Canadian Personal Finance Blog

This week I have talked about the method I use currently to pay my bills: Bill Surfing which is really just a balancing of my bill payments around so that I don’t have pay cheques where I have very little disposable income. Are there other ways of doing this, glad you asked!

Bill Surfing The Next Generation

A few of my keener readers have already mentioned this type of method, and I applaud their financial saviness, and I have a new plan on how to pay my bills.

First, open a bank account with no service charges for paying your bills. ING direct and PC Financial both have such accounts (and PC Financial will actually give you points to pay bills). This is really important, don’t set up a plan that will give the Bank more money! We will call this bank account Bill Central.

Next go to your employer and see if it is possible to split your pay cheque deposit into different bank accounts. My employer does, so this works for me. If you cannot do this you will need to arrange some kind of direct payment into your new account every Pay Day (you can do this by depositing a cheque yourself, or some other method, but don’t use one that costs you money (like e-mail transfers or the like)).

Remember in Bill Surfing when I said find all of your monthly, and weekly payments and sum them up? We are doing that again. Sum all of your bills and divide that amount by 2, this number is your Pay Cheque Bill Payment Value.

Now we have that value, make sure that amount (plus maybe 5% more) is transferred, or deposited into our new account Bill Central , every pay day. The more you automate this, the less you have to worry about it.

If you can arrange for bills to be automatically withdrawn from a bank account, do this, from Bill Central since the more automated the system becomes, the less likely you are to forget to pay a bill (like I did with my cell phone bill this month). For all other bills, arrange with your bank via either their phone banking or on line banking to pay your bills automatically every month out of the Bill Central account.

You are now ready to get going with your plan. Ideally you should try to seed the Bill Central account with a full Pay Cheque Bill Payment Value before you start paying bills (a buffer) to make sure you don’t over draft the account (very bad). However, do not borrow money to do this (going into debt to try to stay out of debt never made sense to me).

Now you have your bills being paid automatically (or as much as possible), the money to pay it disappears before you see it (ideally) and at the end of the year this account will actually have extra money in it (because you have two extra pay cheques worth of payments deposited).

I have not implemented this yet, but I am planning on doing something similar to this very soon

Some questions

Why is disposable income important and having a good supply of it?

Not having money for me is like carrying a long tray of water. When it is steady it is easy to carry, but if one side drops below the other, you attempt compensate and lower the other side more, and this continues until eventually all of the water is on the floor. If I don’t have enough money that is when unplanned credit card purchases occur, which then cause unplanned payments, which in turn causes more unplanned credit purchases, etc., etc., etc.,.

Whatever plan you use, keep this in mind

Aren’t there better ways to pay your bills?

There most likely is, and I am not espousing this as the only method, just that you should have a plan to pay your bills. Whatever works for you, that ensures your bills are paid on time

Enjoy the weekend folks, and for my readers in Ontario, enjoy the LONG weekend (in Ottawa we call it Colonel By Day).

Related Links:

• Bill Surfing
• Bill Surfing Day 2
• Bill Surfing Day 3
• How do you pay your Bills

So far, we have talked about the different methods folks use to pay bills every month (if you get paid every two weeks). I’ve actually been having a bit of a go at my readers on this one, this whole Bill Surfing thing is pretty obvious, but maybe not, it took me a while to figure it out.

Bill Surfing Set up

1. Make a list of all your monthly bills (with how much they are usually)
2. Order this list by most expensive to least expensive
3. Sum the entire list and then divide that value by 2 to figure out how much your “goal” should be for each bi-weekly pay cheque.

That’s about it, with the following caveat to watch out for. You do not want to pay any bills LATE, so if some bills must be paid earlier in the month or later in the month, that is the pay cheque it gets paid on. I almost did this with my Mortgage which actually has to be paid by the 22 of the month, so I was almost paying it late, but luckily my bank pointed out the folly of my ways.

Surfing Methodology

The first pay cheque in the month we will label Pay Cheque #1 and the second pay cheque, Pay Cheque #2 (if there are three pay cheques in the month, you don’t have to pay bills with that one, if you don’t want to).

Pay Cheque #1

First put all bills that must be paid within the fourteen day period of that month (for this example we’ll say all bills that must be paid from the 1st to the 14th of the month). These bills must be paid, so you really don’t have a choice, so pay them! Sum up how much these bills are and compare them to your “goal” bill payment. If these bills add up to the “goal” already, you are done.

If, however, you still have money left to pay bills, find other bills that need to be paid and add them to your list for this pay cheque and pay them as well, until you are close enough to your “goal” bill payment for that pay cheque. Then you are done.

Pay Cheque #2

Pay all left bills from Pay Cheque #1 (and presumably any bills that must be paid between the 15th and 28th of the month). There you have it you are done.

Pay the bills on the day you get paid (that way you are not leaving money around to accidental get spent later, leaving you in a bind).

The left over money is yours to work with now and your bills are paid, and you have one less thing to worry about.

A Few Important Points

Bill surfing is just an idea to make sure you have a good money flow, and you need to work with it to ensure you pay ALL your bills ON TIME, this is the MOST important part of it.

If you have bills that are paid straight from your bank account, you need to take them into account each month as your pay cheques will move around (if you are paid every two weeks), so some months you will need to use some finesse to work around those bills.

Income tax payments are coming straight off my pay, so I don’t worry about that, but if you don’t make sure you put THAT on your list of bills as well.

Have fun with this and make it work for you, in a way that makes your life simpler.

Real Example

Here is another page from my monetary statement, that is effectively my “bill score sheet” for the month with my monthly/weekly payments sprinkled in. Feel free to use this as a template to work from: