It’s Friday night and you just got paid.  You’re getting yourself ready to go out with some friends and you walk past your stack of bills piled up from the last couple weeks.  Do you tear into them and pay them all now?  Nah, you can do it this weekend!  You’ll have plenty of time during the weekend!

Photo by pinprick

Fast forward to Monday morning.  Oh yeah!  Gotta pay the bills!  As you’re tearing into them with just minutes to go before you have to leave for work, you realize one of them was due THURSDAY.  Crrrraaap!  Now you remember that last time you convinced yourself that you’d look for that bill when it came in and pay it right away…but FORGOT TO DO IT!  Oh well, submit the payment that takes 3-4 days to get there and hope they process it before they impose a late fee on you.  (not a chance)

Any of this sound familiar?

There are many ways to pay your bills, many of which work well, and some that end up with scenarios like the one presented above.  The key is to find the one that works for you.  So what I’ve done is outline some of the different methods I’ve tried and explained the pros and cons of each so that you can find one that really helps you get in a groove of paying your bills on time.

Method 1 - Automate Everything

There’s a lot of tools out there at various banks that allow you to completely set up your bills to link up with your checking account.  This is possible with just about any bills I can think of with major corporations, and it’s possible to set up fixed-amount bills that are the same every month with anyone that has a billing address.  Some companies will even allow you to provide your bank information so they can just withdraw the due amounts instead of send a bill.

Method 2 - Pay Everything The Moment You Get It

Photo by Earl

Probably the easiest way to account for things is to just pay every bill the moment you get it.  When the envelope shows up, simply write a check that minute and put a stamp on the envelope.  (Or use your web bill pay system from the bank to arrange a payment immediately.)  Nothing will ever really be late if you’re paying everything the moment you get your statement from the company.

I think this may be one of the most difficult of the methods to follow because it takes the most discipline, but I also think it may be one of the most stress-free if you can manage to maintain a large enough account balance to pull it off.

Method 3 - Schedule Bill-Paying Sessions

Another method that I find to be the most common amongst the people I know is to schedule regular times every month or payday where all bills that are due get paid.  Different pay schedules will determine when you’re able to do this effectively, but there’s two variants that I’ve seen.

• Pay everything that you have in your stack of bills that’s due before the next payday.
• Pay everything that you have regardless of when it’s due.

If you’re on a bi-weekly pay schedule like me, then every payday you’d sit down and figure out what you need to pay to keep current.  The next payday you do the same thing.  If anything is due immediately after the next payday, you can just pay it now and make sure it’s not late.

What I Do

So which method do I use?  Well, I actually use a combination of methods 1 and 3.  Don’t forget that the above methods aren’t the ONLY methods!  There’s many variations in between them too.  I’ve automated all of my non-variable payments from my checking account web bill pay system.  For example: mortgage, student loan, credit cards, some utilities, etc.

Next, I’ve got my budget spreadsheet listing all of my bills due-dates in one column.  This is something I refer to as I’m planning which bills I need to pay every payday.  If the date falls within a pay-period, or even a few days afterward, I’ll make sure to pay it by the payday before that.  Aside from what goes in my envelope budget, I use this for everything that’s not automated.  For example: medical bills, electric bill, gas bill, annual bills, etc.

I find that the combination of automating things I know won’t change and scheduling everything else works best for me.  I only have to worry about the things that fluctuate from month to month, and I can work on minimizing those expenses where possible.

So what kind of system are you using?  Are you tired of paying late bills, or do you have a tried and true system you’re willing to share?  Let us know about it in the comments!

Tricia over at BloggingAwayDebt posted a guest post from me today!  It’s called When You Run Out Of Money and was inspired by some of the difficult moments my family and I endured before being forced to turn our lives around.

BloggingAwayDebt is actually one of the very first personal finance blogs I stumbled onto before deciding to make one myself.  I’ve been a regular reader ever since and highly recommend you all subscribe to her feed.

And a huge WELCOME to all the BloggingAwayDebt readers stopping by for the first time!  Feel free to check out my about pages and popular posts in the sidebar to get started.  Also keep informed of my progress and listen to my family’s discoveries along the way by subscribing to my feed in the sidebar!

