Author Topic: How would you structure monthly bill paying?  (Read 955 times)

gaja

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How would you structure monthly bill paying?
« on: March 08, 2020, 01:04:04 PM »
I'm used to getting paychecks almost every week, but from April we'll be getting paid only on the 12th and 20th. So instead of just paying the bills as they come (and transferring everything else to savings), I will have to do some planning. Everything is paid online at due date. Our emergency fund/cash savings are placed in a sort of HELOC account with 2.62% interest. The account the bills are automatically paid from has 1.9 % interest.

Would you
a) Transfer the normal/average sum you need for bills at the start of the month as a lump sum from the savings account to the bills account, and just forget about it? (And put all the monthly income in the savings account).
b) Transfer only what you need from savings and/or checking account to the bills account every time there is a bill due? Only surplus from the paychecks get transferred to savings account.
c) Other/none of the above

Now we are paying groceries and other spending with a mixture of credit and debit cards. If we choose alternative a, we would use only credit cards, and pay them when the bill comes the next month.

seattlecyclone

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Re: How would you structure monthly bill paying?
« Reply #1 on: March 08, 2020, 01:55:34 PM »
I'd do (a). The difference in interest (0.7%), multiplied by your typical monthly spending, over a time period of a few weeks, is going to be less than $5. The amount of time you need to spend to look up your exact bill amounts and due dates and schedule transfers at exactly the right time is not worth the gains in my opinion. Consider also the possiblity that you get it wrong and overdraft your checking account. That's going to cost you more than $5 if that happens.

Sibley

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Re: How would you structure monthly bill paying?
« Reply #2 on: March 08, 2020, 02:00:28 PM »
Make sure to give yourself some slack while you're adjusting. It seems silly, but to you this is a huge adjustment in your habits. Leave a little extra in the checking account, just in case you mess up.

Zikoris

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Re: How would you structure monthly bill paying?
« Reply #3 on: March 09, 2020, 12:02:39 AM »
We auto-pay everything with credit card, and then pay that off twice a month on payday. No transferring money around between accounts. Money comes in, credit cards get paid, remaining money goes straight into investments, boom, done.

cupcakery

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Re: How would you structure monthly bill paying?
« Reply #4 on: March 09, 2020, 07:07:27 AM »
I would try to automate as much as you can, so that you don't have to think about it and don't run the risk of late fees, etc.  We try to put as much on credit cards as possible, then pay the  card off when the month closes.  I wouldn't want to transfer money for each bill.  That seems like an accident waiting to happen.  We have irregular income.  The money comes in at all different times and the amounts are all over the place.  It is a challenge.  I personally wouldn't want to add bills to that mix.

maizefolk

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Re: How would you structure monthly bill paying?
« Reply #5 on: March 09, 2020, 07:16:38 AM »
I agree with cupcakery's strategy.

I have all my bills autopaid by credit card (except water which I haven't figured out how to automate yet), and then have that credit card paid once a month out of my main bank account. I keep a bit more money than I need sitting in a bank account earning low interest, because it saves me SO much time and mental energy to not be thinking or worrying about which bills I paid yet or whether there is a risk of hitting an overdraft.


ontheway2

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Re: How would you structure monthly bill paying?
« Reply #6 on: March 09, 2020, 07:47:10 AM »
I also get paid twice a month. I start the month with a month's worth of expenses in my checking account to live on for the month, although I use a CC for all non-bills and paid it in full at the due date. As I get paid, it sits in checking replenishing the account for the next month. At the end of the month, I have an auto transfer of my automatic savings to get me back to a month's expenses for the next month.

YttriumNitrate

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Re: How would you structure monthly bill paying?
« Reply #7 on: March 09, 2020, 01:12:04 PM »
I'm used to getting paychecks almost every week, but from April we'll be getting paid only on the 12th and 20th....

If a slight change in when you get paid causes you to adjust your transfers, to me that's a sign you need to keep a bigger cushion in you checking account. Keeping your accounts tight like that to squeeze out a slightly higher return is like picking up nickels in front a steam roller. It will work fine, until it doesn't.

gaja

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Re: How would you structure monthly bill paying?
« Reply #8 on: March 20, 2020, 05:00:09 PM »
Thank you all for good and useful input!

We have now switched to piling up money in the bills account, and it feels pretty good. Easy, and satisfies my hoarding tendencies. Shouldn't take us more than a month or two to build up a month slush fund without moving anything from the emergency fund. After that, we can start moving the surplus to other savings accounts.

I'm used to getting paychecks almost every week, but from April we'll be getting paid only on the 12th and 20th....

If a slight change in when you get paid causes you to adjust your transfers, to me that's a sign you need to keep a bigger cushion in you checking account. Keeping your accounts tight like that to squeeze out a slightly higher return is like picking up nickels in front a steam roller. It will work fine, until it doesn't.
We do have a lot of safety mechanisms, so there really was never any risk. I'm horribly risk averse, and have a background in risk planning, so there is always a plan B, and C, and W, X, Y, etc.