Automate Your Payments
Short of rattling a can in the middle of a busy intersection, we all deal with bills. Due dates, fluctuations, and calls to our providers (please kill me now) if there is ever a discrepancy. I don’t like dealing with the bills themselves, or the people on the other end of the phone lines at all. It depresses me when I see a bill in the mail, knowing that it’s another slice of the pie that gets cut out of my hard earned money. Not to say that the money doesn’t serve a purpose – we need water, natural gas, and electricity to live our modern lives. Much in the same way taxes only upset you if you don’t withhold enough and have to cut a big check in April, bills bother me in the same way, even though there’s not much that can be done about them. You can always go off grid, but we’ll save that topic for another day.
What I can do to alleviate the frustration is go paperless and automate my payments. Not only does this prevent the three-to-four times a month cringe from looking at costly bills in the mail, it assures that I never miss a payment. A result of this fully-automated payment system is that you need a “bare minimum” in your checking account, or wherever your bills are drawn from. That number for me is about $700.00, and it includes enough for a fat electric bill, internet access, natural gas, water, trash, health insurance (I’m independently employed), auto insurance, and some chump change for dental insurance. If you have a lot of liquid tied up in certain mechanical investments, like me, (the 1986 Corvette or 1993 Z28 which I will be blogging about soon - links to come), switch some of your automatic payments temporarily to a credit card, so you can be sure to not accidentally overdraw your checking account due to heavyweight utilities hitting your account the same day. My situation is a little unique in that I manage the utilities and rent for my tenants all in one account – so I pay five peoples worth of utilities up front, then am reimbursed 10-30 days later, depending on when the next rent cycle rolls around. It requires me to always have more cash on hand for utilities than your average bear, but it makes everyone's lives easier in the long run. No reason to have one person paying water and another paying electric, so I just manage it all myself.
I developed a simple spreadsheet for keeping track of those expenses. Each month has its own column, and each column has each utility listed by amount of that month. When all the results are in, I tally them up and divide by five. I add this number to the rent for the month, and I collect that amount so I only end up paying for 1/5 of the utilities.
I have a couple living in my house that only rents one room – so they pay for one room ($300) and double utilities. I am fortunate to be at a stage in my life where I can live with four other people and have 3/4 of the mortgage paid for me each month. It feels good to collect in your mid-20s – if you get a chance to do it, I highly recommend it.
The key to this process is management. I use an app called Mint by Intuit. You can link all of your accounts, which includes but is not limited to debit, credit, auto loans, home mortgages, 401k, private gold reserves, you name it, and Mint will track it for you. An awesome feature of mint is that it learns what categories certain repeating expenditures are, and you can get a glance at your month of utilities in a pie chart of expenses.
Tap the orange "utilities" section of the chart and it shows you everything that hit any of your accounts that were categorized as a utility for that month. So, when I say automating, I don't mean that I never look at those expenditures, it just means I spend less time wondering if I paid a bill or if it’s due today, tomorrow, last week, etc.
It takes the guesswork and stress out of bill paying. To verify all the numbers, I quickly log onto all the respective utility websites at the end of each month, double check all the balances against Mint and any paper records, and look for any discrepancies (shocker - I never find any). It takes a grand total of 10 minutes once every 30 days. You also reduce the amount of paper that gets torn up and thrown away, so you’re doing the trees a favor as well! And who doesn’t want to save the trees? What are you, some kind of monster?