How do you do pay bills?

[KiwiJo09]

I have a question when it comes to paying monthly bills. Right now, since I live at home with my dad and I have limited bills that never exceed one paycheck, I pay my bills with the paycheck just before the due date on the day I get paid, leave some in my checking account for gas, and the rest goes to savings.

Since we're moving in 48 days (I'm not counting...) to our first place, obviously our situation is changing with regards to bills. Our bills will undoubtedly exceed one paycheck amount, so I was thinking about having one month's income in our checking account at the beginning of the month, and pay bills from that balance. At the end of the month, any amount over that original balance will get transferred into savings. My question is, is this the best way to do this or is there a better way? How do you guys do this?

[disneysteve]

I keep a balance in our checking account, usually around $4,000 or so. So after all the bills are paid, there will still be about 4K in the account. That way, I never have to shuffle money around if an unusually large bill happens and I don't have to worry about when my next paycheck is coming in order to pay bills.

I know some people spend their checking account down to zero every month but that would drive me nuts.

[KiwiJo09]

That's what I was planning on doing, keeping around $2500 in checking and never going below that so that I don't have to worry about when a bill is due compared to when we get paid. This is my first real jump into life and I wanted to make sure I was doing it right. LOL

[JoeP]

We have a buffer of about $200 in checking. When bills come, we earmark them for a specific time when we'll have money in checking to cover them. Since we both get paid bi-weekly, and my wife's pay goes into checking and mine goes into savings, there is sometimes a transfer or two needed during the month.

When it comes to paying, try electronic bill payment: a feature pretty much available at any bank/CU these days. When you do this, always PUSH the payments by hand. Don't let the payee pull money from your account. Also you can run into problems (insufficient funds) if you have autopay set up and don't have a big buffer.

We simply sit down once or twice a month and schedule each payment by hand. This lets us be more in tune with where our money is going, and takes maybe 5 minutes to do it and log the payments in our checkbook register.

[Aleta]

We keep the minimum required in the checking account and transfer in the first of the month from the money market ( in the same bank) the amount of money of bills to be paid out. There are times that I may have to transfer more money for something that unexpectedly comes up. Most money markets allow you 3 checks and 3 non checks or they will allow 6 transactions of any kind. Some banks will not count the transaction if you go in person and withdraw the money. Always ask your bank what their rules are on money market accounts. We have unlimited check writing in our regular checking account so I write out most of the checks from there. We keep the minimum so that we won't incur a monthly bank charge.

[maat55]

I pay as many bills as possible automatically(CC and bank drafts). I pay my others bills online and a couple by mail.

[humandraydel]

I pay as many bills as possible automatically(CC and bank drafts). I pay my others bills online and a couple by mail.

I put about 95% of my expenses (other than housing) on my CC, then pay it off at the end of the month. So I really only have 2 big expenses in the month - rent and CC - which makes it very easy to manage a low balance in checking. Plus, I always know about a month ahead of time how much I have to pay on the CC. So often I transfer extra money to savings immediately, and run a razor thin $50-100 in checking. And, if I need money for something, a transfer from savings to checking is literally a click away (immediate transfer).

[maat55]

I put about 95% of my expenses (other than housing) on my CC, then pay it off at the end of the month. So I really only have 2 big expenses in the month - rent and CC - which makes it very easy to manage a low balance in checking. Plus, I always know about a month ahead of time how much I have to pay on the CC. So often I transfer extra money to savings immediately, and run a razor thin $50-100 in checking. And, if I need money for something, a transfer from savings to checking is literally a click away (immediate transfer).

I wish I could pay more with the CC but some of my bills charge service charges for doing so.

[snafu]

Before moving you and SO need a plan for how money decisions & bills are handled and who will have primary responsibility so that nothing 'falls through the cracks.' Are you both on the same track for savings and spending? Have you established spending categories and ascribed target sums? Bills could be handled 50/50 or split to reflect variances in income.

For example if you make 20% more than partner, you pay 70% of joint expenses like rent, utilities, insurance & food. Will you continue to pay auto expenses for your car and personal CC? How much will you retain as a 'personal allowance'? What procedure have you chosen to make major spending decisions? Would you change insurance provider if you got a significant discount for more than one vehicle + rental insurance?

I suggest keeping finances separate until marriage except perhaps a joint chequing a/c for joint expenses.

