The Cost of Carelessness
Posted by Gail | Filed under Money Management
Many of us are careless with our money. We don’t keep track of what we’re spending. We don’t worry too much if we’re a couple of days late with a payment. We don’t really think about how we’re spending the cash in our wallets. Too bad. That carelessness can cost a lot. And since we’re oblivious to the mistakes we’re making, we never calculate the cost and plug the hole.
Ever been late with a credit card payment? There is no excuse for missing a payment or being late on a bill. That’s just dumb. Especially when you know that missing by even a day turns on the interest clock and keeps it on for as much as three months. That’s right. Even if you pay your bill off in full the day after the due date, the credit card company may continue to charge you interest on all your purchases for as much as three months. Sneaky little buggers that they are, if you read the fine print you may find that you have to have three months of zero balance before the interest clock turns back off. Ouch!
The easiest way to keep track of all your bills is to simply write them all down along with their corresponding due dates. Keep the list at the front of your spending journal. And check it each week to make sure you got your bill and have paid it on time. You can also set up two file folders:
- bills due by the 15th, and
- bills due by the 31st.
Or buy a big desk calendar and each time you get a bill, write down how much is due and when. Check the calendar once a week and nothing should slip by.
If you’re bouncing payments and paying almost $50 a pop in NSF fees you’re a complete idiot! All it takes to not bounce a payment is:
- a record-keeping system, and
- enough money to meet all your must-pays.
Keeping track of your money means you won’t take money out of the bank for coffee or lunch when the electricity bill is about to go through. And as for having enough money, you may have to get a second job or a third job. The only solution to “not enough money” is to Make More Money.
Do you bring home your change and toss it in a drawer, leave it on the bedside table, or stick it in a jar? Are you so rich that change doesn’t count as money? Businessweek estimates that there about $10 billion worth of change sitting idle in the U.S. This is one of my personal bugaboos. Lots of people can’t be bothered to count out change. They don’t like holding up the line. They hate handling all those coins. So they treat their change like it’s disposable.
From an environmental point of view keeping your change in our couch means we have to mine more metal. From a personal finance point of view, it means you’re a dope.
February 13, 2009 at 8:33 am
It doesn’t seem like stores are always willing to accept pennies as money. I rolled pennies with my kids and took them to the dollar store so they could each have a couple of dollars to spend. When we got to the cash they would not accept the rolled coins. We’ve also had that trouble at the bank when they would not accept the coins because they were not rolled in “acceptable” coin wrappers, but in paper, like I used to do with my mother.
February 13, 2009 at 8:52 am
regarding rolled coins: my bf accumulates change like a mad person but does at least drop it all in a jar. The jar was getting quite full so we rolled it and I brought it to the bank to “cash it in”. The bank teller was incredibly rude to me as though I was ruining her day. Here I thought that was kind of the banks job. Funny too, the less and less people go to teller’s with rolled change, etc., the more and more teller jobs are going to be electronic bank machines!
February 13, 2009 at 9:06 am
I admit that this month I got carried away with, well, a crazy schedule with a new part-time contract on top of my full-time contract, full schedule for the kids, plus taking care of my in-laws mail while they’re relaxing in a sunny climate for a couple of months. Lo and behold, didn’t I toss a bill into their pile the beginning of the month and then check my excel spreadsheet a day too late. My bill payment was due on the 5th, I checked the spreadsheet on the 6th and noticed I didn’t ‘receive’ the bill, checked the mail and there it was. I made the pmt immediately online, called the company, and was assured it was okay and that there’d be a note to remove any interest charge for the ‘late pmt’ of the bill. It pays to take care of bills religiously so that when you do have an honest screw up like I did, they trust you!
Now I’m going to set up my banking to make at least a minimum payment on any card I use throughout the month, regardless of the amount, so that at least I won’t miss a minimum balance payment and can pay the difference when the bill is actually due (or a day late if I lose my mail again!).
February 13, 2009 at 9:12 am
Ever since I have begun living on cash (using the magic jars and Gail’s Planner of course!) – I have really started to accumulate change. In January, I made my own personal rule that I am not to spend any toonies, loonies, or quarters – but I try and get rid of all of the ‘little’ coins by counting it out at grocery stores, etc. to give the cashier exact change for my purchase. I’m saving all of my ‘big’ change to use right after Christmas for spending money on a trip with my husband! It has been a really easy and pain-free way to save, and it has become such a habit for me to hunt out the big change and put it in my piggy bank that my husband is starting to miss his ‘vending machine money’ hahaha! =)
February 13, 2009 at 9:46 am
I too have fallen behind a time or two and just completely missed a due date. I paid the balance the next day. I have never seen additional interest charges appear so perhaps the company looked at my almost spotless payment record and decided not to charge me.
