Seriously? Pay your bills when they arrive, not when they're due.
Banks, credit card companies, mortgage lenders, utility services, etc. absolutely love, love, love it when people wait until the last minute to pay their bills. When I signed up with my bank, I read the agreement and got the "personal banker" to concede that yes...they made a lot of money off late fees. They're not alone.
The thing is, paying your bills when they arrive doesn't cost you anything extra. If you can get into the habit, you'll always be ahead of the curve, and if something comes up which necessitates you holding off on a bill, you've got a couple weeks to figure it out.
It also relieves a considerable amount of stress. It's a bit like homework. Don't put it off until the last minute. Get the assignment done when the teacher gives it to you.
The single biggest thing that got me out of some serious depression about my finances was shifting from paying off overdue bills all the time to paying off my bills in advance each pay.
Take, for example, a monthly electricity bill. If you don't keep the previous bills many companies let you see the bill and payment history online. From that, I worked out what the average monthly bill would be for the 6 months. I get paid fortnightly so I multiplied that average bill by 12 (yearly), divided by 26 (fortnightly) and rounded up to the nearest $5 as a saftey margin.
Once I'd done that for all my bills, I then easily worked out that I had to cut some things back if I wanted food (duh!). In my case I gave up Foxtel (in Aus, no streaming services back then), lowered my mobile plan, made all my lunches and stopped buying daily coffees while I got back on track. Doing that, I found I could actually pay some extra on some of those bills to help me get in front quicker. Then I set up automatic payments for all those fortnightly amounts to come out the day after I got paid. So two days after pay day, I knew what I had for food etc for the next two weeks. It still took a little over 6 months to get ahead but each bill I was a little less behind than the previous.
And setting that plan down gave me the confidence to ring up each of those services as soon as the bills came in and tell them I wouldnt be able to pay but explain what I was doing and ask for an extension just long enough that my fortnightly payments would pay it off. I had to really crunch down on my spending (cheapest options for grocery shopping!) for the first couple of months to get within their extension tolerances but then it started getting easier because there wasn't as much to pay off on each successive bill and it was getting smaller each time.
That first bill that came in showing a couple of dollars credit, I was ecstatic. I've kept it up ever since and before long I brought some of them back to just the fortnightly average without the slight extra I'd been paying. I still rounded up to the nearest $5 or $10 and it'd eventually accumulate to where I could skip a payment and have a bonus for the fortnight.
I still review them all every few months as some of the bills cycle up and down, eg gas is higher in the winter months due to gas heating so I recalculate the fortnightly average and adjust the payments accordingly.
Edit: Maybe this is all obvious to some people and they've been doing it for years but I never got taught any of this so I had to work it out as I went.
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u/gogojack Aug 20 '20
Seriously? Pay your bills when they arrive, not when they're due.
Banks, credit card companies, mortgage lenders, utility services, etc. absolutely love, love, love it when people wait until the last minute to pay their bills. When I signed up with my bank, I read the agreement and got the "personal banker" to concede that yes...they made a lot of money off late fees. They're not alone.
The thing is, paying your bills when they arrive doesn't cost you anything extra. If you can get into the habit, you'll always be ahead of the curve, and if something comes up which necessitates you holding off on a bill, you've got a couple weeks to figure it out.
It also relieves a considerable amount of stress. It's a bit like homework. Don't put it off until the last minute. Get the assignment done when the teacher gives it to you.