Let’s talk electronic bill pay. This is something that has been around since the mid 90s, but I know many of you still don’t take advantage of it. I honestly can’t tell you when I swapped from writing checks to paying electronically through my bank, but I can tell you I now pay all but one thing via electronic bill pay and that is our tithes to the church…although I could do that electronically, I just like having something to physically put in the collection plate each Sunday.
The reason I am broaching this subject is because bills and the papers produced by them create a mountain of unnecessary paper in your home. Add to that paper checks, boxes of checks, bank statements, etc. and you have a ton of paper and processes that can easily be eliminated.
Setup Your Payee Accounts
I set up all of the companies/Individuals I pay as payee accounts in my online bank account. All you need is the bill or payee information in front of you to do this.
You can actually stop here in the process and decide that every time you need to pay a bill you will just go online and “schedule a payment”. If you choose to do this, just open your bill get the amount, go to your bill pay area of your bank website and enter the amount and date to pay. Most banks have a two day processing time, so make sure to keep that in mind when scheduling the payment.
Setup Reoccurring Payments
I choose to set all of my bills as reoccurring payments unless it isn’t something that comes regularly or the change in amount is too drastic (i.e., credit card – we don’t ever have a set amount because we try to pay it off each month). Now, for those things that often change, but the change isn’t drastic like our electric, gas and water bills, I put in an average amount as the reoccurring payment.
Note: The two steps above theoretically only have to be done once, unless you are adding a new payee account or changing your reoccurring payment.
Review Your Account
When the bill comes in each month, I look at the amount of the bill and the amount in my bill pay area, if they are different I update it with the correct amount for that payment. This step literally takes me 5 – 10 mins, if that, twice a month (my routine is to go into my account twice a month to schedule payments, but sometimes I’m feeling froggy and I schedule them as soon as I get the bill. It usually depends on if I’m at the computer or not at the time the bill is placed in my hand.) You can set your own schedule based on your monthly budget.
Benefits of Electronic Bill Pay
There are a number of benefits to using electronic bill pay. Here are just a few that I have noted over time:
- I never miss a due date. Life happens and sometimes you just get busy and a bill accidentally gets misplaced between the mailbox and your hands. The way I have guesstimated my utilities they are more often on the high side, so I get a small credit on the next bill if I don’t go in and change it in time;
- It is much easier than pulling out the checkbook and/or going to the location to pay in person;
- It eliminates the need to have a bill pay center in your home;
- It eliminates the need for postage;
- It eliminates or reduces the need for physical bill files – for utility type accounts or other monthly accounts that you pay in full, I only have one file. I keep one month of each bill. As soon as I get the next bill that shows the amount was paid in full, I discard the previous month, which eliminates the need to keep a separate file for each bill;
- Historical information is kept online, so no need to keep the physical paper and if you absolutely must have the information you can download and save the electronic copy of your payment history and/or bank statement;
- You get discounts when you receive your bank statement online and/or for some banks you get a perk when you activate online bill pay; and
- The information feeds into most personal/business accounting software systems like Mint
Lets Discuss Your Concerns
What if I’m barely making ends meet?
So let’s evaluate this for a minute because it is a valid concern. If you are living paycheck to paycheck, I would suggest scheduling all the “have to pay” items, I discussed in the budgeting course, through your bank so you ensure they are paid on time and you don’t incur late fees. In my example, I get paid twice a month – the last day of the month and the 15th. All of our bills are scheduled to come out around those two dates. Even if the bill is due on the 25th I pay it on the 16th. That way I know once those are paid how much money is left for the rest of that two week period. If your due date is in the middle of that time frame, see if you can get it changed and/or pay it early. There are a number of factors that need to be considered in this situation, but the first step is completing your budget so you know when and how you need to pay your bills. This will allow you to compare when bills are due versus when the money will be in the account. If you still need help after completing the free budgeting course, I recommend, scheduling a coaching session with me to discuss your individual needs.
What about direct debit?
Well, I much prefer electronic bill pay through your bank over the direct debit system. There is just something about companies having access to my checking account that I don’t like. I’d rather an issue be on my end than on a computer or another person’s end. I’ve had a situation where the person entered the information erroneously and debited my account twice in one month. I understand mistakes, but if I had been struggling or living pay check to pay check that would have caused a ton of problems. That being said, I do have a few of those set up because there was no other option offered (insurance/student loans).
What about security?
With all of the system hacks companies are experiencing these days I can understand why you may be concerned with banking online. I can tell you that they adhere to a pretty stringent security standard and I have never felt compromised when it came to online banking. Also, banks are FDIC insured so your money is protected (up to $250,000). I would say if you are concerned to contact your bank and discuss how they protect your online data and your account.
All in all, you can decide what method of online payment you want to test out, scheduled payments or reoccurring payments. It is just one more way you can eliminate clutter in your home and set up a system to better control and organize your life.
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