Best Results Organizing

Bills paid after their due dates have severe repercussions, ranging from late fees to increased interest rates to severe dinging of FICO scores. Last week, we began reviewing some strategies for making sure those bills got paid on time in order to avoid the unfortunate circumstances that befall the late payers.

1) Pay Bills the Day They Arrive
2) Tickle Yourself With an Organized System
3) Don’t Worry, But Be Alarmed
4) Set Up Automatic Payments

Today, we delve into further strategies for making sure bills get paid on time so that your finances can stay in the black. (Does anyone else think it’s funny that while being “in the pink” implies health, finances “in the red” are bleak? Wouldn’t it make more sense for good financial health to be “in the green”? No? Just me, eh?)

5) Use Online Bill-Pay

Using an online, non-automated, bill-paying system allows you to reap the rewards of going digital while maintaining the control that automated payment systems lack. There are no stamps, envelopes, trips to the post office or worries that your check will get lost in the mail. A few keystrokes are speedier than writing out checks.

You can arrange for a bill to be paid any time between receipt of the bill and the due date; actually, if you have a sense of the amount that needs to be paid, you can even arrange to schedule payment before the official bill has arrived. And you can set payments to be made while you’re traveling or otherwise occupied, without fear that a bill might fall through the cracks.

This satisfies the needs of those who normally would have blanched at the idea of strategy #1, paying bills the day they arrive. By scheduling the exact payment due date in accordance with your cash flow, you can maintain hold on your funds for as long as is convenient. This is especially advantageous for those who have interest-bearing checking accounts — earn interest on your funds for as long as possible, but ensure that no due dates are bypassed.

Non-automated bill payment systems can also make great use of two other strategies we’ve covered. First, strategy #2 (having an organized system) means that even when you’re scheduling online payments, if you manually (but digitally) review your financial obligations and schedule payments on a regular basis, you’ll monitor fluctuations in your charges, notice errors and perhaps shop for more competitive rates.

Online bill-pay also works well in tandem with strategy #3. Most vendors, and just about all banks, allow you to set email and/or text alerts to warn you of impending due dates or low-balance thresholds so that you can make quick adjustments.

There are three ways to use online bill-pay for maximum convenience and benefits:

A) Pay each bill from an individual vendor’s website — This option involves going to the web site of each individual vendor to set up an online payment program, providing personal information to validate yourself as the account holder.

Gather all of your files for your monthly or quarterly bills to make sure you don’t forget anything you regularly pay. These might include bills for:

Mortgage or Rent
Landline and/or Cell Phone
Utilities (Electric, Gas, Water, Internet)
Debts (Credit Cards, Loans)
Insurance

Whenever a bill is due, you will log into the account for that creditor (using your username and password), click on the bill payment option, and specify the amount you wish to pay. With many vendors, the sole option will be to pay the amount due. With credit card companies, the options will include paying the total amount due, the minimum amount due or some other specified amount between those two. Some vendors (and all credit card companies) will maintain records of your bank routing number and account number; others may require you to provide it anew with each payment.

Once you set the payment date and amount, you’ll be asked to review and confirm the transaction. Upon transaction approval, you’ll be provided with a confirmation number (or a combination of letters and numbers). Most systems provide a method for quickly printing the confirmation; obviously, this increases rather than decreases your use of paper. I encourage you to (carefully) scribble the confirmation number, date and amount of payment on your statement and file it away. If you get paperless statements, save the confirmation page as a PDF.

This method gives you maximum control, but is time-consuming and a bit awkward. You must maintain login information for each vendor and must log in to each site, one after the next, to complete your transactions.

B) Pay all bills from your bank or credit union’s centralized online bill-paying center.

Your online bank or credit union account may already be set up to allow you to pay bills online. If not, you’ll need to create an account, with a user name, password and a series of security questions.

Next, with all of the same bills used in the prior example, create a payee for any vendor whom you may want to pay on a regular basis. Your bank or credit union will probably have many of your payees (and their addresses) already in the system; for those they don’t have, you’ll need to provide information including each payee’s payment address and telephone number and your individual account number with each vendor. Once set up, the payees will stay in the system until or unless you delete or revise them.

Logging in to pay a bill (or many bills, all on one screen) should take no more than a minute or two. Enter the payment amount and select the date on which the bill should be paid and the account from which the funds should be withdrawn (if you have more than one account at that financial institution). Again, I suggest you write the confirmation number on your statement, along with the date and, if you’re not paying a bill in full, the amount paid.

Assuming your bank or credit union offers a robust online banking system with free bill-payment services, using this as your primary method is quick and convenient. However, while some payees can receive electronic checks, others may require checks, and will therefore need payments scheduled at least four days prior to their due dates for ample delivery time.

