Scheduling your monthly bills?

[Frügal]

Hello all!

Since I got this new job over half a year ago, paying bills has become much more difficult. I used to get paid on the 5th and the 20th. With this new job, it is just every two weeks. Well, as you know, bills are due on set dates every month. With this new paycheck schedule, the same bill may fall on a different check at some point. Take, for instance, a couple of months ago - I had three checks in one month. One of them was a "free" check, meaning it had no bills to pay. However, I ended up paying twice on some bills, because of how screwy this new schedule is to me.

Now, this month, I paid some bills that usually are paid with the first check of the month, with the second one of last month. Now I am just all sorts of lost.

As a result, our savings account has not been getting regular deposits like it used to.

I use a spreadsheet to lay out our bills.

Could someone try to shed some light on this situation for me?

[disneysteve]

It sounds like you are living paycheck to paycheck with no reserve. What you need to work toward is having a surplus in your checking account sufficient to cover a month of bills. That way, you will be paying your bills with money already received rather than waiting for a paycheck to pay the next bill. Then you'll use your paycheck to replenish the reserve.

Ultimately, it shouldn't matter when you get paid or when each bill is due. As long as your income is sufficient to cover your bills, the dates shouldn't matter.

I don't understand how you could have accidentally paid the same bill twice, though.

[riverwed070707]

You're allocating money on a per paycheck basis. You need to change your thinking to a monthly basis. This is easier to do if you have a bit of reserve in savings rather than waiting for the next paycheck to get the bills out the door.

I pay bills twice a month. It doesn't matter when my paychecks come in, I pay bills on the 18th and 30th. Everything due between the 1st and 18th gets paid on the 31st of the month prior. Everything due the 19th through the 31st gets paid on the 18th. I switched my direct deposits from going to checking to going to savings to help me visulize my spending better and capture my surplus for lower than expected bills. I transfer $ to cover all of my monthly expenses (bills, groceries, everything) twice a month to checking, typically on pay day. If I ever need extra, I just transfer more, but at least that way I'm seeing it as extra spending and not an expense.

In case that was unclear, example:

Sept. 15: Payday - transfer $700 to checking from savings
Sept. 16: Second half of the month bill payments go out (auto banking)
Sept. 30: Payday - transfer $600 to checking from savings
Sept. 31: First half of the month bill payments go out

The two transfers cover everything, including groceries for 2 weeks and all other irregular expenses except for gas which is always put on the CC and paid monthly.

HTH!

[Frügal]

Interesting. I never thought about using what is in savings as bill money.

We don't really live on a paycheck-to-paycheck basis. But I do schedule the bills per paycheck. Hard to explain, I guess? We have enough in savings for a month's worth of bills. Trying to get beyond that. But that is our emergency fund. Still working on it.

I'm not sure exactly how to do what you both are proposing, without losing track of what to put into savings and into checking. Hmm.

So... Do you auto-deposit your paychecks into savings?

[disneysteve]

I'm not sure exactly how to do what you both are proposing, without losing track of what to put into savings and into checking. Hmm.

So... Do you auto-deposit your paychecks into savings?

All checks get deposited into our checking account. Bills get paid from there. Investments get made from there, mostly automatically. In fact, most bills get paid automatically. The only bills I pay manually are the mortgage, credit cards and auto insurance. Everything else either automatically draws on the checking account or automatically charges to a credit card.

How do you do what we're proposing? Keep a buffer in your checking account. Figure out how much you need to keep in there to avoid the problem you're having. Let's say your monthly bills are $3,000. At the end of the month after all of your bills are paid, you should have $3,000 remaining in the account, all ready to deal with next month's bills. If you have more than $3,000, transfer the difference to savings. If you have less than $3,000, transfer money in from savings. That way you are always one month ahead and won't ever be waiting for a paycheck to come in before you can pay your bills.

[Frügal]

All checks get deposited into our checking account. Bills get paid from there. Investments get made from there, mostly automatically. In fact, most bills get paid automatically. The only bills I pay manually are the mortgage, credit cards and auto insurance. Everything else either automatically draws on the checking account or automatically charges to a credit card.

How do you do what we're proposing? Keep a buffer in your checking account. Figure out how much you need to keep in there to avoid the problem you're having. Let's say your monthly bills are $3,000. At the end of the month after all of your bills are paid, you should have $3,000 remaining in the account, all ready to deal with next month's bills. If you have more than $3,000, transfer the difference to savings. If you have less than $3,000, transfer money in from savings. That way you are always one month ahead and won't ever be waiting for a paycheck to come in before you can pay your bills.

That makes sense, indeed.

I guess we are living paycheck-to-paycheck then, considering our Emergency Fund is equal to one-month's bills, and no more than that. Well... I am not sure what to do then, still.

[cooliemae]

I have found that setting up separate accounts for particular purposes has made my life alot easier. I have an account for our cars (insurance, registration, repair), utilities, and misc. monthly payments. I just figured out my monthly average for everything and then have the money dd out of my paycheck directly into the various accounts. Over time the accounts have built up extra money to cover the high power bill that might come in or the car repair that comes up.

Over the long haul, it really won't matter when you schedule the bills because the money will already be sitting there.

