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When it comes to paying bills, it all starts with organization. Once you have an organized process in place, you can be confident knowing your bills will be paid on time, and as a result… you’ll avoid those pesky late fees!
Oh I know, I know… bills top the list of things that don’t ‘spark joy’ when you see them, but they’re a part of life. So that’s why I’ve compiled these creative and easy tips for how to organize and pay bills on time! Whether you’re super methodical or crazy disorganized, adding some new ideas to improve your finances is always smart.
Are you ready to transform your bill paying into something fun, rewarding and maybe even something you look forward to?
Let’s get started! Here’s what you’ll need to do…
How to Organize and Pay Bills on Time
#1: Create A Detailed Monthly Budget
Using a detailed monthly budget is the key to keeping your bills organized. So when you create a monthly budget, make sure it includes all of your expenses. To get started, keep a record of every bill you receive this month. Then make sure each bill is listed on your budget. Make sure to also document any bills you pay quarterly, semi-annually, and even bills you pay just one time a year. Any regular expenses you can think of should be accounted for on your budget.
Could you use a budget tool to help you get organized? All you need to do is search online for a “free budget template” and pick the one that will work best for you. Or, as an alternative you can create your own spreadsheet on your computer. Once you’ve created your monthly budget, you’ll be able to use it to keep track of your bills. Don’t worry about making it perfect right out the gate… you can always add to it, enhance it, or make necessary changes as you go.
#2: Budget for Irregular Expenses
We all have to pay irregular bills, but how do you account for irregular bills on your monthly budget? An irregular bill can be a bill that is different every month or a bill you only pay a few times a year. Examples of irregular bills can include a homeowner’s insurance policy you pay annually, a life insurance policy you pay every six months, or an electric bill that is a different amount every month.
Here’s an easy way to budget for a life insurance bill that is the same amount every 6 months. Simply divide the amount of the total bill into 6 parts. Set aside 1 part every month on your budget. Then when your bill is due in 6 months, you’ll have set aside the full amount in advance that is required to pay the bill in full.
So how can you budget for a bill that changes every month, like with your electric bill? I actually have two suggestions for handling variable monthly bills. First, in the case of a utility, you can call the company to see if they offer a payment plan that will bill you the same amount every month. With my local electric provider, they offer what they call an “Equalizer” plan. This plan ensures you receive the same bill amount every month. The second way to handle variable monthly bills is to add up the last 12 months of your bill history and divide by twelve to calculate the average amount you paid each month. Then set aside the average payment amount in your budget each month. The months your bill is lower than average will cover the months when your bill is higher than average.
All it takes is a little planning for irregular expenses and you can avoid the stress of most big bills. Use your monthly budget to help plan for irregular expenses. Then use your budget as a handy tool for tracking those bills when you pay them!
#3: Use Your Budget as a Bill Tracker
Using a monthly budget is one of the best ways to organize your bill paying. You can use your budget to determine how much money to set aside for each bill every month. Then make sure you have enough money available in your checking account for the bills you need to pay.
As you pay your bills throughout the month, use your budget to track the bills you’ve paid. You can do this by making a note on your budget when each bill has been paid. If money for a specific bill has not been used by the end of the month, check to see if you’ve received the bill. If you can’t find the bill, contact the billing company. Get the bill details and then make payment arrangements. It’s not uncommon for a bill to get lost in the mail. In fact, I usually have at least one or two bills that never make it to me every year… yikes!!
Here’s the crazy part. You can still get dinged on your credit score for paying the bill late. Even if the bill was lost in the mail! Plus, you can also get a late payment penalty. That’s why it’s so important to keep track of what bills you’ve paid and what bills you have not paid every month.
#4: Pay Your Bills On The Same Day Every Week
To make sure you pay your bills on time, it’s a good idea to pick a specific time each week to pay your bills. Bills all have different due dates and some due dates come surprisingly fast. By waiting just one extra week to pay a bill, you could actually be paying it late!
