I feel, and so do a number of experts, that one of the most significant aspect of accumulating wealth is paying your monthly bills on time every month. You not only look towards minimizing number of bills you have to pay, you should also make sure that the bills are paid off on time.
So far in my life I never missed on any bill payment untill lately, because my checking account was frozen, I took the corrective step and mentioned this in my earlier blog post
On average about 80% of Americans at some point of time have had an overdue bill. If you have to ask your self, even if you are financially secured, you must have missed a payment or two at some point of time, and, probably paid penalty for it too. An extra caution doesn’t hurt. I sincerely hope that these 10 tips will make you think and might help you to not miss on payment in future.
If you are financially not so fortunate, you might have to think towards reducing your bills, or, if possible, even eliminating that expense itself. There are various blogs available on blogosphere, which tells about personal experiences and techniques to cut bills.
Any tips is incomplete if the reasons behind it is not explained. Let me first try to explain
why you need to pay your bills on time.
- Build up a good credit record. Also it negatively impacts your FICO if you have a due on any account. Remember a mistake of one month will stay on your record for 7 years.
- Avoid paying fees and penalties, late payments cost you money. Some times the penalties for not paying on time run in to $50s and $100s!
- Peace of mind, I feel very satisfied when I see all my monthly bills are paid. Imagine what will happen if your power company cutoff the line or the telephone company.
- Your bank offers a cool ‘pay bill’ section, you should use that service. On a serious note, these days, it only takes a couple of mouse clicks to pay, there is no hassles.
Here are the ten tips to make you pay your bills on time.
1. Know the due date. You can not pay your bills on time if you’re not sure when they are due. Note when you receive your bills and how much time you have before they are due. When possible do not rely on paper statement. Do not wait for it to come in your mail box, go to creditor’s website and figure it out.
2. Adjust bill payment date. Most credit card companies do offer the flexibility of adjusting payment due date. You may find it easier to pay your bills if they are all due at the same time of the month. You can adjust due date to match your paycheck schedule as well. Do not clutter entire month with due dates, try to squeeze the dates in to a 5-6 days window in a particular week of month. If you do not get this option online, call help desk.I developed a few help desk application of credit card companies, these applications offer far more features than are exposed on their websites.
3. Pay your bills online. If you can read this blog online, I assume you can login to your bank account as well. Search for ‘Bill Pay’ or similar tab once you login to your bank account. First time users will need to set up the payee accounts. My BofA and Capital One , both offer bill pay option. You can select your credit card or your phone company from the huge available payee list, give your account number etc. and you can pay your due from that point of time onwards. Many other banks offer online bill pay and most of them let you set up automatic payments.
4. Set up automatic payments for your bills. All my bills, except rent, are enrolled in to auto pay. The most amazing benefit is, you do not have to remember those dates. Money will automatically debited from your checking account and credited to your creditors. There is a very important caution to exercise here, that is to monitor your bills for any exceptional item. Do scrutinize your bills thoroughly every month.
5. Create a bill-paying spot at home. Separate your bills from other mail and keep them all in one place. Store stamps, checks, and envelopes in the same place so that you have everything you need when you sit down to pay your bills.
6. Create a monthly budget. You can use a website or, like I, you can use a spread sheet to create monthly budget. Allocate money for each of the bills. At least twice a week review this, it will remind you if any bill is due at that time.
7. Write down reminders on calendar. Mark clearly on the dates the bills are due. My fellow blogger has written a good article on using Google calendar for this purpose. Using Google Calendar To Pay Bills On Time
8. Set email reminders. If you tend to forget about bills, a monthly reminder in your e-mail program may help you stay on track.
9. Have discussion at home. If more than one person in your family pays the bills, set a date when you will hold a joint bill pay meeting. Ask every one about their payment.
10. Remember there is incentive in paying bills on time. read the last line of this blog about my personal experience.
How can you save money by paying your bills on time?
- Better credit score results in lower mortgage rate or any loan rate for that matter.
- Average Americans pay around $500 penalty every year on late payment, that’s a clear saving.
- You can keep your credit card interest rate lower, that saves a lot of money.
I did not pay even a cent on late payment penalty for last 5 years. My credit card rates are as low as the issuing companies go. Now you decide!
Write your comments on how you feel about reading this. Your comments go a long way in boosting my confidence and enthusiasm towards writing more of such articles.