Handling bills

Today I was going to write the next post in the “credit report” series, but I saw something funny today.

I was taking the elevator down on my way to lunch when I ran into my boss, also on his way to lunch, carrying a piece of paper in his chest pocket. The piece of paper protrudes out of the pocket and is very clearly a utility bill. I commented on that. “Do you carry utility bills to lunch?” He responded that he had to keep the bill visible to remember to pay it.

A light bulb lit up above my head, as I recalled how many bills I have to keep track of myself. Well, to be honest, not that many yet, since I’ve just moved to my new house, where a roommate who’s been there for more than 2 years keeps track of the bills for the house. I’ve volunteered to take the job from him though, since I want to develop experience managing my own financial situation. But I digress. Truth is, you, me, and just about every other adult, has somewhere in the house a huge pile of bills of all sorts, and most of them are recent. Utility bills, cell phone bills, insurance premium bills, car loan bills and student loan bills are just some of them. Heck, how do we stay on top of this pile (pun intended!) when we already have work to complete, miles to run, friends to visit, beers to chug, ….?

Here’s what I do:

1. Set up automatic bill payment if there’s an option, (and of course, pay with my credit card. ) Most people don’t realize you can pay the majority of your bills online, and the setup is fairly simple. You can go the website of the service provider; there will be instructions. Bills being paid online save them processing costs, and reduce the risk of not collecting bills, so they want you to set up automatic bill payment. On your part, that means fewer bills to worry about, and fewer potential missed payments. If you’re concerned about disputing the charges, the automatic payment doesn’t get triggered until the due date, so you have plenty of time to prepare. You can stop automatic payments any time, which is a huge plus. You can also request that each bill being sent to your email; often there’s also a paperless bill option too.
2. Set up an Excel spreadsheet that keeps track of all bills. My spreadsheet indicates whether automatic payment is currently set up for each bill, the billing cycle, the amount charged each month, and the payment date. At least once a month, I update my spreadsheet. You could update the spreadsheet whenever there’s a new bill; that’s even better. By doing this, I avoid missing a payment because of a bill getting lost in the mail or because I forget to pay a paper bill.
3. Read every bill! It doesn’t take long to scan through a bill and detect unusual charges. If I notice something that needs clarifying or disputing, I take a note, sometimes directly on my Excel spreadsheet, and call up the service provider during the weekend, after work, or whenever I have the time. I keep tabs on my AT&T cell phone family plan, so I also clarify unusual usage charges and service change fees with others in my plan.

Again, even with automatic bill pay, I have at least until the due date to dispute the charges; that’s at least 3 weeks, which is plenty of time. Don’t ignore your bills; I have once claimed back $70 from a cell phone bill. Even if there is no mistake, you should still consider the cost/benefit of the service. Each monthly saving might not be significant, but they all add up.

These 3 things are what I actually do. You may have different ways to manage your bills; if so, please share your methods. But as I mentioned in a previous post, do not miss a bill payment! A friend of mine got a ding on his credit history for failing to make 3 days’ worth of utility for a room he moved out of. It wasn’t even his fault: the bill was never sent to him in the first place: the landlord did not forward any letters to his new address. Had he followed the methods I outlined, he wouldn’t have saved himself a clean record, as opposed to a “baddie” that may take years to fall off the record.

Keeping track of bills is an essential part of personal finance, and I encourage you all to be aware of those annoying pieces of paper. Oh, and did I mention that you can set up automatic bill pay for your credit cards too? Nifty, right? You won’t ever miss a credit card payment this way. NEVER, EVER MISS A PAYMENT!