On the subject of coins, I just rolled up 2 jars worth of change and ended up with $73! I took it all to the bank and had no roblems ‘cashing’ it in. I really hate holding up the lines counting out change so this is how I prefer to deal with my coinage. I’m also trying not to spend my toonies and loonies and am saving those for a special purchase.
February 13, 2009 at 9:55 am
I used to work for a bank and they will supply you with FREE coin wrappers. As for the tellers being rude about the rolled coin, she/he should have accepted it no problem but maybe she/he was having a bad day. Tellers are humans too you know (with feelings) and I know from experience you put up with A LOT of rude customers and I mean A LOT. When I was a teller we weren’t supposed to accept a lot of loose change (like if you came in with your piggy bank and expected us to count it for you). And this was because it would hold up the line of customers for a VERY long time as we were not equipped with machines to count the coins, it was all done by hand. In addition to serving customers, tellers are also required to do a massive amount training on their computers in between customers, have ridiculous sales quotas (yes, your teller is supposed to sell you stuff!) and numerous odd administrative duties. Being a teller is far from an easy job – it’s not just about handing out money!
February 13, 2009 at 10:02 am
this is the push i need gail. tonight i am going to lay out a plan for all the bills that we pay.
February 13, 2009 at 10:03 am
Google has a ‘calendar’ service (attached to their gmail service) that you can enter ‘appointments’ and have reminders emailed in advance with the amount of notice that you specify.
I use it for infrequent/idiosyncratic bills like property tax. But it could also be set up with recurring reminders for monthly bills (you can set it up to remind you on the 25th of every month that your credit card bill is due).
February 13, 2009 at 10:04 am
Arrrgh, why do I do that! The link to Google Calendar:
http://www.google.com/intl/en/googlecalendar/tour.html
February 13, 2009 at 10:07 am
I am going to email this article to my husband, who probably has hundreds, if not in the thousands, of dollars in change stashed away. About 12 years ago we spent a whole weekend rolling change and got over $1,000, and have not done anything with it since. He could get a nice RSP contribution for this year out of it!
February 13, 2009 at 10:13 am
If the teller gets grumpy, I’d just politely tell her that coins are a regular thing for you and ask her to close your account so you can take your business to another bank who’ll be happier to see you.
If applicable to some of you, I use my change to give my kids their allowance. While they are still learning how it all works, I like them to count out their money. I want them to learn their money lessons while they can see the money with their eyes so those lessons can transfer over when they start using debit when they are older. I expected cashiers and people behind us to be grumpy, but I have been very surprised how supportive people are. They make comments to the kids about saving and what a good job they are doing and it helps drive home the lessons I’m trying to teach them.
February 13, 2009 at 10:17 am
I’m a toss the change in the jar at the end of the day and am not a roller nor am I going to stand in line for this (and I’ll admit, I wouldn’t be too happy to be the guy behind the little old lady with the bucket of change). What I do when the jar is full is use those coinmachines at grocery stores where you dump your change in, it counts it, and you get a credit you can use at the store. Yes it takes about 7% of the change as a fee, which is high but my time is worth something too. And it’s easy to pluck out the loonies and toonies before hand, so the machine is really doing the heavy lifting and not making easy money. Not the best financial decision but better than having it sit around.
February 13, 2009 at 10:31 am
My husband used to come home and dump the coins from his pocket in the kitchen counter. He said he doesn’t want to carry it around and its not real money. So one day, I told him that he gets his ” mad money’ and what he does with it is up to him and that includes leaving his change anywhere. But when he finish it, then that’s it. He quickly realized that he wants to keep the change in his pocket if his mad money were to last him the week.
February 13, 2009 at 10:41 am
Toby:
“…About 12 years ago we spent a whole weekend rolling change and got over $1,000.”
Are you insane?!? That’s money, and we’re not talking $50, sitting around doing nothing for you!
Diligence!
Regarding coins & banks, someone already beat me to it, but yes, banks will provide you with the coin rolls free of charge. Incidentily enough, just yesterday I went to my bank (CIBC) and asked for them because my little piggy was getting a little too full with the coinage. He was so full, he was even throwing up my pennies I was feeding him.
Result => $62, plus I couldn’t even roll up the toonies and other coins (probably valued at $40-50) just because there wasn’t enough for a complete roll.
February 13, 2009 at 11:05 am
I get the bill, I preset the payment on-line (for a suitable later date), I write the amount on my spreadsheet (which is set by date) and I can see how much cash is left in the account after every bill is payed.
Infrequent bills are tricker but you can preset an amount to cover the basics using many on-line banking systems. Just keep a check list!
February 13, 2009 at 11:09 am
@ Jess: Sorry if you misread but I didn’t mean any disrespect to being a bank teller. I actually think that I would enjoy the job personally. I just meant that if this teller in particular didn’t enjoy her job so much I’m sure that there is a bank machine hot of the assembly line ready to replace her. Anyway, she was making snappy comments about how annoying it is to have to cash in change even though I had rolled all of it and had all the rolls sorted into pennies, dimes, nickels, quarters, etc. She was even calling out comments about it to fellow tellers in front of other customers. It was embarrassing.
