other ways to save and pay debtt

[prosper]

I wasnt sure what to title this thread!?

As I prepare to exit my job I noticed that I have an additional resource of money and a uncommon option to pay debt.

1-Paid Time off - My company had a lucrative contract end and they are forced to layoff employees. Part of the layoff process is involves paying unused vacation/sick leave. Amazingly, some employees will recieve as much as 25k not including the severance package. Kinda works as an additional savings account.

2- My credit union extends the due date of a loan when extra principle is applied. For example, if you have a payment due this month and you double the minimum payment, the next payment will not be due until November. (Of course interest will continue to accrue) This is a good option to have if you tap out of every available resource you have including savings and investment accounts.

3- In addition, a friend of mine had lost is job 2 years ago. Fortunately for him he stays about 6 months ahead on his bills. He always pays a little extra and over time it puts him ahead. The bills that I am refercing are bills like cable, electric, gas, water, internet, phone, cell phone, insurance, etc

[snshijuptr]

I would disagree with the third option because it puts the money into someone else's hands so they earn the interest and not the original/rightful owner.

[prosper]

Originally Posted by snshijuptr

I would disagree with the third option because it puts the money into someone else's hands so they earn the interest and not the original/rightful owner.

Point taken. But your theory would lead one to assume you keep $0
in your non interest bearing account(s).

[snshijuptr]

No I don't have to assume $0. If you overpay by only $10 a year, and you have a 1% interest account, then you lose $0.10 and the utility company can invest that $10. It doesn't matter how much you otherwise have in your interest account.

[nmboone]

Not sure I would ever overpay on common utilities. If I lost my job and I needed/wanted to drop cable or my cell phone to save money in the mean time, it could be a fight to get that money back in cash. I could see insurance because that's something you can't really go without and you might get a discount for paying 6 months up front.

But if that's your friend's thing, then so be it.

[bjl584]

I was unaware that you even had the option of overpaying on utilities. I simply pay the bill when it shows up in the mailbox.

[KTP]

Originally Posted by bjl584

I was unaware that you even had the option of overpaying on utilities. I simply pay the bill when it shows up in the mailbox.

I actually did this for our water bill. I got tired of sending in a $25 check every month so I mailed them $150 and said don't bug me for 6 months. Worked like a charm.

I guess I lost $1.50 in interest...saved $2.40 in stamps though.

[disneysteve]

Overpaying bills makes no sense. Instead of overpaying, put that extra toward your emergency savings. If something happens to your income, you then have your EF to tap to pay the bills. The money prepaid to the utility can only go for one purpose. The money in your EF can go for any purpose you need. If your car breaks down, you can't use all the money prepaid on bills to get your car fixed but you can use your EF. If you need to buy a plane ticket to attend a family funeral, you can't use the money prepaid on bills but you can use your EF. You get the idea.

[jpg7n16]

Originally Posted by KTP

I actually did this for our water bill. I got tired of sending in a $25 check every month so I mailed them $150 and said don't bug me for 6 months. Worked like a charm.

I guess I lost $1.50 in interest...saved $2.40 in stamps though.

hah that's very clever

I'd never thought of that. lol

[Campfrugal]

You all make good points, but I beleive that if paying extra on bills works for some people, then they should do it. Maybe, they are not good savers and if the money was in a savings account, it would tempt them to spend it. I am always good with what works for each individual, even if it doesn't make sense to others. Just my opinion.

[Tree0164]

I would never prepay my bills. I would rather have the cash in my saving accounts. If you are concerned about saving it-put it in account that isn't easy access.