Tammy's subject was surviving the ups and downs of the "feast or famine" nature of self-employment. She had a lot of valuable information to share, but in this post I want to talk about her advice on bill-paying.
According to Tammy, when it comes to bills you have three options:
- make a date
- do it now
- pay it early
Pay all your bills at one time every month. Pros: You don't have to deal with the bills when they arrive - just stash them in a central location and pay them all at once at an assigned date and time. Cons: If you break your "date," your bills might not get paid. Not a good choice if you're a known procrastinator, or you hate the structure of doing something at the same time every month.
Do it now.
Pay the bill when it first enters your hand. You're going to have to pay it eventually - why wait? Keep your chequebook near your favorite mail-opening spot (or open your mail at your computer, if you pay bills online), and fire off the payments right then and there. Pros: If you're a procrastinator, this breaks down the bill-paying into small, manageable bites. Cons: You might not have enough money in the bank when you receive each bill.
Pay it early.
Paying your bills before they come due may not seem very appealing. I mean, why give away your money when you don't have to? But it might be a smart idea if you receive large chunks of cash a few times a year, and then little-or-nothing for weeks at a time in between (think: real estate agents, or artists and craftspeople who sell their work at shows). Pros: Your bills get paid when you have the money; when you don't have the money, your bills are already paid. Cons: You lose the potential interest you might have earned if you had hung onto your money.
To Tammy's list I would add:
Sign up for automatic withdrawals.
Many bills can be paid through automatic withdrawal from your bank account or credit card. Pros: You don't have to remember to pay your bills. Cons: You do have to remember to keep enough money in your account to cover the withdrawals. NSF is always a danger.
Whatever you decide, make a choice that fits your personality, your financial circumstances, and your lifestyle. Don't be afraid to try out a few alternatives before you settle on one strategy that seems to fit best. And try to make it fun. If bill-paying is a chore, find ways to enjoy it. Play your favorite music. Sip a glass of wine. Treat yourself afterwards.
But do pay your bills. It's good for your peace of mind, and a powerful antidote for insomnia...
copyright 2007, Michelle Lynne Goodfellow