We then have a separate EF just in case the worst happens.

[twest]

We pay our bills one month ahead so for ex: today's paycheck will be our first paycheck to pay bills for October. I go ahead and deduct 1/4 of the amount needed for all bills and then if there is any extra I apply to other savings and irregular things. My husband is paid on comission so his paycheck can vary from week to week. This method really helps my peace of mind because I was kind of like you before doing this. At the beginning of the month it seemed our highest bills were all due at the same time. I got tired of having to go on little amount of money at the beginning of the month. So using disneysteve's 3000 example I would pull 750/week every paycheck in September and by the end of September I would then have my 3000 for October's bills. It is also really nice if there is something to come up like a minor repair because most of the time we can make up for it and not have to get into our actual emergency fund. And one other really good thing is that there are extra paychecks that come along if you are paid weekly or biweekly and by doing it ahead like this our extra paycheck is truly extra money that we can do whatever we want with whether savings or a vacation.

[riverwed070707]

Interesting. I never thought about using what is in savings as bill money.

We don't really live on a paycheck-to-paycheck basis. But I do schedule the bills per paycheck. Hard to explain, I guess? We have enough in savings for a month's worth of bills. Trying to get beyond that. But that is our emergency fund. Still working on it.

I'm not sure exactly how to do what you both are proposing, without losing track of what to put into savings and into checking. Hmm.

So... Do you auto-deposit your paychecks into savings?

Well to be clear, I have more than one savings account. So we save a min of $1000/mo. That amount is auto deducted from savings once a month. The checking account is what we're actually going to spend. At the end of the month, if there is money still left in checking I sweep it back into savings, less $100 or so as a buffer. The reason I've done it this way even though it seems a little more complicated is because before when money was going into checking, I had a tendancy to spend it if it stayed in checking. Having to physically transfer what I know I'm going to spend keeps me in check from overspending.

The thing about managing money is it is mostly a mental thing. Some people see extra money that could be well spent and they save it instead. Some see money that should be saved and they spend it. Similarly, you're seeing your paycheck and visulaizing how those dollars will be spent instead of seeing the bigger picture of what you have going in and out. You just need to find a method that works for you mentally.

[disneysteve]

I guess we are living paycheck-to-paycheck then, considering our Emergency Fund is equal to one-month's bills, and no more than that. Well... I am not sure what to do then, still.

I'd say what you need to do is continue doing whatever you have done to get your EF to that point and keep building it up until it equals 2 months, then 3, then 6 months worth of expenses. For now, use the one month worth as your checking reserve but as the savings grow, you can also have money in the savings account.

And, of course, scour the budget to see if there are any things you can trim to boost the savings quicker.

[Frügal]

I'd say what you need to do is continue doing whatever you have done to get your EF to that point and keep building it up until it equals 2 months, then 3, then 6 months worth of expenses. For now, use the one month worth as your checking reserve but as the savings grow, you can also have money in the savings account.

And, of course, scour the budget to see if there are any things you can trim to boost the savings quicker.

Well, see, the thing is that I was getting paid on set dates, so it was easy to know ahead of time which check was paying for which bill.

I suppose the same could be said about doing it this way, so long as I do not fall behind on anything. After a while, I will end up being ahead.

[Frügal]

Okay. Could someone help me work this out?

Here is our spreadsheet:

https://docs.google.com/spreadsheet/ccc?key=0AoMxlCeYZJVRdHY1aV9hN1dReHpCRjFCS3QwZjA3Tmc

It is the first pay period. However, the following bills were paid with last paycheck instead of this one: phones, internet

With the way the dates are playing out, that now puts those bills on the second pay period.

I'm just having a really hard time figuring this out.

[disneysteve]

Well, see, the thing is that I was getting paid on set dates, so it was easy to know ahead of time which check was paying for which bill.

It doesn't matter which check is paying for which bill as long as you have enough in the account. Don't think of it that way. Just think of it in terms of your total income and your total expenses.

Let me ask one more question that wil help me explain this better. Your mothly expenses are $1,855. How much is your monthly take home pay?

[Frügal]

It doesn't matter which check is paying for which bill as long as you have enough in the account. Don't think of it that way. Just think of it in terms of your total income and your total expenses.

Let me ask one more question that wil help me explain this better. Your mothly expenses are $1,855. How much is your monthly take home pay?

Last month was only $1,984. Before that, $2,132. So, there abouts.

Basically, I should have at least $100 going to savings each month.

When I netted $1,600/mo and bills were about $1,450, I was saving the difference. No reason I should not now, other than being confused with bill payment schedules and the couple of times I paid the same bills more than once in a month. Haha.

[dontgopoor]

Hi,
You can make this easy since your monthly income exceeds your monthly expenses. Don't worry about matching expenses to a check.

1. Deposit your checks
2. Pay your bills on time, just before the due date
3. Treat your savings as a bill and make that payment once a month - you pick the date.

Twice a year you'll receive a 3rd paycheck in a calendar month - don't think of that check as free. Just deposit that check.

When you make your "savings payment", you can determine if you have any extra money to put into savings or your EF.

You've done the hard part - having expenses that are less than income.

Good job.