Look, we’ve got some bills to pay. We do. Until recently, I didn’t understand the difference between a bill and a utility. So let’s break it down right now. A utility is something you need for survival: as in your water; food; shelter (be that home, apartment); transportation (car, bus pass, subway); and clothes.
A bill is what you owe to someone, like: student loans, medical bills, auto loan, home loan. You can see that there is some overlap. So let’s be completely frank here. Sure, you need food to survive, but do you really need to eat out multiple times a week? Yes, you need clothes. Do you absolutely need an overpriced brand? You’ve got to get to work, but what kind of vehicle you take to get there can make a big difference on your monthly bills. You get the idea.
Now think about it this way. What if you never had to pay for anything but the necessities? Water, food, clothes. Everything else was taken care of. Whoa. What freedom. What a breath of fresh air! The first time I had even heard of a life like this in Dave Ramsey’s Financial Peace University my mind was blown. Seriously. I could not take it all in. But then it makes sense. That’s how you build wealth. That’s how you create your financial future. He mentions (and I’m paraphrasing here,) “You’ve got a hole to fill. And depending on your income is the size of your shovel. So start digging.” I just saw life differently. We’ve got to get to work on that hole. But, oh, the hole. Or, better said, the bills.
The bills can get overwhelming. If you don’t take time to take care of it- it will catch up to you. Big time. Before I was married, I was notorious in my family for not getting the mail in my apartment for a couple…weeks. Shameful, I know. I still can’t tell you why, except I was lazy and didn’t expect good news. All of my payments were automatic, so the mail was just a reminder of the student loans. Ugh. Student loans. I want you GONE. If I would have done all this reading when I was younger I would have done things much, much differently. But here we are.
The key has been get organized. Organize your bills in a way that works for you. Having not only a place, but a system to your bills will help you find clarity, you will be able to see the big picture, while focusing on each little payment and create your financial plan. Now, your method will look differently than mine. That’s a good thing. Our minds work differently, so find what works best for you. These three easy steps have made all the difference for me! If you have another suggestion, please share on the comments. I am just in the learning process here. I want to learn from you.
1. Open every bill as soon as they come in the house.
I’m talking every single one. If you walk in with a bag of groceries, a purse and couple shopping bags, get that counter cleared off and everything put away, but before you leave the kitchen open those bills! Keep a letter opener right near you. Open them, but realize here, you’re not trying to read every word- just a quick glance, look at how much and the due date. That’s it. Then, and this is critical, put them in a specific location to hold the bills. I’ve seen letter holders, file folders and a lot of other options online- but that’s not me. I want them out of the way so the kitchen is clean. I have a big ol’ three ring binder and I take a paper clip and put the bill and the envelope clipped together, and place them in the big pocket on the opening side of the binder. Then I throw away the envelopes those bills came in, right then. Whew. In the house, in the back of your mind, and out of the way.
2. Simplify your system
What works best for you? Organized by month? By bill? For us, we have found that when we organize them by bills it is much easier to find out our current status on each bill. This has been tremendously helpful for us. We can see that last month we paid $38 more for electricity than this month. And we can see that in January our gas bill was much higher than July. In the big ol’ three ringer, I have a pocket folder for each bill, with a label on the side telling us which one it is. (Side note: I didn’t go out and buy some really cool pocket folders with matching labels. Although I wanted to. That’s where I’m learning that all these little expenses add up.) It is just a page protector, with a sticky note on the side to label what bill is inside. Once the bill is paid for the month, I put the bill with the paid date in the corner. Then, as we are paying off all the bills, and accounts are closing, we send them to the back of the book. It is getting pretty exciting to see that the back of the book is getting fuller, too.
The key to this is to make it simple. Make it so simple you can look at the sheet, leave it for a couple weeks and come back and know exactly where you are on your financial path. And here’s the thing, you will leave. You will have to focus on other things in life, like kids, a job, house cleaning, dinner, all of the details that keep us going. So the simpler your system, the better you are setting yourself up to know exactly where you are and what step to take next.
3. Set a time to do bills.
This may be the most important step of all. Set an appointment with yourself to pay the bills BEFORE payday. Put this appointment in your book, your phone, your calendar, even on the fridge so that you will see it. You have to make this a top priority. Make sure to this step BEFORE pay day. I have seen the past couple of times, if we don’t sit down before payday then we go out to dinner, run an errand, or spend a little because it feels good to have that account nice and full again. Big mistake. My husband has so lovingly reminded me that we played and we need to take that money out of the envelopes (which we will be talking about soon) and I feel it. It’s painful.
When you set the time to go through your budget, pay those bills and get the money a specific assignment you are taking control. All of a sudden, you are driving the bus. The money just doesn’t come and go. And those dollars get in line real fast for you.
As you improve the process of bill paying by: Opening each bill as it comes in the house, simplifying your system, and setting a specific time to pay bills, you are setting yourself up for success! You are saying, “I’m not going to feel like this anymore.” You are taking control and making your financial dream a daily reality. I am so excited for you! I know you can do it.
Now, tell me about your bill pay system. What works best for you? I want to hear about it in the comments below.
We are on our way!