Set Up Online Bill Pay: Divide Your Bills and Pay Them on Time Every Time

When I first married at eighteen, I found out my husband expected me to handle the bill-paying. I tried all different ways of setting it up so that all got paid on time, and that the money was there for them. It ended up being a confusing mess, until a friend showed me a simple way to handle paying bills.

First, take a sheet of paper, and down the left hand side, write the dates you will receive your money for this month. For example, if you get paid every Friday, put those dates down the side, leaving some space between each one. Also write the expected amount of that check. If you get paid on the first and fifteenth, you will only have two dates to list, of course. Across the top of the sheet, write the month. For example: August 2007.

Now, on a separate piece of paper, list all your bills. Put the name of the bill, the date it is due, and the amount. If it varies, put the higher amount it has been in the past, so you won't get stuck without the funds to pay an unexpectedly high one. (If it comes and it's less, you'll just have more money left that week!) I'm not going to tell you to put down savings, or pare down your expenses, as a financial adviser will be happy to tell you how to set up a budget for a brighter financial future. I'm just going to tell you how to pay those bills you already have.

After you have listed all your bills, go back through your checkbook and the bills you have piled up, to make sure you didn't forget any. Then add them up and get a total. After you have the total, divide that by the number of paychecks you receive in a month. If you get paid weekly, you can put four (when you get five, it will be like extra money!). If you get paid twice a month, divide your total by two.

Now remember this amount you got when you divided, and we will call this your magic number. That is the amount of bills you want to try to pay each pay period. Look at the bills and see which ones are due first. Put those on the first pay period until you get enough to total the magic number. Then put the next bills as they are due on the next pay period until you reach that magic number, etc. This insures that you will not have to pay all of your bills out of one pay period and be short of funds, and then have a lot left over the next.

So what do you do if you get to say, $280 and your magic number is $350, but the next bill due, your car payment, is $200 ! If you put that bill on there you will go way over! Ahhh, this is where WRITE-OFFS come into play. If you have $70 until you reach your magic number, then put "Write Off Car Payment"- $70. When you get that check and sit down to pay those bills, go ahead and subtract that write off, just like you had paid it. Then in the BACK of your check register, put the date, "W/O Car Payment" and "$70", the amount you wrote off. When the next week rolls around, you will have to deduct the rest of the car payment and mail it, and then you go back to the "write off page" in the back of your register and put a check. In your bill register, go ahead and put ADD BACK WRITE OFF and list $70 under the deposit column and add that back to your balance, then write your check.

But what about when I go to balance my checkbook? You may show more money than your check register balance says, but you can go back to your write off page and see that you have write off's that have not been added back, and you will see where the difference is and know you've balanced correctly.
Be sure to not list a write off on your write off page until you have actually subtracted it from your balance in the check register, and don't check it off until you have added it back when you get ready to pay that bill.

Well, what if my next pay check comes on the 15th, but my rent is due on the 10th? In order to keep this budget equally divided into pay periods, you are going to have to find a way to pay an extra month's rent so that when it comes to the 15th, you will be paying the rent for 10th of NEXT month. When you get paid weekly and have an extra payday, use that to pay those bills ahead that are due before the date you have them listed to come out of a paycheck. We had to cut back the first month to prepay some of those to get them to fall correctly on our bill-paying schedule, but it was well worth it the next month when I knew exactly how much spare money I had out of each check.

What do you do when extra bills come in during the month you didn't expect, like a doctor bill? I listed these at the bottom of my budget and each week, I tried to pay something on those unexpected bills.

This method insures 1) you don't have one paycheck with nothing left and the next one with a lot left but not sure how much of it you can spend 2.) that you are paying those bills that are due, even if their statement gets sidetracked in the snail mail system or you lose one, and 3.) you can use the same budget from month to month by just changing the month and the dates of the paychecks for that next month, so you use the same division of bills each month.

As far as expenses that varied, we had groceries and gas that varied each month. I never listed these on my budget. After I paid my bills, I knew I had whatever I had left and had to buy my groceries, gas, and extras from that. By using the magic number, and getting as close to it in the total of bills to come out of each paycheck, you should have a pretty consistent amount left over.

Another helpful thing is to write the addresses and account numbers on a separate sheet of paper and attach it to the back of your bill-paying plan. Then if the statement doesn't come, you can still write the account number on your check and mail it.

I kept a pocket folder with my bills as they came in, my bill-paying schedule, and this address list. When it was time to sit down and pay the bills the day my paycheck hit the bank, I was ready and organized.

I used this system for thirty years, and my children all grew up to do the same system.