Thursday, October 30, 2008

Never Worry About Paying Bills Again

Almost half of the people employed in the US live paycheck to paycheck, regardless of there level of income. [Career builder 03/09/2008 - 1:11 PM]. This goes to show that even if you got an additional $1,000 of income a month, which may seem like the answer to all of your problems, you would still be living paycheck to paycheck until you change the way you handle money.

Easy come easy go. When I was younger, I had trouble paying bills on time, and was usually scraping together last minute to afford whatever bill was due. Sound Familiar? The only way I could keep up, was to automate everything. Take a moment to find out exactly what your monthly cost of living is. I usually scroll through my online statements and write down the reoccurring bills. Establish a exact dollar amount for all your monthly bills like cable, utilities, cellphone, mortgage, etc. Open a second "Bills Only" checking account, preferably with your current bank. Each time you receive a paycheck, transfer the amount necessary to cover those bills, plus a $100-200 buffer. The left over money from you paycheck is yours to save, or spend, as you see fit. Now contact each of your bill companies to see if they can set up an automatic withdawl (ACH/EFT/wire) from your "Bills Only" account. With today's technology, most bill companies will have no problem deducting the amount owed from your account. If they don't, you can usually set up an automatic bill pay for fixed billing through your bank. The bank will be responsible for mailing out the checks, and you won't have to worry about a thing.

Monitoring Your Creation. Now that you have set your bills on auto pilot, it is time to sit back and check for loose ends. For the first few months double check that indeed your bills are getting paid and that you are not over drawing your "Bills Only" account. If you numbers are correct, and you are including a buffer your account balance should be increasing. If not, increase your buffer and re-evaluate your bills.

What Money? I have been doing this for years, and never missed a payment yet. When I get my paycheck, I only see the money left over, and paying bills doesn't even cross my mind. As an added bonus, I know the bills are getting paid remotely even when I' m on vacation. As long as my paychecks are coming in, and deposited through direct deposit, all the bills will get paid. Plus I save on Stamps.

Adding Another. When you and a significant other jointly pay bills, you can both contribute to a "Bills Only" account. Just make sure that your bills don't include each others personal bills, like contacts prescriptions, magazine subscriptions, or personal credit cards. My wife and I keep our finances separate, and only contribute to our "Joint Bill" account for our common bills. This way we don't argue about how each other spend their money, and all the bills get paid.

Out of site, out of mind. It has gotten to the point where I don't even receive paper statements. The only thing I have to do is occasionally monitor my accounts. It allows me to stop worrying, and get on with my life.

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