It was actually funny because it was my bf’s change and he refused to bring it to the bank because he said that it is embarrassing and I thought that he was just being weird about it until I had that experience.
February 13, 2009 at 11:09 am
I use my change all the time. When I don’t have a bus pass. It’s $2.35 to take the bus one way. I always try to use my change, my change pocket in my wallet is small. I usually take out all but 10 pennies, the rest, are suppose to make it to my mall angel jar, but they usually end up on my desk, until I scoop them up. My mom puts pennies, nickels and dimes into a pig bank for her grandsons. For the 1st one, in one year, she put in $85. Let’s see how much she racked up for the 2nd one. The money for the 1st went into his bank account. He goes to the bank and deposits his money. Too cute, and too smart.
February 13, 2009 at 11:32 am
I once saved $2000 in about six months by saving my change. Of course, this was before a husband, a house, and two kids!
However we do usually manage to save about $50 a month in change which we take to the bank and cash in. Sometimes we spend it on something frivolous sometimes we spend it on something wise i.e. we just opened our 4 month olds RESP with $53 in change!
Because I’m currently on Mat leave and don’t have a lot of extra cash we are now going to put our change towards our debt repayment.
I personally have never had an issue with a Teller though I do sometimes feel a bit embarassed when I dump my rolls on the counter. I know I shouldn’t and I don’t let it stop me but I sometimes almost feel as though I appear destitute by doing so.
February 13, 2009 at 11:33 am
As someone who works at a bank as well, had I overheard that conversation, that teller may have found herself looking for a different job. Yes, I agree with Jess, the tellers have a lot of extras to do, but the job is to SERVE customers. I have even helped clients roll change in my office if they are opening an account and shown them how saving the change in an RSP can accumulate over the years. It’s amazing what $25 a month compounds to be. In regards to my own husband leaving his change around – I leave him the loonies and toonies (he has to have his Timmies) but scoop up the rest. Soon as I have a roll I put it in our savings account. P.S. I still pick up change off the ground. My husband calls me a magpie as I can see a shining object from far off distances. I was thinking of starting a special jar of found change, just to see how much I collect in a year. My parking spot for work is near several local bars and drunk people lose a lot of things.
February 13, 2009 at 12:09 pm
I am also a ‘magpie’! I have been told I am going to be hit by a truck crossing the street by stopping to pick up a coin! You would be surprised how much money I could find while walking to work. The only time I ever had trouble cashing in coin was at RBC using my sister’s donation of CIBC rollers!! Since I do a lot of craft sales, I like to keep a ‘float’ of change in my money box, but the rest goes into my mad-money jar. On a different note, there are so many pennies out of circulation that are sitting in jars, the banks have deemed it a useless coin as well. If the banks take pennies out of the currency system, imagine how this would affect the cost of product!! Use your pennies people!!!
February 13, 2009 at 12:09 pm
I used to save change in a piggy bank until our modest little house was ransacked and the easy things were stolen, like about $400 worth of change…. a huge deal way back in college days! So our “emergency fund” was stolen. That was over a decade ago, and ever since I make sure that I use all my pennies as they happen now. My car has also been broken into for loose change, so it never stays in there either (kind of a pain for parking meters, but less of a pain than broken glass!)
(PS, I don’t live in that neighbourhood anymore)
February 13, 2009 at 12:52 pm
I keep my change these days and roll it once a month or so. I currently have $20.50 ready for deposit. I take it to the bank (have never had a problem, although the first time I asked the teller thought I said GOLD coins, not rolled…ha! I wish…) and deposit it into what is currently my gift fund. I’m going to continue this until the end of March and then consider putting this money towards my debt instead. It currently stands at approximately $175 (about 5 months worth). A decent debt payment for sure!
February 13, 2009 at 1:07 pm
If you want to use your change in your day-to-day transactions but don’t want to hold up the line, just carry 10 small coins at a time.
3 quarters
1 dime
2 nickels
4 pennies
Those coins will make any combination up to 0.99, so for that one transaction, you’d either get no change or change over $1. That way you don’t have to pay for stuff in dimes and digging through a bottomless change pouch.
It’s a pretty neat way of getting rid of change. And even if you’re terrible at split second math, it’s good practice and the teller would tell you what he/she needs if he/she’s being hurried enough
February 13, 2009 at 1:09 pm
*either get no change or get change $1 and over.
February 13, 2009 at 2:52 pm
Regarding your comments on spending too much on bank fees. I had this conversation with my 19 year old as she was complaining about the astounding bank fees that RBC is charging her. She’s in school part time and her part time job pays very irregularly, so she uses her debit card alot. I suggested firstly that she use cash only but she admitted that she’s still too irresponsible to not spend any cash in her pocket. My next suggestion was that she change to a no fee account. We tried and were very disappointed to discover that ING and PC both require credit cards to open accounts! She doesn’t have a CC and doesn’t want a CC because she knows she would just get in big money trouble with her small earnings and big list of wants. Luckily, we live in Vancouver and Coast Capital Savings does not require a cc for their no fee bank account.
