OH NO! I forgot to pay my electric bill!
You are sitting in your house. Watching your favorite movie. The popcorn is popped. The sodas and snacks are displayed. It’s a great moment and… the lights go out, the TV turns off, the air conditioner stills.
Then it hits. That turn in your gut. Your head gets just a little light. Your heart sinks. A question pushes through to your mind… You turn to your spouse and ask
“Did I pay the electric bill?”
You both look with a shrug, a look that says: “I think so?!” You get up and walk to the front door. You place your hand on the cool metal brass. You open the door and step outside. It’s night. It’s going to be dark anyway. But you glance up and the street lights aren’t on. The neighbor’s house lights are off. You glance further, every light is off in the whole neighborhood.
Relief washes over you… it’s just a power outage… It wasn’t the bill!
What’s sad about this story is that your first thought was a bill not being paid, not a power outage. Where did that question about the bill come from? Why was that even a question? Why was a power outage not your FIRST assumption, instead of a bill being forgotten?
It’s possible to live without that fear.
Here is my 3 point plan to make paying bills simple... as long as you have the money to pay them in the first place, but that's for another article.
1. Paycheck Dates Not Due Dates
When you pay bills as they come in, you are always running around trying to catch up, or see if something has cleared. Your checking account tells the story.
You have card purchases mixed with checks and electronic bill payments all throughout the month. You are never quite sure what you are paying and every so often you miss something. Either something doesn’t get paid, or you end up with an overdraft.
You always have bills on the mind. It’s just a big, big hassle. I used to sit at the gas station having full conversations with myself in my head: "Did I pay that yet? Has this cleared? How much DO I have left for this gas I need to make sure to leave enough for X to come out..." Contrast that with this idea.
Group your payments and pay your bills on paycheck dates, not on due dates. Tweet That!
You group your payments together. You don’t pay them as they come due, you pay them as YOU get paid. Let’s say you, as most people in the US, get paid every two weeks. Generally, you get two checks per month.
So take your bills and group them together into two groups.
“Paycheck One Group” and “Paycheck Two Group”.
So when you get paid at the start of the month you will sit down that day (or soon after) and pay your bills. You pay every bill that day. The idea is to get them all out of your account on day one of the pay period.
Now, in order to get them out of your account on day one, you cannot:
- Write Checks
- Give your card OR account number to another company by phone or online
- Use Any Automatic Payments.
- Or make any other payment that takes more than 30 seconds to clear your account.
Therefore, to get these items out of your account on day one you must:
- Use Bill Pay. If you are using the banks bill payment service, pay them all that day.
- Use bill pay manually, not automatically
- We"ll talk more about this in a second.
- Take Out Cash and buy money orders and then mail them.
- This is cumbersome, but if you have an illogical fear of the Internet you could do that I suppose.
- Then again, if you fear the Internet you probably aren't reading this?
2. Bill PayFirst of all. Let's get some things straight about bill pay. The following information should be true for any bank I know of, but you'll have to double check your bank to be sure.
Bill pay does not mean auto pay. Bill pay services usually have auto features available and many mistake this to mean that you must have auto pay to use bill pay. Almost everyone I've ever talked to that wasn't using bill pay gave this as their number one reason for avoiding it. Rest easy, you can and should still pay your bills manually.
Bill pay will take a few days to be received by the merchant. Usually 1 or 2 days when sending electronic payments and 5-10 days when mailing paper payments. If you are paying bills last minute than this won't work for you. But if you are paying bills last minute you are not using my system, refer back to point 1.
Access your bill pay service through your banks online banking or mobile app. Typically you will only need three things to set up your "payee", the person you are paying.
Setting Up Payee's
- Name of Payee
- Check your statement. Some companies aren't obvious.
- For Example: Bank of America Credit Cards often list their statement name as "FIA Card Services". Weird, but check your statement to see what name they're using.
- Address on statement
- Typically a PO BOX, but this helps the bank make sure they have the right client. Some receive payments for different accounts at different addresses, you may see more than one listed with your payee's name, use your billing statement for that payee to be sure you have the right one.
- Account Number
- This is not asking for their account number and routing number. It's asking for the item that identifies you as their customer. Could be an account number, customer number or policy number.
- There could be situations you may not have one. Example: If I send my tithe to the Church through bill pay there is no account number. I just click "Does Not Apply To This Payee" or something like that.
Once your payees are put in you now send all your payments through bill pay. All of them? Yes! All of them.
Insurance. When your insurance company offers you a discount for setting up auto pay and you have money in your savings and cannot become overdrawn, take the discount. If you are having overdraft issues, the discount is too expensive politely decline their "discount" as it's too expensive for you and use bill pay.
Card Based Items. Some companies must have your card or you cannot use their service. These act more like purchases even though you and I will treat them like bills. These are things like: Netflix, Hulu, LA Fitness, Magazine Clubs, Etc. You could give your card for these. You could also use a prepaid card or second account for these type of things instead of using your main account just to prevent overdrafts.
Using Bill PaySo this is what you need to know about using bill pay most effectively. Once your payees are set up in the system your overview page will likely show all your payees on one screen. Next to each payee is an amount box and date box.
