Best Results Organizing

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After I wrote Ask Paper Doll: Should I Organize My Space and Time with Color? last week, I got to thinking about how color relates to finance, at least in terms of expressions.

Even though black usually signifies something dire, if you’re “in the black,” it means that you’ve got a net positive income, while finances that are “in the red” are considered bleak, signifying debt greater than revenue.

When you’re “in the pink” you’re in good health, financially or otherwise. And, although it would seem to make more sense that being “in the green” would mean you were flush with money, English lacks that expression. And I’ve learned that in Italian, “Sono al verde,” which literally translates as “I am at the green” means “I’m broke.” Language is funny.

You know what’s not funny? Late payments. Fines for late payments. Increased interest rates because of late payments. Lower FICO scores because of a history of late payments!

During consultations with new organizing clients, people often express frustration over difficulty paying their bills on time. Generally, it’s not that they lack the funds, but that their bill-paying systems get out of whack and fail to fit into their already overstuffed, overburdened schedules. Today, we’re going to look at strategies to get bills paid on time.

BEYOND THE BUDGET: KNOW THE WHO, WHAT, WHEN, WHERE, AND WHY

You might expect that I’d bring up the topic of a budget. Certainly, knowing all of your financial obligations is important to a smoothly-run financial life. As Charles Dickens said, 

Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.

In order to pay your bills on time, it’s essential to know when they are due, and (if applicable) how that relates to when your income will arrive.

Make a chart of all of your creditors and bills. It’s best to do this on a spreadsheet, like Excel or Google Sheets so you can update the chart over time.

• Note when bills are due. Usually, you have three kinds of bills:
  • Bills that are due on or around the same date every month (like rent/mortgage, health insurance, utility/cable/internet bills, credit card bills, etc.)
  • Bills that are due on a regular cycle but not every month. They may arrive quarterly, like water bills, auto, renter’s, or homeowner’s insurance premiums, or tuition bills, or annually, like professional dues, memberships, or auto registration renewals.
  • Bills that a have no regular cycle. These may be one-off bills, like occasional department store credit card purchases or service providers who bill at their convenience, sometimes after you’ve long forgotten about the expense.
• List the amounts or ranges of your regular bills.
  • Some of your bills will have the same dollar amount every month, like health insurance or your cell phone bill, because they are regulated by a contract. (These are the ones that for which it is easiest to set up automated payments.)
  • Other bills will vary by month due to different usage or consumption, like electric bills or credit card statements. 
• List the amounts or ranges of your regular bills. 
• Learn and list the penalty of paying late! — My office landline (yes, I said land line!) payment is due on the 28th of the month, but there’s a grace period until the 8th of the following month, at which point the extra fee is about $3. No biggie. However, the average late fee for U.S. credit cards is $36, and that doesn’t take into account that late payments can trigger higher interest rates. If your credit card balance includes a 0% balance transfer, you could lose that rate if you make even one late payment. Oh, and late payments can also wreck your FICO score.

Photo credit: Simon Cunningham under Creative Commons CC By 4.0 Deed

• Make a column for each month of the year so you can mark when you’ve made a payment. This way, you’ll regularly see your progress and recognize when a payment hasn’t been made.

Yes, this sounds like homework, and you may be thinking that if you had the time to do homework in the first place, you’d be able to pay your bills on time.

However, having a sense of how many bills you have, in what amounts, due when, and with what penalty for paying late, can make all the difference in getting your finances in order.

PICK YOUR BILL-PAYING STYLE

No one bill-paying system is necessarily better than the others, but picking a method that works for you will help you stay committed to the process.

Pay Bills the Day They “Arrive” 

This simple strategy requires the least amount of advanced planning and you’ll never have to worry that procrastination will lead to late fees.

If you get your bills by mail:

Bring in the mail every day, open the envelopes, toss out extraneous junk and “shiny” advertising material, and pay your bills immediately. Done! (Now log that you’ve paid it on the chart.) People rarely have more than a few bills each day, and if you get in the habit of doing this diligently, it’ll take only a few minutes out of your daily schedule.

Photo by Abstrakt Xxcellence Studios from Pexels

If you have opted out of paper bills:

Open your email every day, log in (to either your bank’s bill-pay site/app, or the account’s website), pay your bill, and log that you’ve done it. Bing, bang, boom!

Paying bills the day they arrive saves time (because it’s easy to complete quickly), eliminates anxiety regarding whether you may forget to pay, and helps you stick to your budget. If you pay for all of the things for which you have already obligated yourself, you’re less likely to spend on wants before needs.

This is the easiest system, but it’s also the least-often used. 

Some people avoid this option because they lack the funds to pay each bill on the day it arrives. If our two biggest bills (for example, mortgage and insurance) arrived on the same day, it might wipe out (or even exceed) our checking account balances. So, there may be a practical reason to skip this method.

