Paying bills can be a chore to many. Other more nerdy folks, like myself, rather enjoy the process. Either way they are one of life’s necessary evils. While I can’t give a tried and true method to make bill paying a pain-free experience, especially if you have more month than money…I can help you make the actual mechanisms of paying bills much easier.
If the process is easy for you to stay on top of then maybe, just maybe, the money will go further and last longer. You won’t have late fees at least!
In this wonderful age of technology, we have great tools at our disposal. If you aren’t using them, then now would be the time to get with the program. Below, we’ll discuss some tools everyone needs in their finance toolbox to make the bill paying process easier. We’ll also address their pros and cons so you can decide which are right for you. Having a system, no matter what you choose, is the most important thing you can do to make your life easier.
Tool #1- Auto Pay
Pros: Set it once and forget it! If you forget to pay bills AND it is not an issue of not having enough money but rather just not sending it…this is for you. The vendor itself will often have an auto-pay option on their website, you may even get a discount for using it. You simply enter the amount you want to pay, your routing and bank information, and date of debit, and you’re set up. Your bills will be automatically debited each month. Then you just need to keep a master list of all your autopay deductions and what date they occur.
Cons: If you have cash flow issues, ie if you live paycheck to paycheck, you have to be to super on top of auto payments or you will overdraft your bank account. If you have irregular income or your budget is super tight, this may not be a good option for you.
Hints: Most vendors will allow at least one due date change per account history, so if you realize that a due date creates a hardship on you, change the date. But choose wisely- typically you get only one shot!
Tool #2- Online Bill Pay
Pros: This system is typically offered through your bank, although some vendors offer the one-time pay option as well on their websites. This is my go-to method for handing bills. Done right, you can spend 10 minutes a week paying bills and be done with it. Though initially you may need more time to set up all your accounts with your bank. What I love about this method is that once I hit “pay” the money is gone, no checks waiting to clear. Also I use my bank’s bill pay system and not the vendor’s websites so I only have one site to visit instead of dozens.
Cons: You have to invest time monthly to set up these payments.
Tool #3 – Split Your Bills
Pros: There is usually no need to pay any bill all at once. You can split your bills into much smaller chunks and either pay as you go or send those funds to a separate savings account where the money can accumulate until you are ready to send it. If your water bill is quarterly and generally runs $300, then use bill pay to send the water company $100 a month. They are happy to take your money and you don’t get hit with a big bill once every three months…who knows what life could throw at you by then.
If your mortgage is $1400 a month then why not set aside $350 weekly into a seperate savings account. On the last week of the month you just transfer that money back to your checking and pay it with bill pay. No need to stress about that big mortgage payment when you have already saved the majority of it. And in this instance I suggest saving it and sending later rather than sending it each week. Most mortgage companies will “hold” incomplete or early payments because they want to collect as much interest on your loan as they can. If I hold it myself I earn a small bit of interest on it through my bank.
Cons: There is a bit more time involved because you are making payments more often and transferring money around.
With a little planning each month, your bill paying nightmares can be a thing of the past. Get a system in place today.