Boston Gal's Open Wallet

Boston Gal,

I agree that keeping extra money in the checking account is the easiest method. But then you are losing out on interest on the money sitting there. Also, people tend to live paycheck to paycheck.

 

My method is similar to Boston Gal's, I think.

First of all, we only use 2 credit cards; a Costco-branded American Express and a cashback Visa card. Only Costco purchases go on the American Express and everything else goes on the Visa. And when I say everything else goes on the Visa, I mean everything, including things that only cost a dollar. I enter transactions into Quicken everyday so I always know what we owe. Any bills like the cable bill and termite bond that can be setup to automatically charge to the Visa are setup that way. When the credit cards bills are due, I reconcile the statement with my receipts and pay the bill online, in full.

Utility bills come directly out of checking. I get an email a couple of weeks before they deduct the payment so I have time to move money around if I need to. I keep a cushion of $2000 in savings in case we have an expensive month. If things get really bad, I can transfer money from our money market account, but I try to avoid that.

I also have an automatic savings plan setup where a certain amount of money is taken out of our checking account and invested in mutual funs and a chunk is put in a money market account for use for home repairs, new cars, etc.

I have also setup reminders in Quicken that tell me when bills are coming due. Since things like car insurance are only paid twice a year, I sometimes forget about it. But with Quicken, I get a reminder in advance (I have it setup to remind me 30 days in advance). That way, I can juggle things around if I need to.

The key for me is to keep it as simple as possible and to setup things to automatically charge to our credit card as much as possible. I only allow drafts from our checking account if companies either don't allow automatically charging to the credit card or they charge a fee to do so.

Sorry this was so long!! :->

 

I pay my bills the same way as Boston Gal. I also balance my checkbook the old fashioned way and towards the end of the month, when I know that rent and automatic savings withdrawals are coming, I'll subtract them from my checkbook early so that I'll know ahead of time how much I'll have in a couple weeks. And, I too keep a bit extra in my checking account just in case.

 

I use my credit union's bill pay service. It is free and it has changed my life. I don't like giving others access to my checking account. I can set up recurring payments (cable, dsl, mortgage, etc) once, and go back to pay other bills (Visa, electric/gas, etc) when I get the bill. I can pick the day I want it sent (before the due date on the bill, of course).

I used to go to individual payees to pay bills but I found it too hard to keep track. This way everything I have paid and am scheduled to pay is right there on my bank's website, where I can easily download everything into Quicken (I'm kind of obsessed with Quicken). Once neat feature that my CU used to have was a running balance. Although it didn't reflect my future paycheck deposits, I could easily see how much I would have in my account at a future date. Sadly, they removed this feature with their latest upgrade. Oh well. Like I said, I'm a big Quicken fan, so I have a good idea what my balance is.

The only downside is my ED/ING automatic transfers. They don't reflect in my bill pay because they are initiated at ED/ING. In our situation though, my entire paycheck goes to EF and savings accounts for insurance payments, Christmas, home improvement, etc. so I only budget my husband's paycheck. Also, I don't keep much extra in our checking account (the interest rate is awful!), but we have a generous 'fun money' amount that usually covers everything for us. If something big happens along, we just transfer from ED/ING.

I also apologize for the long post.

 

My bills are fairly consistent in timing and amount from month to month, except for Amex and Discover, which is what we put gas and extras on. DH and I get paid 2x a month (15th and last day) and I use my checking bill pay, so I try to have my bills paid on the same day each pay cycle. For example, we're getting paid on 11/15, so the bulk of my bills are being paid on 11/16. I also know when to expect the other autodeduct items (phone, life insurance, investments, savings), and I check my balances every day. I also look ahead to be sure that we have enough to cover to next paycheck, never falling below $500 as a safety net. Sometimes it's harder, like in months when DH has a lot of dr copays or a quarterly bill is due. But we're managing much better than we used to. Planning and looking ahead is the key.

 

I keep a small chart in my checkbook, listing the regular monthly bills and amounts down the side, with the months across the top. I check off each bill as it gets paid each month.

I pay most bills by auto-debit, some by credit card, and some online (manual entry each month). Regardless, each time a payment is made, I check it off on my chart. I usually check the checking account online a few times each week to be sure when things cleared. I can always see what bills are left that month and know how much I need in checking. I make a new chart each year.

I only keep a buffer in checking of a couple of hundred dollars, since I use the credit card for all minor purchases whenever possible. Everything else goes to savings.

 

If possible, my bills are paid by credit card (automatic payments). The next option is to have them taken out of my *savings* account instead of checking. Currently, I think just one payment is taking out of checking now! A couple others used to be and after a problem with that (an automatic transfer didn't transfer so the mortgage payment was rejected, ack), my credit union said they'd change it so that it came out of savings, too!

Ultimately, however, the way I make sure to not get overdrawn is to use Quicken. At the beginning of the month, I enter all the stuff that comes out regularly and is always the same (mortgage, IRA, cable, etc.). Others, I try to enter them when I get the bill since that's when I know their amount. I don't wait until a day or two before they'd be withdrawn! This gives me time to set up a transfer to checking (or to savings) if necessary. Often, I'm aware weeks in advance. Sometimes I go ahead and transfer then; othertimes, I write myself a note to do it closer to the date.

