Paying bills is a drag. Even people with lots of money hates it, let alone those who struggles just to stay afloat. Especially since the cost of living in Australia continues to go up and sometimes it feels like there is nothing we can do about it. Well, sometimes it seems like the government doesn’t do anything about it either, especially with the recent approval of health insurance premium increase (thought they did say it could have been worse without Government’s intervention). There is no sign that this will stop or reduced. Every month, a typical household will come across these bills one way or another :
For some people, managing bills payment is almost like a sport, organising it is so easy. However, for most of us, taking control of this aspect of our financial life can be difficult. Not every one has the time or the inclination to sit down and sort out the financial mess. But consider this a part of adulting. That said, sorting out your bills shouldn’t be as complicated as some may suggest. Don’t have to bring out the excel spreadsheet just yet. There has got to be a happy medium right ?
Benefits of Paying your Bills On Time (or Early)
Comprehensive Credit Reporting
As of 1 July 2018, comprehensive credit reporting regimen will give lenders access to a deeper, richer set of data enabling them to better assess a borrower’s true credit position and their ability to pay a loan. This means, your debt payment history of up to 24 months can be recorded and accessed on your personal credit file. So, paying bills and loan repayments on time will reflect favourably on your credit report and hopefully make it easier to secure credit. Where else, consistently dragging the chain with bills can make it harder to get a loan in the future.
Avoid Losing Money By Paying on Time
In this case, procrastinating is uncool and will cost you money. Look at your previous bills (where late payment was made) and look at the amount on late payment fees added onto you bills. Some bills charges up to $A30 for late payment. Take an average of $15 per bills. If you have 5 Bills each month to pay , that equates to $A75 per month and $A900 a year! All that money gone just because you are lazy and cannot be arsed to take 5 mins daily to keep your finances on tab!
Save Money By Paying on Time
Some bills provide discount of up to 20% for paying bills ahead of time. Our energy bills works out to be around $A300 every two months and paying early means we saved approximately $A60 per bills , which is around $A360 per year! Some utilities also provide concession and government rebate for energy and electricity services.
If the above benefits are important enough for you to make improvement to your finances, lets look at some of the tips and hacks which will help in managing your bills payment on time.
Tips to Pay Your Bills on Time
Consistent Payment of Small Amounts Weekly
When Sam and I were just starting out, I was still in Uni and we mainly relief on his income. I started using this practice so I won’t freak out about forking out hundreds of dollars in bills, which tend to all come and due at the same time. So I made small weekly payments of $A20 into each big bills account, such as energy, gas and council rates. I chose $A20 as it was an amount I didn’t mind parting with. It’s an amount that I would have spent on other things like take away food or crappy knick-knacks.
So , pick an amount you are comfortable with, even if it is $A5, anything you could put away into bills helps. Some weeks, I couldn’t make the whole $A20, but I still try to put it something. This way, by the time my bills arrived, a bill that usually would cost me $300 would go down to $170 or so, a much manageable amount to pay. Some bills , such as our council rates are even in credit. Which will definitely help on rainy days.
Set Up Direct Debit
This is a good method for those who procrastinate or are not big on putting money away for bills. Direct Debits are doing it for you. Direct debit is perfect for fixed amount bills such as mobile, internet, foxtel and insurances. This way you know what day of the month it is due and you can set it up to work with your incoming paycheck schedule. Direct debit is a great way to eliminate paying late fees. When doing direct debit, just make sure you have enough money in the bank to avoid having to pay overdraft fees.
Set Up Payment Reminder
For some people, sometimes they get behind not because they are struggling with money. They simply forget to pay their bills! This is not fun for bills such as credit card payments and bills with expensive late fees. To avoid this, organise the bills according to your financial situation. If you get paid weekly, set up a payment system where you pay your bills a day after your pay. If you get paid monthly on the 15th, set up the payment to be on the 16th or 17th.
This requires a bit of an organisation at the start. But even for the laziest person, this shouldn’t take any longer than 10 mins. All you need to is check your bills (placing them on your fridge door works) , keep note on the payment due date, arrange the due date with your incoming pay. You can either set up a direct debit payment or put a reminder on your phone or Google Calendar to pay it manually.
Organise your Finances
There are plenty of suggestions on creating a financial spreadsheet or similar software or an app. By all means, you should try them and I hope they work for you. But if you are like me, who simply don’t want to and don’t have time for more data entry, they will only work for a short time. For me , it is bad enough I have to spent time on sorting out my bills payment , let alone having to maintain a spreadsheet. Normally, I would just sit down with a piece of paper and write down my monthly expenses. Then, in my head, I basically incorporate the total in my head with my paycheck. I would divide half of the remaining for ‘other expenses’ and the rest on saving.
The trick is to prioritise things that are important. For me there are only 2 things; paying off debts and saving. Any ever left over after that I use for spending, aka Fun. Some people might think ‘thats boring’, but paying off debts and saving provided me with something far more valuable, so valuable that a $A1000 handbag could not give me… a peace of mind.
To get started, a useful guide would be this informative website from ASIC. There are tons of free and impartial financial guidance you can utilise in managing your personal finance.
Maximise your Entitlement as a Consumer
Sometimes despite our best efforts, the bills keep coming through to the point where paying them off becomes a down right struggle. Especially when after all the budgeting, saving, planning and organising, you realise you are still miles from getting ahead. If you’re having trouble paying a utility bill, the first thing you should do is contact your provider and ask about bill smoothing. Most companies have hardship officers who can help you work out a plan to pay the bill in instalments.They can also help you apply for emergency utility bill vouchers that you can use to meet minimum payments. Should the utility provider become unhelpful, you can make a complaint to the ombudsman.