I’ve already discussed automating and batching the monitoring of my finances with Mint.com (Day 1), but that’s more for just keeping track of your account balances. One thing I (surprisingly) have not done yet is automate my bills completely. Here’s a list of my bills that require periodic (usually monthly) payments, and I’ve noted which items I’ve already set up to automatically charge my checking account:
- Credit card (#1)
- Credit card (#2)
- Credit card (#3)
- Student Loan (already automated)
- Cable/internet bill
- Electric bill
- Gas bill
- Gym membership (already automated)
- 401(k) (not a bill, but it’s an account that requires a periodic payment, which I’ve already automated)
- Cell phone bill (already automated)
Let’s break down the steps to achieve this “day” of the challenge:
1) Make a list of every periodic payment that you make, as I have done, and note which items are not currently automated.
2) Batch the process of setting up automatic payments (i.e. just sit down one afternoon and do them all at once, since I know this something for which people will procrastinate).
3) Use Mint.com to monitor your account balances to insure that no payments will cause your checking account to be overdrafted. If possible, see if your checking account has overdraft protection available. Wherever possible, set your automatic payments to be paid for via credit card, to avoid the issue of overdrafts.
4) Eliminate paper statements. Nothing is a bigger waste of time than having more mail to sift through, only to find envelopes that you generally open to file away or throw away. Maybe you glance through your credit card statement briefly, but you probably never look at it again unless you run into problems. Wherever possible, elect to receive your statements online. Storing them electronically allows you to keep them indefinitely without taking up physical space. Also, you never need to worry about losing statements. Overall, it’s less clutter, which is better for your life.
Most bills that allow you to pay electronically should give you the option to set up automatic payments. For certain recurring expenses, like rent, you may not have that option. For expenses where you can’t easily set up automatic payments, you can use something called “bill pay” offered by most banks and credit card companies. I would first check to see if your bank allows for free bill pay, and if not, find a bank that does. In reality, you shouldn’t need to switch banks – most banks have accounts available that offer free bill pay. They don’t want to lose you as a customer, so be sure to let your bank representative know that this is an important feature for you.
- Estimated time spent paying bills manually: 1.5 hours/month
- Estimated time spent paying bills automatically, after initial setup: 0 hours/month
- Monthly time savings: 1-2 hours
Think of the initial setup as an investment in your future free time. Spend an hour or two today to save you a lot more time each month in the future. Time savings aside, automatic payments will allow you to NEVER have a late payment and incur late payment fees ever again.
Have any other tips to automate your finances? Please share them in the comments!