Besides avoiding late payments, it’s also easier to fit paying bills into your schedule when you pay your bills on the same day every week. Plus, by paying your bills more often you’ll be spending less time and paying fewer bills each time you sit down to pay bills. Monday, Tuesday, Wednesday, Bill-day!
#5: Organize Your Bills
You can often choose to receive your bills via U.S. mail, email or even by text message. Choose the delivery option that will work best for you. Then try to have as many of your bills delivered to you that way.
Once you’ve received a bill, it’s important to create a safe spot in your home to store the bill until it’s paid that week. This can be on your desk, or even in a special drawer in your kitchen. For bills you receive via email, you can keep the bill in your inbox until paid or print a copy to put in a safe place on your desk, like a bill organizer. If you receive bills via text message, you can add a reminder to pay the bill on your calendar or on your monthly budget.
Once you’ve paid your bills, you also need to create a safe place to store the paid bills. I suggest using file folders stored in a file cabinet to keep your paper bills organized. Simply create one file for each bill type… Cell Phone, Electrical, Credit Card, etc. Do you prefer to keep digital copies of your bills? You can also scan the paid bills and save them in a specific folder on your laptop.
#6: Open Your Bills Right Away
Before you put your bills anywhere, be sure to open them right away. You want to make sure there are no surprises. If you do find something wrong on one of your bills, you’ll want to deal with it right away. That way you’ll have some time to deal with the problem before the bill is due.
For example, my local internet provider seems to increase my rates almost every year. However, I’ve had success calling and negotiating for a better price. I do this by either changing my plan or getting a temporary discount. I usually get the discount right away, allowing me to apply the lower rate to the bill I’ve just received in the mail!
#7: Pay Your Bills Online for Free!
Did you know that most banks and credit unions offer you a free online bill payment tool? There are some really clear advantages to paying your bills this way. First, you’ll save money by not using stamps to mail your bills. But saving money on postage is only the start. You can also often get your bills paid faster than if you mailed them. Bills paid through my own bank’s online bill payment tool usually get to their recipient one or two days faster than if I had mailed the bill!
Plus, by paying your bills online with the tool your bank provides, you’ll effectively have another record of all the bills you’ve paid. Now you can keep even better track of the bills you’ve paid. It’s like having a free backup that you can access anytime!
#8: Improve Your Credit By Paying Your Bills on Time
Did you know that paying your bills on time can help improve your credit score? In fact, late payments and missed payments are some of the key factors that can influence your credit score! That means paying your bills on time can also help save you money on credit related purchases in the future. With a higher credit score, you can get a better deal on car insurance and even save money on your next cell phone purchase. Plus, having a higher credit score can help you get a lower interest rate on your next car loan or home mortgage.
It’s always a good idea to consistently review your credit report. You want to make sure everything being reported about you is accurate and up to date. You can actually get a free copy of your credit report from AnnualCreditReport.com. Once you’ve received a copy of your credit report, review the report to make sure there are no errors in your credit history or personal information. Also check to see if there are any negative items being reported.
Did you find any problems or incorrect information on your credit report? Don’t worry, this is common and there are some really helpful tools available from CreditRepair.com to help clean up your credit score!
They will help make sure items in your credit report are substantiated, relevant, accurate and reported fairly. If items in your credit history are incorrect, they will work hard to get them corrected and to defend your financial reputation! To learn more, go check out CreditRepair.com.
The obvious, but often overlooked credit benefits of paying bills on time is a really good motivation to get your bills organized. So don’t risk paying late fees and hurting your credit. Take some steps today to get organized. Use any of the ideas from this article that you found helpful. Then sit down to create your very own plan to get your bills organized and paid on time.
If you have any additional questions about paying your bills or managing debt, I suggest speaking with a licensed financial planner or your CPA. Just make sure that you do whatever it takes to get organized and keep those bills paid on time. You’ll be so glad you did!