When Ryan & I first had our own apartment, we often found ourselves paying late fees. Before moving into our first apartment, we had sat down and wrote out a budget. We knew we had an income that was higher than the total of our bills. Neither of us were big spenders, or buying things we didn’t need. Yet, we were basically throwing money away on late fees. We got tired of it, and came up with a plan to avoid paying late fees on bills.
1. Live within your means. If your income isn’t enough to cover your months bills, it will be pretty impossible to avoid late fees because you can’t pay all of your bills! To fix this, find a way to lower the cost of your bills (drop cable, reduce how often you use your air conditioner, etc) or increase your income.
2. Don’t overspend. If your bills and neccessities are less than your monthly income, but you’re shopping for new clothing, video games, or going out to eat all the time you will still end up in the red. Your budget should include ‘spending money’ each month. For example, if your budget allows for $50 spending money per person per month, you’ll know whether or not you can go out to eat, or see a movie, or buy that dress this month or if it needs to wait.
3. Set up bill auto-pay. We use auto-pay on all of our bills that allow the service. To use auto-pay, you have to have your budget in order so that you know the money will be in the account when the system tries to pull it out. However, as long as you’re careful with not overspending and the money is there, auto-pay is an excellent way to avoid late fees.
4. Use a phone alarm for due dates. We have a few monthly bills that don’t offer auto-pay. One is our rent (our biggest expense!) and the other is our trash service which is quarterly. We set an alarm that goes off a few days before that bill is due to remind me to put the check in the mailbox. I set it a little early so I have a bit of lee-way if I don’t happen to have a stamp or an envelope at home. I use an alarm sound that I never use for anything else, so I don’t confuse it with my wake up or pill-reminder alarms.
5. Check your mail or email regularly. If you get paper bills, make sure you’re getting your mail regularly. If you go paperless and need the email reminders, make sure you’re checking your email very regularly.
6. Pay in advance. You can usually pay bills before the due date. A great method is to have two monthly bill payment dates. For example, if you get paid on the 1st and 15th, make those bill pay days. On the first, pay bills due from the 1st through the 14th. On the 15th, pay bills that are due from the 15th through the end of the month.
7. Have an emergency savings. If you got in a car accident or had to pay $800 for a vehicle repair unexpectedly, would you be able to pay your bills that month? What about if your water heater or fridge broke and needed replaced immediately? Unless you have a lot of discretionary income, it would probably throw off your budget. However, “unexpected” expenses happen to all of us on occasion. Having an emergency savings of at least a thousand dollars can provide a buffer that can get you through most unexpected expenses. Having cash savings is a much more financially savvy idea than relying on a credit card because there is no risk of accruing interest. I have a credit card, but I only use it if TWO emergencies come up very close together, where I wasn’t able to rebuild the emergency savings between events. If I were to use my credit card for the first emergency, and then a second arose I would be stuck paying interest before I could pay off the card which is a really bad path to start down. Of course, you could protect yourself further by having a larger emergency savings. I would like to have an entire month’s worth of income saved so we could avoid using credit cards even in the event of multiple emergency expenses.
Do you have any tricks for avoiding late fees or overdue bills? Share them below!