When it comes to setting budgeting goals, the first is to get current in paying ongoing bills. For many of you, it may sound like something so basic that it’s already taken care of. That’s great because it means that you’re doing well enough to be able to pay on time. For others, staying current with monthly expenses is something that seems unattainable.
Paying late can mean incurring costly late fees, further stressing your already-weary budget. In the worst case, it could mean risking collections, eviction notices, wage garnishments, and even court dates. Either way, late payments impact your credit scores, your ability to work in some industries, and your available funds for other, more fun things. So today we’re going to talk about three ways to get current on your regular bills.
A First Step
It is always a good idea to call your provider first. Companies have different policies as to how they handle payments, cycle dates, and overages. Be informed before choosing a strategy.
Talking with the company may also bring up other possibilities. Maybe they have new offers to save you money. Maybe they have payment plans that better suit your needs. Don’t be afraid to ask about what is available to you. This is why they have customer support teams.
1. Get Current by Adjusting Dates
A major contributing factor to missing payments is the timing of when they are due versus when you are paid. An easy way to get current on your bills is to try to work with your creditors to adjust your due date.
By adjusting your due date out so that it aligns with your checks, you can get current with that bill almost immediately. This may also give a little bit of extra time on your next payment, which means paying some other things in a timely fashion.
Both credit card companies and other service providers are somewhat flexible when it comes to your billing cycle dates. They often have a limit on how frequently you can adjust the due date. This avoids people trying to game the system so that they never pay. They also have limits on how late you can be at the time of the adjustment. For instance, if you are 15 or 30 days late already, they may require you to make a payment before they adjust the date.
Example
Your paychecks come in on the first and 15th of every month. Rent takes up most of your paycheck on the first, leaving only enough for necessities. Your cell phone bill is due on the 14th of the month. You do not have enough left over from the check on the first to cover the cell phone bill.
Call the cell phone company and ask to adjust your bill to after the 15th. In your budget, allocate money from the check on the 15th of the month to pay your cell phone bill.
2. Get Current Over Time
This one can take a little while and requires that your budget have at least some wiggle room. The goal here is to keep some money back from each check until you have enough to pay a bill twice in one month. The first payment might be a little late but the second will be on time or even in advance. From that point on, pay the bill on time.
It will take you a few checks to get to this point. Typically, you use this technique one bill at a time until they are all current. If you are paying multiple bills late routinely, this can take a very long while to get current on all of them.
Example
As above, your paychecks come in on the first and 15th of every month. You have $30 extra per month after everything is paid including necessities.
Your cell phone bill is due on the 14th of the month and is $90. You pay it on the 16th of the month after the check clears on the 15th. In this example, assume we’re starting in January.
Pay your cell phone bill of $90 on the 16th as usual. You have $30 remaining in your account at the end of January. Follow the same pattern for the next two months. You now have $60 in your account at the end of February and $90 at the end of March. In April, use the $90 that is in your account to pay your cell phone bill before the 14th.
You have $90 extra from your check on the 15th every month that now gets carried over into the following month to cover the cell phone bill.
3. Get Current with Partial Pre-Payments
This strategy is a great way to get current over time without running the risk of accidentally spending money you were trying to save for bills. Partial pre-payments are when you pay some, but not all, of a bill in advance. Essentially, you pay a little extra until you are current. Your account with the company may reflect a temporary credit (where it looks like the company owes you money) until the cycle ends. New charges hit your account but your bill will look lower. Do this until the amount you have pre-paid equals the amount of your monthly charges. Then start paying by the due date.
A Word of Caution: not all companies allow you to carry a credit forward. Check with your provider as to their policy. Otherwise, you will send them a payment and they will just send you back a check. They can take their time with sending such refunds and you don’t want to be out that money.
Example
As above, your paychecks come in on the first and 15th of every month. You have $30 extra per month after everything is paid including necessities.
Your cell phone bill is due on the 14th of the month and is $90. You pay it on the 16th of the month after the check clears on the 15th. Again, assume we’re starting in January.
Pay your cell phone bill with $120 on the 16th of January. This includes your normal payment of $90 plus your remainder of $30. Your account will show a credit of $30 until the next cycle. The bill in February will be $60. Pay the same $120 on the 16th in February. Your bill in March will be $30. Pay $120 again on March 16th.
Your April statement will show a balance of $0 because you have pre-paid $90 thus far. You are now current and do not have to make a payment on this bill. Be sure to keep that $90 in your budget and make your next payment before May 14th.
Disclaimer
I am not a professional financial planner or investment advisor. Articles are meant for entertainment and general information purposes only. If you have questions regarding your specific situation, please consult a financial professional.