Re: paying bills on time: I use a budget/spending plan spreadsheet and got ahead of myself once by paying cc bills before they came in the mail. I discovered that I had made 2 payments in one month on my cc and no payment the next month! The due date had changed. Of course, this counted as a missed payment. So, watch those due dates. That’s my tip.
February 13, 2009 at 2:54 pm
Paying attention to money: This is my least favourite time to pay my electricity bill….. it is the most expensive one all year and it nearly always makes me choke! A full $100 more than December’s and it’s been an exceptionally cold year on the West Coast.
BUT thanks to Gail’s savvy advice, I was aware that the bill was coming and I have the money for it! Late fees on that amount would be a terrible extra burden!
February 13, 2009 at 3:00 pm
Erran – I agree, it is insane, but it’s my husband’s insanity, not mine. If I had my way it would be rolled at least every couple of months and deposited. However, it’s his money, not mine (we don’t combine our money, bad I know) but maybe if I put the RRSP contribution spin on it he’ll think twice.
February 13, 2009 at 3:04 pm
Hi Pol, fellow west coaster,
Our electricity and gas bills are both on the annual equal payment plan. We know exactly how much we pay every month because it’s always the same except on the last month when you pay any shortfall or receive a rebate for any overpayment during the year. This year because the price of natural gas fell so sharply, we received a nice rebate. Sweet!
February 13, 2009 at 3:08 pm
Diana, my son and I both opened PC accounts just two weeks ago, and did not require CC’s at all. That is in Saskatchewan, so may be different. Every bank, account and person’s criteria are different also. As an example, my sister has an account there (for over a year now), and is only allowed to take ATM cash up to $200/day, and debit transactions of $200/day. I assumed I would be the same, which I could live with. I called them today, and was told that I am able to withdraw up to $500/day, and Point of Sale transactions of $1,000/day, funds pending of course. I can only assume because my sister has a recent bankruptcy on her record that that is why the restrictions on her account. PC offers free cheques, and I was told that I did not have to order them, they would do it automatically when we opened the account. The reason I called them today is – my cheques have not arrived, yet my 18 year old son, who doesn’t even need them, got his four days ago. I was told that someone forgot to order mine. So, even though some options seem better than others, not everything goes smoothly.
Further to saving our coins, or picking up loose change on the streets – as I was driving out to feed my horse this afternoon, I was noticing all the beer bottles/cans in the ditch. It is also quite common to see them on the streets, or in parking lots. I am not too proud to pick them up while on a walk, and have on more than one occasion picked up at least $1 worth while on the way to work!! Added to the extra ‘free’ money, you are helping protect the environment by recycling. P.S. don’t take beer bottles to Sarcan, they are only worth 4 cents there, while across the street at the liquor store, they are worth 10 cents! I am always amazed at people who won’t make the effort to get that extra 6 cents/bottle. In this day and age, every penny counts. Just let your bank account be short by 6 cents (without OD protection) and see if your cheque doesn’t bounce!!
February 13, 2009 at 3:43 pm
We do have a change jar, but every year or so we roll up the extra pennies and cash them in. It’s mostly dimes or smaller that end up in the jar. They do count as money of course, but now that we also have $1 and $2 coins my change purse runneth over. So I only keep a few of the small coins in my wallet at a time.
February 13, 2009 at 3:43 pm
A few cents means nothing – until you don’t have them. Like many I have lived most of my life with a complete contempt for small change. Thought the stuff was no better than shiny Monopoly money and was always annoyed at having to deal with it.
When I was a teenager my parents sent me to boarding school in Switzerland. My Dad said he felt a lot safer with an ocean between us. Well, I got bored and the school had a reputation to uphold so they threw me out. I didn’t want to return home so got a job as an au pair – nanny – and went to school part time.
Taking care of kids was something I stumbled into but truly loved. Unfortunately it paid barely anything other than room and board. I of course spent my small salary on having fun and buying clothes so was always broke.
One day I ran out of feminine necessities. The most embarrassing moment of my youth (turned out to be barely worth a blush compared to the ways in which I managed to embarrass myself over the next 30 years) was having to put the goods back on the shelf because I was a few “centimes” short.
Now you would think that having to improvise using newspaper and toilet paper would have taught me how to budget but if a single moment of embarrassment and temporary lack of funds could turn the tide for us habitual debtors Gail would have a cooking show and not a money show.
During my formative years (twenties, thirties and forties) I cheerfully used credit to get out of any and all situations. This works until the day you are maxed out, have no cash left and are not expecting any more any time soon.
