I pay all my bills once a month. Unless I had a lot of unexpected charges on the credit card, say an expensive mattress, home repairs, tuition, etc, I know approximately what my bills are on the 1st of every month.
I keep like I’ve mentioned before a large buffer in my checking account, about one month’s salary to be honest. This habit started with a job I had in which I was paid once a month. That meant that I had to be extra careful about spending. It also meant I went almost 1 month without being paid after starting.
Everyone I worked with told me that the only way to manage getting paid one month after you work is to pay bills once a month and have a one month buffer at all times. So I did. I’ve found it very easy to get organized and stay organized. On the 1st of the month I sit and pay all bills no matter when they are due.
Mortgage not due until the 15th? It’s paid on the 1st. HOA not due until the 15th? Done. Utilities not due until 22nd for electric, 18th for natural gas, and 6th for cable/internet/phone? All paid early. Basically all fixed expenses for the month are “prepaid”. Then the paychecks for the month are built up for the next month.
One thing people rarely know is you can ask your utility companies or credit card companies or loan companies to move your due dates to the end or beginning of the month. This will align all your due dates and make it easier to remember and budget for.
On top of that, in case I am not paid, I leave a month of cash in my checking as buffer. So our checking grows to about 2 months of cash every month and is used up on the first of every month routinely. This extra buffer allows me to pay our insurance in full. It also allows us to pay for things like car repairs, emergencies, etc without shifting cash back and forth from our online savings account. I find it easier to manage than constantly waiting for money to transfer between our HSBC account and out BofA checking account.
Perhaps it’s not the most efficient way to keep cash. But I think it’s the simplest method for paying bills and never being late. I’ve never paid a bill late. I think even if you are paid 2x month or biweekly, this method makes certain that you always pay your bills early and in full.
The one caveat is that it can take awhile to get used to paying your bills ahead of schedule and building the buffer can take some time. It can be difficult to get used to using last month’s paycheck to pay this month’s bills. Also financially it can be a struggle at first, but then you just naturally build in a buffer.
5 responses so far ↓
1 Ashley @ Wide Open Wallet // Oct 22, 2008 at 11:52 am
We do this too! I’ve always paid my bills this way. For a long time I worked for a small business and we got paid weekly, my boss used to get so mad because I wouldn’t cash my checks til the end of the month. lol. He would always be after me to cash my checks.
2 Jim ~ mydebtblog.com // Oct 22, 2008 at 3:31 pm
I know the creator of YNAB (You Need A Budget) suggests doing things this way. The idea is to get one whole month in front and use last month’s income for the current month’s expenses. That way all the money is already there and budgeting can become a little more exact. Bills get paid as soon as they come in instead of waiting to be paid by a job. I think we’re probably about half way on this kind of system and eventually the other half will catch up. While it’s nice to have a larger buffer in the checking account, I keep in mind that much of it has been forecast for future expenses already.
3 LAL // Oct 22, 2008 at 3:54 pm
I think it definitely takes awhile to get used to. One thing is that when you are paid once a month it immediately becomes an enforced habit. One you cannot break because you are paid once a month.
I like that you did it Ashley without being paid once a month. I did it out of sole necessity.
4 Justine // Oct 22, 2008 at 4:27 pm
That is a really smart idea. I tend to pay all of my bills twice a month (I get paid every other week); to try to get balances down. But what I don’t have is a big enough cushion in case of emergencies. How did you get to the point you are at now to have that cushion?
5 LAL // Oct 22, 2008 at 4:30 pm
Honestly? Necessity. I got a job where I was paid once a month, and I had to survive 2 months until I got paid after I had worked a month. So it was not fun.
Then going on the routine of getting paid on the 1st of the next month for the previous month meant I had to learn how to budget money forwards. If you get a job like that, everyone who works there will tell you the bills need to be paid with last month’s check. It’s too hard to survive waiting for the month’s paycheck.
Previously I had lived like you 2x month paystubs. But circumstances forced a change and honestly I liked it and stuck with it.
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