This week I have talked about the method I currently use to pay my bills: Bill Surfing, which is really just balancing my bill payments so that I don’t have to write cheques when 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 approach, and I applaud their financial savvy. I have a new plan for paying 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 you can split your pay cheque deposit across 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 payday. 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If you can arrange for bills to be automatically withdrawn from a bank account, do this, from Bill Central since the more automated the system becomes, the less likely you are to forget to pay a bill (like I did with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 phone banking or online banking, to pay them automatically every month from 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?
For me, not having money 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 to compensate by lowering the other side further, and this continues until all 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 cause 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).