We went through a very bleak period when the only money we had was the coin we found in an old tin and down the back of the couch. But even that ran out after 2 weeks and I ended up having to get off the bus because I not only didn’t have exact change – I didn’t have enough change. I however did have a lot of time to think about our money problems and the sadistic mind behind the design of high heeled shoes on that long, long, long, walk home.
Today I greatly admire and covet all coins – Loonies and Twonies are particularly attractive. Spare change has a way of adding up that is almost like a magic trick. In fact up here in the Yukon pennies are very special. They are worth more than a cent. Our banks are so desperate to get them that for $5 worth of rolls they will pay you $7. That is – ummm…add 5, multiply 12, divide 7, subtract 29, carry the 3….ummm…- 140% return???
The next time I am down south in the big city I am going to cash in our GICs and buy pennies.
February 13, 2009 at 4:00 pm
…it “pays” to pay on time, and when it comes to credit, it really does. My loc interest rate just dropped .5%! That’s exciting, over the last few months it has dropped a total of 2%, just for paying extra and on time.
And not only does paying late cost more in several different ways financially, but it costs you extra energy and stress in dealing with the reprecussions! No fun!
February 13, 2009 at 4:04 pm
LOL – Maureen, you make me laugh.
I don’t keep change in a jar or anything as I spend it as I get it.
As far as paying bills, I pay my bills as I get them. I don’t wait for them to come due.
February 13, 2009 at 4:52 pm
My hubby and I just recently rolled over 1200 in change! What a job! We had an old wine jug we used, the kind used for making wine to save our change for YEARS! That money has gone to bits and bobs that we needed etc.
My mum used to let the change fall to the bottom of her purse and clean it out only once a month. She saved enough to take us, a family of 4 when I was 6 to Scotland for a 2 week vacation.
I’m using small tins from the dollar store now that our big jug broke
and they fill faster (it doesn’t hurt that every month I stick in one 5 dollar bill). This is going to be our family vacation money in 2 years.
TD bank that I use is quite happy to accept any and all rolled coins and they do not charge for taking them as apparently some banks do now. I was shocked when another bank I use wanted me to pay 1 dollar for every 10 rolls. TD is also thinking of putting those coin counting machines in and not charging people for them as many do then you would just take your slip to the counter and either get your cash or put the amount in your account. There is ONE bank branch in Toronto that has this apparently already as a trial (this all is according to the teller at one of the TD banks near me)
February 13, 2009 at 5:11 pm
You guys are all speaking my language!!!! I have a spreadsheet with the due dates of all of my bills recorded. As I pay a bill I mark it paid and can easily tell you at a glance which ones are paid and which ones aren’t. It’s very simple and I agree that paying bills late is crazy.
As for coins – I am a coin fanatic. I did an experiment last year where I kept the “found” coins separate and I got just over $15! That’s free money!!!
I am also not too proud to pick money off the street or pick bottles from the parking lots or ditches. I even made an agreement with my boss at my second job that I get to take all the cans and bottles in and get to keep the money. They normally would throw them in the garbage because noone wants to take them in!! The last time I took them in I got $73!!! Wooo hoo!!
February 13, 2009 at 5:13 pm
Quarters and loonies used to mean one thing to me: LAUNDRY!
February 13, 2009 at 5:19 pm
@ Diana C – re “Our electricity and gas bills are both on the annual equal payment plan.”
Can I ask why you would do that? I assume that the utility companies aren’t paying you 3% interest on your overpayments in those months and you could just setup an account that pays these bills and holds excess amounts in your savings account, earning interest for you. It could all be setup electronically so it’s probably not particularly onerous. The net effect is the same as paying extra money into the utilities, unless I’m missing something?
Actually Gail that would be a good idea for a post, love to hear your thoughts on it.
February 13, 2009 at 5:31 pm
Geoff: There is a trick!
If for gas heating, you start when the cost/consumption is about to rise (in the fall). During the summer, you are paying for last winter’s gas. If you start when the consumption drops (late spring) then you are paying ahead of time (generally a poor financial decision). If you have a gas BBQ and are a HEAVY user, verify your monthly use before deciding when to start equalization payment
February 13, 2009 at 5:35 pm
Diana – call PC and talk to them again. It was a few years ago, but I opened my account with them and got my first credit card before I left highschool.
Or maybe you could be a co-applicant on her account? Ask them how long you would need to be her co-applicant before you could take your name off of her account?
Also, I would recommend your daughter get a credit card, even if she doesn’t use it to start building credit history now so that she doesn’t have any trouble getting one when she does need it (as long as she understands the danger of credit cards).
If she lives near a store that sells PC products she can use her points towards groceries. I get about $20-30/month (but I do spend more now than I did when I was in school) just for my day to day banking. It’s a nice treat for a student to get a few free groceries now and then.
