One definitive milestone of growing up (or more famously termed adulting nowadays) is having to deal with bills.
Bills, bills, bills!
And it starts with one thing – typically getting a postpaid mobile plan – and unconsciously multiplies with rent, utilities, credit cards, and the list goes on. The number of account statements that we receive multiplies as well as the number of dates we have to remember to ensure we are up to date with our payments.
Finance people would be familiar with the policy to collect early and pay late. But that is on the assumption that there are opportunity costs to holding money. And we are talking about small numbers here and not millions of payments like in companies. Hence, this is not an excuse to delay payments of bills.
Instead, what we want to do is simplify managing bills. Remember, maximizing is different from optimizing, and the latter is what we are going for. In this entry, I want to show you how I figured out a way to spend only an hour every month analyzing and paying for my bills.
First, let’s consider all your bills.
Here is my personal list of bills:
- Condo utility bill
- Visa credit card
- Mastercard credit card
- Globe postpaid
- Amex credit card
Some other regular expenses are not included here as I’m paying them out using post-dated checks. Examples of these are the downpayment I’m paying for a condo, and rent to my landlord. You can actually still include them and take note of when you have to fund your checking account, but doing this as early as I get my payroll already works well for me.
Second, get a calendar and plot out the statement dates and payment due dates.
I color-coded each bill and marked two circles in my 3-month calendar. The first one for the statement date, which is the transaction cutoff and when the bill first becomes available, and the second one for the payment due date or the last day you can settle your charges. For example, in color purple, my Mastercard statement first becomes available on April 10, while payment is due around 4 weeks thereafter on May 2.
It’s helpful to have a 3-month calendar because some statements become available early, some late, and some others have extended payment timelines. It is safe to assume that the dates are consistent every month, but to have a clear mapping, I suggest you focus on a set of bills for one specific month.
Third, look for a window when all bills are available, but none is due yet.
After plotting out all the bills, we take a glance at it to find our sweet spot. In my case, by the 10th, I already have the details of all my bills, while due dates will only start on the 15th. This is highlighted in green in above. Anytime during this period, I can settle my bills altogether! No waiting for others to be available, no checking which will be due when.
Fourth, set an alarm in your phone calendar to remind you of your chosen bills payment date.
I have set mine every 12th because I still like to be a bit early, while at the same time, avoiding the rush towards 15th when most other people will receive their salary and will pay for their bills as well.
Lastly, stick to your schedule.
Every 12th, I rise early and download all the balances of my bills for the month. Good thing I have already enrolled my globe bill and VISA credit card through BPI online bills payment. I can also pay my Mastercard through my online Metrobank account too. The Amex card is actually our corporate credit card and I usually pay this over the counter, same with our condo utilities. Overall, I spend 30 minutes online and another 30 minutes over the counter to settle all my obligations.
And that’s it! I will only have to think about bills in another month’s time!
- This is effective only if you are already handling your finances well. In above, if come 12th and I have no money since my salary comes in every 15th, then I have nothing to pay with too.
- The illustration above seems very easy but it takes some analysis. You might need to plot out two sets of circles to fully understand the pattern of your bill dates.
- Not everyone can come up with that “window.” There might be cases wherein due dates are earlier than the last bill to become available. In this scenario, there is no other way but to just settle one early or to find a way to take care of this alternatively (like setting it up for auto-debit or through PDCs).
Do try it for yourself and let me know if you’ve found your sweet spot! Hope this was useful in having a systematic approach to managing bills!
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