But there are far more common reasons why people don’t pay their bills as they arrive.

For some, there are psychological or philosophical obstacles to using this strategy. They may think, for example:

“I’m not going to pay this bill until right before it’s due. They don’t deserve my money one minute earlier than necessary!” [Insert your own “harrumph” as necessary.]

We see this most often when someone wants to avoid paying a credit card bill before the due date. People are fine paying for their electricity or health insurance, because they see that they’re getting the benefit already, so payment feels “fair.” But with credit cards, it’s common to forget that payment was actually due upon purchase; the cards simply shifted the time frame. People forget that a credit card bill is actually an IOU, the debt having been incurred in the past.

If you struggle with this philosophy, there’s still a way to pay bills as they arrive to prevent late payments.

If you pay bills online, log in now but schedule each payment for a day or two before it’s due. (Waiting until the day it’s due can cause holiday/weekend kerfuffles.)

If you pay by check, write out the checks, but put them in your tickler file (see below) or clip them to the calendar page of the date when you’re comfortable mailing them so only that final step remains.

“I don’t like paying my bills in dribs and drabs. I want to pay them all at once.”

This is similar to not wanting to hang up one shirt, or not wanting to file each piece of paper as you finish with it, or not wanting to wash each dish (or put it in the dishwasher) when done eating. It makes sense…until you find yourself with a backlog.

Sure, there’s something to be said for flow, doing a large project once and pushing through it to give your the satisfaction of completing a major task. However, the more we let our clothes pile up on the exercise machine, the more we let our filing pile up in the office, and the more we let the dishes pile up in the sink, the more of a behemoth the task seems, and the more likely we are to procrastinate altogether.

The downside of procrastinating on those tasks are wrinkled clothes, messy offices, and dried-on kitchen yuckiness. The downside of procrastinating on bill-paying? Late fees, increased interest rates, and lowered FICO scores.

Tickle Yourself Organized

If you don’t do something immediately, you have to do it later. Sadly, that’s just one of the laws of physics, that we can’t go back in time. (That said, if you find yourself with a time machine or TARDIS, please let Paper Doll know. I have some experiments I’d like to try.)

Later requires a system, and a system requires both geographic and behavioral changes from what you’ve been doing thus far.

Photo by Nataliya Vaitkevich from Pexels

Geographically, you need a bill-paying center with the following tools:

• Tickler file, or at least a bill-paying folder
• Letter opener (to avoid paper cuts and add pizzazz to opening envelopes)
• Calculator or calculator app 
• Pencil and scrap paper (if you have an untenable relationship with calculators)
• Envelopes
• Stamps
• Return address labels
• Non-washable gel-ink pens (to deter identity theft and fraud) to write out checks OR a printer if you prefer computer-generated checks

This assumes you’re getting your bills in the mail and paying them by check. If you’re paying them digitally, you can skip the envelopes, stamps, and return address labels.

The behavioral process is similar to the pay-upon-arrival system. Show up for mail call. (Seriously, I want you to open your mail every day. But if you absolutely won’t, at least put all of your mail in one spot, near your bill-paying area, and commit to opening ALL the mail at least once per a week.)

Open the envelopes, toss out the glossy advertising inserts, and if you pay online, toss the envelopes, too. Even if you’re not going to pay right away, process each bill immediately to keep it from ending up on top of the microwave or mixed in with your third grader’s math homework.

Eyeball each statement to review the charges, note any unexplained fees, and check for new policies and/or errors. (The sooner you catch a billing error or a policy change you don’t like, the easier it is to address.)

Circle or highlight the payment due date. Then figure out how far ahead you want to pay the bill. Take a glance at the calendar to make sure there are no weekends or federal holidays that might cause delivery obstacles.

If the due date is consistently inconvenient (because of when you get paid, or when lots of other bills are due), ask the vendor to change the date to a more convenient one. Many credit cards let you change your due date from inside the account profile.

Once you’ve opened each bill and figured out when you want to pay it, arrange them in chronological order by due date with the one due soonest on top. You can stop here and just tuck the stack in a folder, but longtime readers know that I encourage you to use a tickler file.

I used to tell folks to put the bills in slots at least 7 days in advance of when they’re due, but with the change in postal service delivery speeds, I encourage mailing at least ten days in advance or paying online. Or, make it even easier on yourself and only pay bills one day per week (like Tuesdays), and then just pick a pay date that’s two Tuesdays (or whichever) prior to the due date.

If you receive your bills digitally and pay them online, it’s easy to lose track of the email or texts. There are still ways to tickle your memory. Write the name of the bill on a piece of paper or index card and put it in a slot in your tickler file a day or two before you absolutely have to pay the bill, so you’ll see the reminder in the course using your tickler file for all your action paperwork. You don’t use a tickler file? If you read my ebook, Tickle Yourself Organized, I bet you’ll start!