February 13, 2009 at 7:02 pm
I was just reading an old blog of Gail’s called “Aligning Your Payments” and thought I would add this because they seem applicable here as well. I’ve never seen anyone else do things this way so maybe this will help someone?
My spouse an I both get paid biweekly so I set up every possible payment to come out on a biweekly basis. By the way, this includes our mortgage, student loans and interest on our lines of credit (if there is a balance).
We withdraw $XX every two weeks in cash for the jars (LOVE the jars).
I pay all other bills online through my banks’s automatic post-dated payments. This way, I have all of the control (I don’t like automatic bill payment withdrawals). For monthly bills that never change, I take half of the monthly charge and make an automatic payment every biweekly payday. Eventually, there is a month where we receive three pays in a billing period, so I end up with a slight credit on our account. (This occurs at different times of the year for different bills because monthly due dates vary. ) Anyway, I then reduce my biweekly amount so that it reflects what I should be paying per year – divided by the 26 pays in a year – Or just skip a payment (and put it on debt!) if I want.
I never ever have to worry whether my bills are paid on time. When they come in the mail, I open them, make sure there are no mistakes, make sure the payments were received, make sure there is not a credit on my account and file them away. I have never missed a payment using this method (about 1.5 years). I sometimes have small credits on my account with a given company but mostly not. The peace of mind is incredible.
I know some will say that I could be making interest if that small credit balance payment was put into a savings account until needed (if I took more care, in other words). But honestly, I’ve known myself for along time and I will never ever be that careful about paying bills. I’ve tried many different times, many different ways over the years. I’ll be on top of it for a couple of months and then I just can’t force myself to keep going. This method absolutely works for me. The worst thing that happens is I get lazy and I look at that $30 credit balance on my phone bill and I think, “now, there is one bill collector who won’t be phoning me!”. It’s worth the pennies I lose in interest, believe me. For me, for now, that is what I need.
I only have one or two bills that are required (eg, house insurance) to be automatic debit once per month. In this case, I make an automatic transfer every pay day (biweekly) from the biweekly “pay day” account to a second account, from which my monthly debits come out. Again, I transfer 1/2 of the monthly payment using online postdated bill payments. A little bit of money accumulates in that “monthly” account, which I can put towards savings or student loans or chocolate bars or whatever. Someday, I will likely move the above-mentioned fixed monthly bills into this system but I’ve tried that in the past and found that I got confused about what the balance of that account should be, missed payments, stressed about whether there was enough in the account and so on – and that is WITH an excel sheet and a good filing system. There was always a small amount of temptation, also. For now, I’m happy the way it is. Also, my spouse understands it better this way also.
I do something similar with credit cards if/when I have a balance (low interest balance transfer, trying to pay off LOC). I set up a postdated biweekly payment online (very easy with online banking) that is half of the minimum payment, making sure there are enough payments before the next due date. I can have this set up to run forever or for three months or almost any amount of time.
As for the annual equal payment plan, BC Hydro does this but our anniversary date is at the start of winter. As an example, say we are paying, say $60 every two weeks for the entire year. We actually use more like $80 every two weeks in November, until March but over the summer only use $40 every two weeks. In effect, we are “borrowing” money from the Hydro with no interest over the winter and paying it back over the summer. BC Hydro must make up for it using the people who have their payments start in the spring. The only problem I can see is if you were to move during the winter and then they would be asking you to pay a lump sum at once. But still, it is like a no interest loan.
I have a third account, with interest, for some of the annual bills, like property taxes, into which I deposit a certain amount biweekly but have not been 100% effective with that yet (takes a while to get the minimum “float” in there). This account is not attached to any debit card and I must make an extra effort to get money out , which is what I want. Still working on it…
To summarize, I get paid $XX every two weeks and it all gets funneled automatically the day it arrives, exactly to where it is supposed to go. There are fewer risks of mistakes and less temptation between when you get the money and when you pay the bills. The effort required to somehow balance monthly/weekly expenses and the temptation of the debit card is just not there. Our worst slips now happen when we spend grocery money in this really great little sushi place, but that is another post.
Cheers, everyone!
PS I use a spreadsheet also…
February 14, 2009 at 12:24 am
Diana C – Hey there other West Coaster!
Equalization plans feel like then I wouldn’t have to pay attention to my Hydro bill…. not to be too pessimistic here, but I don’t trust them not to stiff me. And I’ll admit, I’d rather see it in black and white which months are the heaviest consumption, having my pennies in my own account until I have actually used to electricity they bill me for.
February 14, 2009 at 9:17 am
Just be careful assuming that if you get a credit card and “never” use it or pay it off in full each month. I had a such a situation where I had a credit card and paid it in full each month and when I went to try and “buy” a car I was told I had no credit history because I had never showed repayment. I had never had a loan of any sort (was fortunate not to have any student loans, etc) and was shocked that after 10 plus years of a credit card that as far as they were concerned I did not have a credit history to base repayment on. I was able to lease a car with no cosigner and started building it that way as well as charging on my credit card and paying 95% by the due date and then 2 days later pay it in full so very little interest incurred. However, like Gail has said check your fine print since now I am finding out that there are conditions as to the interest clock ticking for much longer than the month that it was paid in full. But that is what I did at the time (again this was 10 plus years ago).