Having a goal each month really helps drive me toward making progress, even if I don’t quite reach them all.  I don’t want to make goals that are too easy to accomplish just to be able to complete them every time.  I’d rather fall just short and get a lot more done!

Here’s the goals for this month:

1. Reduce overall debt by $1000.  Last month was $2000, but half of that was medical expenses that got paid from my flex spending account.  This month I only have about $200 of medical expenses outstanding.  I think 1K is reasonable, but not too easy.
2. Continue evolving our envelope system.  It’s going to take awhile to get our system where we want it.  Another successful month under our belt will simply strengthen our habits.
3. Finish my debt scales page.  Ok, I’ve put this one off long enough. Time to just get these out there.
4. Revive my daily journal entries again.  Starting with my next budget update to the site this weekend, I’m going to be doing journal entries again.  I did much better tracking incoming and outgoing money when I was doing this, and it’s taken a back seat to other developments for too long.
5. Release the forums!  Yet another development project I’ve been tinkering with too much.  They’ve been "coming soon" for almost half a year now.  Lame.

There’s lot of other things I want to do, but I’m going to focus on these main things this month along with keeping up with a regular posting schedule.  We’ll see at the end of the month where we are with it! 

Earlier in the month I stated my goals for March.  I’m going to list each goal and talk about how things went.  Overall, I think we did pretty good.  I think I’ll give myself a grade of about 80%, so there’s definitely some room for improvement here.

1. Reduce overall debt by $2000.  We managed to drop $2027.77 in debt this month.  Considering I had to replace the garage door opener (~$200) during this time, I think we did great.  This doesn’t count a ~$60 finance charge that’ll apply tomorrow, so I’m actually just under my goal in my mind.  Most of this is medical bills that got paid right out of my flex spending plan from work as well.  This also doesn’t count the money we just spent for our last two trips that we’d already planned before going on a budget.  I finally bought the plane tickets this month, but we paid cash for all but one.  The other will be paid by next month.  This completely concludes planned vacations for a long time.
2. Follow the envelope budgeting system.  I posted how we created and maintain our system earlier this month.  It’s really been helpful, and we stuck to it almost perfectly.  There was a couple of things that we didn’t account for and had to pull money from our little miscellaneous stash to accommodate for them.  I think the cash habit is here to stay though!
3. Complete the separation of my daily journal from the main blog and their respective feeds.   I finally did it, but I haven’t picked up my daily journal routine since.  This will definitely be addressed in the next month.
4. Finish my debt scales page that shows the breakdown of individual debt progress, not just the overall on the header.  I totally blew this one off.  This is the source of most of my bad grade this month.
5. Follow a new schedule that I’ve created for myself on running this blog.  I’m pretty happy with most of the month.  The last week I’ve gotten so little sleep that I just couldn’t seem to finish doing any polishing on my posts.  So they’re all still sitting in my queue here waiting for me to get them post-ready.  (For large posts, I write drafts a week or two in advance, then polish them a day or so before they go out.)  I think there’s room for improvement, but I’m still getting used to a routine amongst my chaotic life.

So, I think we did pretty good financially.  Even with a $200 setback for a garage door opener, we managed to stick to our plans.  The rest of my report mostly concerns the blog itself, which is something I hope to improve on now that our financial progress is on track.

I submitted to a few carnivals this last week so want to share some of the highlights of each.  This is the 2nd week in a row that I had an editor’s pick on the Carnival of Personal Finance!  I’m really glad that I’m able to provide stuff people like to see.  I’m hoping there’s more in my head where those came from.  I’ve simply loved the sense of community around some of these carnivals.  Here’s the list for the fouth week of March:

Carnival of Personal Finance #145 - hosted by Million Dollar Journey

My Post:	How to Create an Envelope Budget System - I’ve been doing pretty well with envelope budgeting, so I thought I’d share how we did it.  This is my 2nd editor’s pick in a row too!
Others I liked:	Free Money Finance: How to Keep Your Child’s Identity Safe - I have 6 children.  I love articles like this that people with children need to read and apply.
	Squawkfox: Just say "NO" to crap! - I loved this post.  I’ve been telling my wife for years that we buy too much crap.  I’m printing this one and hanging it on my fridge or something.  Also, I love the blog.  Lots of potential there.
	The Honest Dollar: 11 Ways to Trigger an IRS Audit - Good stuff to know here, even though I’ve already done my taxes and all.  Never hurts to tuck this stuff away for next time.

