Reader Tip: Pay Your Bills as They Arrive

February 4, 2010 by J.D. Roth

by e-mail the other day. This isn’t long enough to be a reader story, but I think it’ll be useful advice for some GRS readers. Andy says he’s learned that if he pays his bills as they arrive, he feels a lot less stressed than if he puts them off to the end of the month.

When he got his first credit card, Andy made a habit of paying his bills when he got them in the mail. But: “Then I got laid off. I didn’t pay my credit card bill until a day or two before it was due. I waited as long as I could because I needed that money elsewhere.”

Even after he got a job again, Andy kept paying his bills just before they were due. And he kept feeling stressed. Why? “Because I still am struggling to pay off my credit card bill each month before the due date. I have the money, I’m not carrying a balance or paying any interest…but instead of being ahead of the game I’m trying to base-slide in that home run at the end of each month.”

Andy writes:

I recommend that people do two things. Even if you’re carrying a balance on your credit cards, send your payments as soon as the bill comes due. Then you’ve got a buffer of about 30 days if for some reason you can’t make the payments immediately. If something does happen, do everything possible to get back your buffer ASAP.

Andy says there’s a real psychological difference that comes from paying his bills early: “That 30 day window makes me feel more secure.”

Long long ago, back when this blog was young, I wrote about my own personal discovery of this technique. When I was living paycheck-to-paycheck, I always waited until the last minute to pay my bills. Four years ago, I finally realized there were several advantages to paying my bills as they arrived:

  • It saves time. Rather than spend half-an-hour batch-processing bills, I can take a few minutes at a time to pay just one bill.
  • It saves worry. I’m no longer concerned with late payments. I know my bills are mailed on time.
  • It saves mistakes. Sometimes I would forget to pay a bill. If I pay the bills as they arrive, this can’t happen.
  • Most of all, it saves money. When I got paid, I used to buy my fun stuff first, and pay bills out of what was left over. Now that I pay bills first, I’m more inclined to invest any remaining money instead of spend it.

Even if you live paycheck-to-paycheck, you can profit from this advice. Try it for a month. You may not be able to pay all of your bills this way (your mortgage, for example, might have to wait), but you should be able to pay most of them. See if it doesn’t take a load off your mind!

After having used this technique for four years, I can’t imagine doing anything else. In fact, I barely remember that I used to struggle with paying my bills on time. But I did. Amazing how far I’ve come! And it’s amazing that smart personal finance is made up of regular small habits like this one.

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