There isn’t enough time to do all the things we want to do, let alone the things we dislike – like paying bills. We get bills, and we can’t get away from many of them.
Whether you rent or own, you’re subject to a variety of monthly obligations: Electrical, gas, water & sewer, telephones (home & wireless), cable, Internet, insurance (home & auto), credit cards, condo fees. You can bundle some of those bills, but you’re stuck with others. What to do?
You can free up some time and improve your finances by automating the tedious task of paying your bills. Put your regular bills on “cruise-control,” or make sure a bill gets paid without you having to lift a finger every time. It’s work up front, but the payoff is worth it.
Companies that issue recurring bills frequently permit you to set up pre-authorized payments, either direct from your bank account or from a credit card. I prefer using a credit card for two reasons:
- I use a credit card that pays me back a cash reward equivalent to 1% of purchases — and yes, I do pay the balance in full each month, and
- I prefer to not disclose my bank account number, when I can avoid it.
Thus, I pay a few utility company bills from my bank account (i.e. those companies not accepting credit card payments) and most everything else by credit card.
The process for setting up pre-authorized payments usually involves mailing in a form or a letter, or using the company’s secure web site to provide the same information. It can be tedious, but it’s a one-time thing, and you get a recurring payoff.
Once you’ve set up pre-authorized payments for all of your regular bills, you can relax. Instead of sitting down two or three times a month with envelopes & cheques or doing data-entry with your bank’s online service, you can simply review & file your bills as they arrive. Do review your bills — though a glance is often enough to tell you whether all is well, or not. (Don’t just toss your bills, unopened, in a drawer.)
But what about the credit card bill? Some banks even offer an automatic-payment feature for the credit cards they issue, whereby each month they deduct from your bank account either the card’s minimum payment, some other set amount, or the full balance due. The minimum payment could be handy to make sure that you at least never miss a payment, helping to protect your credit history, while still allowing you the flexibility to pay off the remainder at a more convenient time during the month.
If your bank doesn’t offer such an automatic-payment feature for your credit card, you may still be able to simulate a “minimum payment” feature by estimating an amount yourself and setting up a recurring online bill payment to the credit card. You’ll still want to pay the balance at some other convenient time of the month, but at least you can be assured you’ll never miss a payment.
After you’ve put your bills on cruise-control, the freed-up time could be put to better use. In lieu of reacting to bills, use the time to think strategically about your money: Could you be saving more, or investing better? What other improvements might you consider?