of those big graphs.
I keep mine on post-it notes on our master bathroom mirror. No one goes in there but us, and it's nice to see those post-it notes going away as we get accounts paid off.
I keep mine on post-it notes on our master bathroom mirror. No one goes in there but us, and it's nice to see those post-it notes going away as we get accounts paid off.
To see past posts on the subject, just click the Smart Money tag at the bottom of this post for a complete list.
3 comments:
I've switched to online bill paying too, and it has made my life sooo much easier. Most of mine are actually paid automatically so I don't have to do anything. So much better than when we first got married!
I love the online bill pay system. It makes life so much easier!
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In addition to paying our bills online and paying on the day the paycheck gets deposited--I also keep a master list of our bills in a Excel folder with the due date and the date the bill gets paid. I simple enter the info every month and keep red for unpaid and bloue for paid so I know at a glance what needs to be paid or what has been paid. Never paid a bill twice this way! Paying bills on the day the checks get deposited was a life changer for us just as you said!
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