 

I have an auto transfer set up to occur monthly, to cover most of the regular bills I know I pay early in the month, either electronically or by check-- like the first commenter, I don't want to let the money sit in my checking account too long. Then I just make sure I keep an eye on daily balances in Quicken when I enter any other transactions to be sure I know when to transfer more money to cover those bills.

 

I nomally keep a buffer amount in my checking account. I keep $600-$700 more than my expenses. I give up the 4.5% (at todays saving rate) I would earn if I had that money in my ING savings but its worth it to me. Gives me peace of mind and I think is cheaper then paying $40 late fees or return check fees. I guess on average maybe 4 times a year I write checks (or have automatic payments) that due to clearing and/or posting delays dip into my account buffer. If I had to pay any fees would add up to at least 100 (assuming low estimate of $25 free per infraction). I willing to give up ~$31 if it keeps me from haveing to pay $100 in fees.

 

I have only 2 bills coming out of my checking account - rent and electricity - and everything else is by creditcard. I arranged the pay dates so that all my bills are due a few days after my pay date so that I get paid, all my bills go out in the next couple of days and then I'm left with the rest. Goes against the 'pay yourself first' philosophy but I don't need to have extra money sitting around in my checking.

 

hi bostongal, have you trie www.mybillq.com? it's a website for tracking bills. i've recently started using www.billmonk.com, was wondering if you had any inputs. thankees!

 

Many banks have free online billpay that you can set up (e.g., Wachovia) to make payments either automatically or manually. I usually login at the beginning of the month and just pay all my bills. That way, my balance is right in front of me.

Also, most utility companies (and others) will let you request a specifc date for your bill to be due. Making all your bills cycle on the same date may elimate some confusion.

 

I get the same advantage from entering amounts in Quicken registers (I project out about 30 days) as you get with writing checks - hands-on monitoring of expenses. However, I can see into the future and know my balance on any given day for the next month. I can easily see problems and adjust payment dates or savings withdrawls (say, to come after a payroll deposit) and/or plan discretionary purchases so they don't interfere with scheduled payments. This waiting period has saved me a ton of money when I lose interest, find a used one, or catch a good sale.

Also, with everything automated (or at least electronic), I never pay a bill late or pay the wrong amount. Before Quicken/auto payment this happened way too often.

My credit card is even set up so I set the date and payment amount (full balance) manually, but if for some reason I forget the minimum payment is automatically paid on the due date. It's never happened, but if it did the interest on the balance would be much less than the outrageous late/missed payment charge. I still can't figure out why my bank offers this option. It's very un-bank-like.

Before quicken I paid a lot of late fees, and had low-cost overdraft loan protection on my CU checking account just in case.

 

I use a combination of ways to pay bills and balance my checkbook. But one site that I find invaluable is http://www.yodlee.com/ (the free sign up is at the very bottom of the page). I stumbled on this site because it was used by a credit card I had but I soon discovered that you can sign up for accounts even if you don't have that card. You can see everything in one place (bank, credit cards, investment) along with rewards programs (airlines, hotels) and bills and much more. Also helps me keep track of the logins for the million different sites that I use.

 

Hi Boston Gal,

You know I had a small problem with this earlier this year. I just make sure I keep an extra amount of money hanging around in my account, but only about $50.00-200.00. It depends on the month.

I use Quicken and because I can easily project out my expenses for the next 15-60 days, I know where all the money is going. Also, I keep two checking accounts, one for the fixed bills going out every month, and the second is my discretionary funds, out of which I pull a small automatic savings amount. (Because I do direct deposit, I didn't calculate a savings amount into the fixed bill account at first. It doesn't hurt me to pull it out of the discretionary account.)

I'll probably write more about this in my blog soon.

 

Three tools have prevented any late payments or overdrafts for me this year since I started using them all:

1) Quicken - the calendar function allows me to visually see what is coming and when it is due. I can easily monitor that my spending stays under my income through the income and spending reports feature. The scheduled transactions feature allows me to project even the little expenses such as fast food once a week. This means I don't allow untracked little expenses to add up to more money than I make. I track each and every expense and try to anticpate them!

2) The second tool is a prudent reserve of $500 in my checking account. Every cash drawer at a business has some sort of working cash in it for cash flow purposes -how could I expect to handle my own cash drawer (checking account) any differently?

3) Online bill pay through my bank - there are no fees to use it and the service has saved me $32 in stamps so far this year. When I get my prudent reserve up to one month's expenses, I'd like to explore their express pay option where all of my bills get paid in one click.

I would never give anyone else the option of accessing my checking account through automatic payment. Life is too unpredictable for that!

Thanks Boston gal for your example and your inspiration.

 

billing directly to a credit card instead of a checking account is a good idea. it gives you a buffer during the credit card grace period in case you're on vacation, or whatever.

also, if you think about it, it's kind of a waste not to use a credit card if you have a choice. you can earn interest on your money until the credit card bill is due. The merchant gets charged a fee for every credit card transaction (thus the min purchase requirements sometimes), and this cost is effectively included in the price of the merchandise already anyway!

insurance companies and the IRS do this "making money off of a delay in payment" thing all the time. think of this as your chance for revenge.