Everyone has those expenses that are the same each month – a YMCA membership, a Netflix bill, the cable bill. Reviewing how you are paying these bills can give you some ideas about where you can save money.
When I was working through my SUM 180 interview, I made a list of all my recurring bills. I had set some up to pay on a credit card, some were direct withdrawals from my checking account, and others were still paper bills. I had never thought about a consistent plan for these bills – my approach was completely random.
After I had my list of bills, I added them all up. Then I put them on the calendar and added up the expenses for each week. My first idea was to transfer that weekly amount to a new “online bills” account. I decided it was easier to divide the total by four and transfer that amount each week from my main checking account. That was easier than trying to keep track of a different number each week.
I set up an automatic weekly transfer via my online banking system and then switched all the bills to that online bills account. I also switched my PayPal account to be funded by that account. This helped me control my online shopping as well. Now, when I want to buy something for myself or as a gift, I have to have enough money in that account to cover it. No more “endless funds” from my credit card to cover Christmas presents or birthday gifts.
Having this separate account also helped me feel more secure about paying these bills automatically via my bank account. There is always a limited amount of money in that account, so if it were compromised, I would not lose that much money. It’s a bit irrational, I know. I suppose if a hacker found the credentials to one of my online accounts, he could find them all – not just the one with a low balance.
However, this new system keeps the recurring bills off my credit cards, lets me control my monthly cash flow, and reduces a few worries about online banking. I’m willing to trade off a few security worries – no matter how irrational they may be – in exchange for those benefits.
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