But there’s still an more “alarming” way to remind yourself.

Don’t Worry, But Be Alarmed

Digital alarms and system alerts are the perfect way to ensure tasks get out of your head and conquered in the material world.

You can set a repeating alarm on your phone or computer for every “first Tuesday of the month” or the 17th of every month to remind you to pay a specific bill. Yes, it’s a bit of homework to set it up, but then you you never need to adjust it unless the bill’s due date changes.

Most credit card companies will also allow you to set email or text reminders for X number of days before a bill is due.

The only problem with alarms and alerts is that if you tend to rebel against authority, then repeated alarms might seem like pestering, even if you set the alarms yourself! So, consider making the alarms fun. Instead of creating an alert that says “Pay the electric bill,” make it say “If the electric bill doesn’t get paid, all the yummy ice cream will melt!”

Make bill reminders fun. Instead of creating an alert that says *Pay the electric bill* make it say *If the electric bill doesn't get paid, all the yummy ice cream will melt!* Click To Tweet

ALTERNATIVES TO MANUAL BILL-PAYING SYSTEMS

If just the idea of sitting down to pay your bills, let alone scheduling them, makes you cringe, there are other solutions.

Set Up Automatic Payments

This is the ultimate “set it and forget it” approach. You can accomplish it in one of two ways, and if you already pay some or all of your bills online, you may only need to tweak a few settings to add the “automated” part to what you’re already doing:

• Set up recurring automated payments at each vendor’s website. Decide whether you want the bill paid in full, if you want the minimum amount paid, or if you prefer some other option. Provide your bank routing number and account number or a credit card. Some creditors (like your mortgage lender) may require you to sign a document in order to complete the process. If you ever have your credit card stolen and get a new number, or cancel your card, you’ll need to go in to each vendor account to update new payment information.

or

• Set up automated payments through your bank’s online bill-paying center. You’ll create a payee for any vendor whom you want to pay on a regular basis. Provide payee data and the day of the month your prefer ongoing payments to be made. Then set the dollar amount. For fluctuating bills, it’s a little more complicated because your bank has no way of knowing how much to pay a vendor whose charges change from month to month, so you may need to authorize payments of “paperless bills.” 

Automated payments have many advantages. There’s no postage (or going to the post office), no checks, and you can’t mostly ignore the task. And you won’t have to watch the clock or the calendar with dread.

Vintage Alarm Clock (Public Domain)

However, it’s not for everyone.

If your income is unpredictable, automated bill-paying can lead to overdrafts.

If you have a strong need for control (or have ever been called a micro-manager), automation may make you nervous. (Consider starting with just one bill that has a predictable payment amount and due date, like for your cell phone, and see how you like the experience.)

Just because payments are automatic, doesn’t mean that your financial management can go completely on auto-pilot. It’s still essential for you to monitor your statements — whether paper or online — to make sure there are no computer or human errors.

Further, automated payments tend to make people less aware of their spending patterns. If you have to sit down to pay the phone or insurance company on a regular basis, you might be more inspired to check competitive rates, but if you never see your bills, you might become complacent about what vendors are charging.

Remember to cancel automatic payments if you no longer want or need a service, or if you relocate. Gyms and telecomm companies are famous for not ceasing billing when they are obligated to do so, and only your diligence can ensure that they stop billing and debiting your funds.

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 dance step invented since the premiere of the  movie Desperately Seeking Susan and I’m not inclined to prepare a meal more complicated than a PB&J.

You know where you excel. If the above strategies work for you, yay! But if you are constantly overwhelmed, whether by ADHD or running a business or trying to juggle your kids and elderly relatives (your own or your partner’s), it’s OK to wave a white flag. You don’t have to do it all!

If you have a partner, even if you are iffy about the idea of giving up control over the family finances, ask if they’ll take over the task for six months and then reassess. (You can always ask for status reports.)

But what if your partner is treading water as furiously as you are? Or what if you’re a singleton? There’s still help.

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. The amount they pay for assistance is balanced (or even outweighed) by money saved and peace of mind earned. 

You could seek a bookkeeper to keep your finances straight and ensure that bills are paid on time.

Similarly, visit the National Association of Professional Organizers (NAPO) to find professional organizers near you who specialize in financial organizing. They can help prune and organize financial records, assist with setting up online payment systems, and actually pay bills and monitor the accuracy of financial transactions, all depending on a your needs and desires.

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

“There’s always something to be thankful for. If you can’t pay your bills, you can be thankful you’re not one of your creditors.” ~ Anonymous

There's always something to be thankful for. If you can't pay your bills, you can be thankful you're not one of your creditors. ~ Anonymous Click To Tweet