Bill Surfing (Day 3)

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

Become a Tangerine client today

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:

Pay Cheque #1
lChurch donations
Kids lAllowances
lLife Insurances (plural)
l
lElectrical
lMortgage Payment (divided by 2)
lProperty Taxes (divided by 2)
lXmas Fund
lCable TV
lWater
lCharitable Donations
l


Pay Cheque #2
lChurch donations
lCar Payment
Kids lAllowances

Mortgage Payment (divided by 2)

lProperty Taxes (divided by 2)
lXmas Fund
l
lNatural Gas
lHome Phone
lCell Phone
lISP DSL Charges
l
lKids Allowances
lBank Service Charges

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Bill Surfing (day 2)

Hang ten moon doggies! I have seen a whole bunch of surfing movies in my life and I still am not too sure what that means, but it sounds really surfer-like, so it fits with my thematic premise this week.

Yesterday we introduced the concept of Bill Surfing , ok, we talked about it, but we never really explained what it really meant, but today, we really will define what that means (I hope).

We now have our list of expenses that we usually pay on a monthly basis, but we still have this quandary of only getting paid every two weeks, and what to do about it.

Solution 1 All At Once

Simply pay all of the bills from one of my pay cheques. While that does solve the problem it does mean that I have to do some judicious grocery shopping and a very tight final few days ’til I have a pay cheque that I can buy things with (assuming that one pay cheque can actually cover this entire group of bills, which in my case is not true).

Solution 2 Piece Meal

As each bill arrives pay it the moment it arrives and be done with the darn thing. This was kind of the methodology that I started working with before I came upon bill surfing. This method has the advantage of having some disposable income all the time, but not a very predictable out flow of money, especially if bills are being paid as direct withdrawals from your bank accounts.

Solution 3 Bill Surfing

Become a Tangerine client today

What would happen if I could make my “BILLS” payment on each pay cheque equal (or as close to equal as I can make it)? This would mean that each pay cheque I would have a predictable amount of money going out, and I would know exactly what my disposable income actually is (and then plan any extra saving I wanted to do). How can I do this?

Read tomorrow and we’ll spill the beans on this highly effective and exciting new way of paying bills (this writing like I am publishing an info-mercial is a lot of fun, but must be really annoying to read).

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Bill Surfing

This is an interesting concept that we who get paid every two weeks can use, and most certainly must plan around.

So what do I mean by bill surfing?

Here is a list of typical bills for a household:

  • Hydro
  • Mortgage Payment
  • Car Payment
  • Property Taxes
  • Natural Gas or Heating
  • Cable TV
  • Home Phone
  • Cell Phone
  • High Speed DSL Access
  • Water
  • Charitable Donations
  • Life Insurance
  • House Insurance
  • Car Insurance
  • Bank Service Charges
  • Xmas Savings
  • RRSP and/or RESP Savings

I trust this list, because I took it from my Monetary Statement (we can talk about that later) that I gave my wife to show her where all the money went (and other parts of our financial story). There may be things you can add (like a monthly loan payment) or remove (maybe you only have a cell phone and no home phone bill), but this is a good model to start with.

Become a Tangerine client today

So what is Bill Surfing? Well you have monthly bills and 2 or three payment periods to pay them out, what do you think it might be?

Tomorrow: Surfing or balancing? Tomatoe or Tomato?

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Equal Billing (Epilogue)

My electricity Utility allows for equal billing, so that I pay the same amount every month of the year, instead of having my bill fluctuate with the months, which on the surface sounds good. The problem is that in the past year I have managed to cut down on my electrical use a great deal, to the point where I have built up a positive balance of over $800 (about 6 months worth of electrical bills).

I sent the utility an e-mail and they have agreed to refund my money to me (finally), but I have not seen it yet, so I will wait until I start tap dancing at the win fall of receiving back my own money, but then they went on to say they were going to adjust my monthly payments to drop it by $17 per month (or $154 a year). This seems a little small, given the amount I have not spent in the past year. Now it may well be they are implementing a MASSIVE rate hike at the same time, but I don’t think so (since the rates are government regulated).

I think my battle here has only started, as will tomorrow’s story about my Van dyeing after being serviced. Stay tuned!

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Options for lowering your monthly payments

Another interesting headline that I saw floating by. Let’s dissect this topic and think about what this is saying. There are two ways to lower your monthly payments :

  1. Get the interest rate on the debt lowered. This can happen if you are foolishly carrying your debt on a credit card and not using a loan or line of credit from your bank. Other than this big step, it is unlikely that you can lower your interest rate (maybe a little, if you like to kibitz with your banker), unless you go for a Consumer Proposal (or worse bankruptcy).
  2.  Extend the period for the debt. This means it will take longer to pay the loan off.

If you are in (1) what are you waiting for (unless you have no credit rating, then I think you might have issues). Do not carry debt! If you are dumb like me and are carrying debt, for the love of Buddha, use a line of credit to control the amount of interest you have to pay. Now this does not give you free reign to then add MORE debt, your goal is to PAY this off!

The better question is why would you want to increase the period of the loan? If you are on the edge and cannot afford any more monthly payments, then I guess this is an option, but putting off to tomorrow is never a safe plan when it comes to debt! I have done this FAR too many times and then have been hit by DEBT BOMBS that appear (e.g. car breakdown or worse car blow up), if you possibly can take the pain NOW, and you can have the pleasure later.

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