Carnival of Debt Reduction #132 - hosted by Debt Reduction Formula

Carnival of Financial Planning - hosted by The Skilled Investor

Well, that’s it for this week, we’ll see you all next time!

Photo by scubaham

I’ve been doing a lot of thinking lately about changing my habits.  This year has been a pretty good one for me in general with changes to my habits regarding health and finance.  Another area where I’m going to be focusing this year is going to be on habits related to time management.

As I was thinking about my time management skills, I noticed a theme arise from my pool of thoughts around procrastination.  I’m actually a very experienced procrastinator.  I’d almost say I’m pretty good at getting things done when I really need to.  The problem is that I just can’t seem to complete everything plan for…just what’s on the first half of my to-do list.

Realizing I Was Borrowing Time From Myself

It hit me…like a Nerf bat to the head a half-dozen times in a cartoon-like fashion.  The source of my procrastination could be coming from my habit of borrowing from something I don’t have yet.  In this case, it’s time.  For example, when I’m cleaning out the garage I sometimes pick a corner to pile up things that I’ll go through later.  I get 75% of the garage cleaned, but then I’ve got this awful mess of stuff in a corner that’ll take me longer than that first 75%.  It’s very easy to walk away thinking I cleaned "most" of the garage, only to have to take twice as long next time just sorting through the mess to clean it correctly.

What happened here is that the first time I was cleaning, I really had the time to do it all correctly…but I ended up putting some of it off to do later, even though I wasn’t sure how much time I’d have in the upcoming weekends.  As it turned out, I was pretty busy the last 4-5 weekends and the mess is still there.  What I did was borrow future time in my mind that I ended up not having later because it was already allocated to something else.  So I wasted the time I had to go watch TV or something useless (I really don’t remember) essentially borrowing time in my mind from future weekends to finish the job I could have done now.

The Debt on Time

That borrowing of time from the future is the same mentality that got me into a financial mess with tons of debt!  Do you see the correlation?  I’ve borrowed a bunch of money to pay for things now based on some future income I’ll be getting.  With the garage, I borrowed time to complete the task later based on some future weekends in the schedule.

Photo by marina~

Now, since many of my weekends are filling up with other obligations, I’ll have to work twice as hard to manage enough time to eventually clean it all up.  I’ll probably have to do a little at a time over the course of a few weeks to finish it instead of being able to do it all at once.

This is the same predicament I’ve got for my finances!  It’s obvious that a behavior change is needed across the board here.  The debt mentality doesn’t stop at just finance.  You really need to break the debt habit with more than money, it can be applied to time the same way.  I’m not just talking about for chores either.  It can show up in lots of places:

1. Quality time with your family.
2. Finishing up a project for work.
3. Writing blog articles.
4. Paying bills.
5. Household chores.

I think your time management will improve if you think about your procrastination habits with the same despising hatred you have with debt.  I certainly have noticed a change in my attitude this weekend.  I had some family here for the holiday, and all the time I thought I’d have to do random tasks was completely eliminated by a change in plans.  Not that I regret spending time with family, but I’d have not put off so many things for the weekend instead of just doing them during my first opportunity!  I wouldn’t have procrastinated!  I wouldn’t have created my own debt on time.

How many of you seem to never have enough time for anything, but know your top 3 American Idol picks or can tell you all about the latest Lost romance?  Maybe it’s time for a re-examination of your time debt.  Got any other examples of things you’ve borrowed time for and still haven’t done?  Share your time debts with us, I’d like to hear if any of you are having some of the same issues.