[Gailete]

We are on a tight budget and it would be a dream to have even a $1000 buffer in our checking account. Between my disability, and a small pension and self-employment income our money trickles in all month. For close to 15 years now I have a system that keeps things from falling through the cracks especially useful for when things are tight. I use a spiral notebook that I use a page for each month and since I get my SS on a Wednesday it is based on those. In each quadrant of the page is that date of each Wednesday for that month. Any bills that come due at that time are listed there (always giving enough time for them to arrive). Each Wed. I sit down and go through any bills that came in for the last week. Write them down where appropriate in my book as some things like property taxes and driver license renewals come way early. I also yearly when I set up the book, go through and write down all the usual and customary bills that come due during a month so things like house and car insurance, estimated taxes, etc. aren't a surprise, if you have to budget an amount for Christmas (I'm always surprised at the people that somehow forget that Christmas always comes on Dec. 25 and have no money or presents set aside and then ‘have’ to borrow). After making sure that I know what all needs paid and have balanced the checkbook--each week, easy with on line access, I pay the on line bills and set the money aside in the checkbook for the automatic withdrawals for things like my Medicare supplement that gives me a $2 discount each month for paying automatically. Write what checks are needed. If we are lucky we have money for groceries, and maybe some savings, etc.

It may sound complicated, but it works. The most important thing is to have a set time to pay bills, a set place to keep bills, envelopes, checkbook, stamps, pen, calculator, etc. and then do it. I save over $100 a year by using on line payments and not paying for stamps or having some items like our IRAs on line which saves us $25 a piece each year. Those savings can add up.

So for those of you that are flat broke and also dream of $4000 buffers in their checkbooks, there are ways to get those bills paid on time and no chance of thinking, "oh goodie I just got a $200 bonus" spend it all and then notice that you just got a yearly bill for $200 that you had forgotten about! I think the closer you are to the line, the more organized you have to be so you know your financial state and there is no lying to yourself that you can afford something that you can't. One of the reasons we don't have cell phones, cable, newspapers and a whole slew of other things that everyone else sees as a necessity. We can't afford them so we don't have them.

[surveyspencer]

Definitely automate as much as you can.

That way you can focus on spending your time SAVING and MAKING money instead of spending it.

[FrugalTexan75]

You may want to look into the You Need a Budget philosophy/forum. YNAB's methodology is based on living with a one-month expenses buffer (generally left in your bill paying account, but everyone does it slightly differently.) This way you can pay all your bills for the month on the first of the month, and still have a month's worth of expense/income in the bank as a buffer.

The YNAB program is $60 (and worth *every* penny!) but you can also get a 30+day free trial to try it out first. Plus on the forum you can ask any questions, or take numerous different classes (free.)

[KiwiJo09]

You may want to look into the You Need a Budget philosophy/forum. YNAB's methodology is based on living with a one-month expenses buffer (generally left in your bill paying account, but everyone does it slightly differently.) This way you can pay all your bills for the month on the first of the month, and still have a month's worth of expense/income in the bank as a buffer.

The YNAB program is $60 (and worth *every* penny!) but you can also get a 30+day free trial to try it out first. Plus on the forum you can ask any questions, or take numerous different classes (free.)

I actually use YNAB. My dad let me piggy back off his subscription. I love it! It really helps and I will continue to use it when I move out, for sure. I think I'm going to leave one month of buffer in our checking account so I don't have to worry about when I get paid vs. when bills are due.

[Gailete]

YNAB's methodology is based on living with a one-month expenses buffer

I certainly think that that is a commendable way to live IF you can do it. Some of us live payment to payment not because we wish to, but because that is life. What large amounts (LOL) that we might have is in our IRAs such as they are and can't be used for living expenses. I don't know anything about this program, but why would you pay money to be on it or need a free trial?

It isn't that we don't want to do something like having a buffer, but when you have health issues you really are chopped off at the knees in ability to earn and save. When $8000+ of your income goes to medical bills each year and that is 1/3 to 1/4 of your income, you can see that it is a tough situation. Hubby landed in the hospital a month and half ago and consequently we now have $19,000+ in medical bills staring us in the face. We could cash out every bit of cash we had including the IRAs and barely make a dent in that bill. But we struggle on the best we can. I'm not looking for advice as I know just about every trick in the book on living frugally. I know if I was healthy and could work more full time (instead of having to take naps part way through the day to recharge) we would have plenty coming in as I see and understand the possibilities.

This is why I do try to encourage younger folks to save what they can when they can and take advantage of their health and ability to work and save. Why I encourage people to have short and long term disability policies. I had a girl once on another forum tell me that she personally didn't need such a thing as she had savings and was healthy--well I hoped she stayed that way as a sudden disability can wipe out savings quickly and you may never get a chance to go back to work. Folks it does happen and believe me it isn't any fun!

Sorry to have gone off topic. But originally I had thought the original poster thought they would have problems paying their bills monthly without the ability to be living at dads house. I tried to tell my best how you can keep track of things. I think it is a good idea for anyone whether they have that cushion or not. For example while you may not think it, September can be big expense month depending on your circumstances. For self-employed they have to pay estimated taxes, and you might also have property taxes due, kids back to school needs, etc. But without keeping a month to month way of remembering these items, they do sneak up on you!

[Blessed]

I budget with YNAB so the $ is already there for next months bills. I just pay the utilities etc as they come in and record it. Since the program does sinking funds for things like once a year life insurance, car insurance and home insurance the money builds up for these categories. I can't express how awesome I think the YNAB program is. It used to take me forever to track on these things on paper.