Hey everyone! In the past I’ve started my posts with scenarios. Well, the scenario I would have written was going to sound quite similar to one I’ve detailed in the past, so I’m going to get to all the good stuff instead. In today’s day in age, technology has become extremely advanced to the point you can even lock your home doors from a faraway location via cell phone apps. With all these technological conveniences, it’s a wonder why companies still have late fees. The point of this story is: Auto Pay! I have debated on setting my own bills on Auto Pay for quite some time for the simple reason of consequence. For example, what if I don’t have all the money in my bank account by the date this company plans on taking it out? What if I get charged a bank fee and a late fee from this particular company? We’ll those fears are legitimate, as others have shared the same. Here are some ways to make this as fool proof as possible:
1. Carefully read the Terms and Conditions before setting an account on Auto Pay.
Most people generally scroll to the bottom and simply click “agree” instead of reading through it all. Then, at a later time, find an unknown charge or increased minimum payment on their account that the customer service representative explains was on the agreement. Trust me, it’s better just to read it all and save it after. This contract will detail any scenario that may occur and the action of the 1st and 2nd party (the company and yourself). If this agreement changes at any time, the company you do business with should let you know via letter or e-mail.
*Please note: If your Auto Pay rule is set for the minimum payment due and that minimum is increased for any reason, the company you do business with may require you make a second payment or they will just take it out themselves. Again, this is something you will read in the Terms and Agreement.
2. Browse upcoming months to discover when the best date to set this recurring payment to.
While the date may be perfect this month, what happens when the next Auto Pay rule is set before your next pay day? I looked through every month to make sure the date is convenient, not only by pay days, but also by what day of the week it falls on. Say your bill is due on the 9th and you set your Auto Pay rule for the due date; your bill could be late. Some companies give a pass if your account is set an Auto Pay. Some will charge you a late fee. Some companies even take the money out on the Friday prior so you can avoid these fees. I prefer the less risky approach, so I do the research myself and set the Auto Pay rule for a few days in advance.
3. Don’t forget to check your bill!
At any time, for any reason, your bill can change. Just because your account is set on Auto Pay doesn’t mean you never have to open your mail (or your e-mail, for you savvy people out there). One time my credit card company removed $80 from my account instead of $35 so while I have been guilty of this, I have been working to break that habit little by little.
I hope this post helps you all become less stressed about paying your bills. Also, please remember that not one of us is perfect! Being perfectly organized does not happen overnight! This is a process that takes mistakes and learning from them. Good luck, you all.
Scenario: Your girlfriend calls and says she wants to go on a date; preferably a movie. You don’t enjoy going to the theatre because ticket prices are rocketed through the roof – but you still say yes to the romantic date. During the show you receive a text message from your bank that you have overdrawn in your account by the same amount of dollars it cost to see the movie you are sitting in. Embarrassed, you fake sick to avoid paying for dinner. When you arrive at home, you check your online banking account and realize that you only had enough to cover your phone bill. Then, you remember you set up automatic bill pay so you wouldn’t forget to pay it on time; but you still forgot the day it gets paid.
No one likes to be caught off guard with money. In my previous blog, I taught you how to use a personal calendar. I’m going to dig a bit deeper into that and show you how to create a budget!
So first things first – personal calendar. It’s important to use a calendar, especially if you’re forgetful, like myself. I use a notebook calendar so I can take it with me wherever I go. Seems silly to take it everywhere, but it’s better to have it and be prepared than to promise you will be somewhere when you already have made plans. Generally, I put my works hours on the monthly calendar. I also go the extra step to highlight pay period start-end dates and mark the days I get paid along with how many hours should be on my check. I then list down my bills corresponding to the date they are due. This is helpful because I can roughly calculate how much my check is going to be so I can create a budget and pay my bills on time.
*Note: This is gathered from my Google account, for which I used a blank calendar to demonstrate this example. None of what you are seeing are true numbers/due dates.
So, after you have marked your schedule, your calendar should look something like this:
As you can see, I listed off my bills and exactly when they are due. Next was my work schedule. I followed that up by marking my pay period start-end dates with a green box; next to that I counted up how many hours I would be working that go into that period (that is what the number “80” stands for in green). Pay day is Friday, so I simply put a green dollar sign on Friday’s date so I can remember when I’m supposed to get paid.
I also make sure to get paper copies of my bill statements so I can put that in my calendar, too. The calendar I have also lists by week/day/time, so I find the corresponding date and staple my bill onto it. This way, if I have any questions or concerns about my bill, I know exactly where to find it. It comes in handy to take a note of when you paid the specific bill (in case you pay it early or late) and the confirmation number to trace the payment.
I retrieved this sample bill from Antares Group Incorporated.
Remember to always record your confirmation number. I know of some phone companies who text message it to you, which is great. It’s always useful to do this for all payments you make, in case there is an error in the system and they shut off your water thinking you didn’t pay it.
Now that should help you get a better idea of how to stay organized. Remember, some of these things are optional. For example, you don’t necessarily have to mark your pay period start-end dates. I like to do this because it’s easy for me to remember what days I am getting paid for on my next check in case I pick up extra shifts, call in sick or request days off. It is also helpful to list them all because it plays a role in my next step, which is Creating a Budget.
So as you can see, we have a few bills due for this month. Let’s act like it’s the first of the month, so we can have a fresh start. Because your bills aren’t all due on the same day, it’s important you refresh your memory by taking a look at them at least once a week. (I usually check it every other day- three days, just to make sure I’m not forgetting anything.)
For easy numbers, let’s pretend there are no government taxes being withheld, no minimum wage and every bill listed is for $50; except for Rent – rent is $350.
So we’re going to start off with seeing how much your check is going to be. The first time you get paid in August is the 7th, which would mean that you would have already paid your rent. Since we are pretending there are no government taxes being withheld and no minimum wage, let’s continue by saying you get paid $8.00/per hour. If you worked 80 hours in your two week pay period, on August 7th, you would get paid $640. ($8.00*80 hours=$640)
Now that you’ve calculated your check, it’s time to see how much you actually get to keep for yourself!
You have four bills due before your next paycheck, so that means you have to calculate that into this paychecks budget. Remember we said every bill was going to be $50? So if the utility bill, phone bill, car insurance and car payment are all $50 each, then that would mean you need to take out $200 from your check to cover the costs. ($50*4 bills=$200)
You want to be sure you don’t spend this money, otherwise you’ll be driving with no insurance until they take your car away – and even in the best case scenario that it doesn’t happen, you still won’t have a phone to call for help in case it does.
Now, you’ve collected $600 from your employer and “spent” $200 to put aside for your bills; that leaves you with $440. Let’s stop here and take a look at what your next check and bills are going to look like so you have more of an idea what you need to save.
Your next paycheck is the day after your utility bill is due, which means you only have to pay rent. Rent is $350 and is due on the first of every month; assuming you don’t plan to take off any days from work or pick up any shifts, your check is supposed to be $640, just like the last check was. Foreshadow that after you pay rent, you should have $290 left over. ($640-$350=$290)
Whether or not you’re okay with both these numbers depends on if you should put some money off to the side for the end of the month. Usually, if I have extra money from my paycheck, I dedicate the rest of it to future bills. I also have a partner, so this is a bit easier to do because I know there is other money coming in. If you’re no okay with having $290 at the end/beginning of the month because that’s usually the time you do grocery shopping and get your cat food, like I do, you should plan ahead and take a few bucks from your first check and put that off to the side in case you need it later.
I know this is probably a lot of information to take in at once, and that’s okay! It doesn’t take one night to become organized. It takes patience, attention to detail, time and effort!