Sunday, March 17, 2013

Pay your bills as soon as you receive them!

I used to wait until a bill’s final due date before paying that bill.  Whenever I received bills in the mail, I would open them to look at the balance and due date, then set the bill aside to pay later. 
I remember a time when paying bills used to always stress me out.  Not paying my bills immediately led to several issues and big headaches:
  • Sometimes my utility / cell phone / credit card company would receive a late payment and would stick me with a late fee.
  • Sometimes I would forget to pay a bill.  Then I’d stress out trying to get the payment in last minute: whether it was rushing out to the post office to drop off a bill, or calling my credit card company to pay a bill over the phone.  If the bill didn’t get paid on time, I’d get stuck with a late fee or increase in interest rate.
  • Whenever I got my paycheck, I would think that I had tons of extra spending money.  I would buy the things that I wanted first.  I couldn't wait until I received a paycheck so I could go out and spend, spend spend.  Then later in the month, I found myself scrambling to find a way to pay my statement balances as the due dates approached.
A common argument against paying bills early is that people prefer to keep their money in the bank as long as possible “earning interest” before making a bill payment.  With today’s interest rates, the amount of money you’d earn by delaying a bill payment is insignificant.

Two of the best lifestyle changes that I have made over the last few years were to: 
  1. Pay my bills as soon as I received them
  2. Automate as many bill payments as possible

I have set up automatic bill payment for most of my bills.  Each month, I receive an email billing statement from my cell phone, gas, electric and water companies letting me know my statement balance charges and due dates.  Then these bills are set to auto payment and paid off automatically. 
Paying these bills couldn’t be easier.  I just need to read my email, verify the charges, then delete the mail.

Paying bills as soon as they arrive relieves me of financial burden:
  • I never forget to pay a bill
  • Bills get paid well ahead of time.  Goodbye late fees.
  • It takes just a few minutes for me to open up a bill, and then immediately pay it
  • I am now more consciously aware of how much money is left over each month.  This better helps me decide how to save, invest, and spend my money.  I never have to worry about not having enough money to pay my bills before the due date.
  • If you carry a credit card balance (which you shouldn’t unless you have a 0% introductory APR) then you will pay less interest fees when you pay your bill as soon as you receive it, versus if you wait until the payment due date (since credit card interest accrues daily).

Along with this advice, I have to recommend that you NEVER pay for a consumer good with credit if you can’t afford to pay for it with cash.   But if you can afford it, pay for it with credit to earn those points!

Everyone’s situation is different.  Not everyone may be financially in a position to pay all his or her bills immediately.  Many people live paycheck to paycheck.  If this is you, it’s time to consider increasing your income, or cutting your costs.  

There are other ways to pay a bill immediately.  Most financial institutions and bill pay programs have ways to schedule a payment a few days before it’s due.  Instead of paying your bill the day before it’s due, why not schedule your bill payment right after receiving your statement?  You would have one less bill to worry about paying.

It may take several months to get on track.  But once you get in the habit of automating your bills or paying them off as soon as you receive them, you will never look back.  

1 comment:

  1. For know the financial investment for the future is a great thought but how we can learn all about this. All this has been learn in universities programs. Good approached as term of investment. Any employers, organizations or institutions that are, have been, or may be affiliated with the improvement.


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