February 14, 2009 at 11:34 am
My bf has started this habit of not spending any coins he gets back as change and puts them in a huge bottle at the end of each day (btw, bottle’s almost filled up, yay!). Here in Singapore, they are a lil sticky about taking coins at the banks (they have certain days that they will take the coins, some will charge a small fee etc) so what I did the last time was change the coins with my self, $10 at a time and I will make it a point to use the coins when I pay for smaller purchases. It takes a lil longer to clear the coins but eventually it gets cleared.
As for paying my credit card bills, I had it arranged such that I get my bills by the first week of each month and when I get paid on the 12th, I spend 20 minutes or so paying the bills online and I am done for the month! This way, I won’t forget to pay any bills cuz they are all kept in a folder, waiting for the 12th. And I actually find it such a relief when I have paid my bills, transfered money to the three savings accounts that I set up for different things (I am horrible at organising things so opened up three accounts for different things e.g. emergency funds etc) and then withdraw cash that will go into the jars. I am still working at improving my budgeting skills so that will be my target for myself this year. Am actually enjoying it and realising that budgeting is not as painful as I thought it would be
)
February 15, 2009 at 2:11 pm
Lexi on Victoria:
Wow! I am glad you can follow that!
I must admit of being guilty of a financial mistake which I intend to remedy this year. I finally separated my emergency fund from my cashflow fund, so I must address this issues ASAP for myself.
Reflection for all: WHICH PAYCHECK ARE YOU SPENDING? If you choose to pay by credit card whose balance gets payed off every month, are you spending NEXT month’s paycheck or the previously EARNED paycheck? Are you being as good as you thought? What if the next paycheck does not come? Some businesses may crash without paying employees what they are due and fighting to get your money could take a while (or never happen). The message in a balance budget is to not spend money you do not have in hand.
If you have 1-month’s worth of expenses in your cashflow account, concerns about clearing the check by the due date are almost gone because the money is already there.
Are you spending money you do not have yet?
February 15, 2009 at 5:11 pm
WOW!
Tons of comments here!
Diana – I am so disturbed to hear about the banks CHARGING for changing coins into dollars. It’s crazy. It’s one more way that the banks are just stealing money from its people. I mean what kind of service are they really providing? It’s total BS.
I hope that market forces will result in some ingenious person setting up a system that changes coins into dollars for less than 10%.
In the meantime, I do roll my coins -using the free papers from the bank and not the ones from the dollarstore of course – and change them at my bank. But if other banks are charging, I will most definitely just start to use more change. I do like to do this anyway, because it feels a bit like “free money” since you don’t notice those pennies and dimes missing, but you definitely notice the loonies and toonies disappearing.
Erran – good point about collecting interest on your coins.
February 15, 2009 at 10:17 pm
@Lexi in Victoria:
You have to be careful with the bi-weekly, forget-about-it schedules. My husband was on bi-weekly paycheques for 2 years & our mortgage was set to match this (still is-pays off faster this way) however he was suddenly switched to paycheques on the 15th & 30th will very little notice this year to get ready for this.
Sends a little panic with the mortgage payments in the 2 months of the year that would see a “bonus” 3rd paycheque because before we didn’t have to “think about it”. That third cheque isn’t going to be there now & requires adjustments & a new budget schedule for us.
~Looking back, I wish I would have budgeted like as if we only had the 15th & 30th paycheques and Invested those two extra 3rd cheques!!
February 16, 2009 at 2:44 pm
Thanks Andrea. I don’t really forget about it. I just don’t spend alot of time on a monthly basis. We’ve got an emergency fund – I would use this to bridge the gap if something strange happened with our pay periods. Obviously everything would have to be readjusted if our pay periods were to change for whatever reason.
February 16, 2009 at 3:37 pm
Marie:
My spending is this:
1) First paycheque of the month: 1/2 goes to savings/loan (on the 15th), 1/2 gets set aside for the 1st of the following month for rent
2) 2nd paycheque of the month: goes to credit card, savings, standard loan payment, metropass (all go out between the 1st and 9th of the following month).
Basically, I cover next month’s expenses with the paycheques I receive in the current month.
February 16, 2009 at 6:29 pm
ABOUT THE PLANNER:
I really enjoy the challenges, such as spending no money in January, or a goal/plan per month to get on track. I also really liked ticking off a list of things I do/have done, and stuff that I haven’t done. It gave me a good sense of how well I was doing with regards to managing my financial life.
I did notice a typo or two when I first looked through the entire planner, but nothing major.
The ‘jars’ allocation and keeping track of savings per day was also good.