Date could refer to "Send By" or "Send On". There is a big difference here. Send By means it leaves your account a few days early to get it there by that date. Send On leaves your account on that date.
You are paying your bills on your paycheck dates, twice per month. So when you get paid you pull up bill pay. Verify what amounts you want to pay.
- Select who you want to pay.
- Type in the amount into bill pay next to the name you want to pay.
- Choose Date.
- You are going to choose Send On, and then select Todays Date for all bills, not the due date.
3. Yearly Sheet
If you find your life as chaotic as I do, you need an external way to organize yourself. Studies show that the more you can group things together the easier it is for you. The following instructions are based on the average household with two paychecks that come in every other Friday.
The ideas can be implemented by anyone, with some adaptations. . If you have a different system, like you only get paid once a month or you get paid on off times, you may need to adapt this to fit you.
Here’s what you are going to do. Take out a blank piece of paper (You could also use graph paper, or even excel to do this. Excel users click here). You want a long piece of paper, 8.5X14 legal size is best. You will lay this out long side to you and short sides to your sides. Or, you could use two regular sized peices of paper and split your year into two.
On the left hand side you will write out Four categories.
Tithe. Paycheck One, Paycheck Two, Misc.
Tithe. The first group of payments is your tithe's, offerings, charitable donations, etc. When you put God first you get better financial results. If you don't understand why see my article on the tithe.
The Misc category is for things that come once a year, once every few months, or once a quarter. Things like AAA memberships, car registrations, HOA dues, etc.
Monthly Bills. You will divide all your monthly bills into two groups. Those things that you usually pay with paycheck one, and those things you usually pay with paycheck two. List them out accordingly.
*Helpful Hint. You could, next to each name if you have room, write the web address, username/password, and 800# for each company.
You will want to write down the due date and amount for later reference.
If the date and/or amount is fixed, Horrah! You got it for the year.
If the amount or date varies make some notation next to it, like this: “ ~ “ to indicate that the amount or date can change, but still include your best guess as to the average there.
For example “ ~$75 3rd “
Now, to the right along the top of the page, spaced evenly, you will write out the months of the year. January through December. If you did this on graph paper or excel you will find that you have created a box for each payee for each month. If not you could take a pen or pencil and a ruler to make the grid. I like to staple the sheet to my wall, my wife likes to use a book to keep it in. Whatever works for you.
And you are done with the set up.
The Perfect Bill Payment SystemNow let’s put it together. So you are going along in life and you just got paid this morning. You have a moment to focus on bills so you sit at your computer.
You pull up your sheet and you see that it’s paycheck two today. You paid the first round of bills two weeks ago.
Now you sit down on payday to review your bills. You don’t have to guess to see which bills you are actually paying, because you are using your Yearly Bills Sheet.
It’s all right there in front of you. You double check how much you are paying on the electric bill because that changes, the rest are fixed bills this paycheck.
You already set up all the “Payee’s” into your bill pay so all you have to do now is type in the amount next to each payee and choose TODAY’S date as the “Send ON” date for all the bills. Hit send. You’re done.
The bill money has left the building!
Your paycheck came in, your bills left, now all you have to do is keep track of card purchases for the next two weeks.
*If you are only getting paid once a month then do this same thing, just do it once a month. 1st and 15th, then do it then. If you get paid every week, or you have deposits from two people coming in all over the place that’s OK too. Let all the deposits come in and settle and choose two dates every month you will pay bills and do it twice a month. I don’t feel it would be helpful for you to pay more often than twice a month, but if it works for you it works. DO what works. This system isn’t mean to be fixed but fluid.
Need help getting started? Here's a jump start!
Here are two versions of ways you could group your payments!
Click Here to download and personalize your own version for yourself!
A SPECIAL THANKS: to my wife Flavia... most of these great ideas are hers!
So here’s my question for YOU! What could you add to this system to make it even easier? Do you have any other ideas, or anything to add?
By Darrell Wolfe
FOR MY FULL DISCLAIMER: See my "Start Here About" page. Click Here
* Information here is As-Is. These are the opinions of a fellow traveler and seeker of truth. I am not a doctor, lawyer, licensed financial advisor, tax preparer, etc, etc... I'm just one guy, sharing what he's learned. As such, the information may be as true or faulty as the guy on the buss stop giving you directions. If you need accurate information I encourage you to seek the help of a professional in your field.
* I do make money from this blog. 1 Tim 5:18 says the worker is worthy of his wages. I do earn affiliate commissions or freebies from some of the products I discuss at various points on this blog. Regardless I only suggest things that have personally helped me, or someone I know. If you click on an "Affiliate Link" and you buy something I'll get a cut. Thanks for your support!
* I am a conservative Christian. I write from a bible-centric point of view. I welcome people from other points of view to jump into the conversation. If you don't like bible-centric writing: I encourage you not to read my posts.... Unless you want to learn something new.
* In all you do: Live Long and Prosper, with GOOD SUCCESS!
Thank you, Darrell Wolfe