Here’s a scenario. You come home from work to find a “Past Due” bill in the mailbox. Thinking that you paid the bill, you check your unbalanced checkbook and realize that you didn’t pay it. You think hard to yourself and realize that there wasn’t a bill sent. Oh well, so you pay the past-due bill along with a late charge and send it off in the mail.
A few weeks later, you get a notice in the mail that your check had bounced. Now, you not only have to pay the bill and another late charge, but you also have to pay a “check returned” fee to the company AND a similar fee to your bank! In frustration, you search through your house for any other bills, determined to pay them all on time, and what do you find buried under a stack of papers? The original bill, unopened.
Sound familiar? If so, you’re not alone. Paying bills is probably one of the most dreaded household duties next to scrubbing the toilet. Not many people enjoy doing it. I mean, who actually enjoys forking over all of their money to the credit card companies or to the landlord?
Well, I have good news and bad news for you. The bad news? It’s an inevitable job that needs to be done. There are no ways around it. If you don’t pay your bills, you’ll lose what you have. The good news? There are ways to make this dreaded chore easier for you so that you can minimize the stress and hassle and have more fun in life.
What you’ll need first are some simple supplies: 5 hanging file folders, 5 hanging folder plastic tabs, a basic month-to-month 8X10 calendar that has the days laid out in blocks for each day. (You’ll need the square spaces for writing information) and 1 plastic portable file box. For a calendar I use a free one that I get from the charities I donate to, but you can also find one in any office supply or book store.
Just be sure that it can fit inside your file box. My file box is a nifty little one (conveniently called the “Bill Payment Center”) that I got from Target that has a slot in the lid so I can slip my bills into it. It also has a handy little top tray where I keep a calculator, pens and pencils, address labels, and stamps. However, if you can’t find one like this, anyone will do.
The reason why I suggest a portable file box instead of a file cabinet, is so you can pay bills from anywhere. I like to do my bills in front of the TV, or sometimes in the back yard when it’s nice and sunny. When I go out of town to visit in-laws, my file box can come with me.
The first step you should take is to go down to your bank and open another checking account. Most banks have free checking accounts, so it shouldn’t cost you anything. This is also good because then you don’t have fees to take into account when balancing your checkbook. When you open up your free checking account, deposit a round figure into it, like $50 or a $100.
I deposited $100 dollars into mine. You can deposit a lower number like $30, or $20, but I like to have a little more just in case. It’s up to you. If you get an ATM card with that account, just stick that ATM card into a folder and file it away. You will be using this checking account for bill paying ONLY!
When you get the rest of your supplies, label your 5 hanging folders using the plastic tabs as: Week 1, Week 2, Week 3, Week 4 and Week 5 and then place them in the file box. (NOTE: The reason why I use 5 weeks instead of 4 is because of the layout of calendars. The last week is usually broken in half. The first few days are usually part of week 5 of one month, and the remaining days as week 1 on the new month).
Now take your calendar and “X” out all the Sundays. The reason for this is because the post office is closed on Sundays, but companies will still count that day if you’re late on a bill. So it’s better to be safe and compensate for Sunday. For people who are just starting out, you can label each week on your calendar; EXAMPLE: on the month of November 2000, Week 1 would be 11/1 to 11/4, Week 2 – 11/5 to 11/11, and so on.
Now take your stack of bills and look at the due dates. For each due date (for the purpose of this article I will now call that date “company dates”), count back at least 5 days (being sure to skip Sundays) and see where that day falls into the week. After counting back 5 days, that day will now be your new “due date”.
What we are doing here is compensating for the postal delivery and processing. Five days should give your bill enough time to get where they’re going. So for instance, if the Gas bill is due on 11/9/00 (company date), then by counting 5 days back from that date, your bill should fall into Week 1, (Friday 11/3/00 – new due date). Do this with all your bills and arrange them into stacks according to the week that they fall in.
Now take the bills for Week 1. Find the bill with the earliest due date, and designate that day, bill paying day for that week. EXAMPLE: for Week 1, say you have a Target Credit card bill with a due date of 11/1, a telephone bill due 11/3, and a car payment due 11/4. You want to pay all those bills for that week on 11/1. That way, no bills will be late. If you pay the bills on 11/4, the Target bill and possibly the telephone bill will be late. So use the earliest date for the bill-paying day.
Now take each bill for that week and write the due date on the outside envelope (not the envelope that you will send your payment in, but the envelope that the bill came in). Also, write the amount due on the envelope as well. This will help make it easier for you in case you have to refer back to the bill for any reason. Instead of having to take the bill out and search for information, it is all written out on the outside envelope.
After you have finished labeling the bills, mark the day on the calendar. So in using the previous example, you would write in the block for Wed, Nov 1: Target- $12.50, Telephone-$65.74, and Toyota payment $280.98. Then stick the bills for that week in the corresponding hanging folder. Continue doing this with the rest of the “Weeks”. (NOTE ABOUT WEEK 5: Say you have a bill due on October 30, and another bill due Nov 2. Using the earlier date, your bill paying day should fall into Week 5 of October.
Thus you will be skipping week 1 for November since all the bills will have been paid. I hope I’m not confusing you.) If you’re not completely confused by now and understand this organization style, you should only have to pay bills 4 times a month. If you can swing the cash, you can even try doing this method in two-week periods thus paying bills twice a month! Just be sure to use the earliest date in the two week period.
Just think of how happy your creditors will be when they start getting your payments early! Once you’re done, you should have all your bills separated by “weeks” and a payment schedule all written out on your calendar. Now you can insert the calendar into the hanging file of the pending week.
BILL PAYING DAY
At the start of each week, check your calendar for any bills due. On bill-paying day, total up the bills to be paid. Example: Say it’s Nov 1st and you have a Target bill – $12.50, Telephone-$65.74, and Toyota payment $280.98 due. The grand total is $359.22.
Now, transfer that EXACT total from your other account into your bill-paying checking account (most banks will allow you to transfer by phone). If you started out with a balance of $100.00 in the bill-paying account, you should now have $459.22. Now pay all your bills for the week and mail them out. Once the checks have all been cashed, your bill-paying account balance will again be $100.00.
After paying your bills for the current week, you can now move the calendar into the hanging file folder for the next week that bills are due. Now you’re all paid up and don’t have to worry about any more bills until that week!
Although this may sound complicated and confusing at first, you’ll find that it really is a simple system. Trust me, it’s easier than it sounds and is worth all the effort. The rewards of this system are never having to worry about bouncing checks, never losing a bill, never having to pay late fees, and always being on track with your checking account.
Now when your bank statement for your bill-paying account comes in the mail, it will literally take you less than 5 minutes to balance your checkbook! Trust me all this is worth the peace of mind that you will have and you will feel so much better about your finances.
After learning this simple organization system you can devise your own shortcuts and techniques to make your life even easier!