After a conversation with a friend the other day, I gave some thought to how many choices there are now just to pay our bills. When I was young, before I had any bills to my name, there were only about two ways to pay bills. You would write a check to whom you owed and send that check with your statement to get your bill paid, or take a check or cash directly to pay bills in person if the company or person owed was local.
That old, archaic method of paying bills still exists, but most Americans now have a slew of choices when it comes to paying bills.
ONLINE BILL PAY
If you participate in online banking, like most of us do, online bill pay is an option for you. Bill pay is very easy to set up with most institutions and can make paying your bills an afterthought. Bill pay offers the option to pay your bills whenever you want, with paperless convenience and electronic records to avoid a cabinet full of statements. No stamps, no waiting in line to pay bills, and change your settings whenever necessary. Bill pay is usually free and can be very beneficial, especially for those who constantly misplace paper bills and end up paying late or missing payments altogether.
Bill pay may not be for everyone. If you have money management issues or are constantly scraping the bottom of the barrel in your account(s), I do not recommend enrolling. If your finances are not in good standing or you fear that funds may not be available, bill pay is not for you.
CREDIT CARD METHOD
The “credit card method” of paying bills is a relatively new concept to me, but I like it and intend to use it when my credit card balances reach zero. It is very simple: If you use a rewards credit card that pays you to use it (cash back, miles, discounts), pay all of your bills with that card. It is usually very simple to automatically have your bill directly paid by your card company, but you may have to pay a few manually.
This method has two very distinct benefits. The first is that you may only have ONE BILL to pay every month. You pay the same amount for all of your bills, but your checking account will only show one debit for the payment of all bills. This may help manage your finances even further. The second main benefit is that you will be getting paid for paying your bills! Whether your rewards come monthly, quarterly or annually, the money from your bills will add up quickly. Your rewards card will be paying you to do what you have already been doing for years.
The credit card method is definitely not for everyone. In order to use this method, you must not carry any other balances and you must have one card allocated only for paying bills. If you have any card with a balance, I do not recommend paying bills with a card until your self-discipline is well under control. The last thing you want is to start building debt because you have not saved the proper amount in your checking account to cover the ENTIRE bill at the end of the month.
Receive bills during the course of the month, and pay before the due date. It does not get much more simple than this. For many people, this ends up being a mix and match method. For some bills, you may send a check, for others you may pay online.
Since most people still use the traditional method and have yet to streamline their bills, I will not go into great detail about this one.
Most who use the traditional method still have yet to get an effective system in place to properly track and modify their normal monthly expenses. Many lack the organizational skills to do so in the first place.
Until I am able to adopt the credit card method, I institute the spreadsheet method. Now that I can pay all of my bills manually online and do not have to write one single check, I have started my own spreadsheet method of paying bills. My process is very simple. After paying my bills online, I open a spreadsheet in google documents where I keep track of all bills that I pay. Do not be afraid of putting together a spreadsheet yourself. Even if you are unfamiliar, all it really does is organize your bills for you. There are no formulas you need to know. Nothing complicated at all. After my bills are paid, I enter the amount and confirmation #. That way if there any issues with my payment, I do not have to sort through pounds of paper looking for old statements. I just turn on the computer and find the amount and confirmation number.
Like the other methods listed, the spreadsheet method is designed for those who have good organizational skills. If you do better with hard copies and need something tangible to keep records, continue to do so. If you are looking to go “paperless”, and do not have the desire to enroll in a bill pay program, the spreadsheet method may be for you.
So, how do you pay your bills? How do you keep track of the payments you make? Do you even keep records?
Maybe there are effective systems that I do not know about that could benefit me or other readers.