Welcome to the Busy Mom on the Go Guide to getting your bills organized.
In this post, you’ll learn a lot about not only how to get your bills organized, but also how to be accountable for your expenses and debts.
Even if you don’t currently have any debt, it’s a good idea to plan around it in case you ever need to borrow. Without wasting time, let’s get into the details:
Step 1: Open the Bills
Now that all of the bills can be located it is time to open the bills. For some, this will be an easy step and for others, this will be a stressful step.
This is one of those hurdles where the initial leap is more daunting than anything else. There is more comfort in understanding your bills on a regular basis then avoiding them.
Before getting started mark each bill as fixed payment, variable payment and debt.
Wikipedia defines Debt as
A debt is created when a creditor agrees to loan a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in most cases, plus interest.
I have included a PDF for monthly living expenses.
Please use this for your fixed and variable payments to determine your monthly cash flow. This will be a good indication of any unallocated spending that could be used for adding to your debt payments.
For this series I am just discussing efficient, debt-reduction strategies.
For added convenience I have created a debt-tracking PDF (print 2 copies) that will allow you to capture the information below:
- Account Name
- Outstanding Balance
- Regular Repayment Date
- Minimum Amount Due
- Total Amount Due
Once all bills have been opened and the information has been written down or added to the debt tracking spreadsheet prioritize this list.
Use the 2nd copy of the PDF for step 2.
Step 2: Prioritize debts by interest rate.
List each debt in order starting with the biggest ones.
This will most likely be your credit card bills and consumer loans. If you have discovered any unallocated income from the budget worksheet consider adding it to the minimum monthly payment of your highest level debts.
Stay focused and disciplined so making these payments and seeing the debt decrease month-after-month becomes encouraging as opposed to stressful.
There is a good argument against paying the most towards your highest level debt first. I do not disagree with the logic and so I will take this opportunity to explain this strategy as well.
In the case, where you have a small loan that would only take a few disciplined months to pay off regardless of the amount so go ahead and spend the additional income to PAY OFF this debt.
The feeling and satisfaction of paying off one of your debt payments can be the boost you need to keep charging forward on paying off the remaining debt.
In the next section, I will discuss how I have chosen to organize my bills with the White Board strategy.
I have found this to be by far the most stress-free way of ensuring all bills get paid each month by their due date.
This is especially important when you are paying debt on 0% interest loans that stipulate if a payment is missed interest will start accruing. Or worse the interest will accrue as of the date of purchase! Stay tuned…
Step 3: The White Board Strategy
In my household life can get pretty hectic and remembering which bills have been paid and which ones have not is time wasted and stressful.
In order to remedy this situation, I have elected to have some of my bills set-up on auto-draft. In other words, each month the crediting agency automatically deducts the monthly payment from my bank account.
This is helpful, but I cannot set-up all of my bill payments this way nor do I want to. There are two reasons why I do not want all of my bills drafted monthly from my account.
The first one is because some of my bills are variable payments that change from month-to-month and I want to review the bill for accuracy before submitting my payment.
It seems to be an all too common occurrence to review a bill and find out the statement is not accurate. There is no time wasted in reviewing your bills before submitting the payment and inquiring about any inaccuracies, just make sure to complete this step before the bills due date.
The second reason I do not want to set-up auto-draft payments is that some of my bills are high (ex. mortgage) and my paycheck direct deposits into my checking account on payday, in some cases this deposit occurs before those higher payments are due and other months it is a few days after.
As a good habit, I keep a little extra money in my checking account and have my account over-draft protected, but I would still prefer to have the freedom to pay certain bills as I see fit for my situation and before their due date, of course!
Thus, my small (I define small as $50 or less), fixed bills are set-up on auto-draft and the rest I add to the whiteboard.
So, what is the whiteboard strategy?
I purchased a whiteboard and some dry erase markers and wrote out a list of all the bills, in due date order, that I do not have set-up for auto-draft payments.
At the beginning of each month, I clean the board and list the current month at the top. As I pay a bill I place a check mark beside it on the board. It’s that easy!
You may notice that there is a blank space in the middle of my whiteboard. This spot was once for our credit card payment (0% APR, used only as interest-free leverage) and a few months ago we paid it off!
I kept the blank space as a reminder that debt payments really do get paid off with goal-setting and persistence.
I am certainly not reinventing the wheel with this strategy, however, there have been countless times when I have paid a bill, but within a week or so I second guess whether I actually paid that particular bill or if I am just recalling last months payment.
I must say this is added stress that I do not need. Having the whiteboard beside my home computer is perfect because at any time I can glance at it and I know instantly whether or not a particular bill has been paid this month!
*One precautionary note that is very important for any parent that wants to implement this step.
If you have children that may be tempted to use this whiteboard as their personal drawing board make sure to place the whiteboard up high enough so they cannot reach it or in a place in which they do not have access to it. Consider moving it to your office if that is more convenient.
Next section is the final step! Stay tuned…
Step 4: Results and Reward
I hope every reader has had the opportunity to implement the steps laid out from the previous section in their household.
At this point once the bills come in they are efficiently organized, debt payments have been prioritized and you now have a method for paying your bills with peace of mind knowing when all of the bill payments have been sent for the month.
This is a big undertaking in a short period of time and now it is time to reward yourself for this diligence and hard work.
In this section, I want to make sure that everyone takes the time to realize the mountain that they just crossed and I want everyone to be proud of this achievement.
I mentioned in the first section that the biggest challenge with getting your bills organized is the initial set-up and now you are done with that component!
From this point on the process of organizing the mail, reviewing bills for accuracy and efficiently paying all bills for the month will be routine and a piece of cake!
Can anyone tell I get a little too excited perhaps when it comes to successful money-management? I can only hope that my enthusiasm for this topic will help motivate any readers that are still working on these steps.
I would like to re-emphasize that as a result of my passion for personal financial management if anyone is struggling in a particular area please send me an e-mail (firstname.lastname@example.org) and I will be more than happy to offer my words of encouragement.
Now, that you have achieved the results of getting organized I believe that everyone should reward themselves. Considering budget constraints take the word “reward” with a modest perspective, but do make it a point to take time for yourself because you earned it.
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