In all, I would definitely buy it again! In all, it is a very good tool.
February 16, 2009 at 6:56 pm
I have nothing against Bank Tellers. Many of my best friends are Bank Tellers. Well, maybe not many. A few. One. And she isn’t exactly a best friend. More like a casual friend. Actually, just an acquaintance. Work associate. Occasional contact. Well I know her name. When she’s wearing her name tag. And I did recognize her when we passed in the grocery store. At least I think it was her. I didn’t have on my glasses and I think she has gotten a lot taller since the last time I cashed in my rolls of coins.
All in all I must say that I have no complaints against Bank Tellers. In fact if it came down to a contest between us as to who was being rude, impatient, surly, indifferent, condescending and uncooperative I think I would be the hands down winner.
However: I do have some strong emotions about Bank Managers. I feel the same about them as I do about Policemen. Don’t much care for them until I need them. They make me feel guilty even when I haven’t done anything and even more so when I have.
Seeing one (a policeman I mean) appear in my rear view mirror when I have just cut off a whole line of traffic and then taken a corner on two wheels has never ended well.
However: Things are a bit different when the Hubster is out of town and in the middle of the night Dawg decides to pace back and forth between the bedroom and the head of the stairs and then runs down – barking hysterically – to bounce off the front door over and over again. I am not only happy to have a policeman answer my 911 call but I would cheerfully invite SWAT and all of their guns in for coffee and donuts. On the condition of course that after they have neutralized the threat to my jewelry and virtue they do not hesitate to shoot Dawg. Just kidding. If they have any bullets left I want to shoot him myself.
Seeing one (a Bank Manager I mean) glaring at me from behind his desk when we have just finished maxing out our cards and lines of credit, broken the World Banking record for bounced checks and fallen ever so slightly behind on our student loans and mortgage has never ended well. Especially when we get the “unmitigated gall to sit there as if butter wouldn’t melt and apply for yet another consolidation loan when you’ve never made an on time payment for the last one” lecture.
However: Things are a bit different since we paid off our cards and student loans and stopped using the line of credit. I have actually found myself almost able to look our Bank Manager in the eye and have been quite courteous to the Tellers and downright friendly to the ATM machines.
No longer do the security cameras have tapes of me ripping my debit card to pieces with my teeth, silently mouthing obscenities and using finger language to express my dismay and discontent. And when we needed money for a real emergency it was an unbelievable feeling to actually be able to go up to the Teller’s cage and demand money (without menaces) from out of our savings account. And when that ran out it was even more unbelievable to actually have our Bank Manager offer to see what he could do for us.
I swear there were tears glistening in his beady little eyes and he cracked a smile before he caught himself. Or perhaps the glistening was just the sunlight glinting off of his pearly white Vampire teeth, reflecting off the gold bars stacked in the corner of his office and then refracting off of the lenses of his glasses.
February 17, 2009 at 2:05 am
Maureen, you are a hoot!! After nine hours on the job, I love to come home and find one of your gems to make me belly laugh. Between you and “Maxinne”, you get my vote. Further to bank managers though – remember the good old days, when you actually took a paper pay cheque to the bank, and deposited most, took some cash, and everyone knew your name? I got my first car loan over the telephone!! Now, even if your child plays on the same baseball team as your local branch manager, you don’t have a shoe-in for a bank loan. It has to be approved by head office in another province, where they are looking at your numbers, not your past/present/future personal/financial history. When I had started bi-weekly deposits towards my first $500 to start an RRSP fund, all of a sudden I had the option to overdraw my account up to $500!!! Found that out quite by accident, and it cost me $5 to do so!! I guess we have to do what works for us, and with my past history in the way, I might as well take advantage of the PC Financial option, with no charges to worry about. When/if I am ever in need of a loan, I hope that my savings history will speak for me. Till then, I will do what I have done for the past seven years – Pay CASH or go without.
February 19, 2009 at 12:10 am
I’m a bit late to this one but I have a couple of comments. Regarding paying bills on time, I swear there is a conspiracy to make payments late. Why in the world does it take 5 business days to move money from my bank to the credit card company when I can transfer money to my mother (from one bank to another) in less than 24 hours. Where does that money go? It is not in my account as of the moment I make the payment but it isn’t in my credit card account either. This a banking version of kiting, where the bank makes the money on the difference. And by holding the payment up, it ends up late and the credit card company jacks up the nice 1.99% rate to 24.99%. I did the process of paying the bills right when they come in but as one person says, depending on the timing of the statements, you can get a period without a payment and 2 in one period and they treat you like a deadbeat.
And as for not using your credit card, my mother just had her card credit limit reduced because she hasn’t used it.
April 27, 2009 at 4:53 am
Right on !! Damn I’m getting addicted to your blog
April 26, 2011 at 9:31 am
Tks…
This information really helped me, I am sharing with a few friends….