Mortgage, Credit Card and Car: Managing Your Monthly Bills

Like everyone who has bills to pay each month, I am frustrated. My reason for frustration is not because I don't have enough money to pay my mortgage, credit card, or car bills each month (although it feels that way sometimes). It's not because I am late on payments due to forgetfulness (I'm forgetful, but not when it pertains to money). It's not even because a little part of me dies inside every time money leaves my bank account to pay a credit card company.

No, I'm frustrated because there doesn't seem to be one perfect, easy, stress-free method for tracking and paying all of my bills. Instead, there are three decent, imperfect methods I have to use each and every month.

The ol' Envelope and Stamp Method for Bills

This is my (and possibly your) parents' preferred method for paying bills. Until a few years ago, it was my primary method as well. Paper bills come to your mailbox each month. The dates you receive them and their due dates vary from bill to bill. Depending on how organized you are you either pay all of the bills for the month in one or two sittings, or you sit down and pay your bills randomly throughout the month (hoping none of them are late).

If you're lucky, there is an envelope included with your billing statement you can use to mail your payment. In that pristine scenario, all you have to do to make a payment is get your checkbook, a pen, a stamp, and some saliva.

This method, clearly, is riddled with holes the size of Alec Baldwin's head.

Online Payment for Bills

The modern method for paying bills. It is the method I primarily use. You log into your banking institution's website, choose who you want to make payments to, fill in the payment amount and date for payment, and submit. No envelopes, no checkbooks, no stamps, and no saliva. It's pretty easy. It's a pretty straightforward and easy method for paying bills.

However, it's not perfect. You still have to track your bills and physically sit down and make the payments. If all of your bills came to you on the 15th of every month and were all due on the 1st, this would be easy. But if you're like me and you have ten different bills coming to you on ten different days and they're due on ten different days, this is a hassle. Ideally, I would move all of my due dates to the same day, but only my Discover credit card allows me such flexibility.

Online bill pay does allow you to make recurring, scheduled payments (if your credit card or mortgage bill is the same amount each month and due on the same day each month, recurring payments are ideal). But what if the amounts due for your bills change from month to month? My electric bills are never the same one month to the next. Neither are the two Visa credit card bills I'm working hard to pay off this year.

Another problem with online bill pay is the funds leave your account either the day you initiate payment or the day the recipient is due to receive the payment - not when the payment is actually received and cashed. With recipients capable of receiving electronic payments (like my credit cards and car loan), this isn't an issue. However, this is problematic when a paper check is sent through online bill pay to a recipient incapable of receiving electronic payments. I once sent my mom a paper check through online bill pay.

I initiated payment on a Monday, it was due to be delivered to her on Friday, and the funds were taken out of my account that Friday. The check didn't actually arrive until the following Thursday. What happened to it? Who knows. Maybe it decided to see the world before arriving in my mom's mailbox.

But what if the check never arrived? I would have had to contact my bank, explain to them the payment never arrived, get them to put my funds back into my account, and then try the process all over again from the beginning. This is never an issue with paper checks written by you from your checkbook - the funds do not leave your account until the check is cashed (what a novel idea).

Automatic Debit

Many payees offer the capability of automatic debit payment for bills. If you give them your bank information, each month on their respective bill's due date they will take the amount due out of your checking/savings account.

This is as "hands off" as you can get and it has many advantages. You'll never have to worry about forgetting or being late with a payment, and you don't have to worry about accidentally paying the wrong amount.

That said, depending on your preferences and situation, it has drawbacks too. Unless you always have enough funds in the bank to cover expenses, you'll still need to keep tabs on when your bills are due. If a $300 car payment is going to be automatically taken out of your checking account on the 16th of every month, you need to be aware of this fact if you're the kind of person who has a checking account balance that floats between $100 and $800 from one week to the next.

Also, the notion of giving a big company access to your bank account is a bit much for some people. It's one thing for a huge car insurance company to have your bank information, it's another for your local gym to have it.

Conclusions

So what's the perfect method? Sadly, I don't know of one that works in all situations for all people (much less one that works for me). In my situation, only half my bills are eligible for automatic debit. If my preference was to use this method, I couldn't use it for all my bills. Five of my bills would have to be paid via online bill pay. And two bills, as hard as it is for me to grasp since we live in the year 2007, can only be paid via paper check.

Is there a better way to keep up with your monthly bills?