I spend a lot of time doing debt-free counseling with people. A lot of the issues I see them struggling with are just due to poor bill paying strategies for handling their monthly bills. It’s no wonder. They don’t teach that stuff in school and many parents never think to explicitly cover bill paying strategies with their teen and young adult kids. So most of us just have to figure it out on our own.
But happily, it’s a pretty easy fix. If this is something you are struggling with, I’ve got some a number of clever strategies to help you get a handle on your monthly bills. I even have a monthly bills spreadsheet that I’m happy to share with you for free to help you get your monthly bills set up on a regular schedule.
Why is a Strategy Important for Paying Monthly Bills?
It’s critical to understand how your payday schedule and your bill due dates align so you can avoid those pesky late fees and any resulting damage to your credit score or your credit card interest rates. That strategy right there could save you hundreds per year and tons of headaches.
I’m going to show you exactly how to:
- Handle your monthly bills in an organized manner that is repeatable every payday
- Arrange your bills so they work correctly with your weekly or bi-weekly pay schedule
- Pay all your bills on time (and hopefully in full) to avoid any late fees
Especially if you have ADD (me too!) or are chronically disorganized, it’s important to have a set and repeatable monthly process in place so that you can get into the habit of keeping your monthly bills caught up. Otherwise, you could be dealing with late fees, collection agencies, utility shut-offs, or bill collectors harassing you. That’s just no fun!
Paper Bills vs. Online or Electronic Bills?
I have a pretty strong opinion on this one. After talking to many, many people about their disorganized bill habits, most of them are trying to manage their monthly bills in an electronic format. That’s the very first thing I will suggest they change. With the FLOOD of Email coming into your inbox every single day, it can only take a couple of hours for an important bill to get pushed down out of sight underneath dozens of other Emails.
Having a physical paper bill in your hand is a huge help to keeping track of your monthly bills – BUT – only if you manage it correctly. It’s taken me more than 20 years, but I’ve trained my husband explicitly on how to manage our bills. He typically gets the mail, and then brings it into the house. Then he fishes out anything that even looks like a bill and puts it into a specific drawer that is reserved ONLY for bills. The rest of it, he usually dumps on the kitchen counter, but as long as the bills make the bill drawer, I’m happy!
Then when I have a minute, I go through the drawer with a sharpie. I open each bill and write the amount due and the due date in BIG BLACK LETTERS. I don’t really need to do that any more as I have our bills pretty well memorized, but it’s an easy way to fix in my mind what needs to happen with the bills and when.
If you are in the habit of wanting to avoid your bills because you’re unhappy with what’s in them, it’s time to realize that this solution is hurting you rather than helping you. Ignoring the bad news doesn’t make it go away – in most cases, it just makes it GET WORSE.
So, if you can just implement these simple habits, you will be in better shape right from the start.
- Get the bill people to switch you back to paper bills
- Designate a specific space for the bills – a drawer, a folder, or a clipboard
- Label the bills with a sharpie or a bright marker
If you are dead set on sticking with the electronic bills, at least set up some filters to get them all into a specific folder that you will check on your designated bill paying day. Some people just set them to go straight to credit cards, which is fine, as long as you take action to pay off that credit card every month.
The whole auto-pay thing where they just suck the money right out of your checking account – I HATE that option and will never use it if I can help it. It’s a good deal for them, but a terrible deal for you if they overdraw your account or take out money you had planned to use for other expenses. I had that happen this week with a business expense and I was completely ticked off. No reminder or warning – they just sucked $159 out of my business account. I will set that up on a different payment method in the future.
Actually Paying Your Monthly Bills
Time to decide exactly WHEN you will pay your monthly bills. After much trial and error, I finally decided that I will pay my bills every other Friday first thing in the morning. Even though I am a full-time freelancer, I still manage to keep my income on the same payday schedule as I had when I worked my 9-5 job. It’s just easier. And paying them specifically ON payday assures that I don’t have a chance to fritter any of it on Friday dinner out or a random shopping spree, or even at the grocery store! Ask me how many times I’ve done that….
So, pick your day and get it set in stone. Put reminders in your phone, leave a note on your computer, pile the bills next to your plate at the table, whatever it takes to make sure that bill paying appointment happens, no matter what!
Now is where my handy spreadsheet will help you. Since most families have a pretty traditional paycheck schedule, I have a spot for 2 paychecks per month for 2 spouses. And then underneath, you can list the bills that you will pay from each paycheck. I kept it super, super simple for you, and it’s a Google Sheet, so both spouses can share it if desired.
It’s helpful because you can look at the dates for your paydays and compare them to the due dates on your bills. Then you can figure which bills need to be paid on which paydays, because if you hold them over to the following payday, you’ll be paying them late. It’s also helpful if you have a big expense like your mortgage, so you can shift some of the smaller bills around. Most utilities or credit card companies will let you change the due date for this.
Or maybe you tuck half the mortgage away from your first paycheck and then pay it on the second check. Or you can do those bi-monthly payments if your lender will allow. We’ve done it both ways and both work very nicely. I also pay all my credit cards twice a month – I’ll explain why in the next section.
See how this system helps you have some control over your bill paying? You have all the bills in one place. You know what is due. You know which payday they need to be paid on. And you’ve set aside a specific time to pay them. That is a major victory for a lot of people right there!
My Double Minimum Strategy
Who do you think determines the minimum payments on your credit cards? A bunch of jerks in suits sitting in a conference room. They calculate them very carefully in order to get the maximum amount of interest out of your pocket. That’s why minimum payments are for suckers! The game is literally rigged in favor of the credit card companies.
The best way to beat the jerks from the credit card companies is to ignore the minimum payment amount completely. In fact, if I can’t pay off the whole balance, I normally at least pay the minimum payment twice. I pay it once on my first payday and pay it again on the second payday, or even more if I can afford it. Why do I do this? Three reasons:
- I never have a late fee or a missed payment
- The interest fees hit on the first payment, so 100% of the second payment goes towards principle
- I’m paying my bills off twice as fast and outsmarting the suits!
It sounds like a simple thing, but little bill paying strategies like this can have a big impact on managing your debt. Click the link below to access the free spreadsheet.