C) Combine Vendor and Bank Bill-Payment Systems

Paper Doll encourages clients to use their bank bill-pay systems as their primary payment method. However, it’s still a good idea to set up those online accounts with individual vendors as a back-up for special circumstances, such as when:

–A busy life or emergency situations overwhelm you such that even combining strategies 2, 3 and 5B fail, and a payment due date is looming. Even if 99% of the time, you’ll pay via your online bank account, if unexpected travel or personal emergencies flummox you, you can generally log into a vendor account and have a payment scheduled today be credited for today.

–Your bank is experiencing online difficulties. This is extremely rare, but denial-of-service attacks on financial institutions sometimes make logging in impossible for minutes to hours. Being able to switch gears and quickly make a payment at a vendor site on an ad hoc basis is a nifty (belt) alternative to your normal (suspenders) method.

6) Bill Everything to One Rewards-Earning Credit Card

Yikes. Yes, I’ve known people for whom this system is workable. They set up everything from utility bills to gym memberships to insurance premiums to be billed to one credit card upon which they earn points for every dollar spent. Points can be turned into cash, miles, or any of a variety of perks, and the user only has to pay one bill each month.

This option can work well for high wealth individuals who can easily pay off balances — every single month! If you only have one bill to pay, it’s probably a lot easier to notice it when it comes in the mail, and paying it as soon as it arrives (whether via traditional or online means) is relatively convenient.

If you select this option, you must have enough of a cushion so that if you run into a revenue problem, it doesn’t turn into a cash flow problem. You’d need to have at least two months’ worth of funds in your checking account to cover payment of this credit card (and at least eight months’ worth in your emergency fund) before considering this option.

Also, it’s essential to have a back-up plan in case you are unable physically (as opposed to financially) pay this bill. If you are unexpectedly caught out of the country, without access to the internet or phone, you would need to have a system in place whereby your spouse, assistant or trusted friend could pay your huge, honking credit card bill (and/or transfer funds between accounts to accommodate this, if necessary). Otherwise, you’re likely to have not only a hefty late payment fee but a huge boost in interest payments, a possible increase in your interest rate, and a serious a ding to your FICO score.

In theory, there’s not a huge difference between having all of your bills paid by credit card and then paying the lump sum and a dozen separate monthly bills that add up to the same amount. In actuality, however, I’m concerned about the psychological shift this process entails. As with automatic bill payment, I fear you’re less likely to pay attention — to feel the pain — of the money you spend if you don’t actually, manually, make a payment on a regular basis.

7) Outsource Bill-Paying to a Specialist

We all have things at which we excel…and things at which we don’t. Paper Doll doesn’t blink at an organizing project, is a speed demon when it comes to typing, and can decipher a muddled check register from fifty paces. I cannot, however, do any formal dance step that would have been out of place in Desperately Seeking Susan.

You, dear readers, have your own things at which you excel. But even after employing some combination or even all of the first six strategies, any of a variety of life circumstances (ranging from juggling the care of both elderly relatives and lively kids, to running a business, to dealing with ADHD), may leave you waiving a white flag.

If trading tasks with your spouse or significant other meant the bills would all be paid on time, even if it meant giving up titular control over the household finances, you’d probably consider it. But what if your partner is treading water at least as furiously as you are? Or what if you’re a singleton? There’s still someone to whom you can turn.

You might think outsourcing bill payment is a luxury, but many people find that hiring a professional relieves them of the anxiety, dread and annoyance related to financial tasks. They believe the amount they pay for assistance is vastly outweighed by the money they save, ensuring their financial pictures stay rosy.

Certainly many individuals and businesses make use of bookkeepers to keep their finances straight and ensure that bills are paid on time. Similarly, one of the many specialty practices of members of the National Association of Professional Organizers (NAPO) is financial organizing. A professional organizer specializing in financial organizing may help prune and organize financial records, assist with setting up online payment systems, or actually pay bills and monitor the accuracy of financial transactions — all depending on a client’s needs and desires.

One should also note that the American Association of Daily Money Managers (AADMM) is a national organization of professionals who provide personal financial and/or bookkeeping services to senior citizens, the disabled, busy professionals and others who find keeping up with bills and other financial tasks to be onerous or inconvenient. (Not surprisingly, many financial organizers are members of both NAPO and AADMM.)

Just as you might make use of the services of a fitness trainer, life coach, or academic tutor, a financial organizer can help you accomplish your essential financial tasks so that you can focus on what means the most to you. A financial organizer is also a superior solution for overwhelmed members of the sandwich generation who are trying to oversee their own finances, as well as those of their senior citizen parents or grandparents.

Whatever bill-paying strategies you employ, know that you can control your financial destiny.