Take online billpay to the next level

[ernesto sidi]

Hi Folks,

It sure is very convenient to pay your bills online, as it eliminates writing checks, licking stamps, and going out to the post office every week or so.

But, there’s more you can do with bill pay to reduce debt faster, stay ahead of your creditors and vendors, and also avoid the biggest pitfall of paying bills in the first place: running out of cash before pay day.

For many years, my wife and I would constantly be logging into our online account to see our account balance, especially before making large purchases. We just weren’t sure if we’d have enough money. Our spending was never excessive, but we did not have control over our personal finances, and so we were not able to forecast when we needed more cash to clear payments I’d made.

I had already been using bill pay for a while, which made it much simpler to see online which checks would clear before pay day and after pay day, and how much money I’d have left over after the payments cleared. Problem was that too often I’d have very little money left, and sometimes I would not have enough to clear all the payments I’d made, and certainly not enough to go out to lunch without over-drafting. If it wasn’t too late and my overdraft protection hadn’t already kicked in, then I would transfer some money from my equity line of credit and then pay it back later. The biggest bills, such as my mortgage, were the biggest problem. They took a huge chunk out of my account every month, and even worse if they came due at the same time or within days of other large bills. Another problem was my utilities. In Arizona, the electric bill can vary from $80 in the winter to over $300 in the summer. The gas bill will do the opposite. So it’s hard to forecast and keep a constant cash flow every month, having such a cyclical nature. Imagine paying between $80 and $100 for several months, and all of a sudden, the electric bill tops $200 one month, then $250, then $300.

Over a period of about 4 weeks, I started to convert all my online bill-pay items into recurring payments, and I scheduled them weekly rather than monthly. That way my $200 auto insurance bill was costing me $50 per week. My $300 car payment was $75 per week. And my mortgage payment was about $415 per week. Sure, in the end the aggregate costs were about the same, but the difference is that now the cash flow is leveled out more evenly throughout the month. That automatically increased the cash reserves in the bank, or my average daily balance.


Best of luck,

Ernesto Sidi

[irmanator]

interesting....... anyone else try this and how did it work for you?