Good morning, savvy savers! This past holiday my husband and I spent some time discussing our financial goals for 2015, and one area we both agreed could use a little tweaking was our monthly budget, as we both opted to up our percentage of donations and to cut an additional 10% of our monthly spending to contribute to a new retirement fund. So, last week upon searching, researching, and looking over my monthly bill book, I realized that part of the amount needed for my new account was already in reach! Let me explain…
Three years ago, when I was first married I was given the opportunity to switch from working in my traditional office, to working my clerical position from home. With these new changes, came a new pay cycle, a cycle which was maligned with my current utility and housing bill cycles. My pay cycle had changed, which meant that my bills were now coming in during a time of the month when I had the least cash flow. I wasn’t prepared for this change, so I called up my major creditors and asked to change my billing cycle dates. To make sure I was keeping with my new pay cycle, I also decided to sign up for auto-pay instead of continuing to pay by mail.
Why auto-pay?
- Changing my billing cycle to auto-pay forced me to pay my essential bills right away, and pay down debt.
- I also contacted my local Credit Union and Employer, and had the remaining bulk of my paycheck directly deposited into my savings account.
- These steps allowed me to know exactly how much money I had left over in my discretion fund every month.
- I then immediately knew how much cash I would have left for my envelope savings system.
So here’s how these two simple changes will benefit your financial future:
- Eases the impulse cash bind: When you align your billing cycle dates with your pay dates, you reduce the risk of impulse purchasing power, as your extra cash you have not needed for mortgage or rent, car payments, insurance, groceries, gas, etc., can be immediately used to fund your savings account.
- How this helps: When your bills are paid as soon as your paycheck comes in you cut your ability to impulsively spend.
- Saves money: If you send in payments through the mail, you’ll pay the cost of envelopes, stamps, paper, bank checks, and gas to drive to the post office; broken down you can except to pay around the following: $0.02 envelope + $0.49 stamp + $0.02 paper + $0.05 check + $0.32 gas = $0.90 per bill paid via U.S. mail. That’s about $0.90 per bill that you could be saving each month. Why should you be paying extra to pay your bills?
- Keeps you safer: Auto-pay offers you the added layers of safety through data encryption and keeps sensitive data out of your trash can, where unscrupulous individuals could potentially use your statements and information in an effort to steal your identity.
- Repair credit score: The more timely you are about paying bills, the better your credit score will become over time; you can increase your credit score by as much a few points each month!
- Card rewards: I have two emergency family credit cards, two cards whose reward balances are used for hotel travel for my husband and I. Sending in your card payments by check doesn’t help you accrue any type of reward. Converting bills to auto-pay and choose a rewards credit card to pay with, you accrue reliable rewards each month. However, these rewards are only valuable if you don’t cancel them out with interest from carried balances.
- Saves yourself time and stress: When you align your billing cycle dates with your pay dates, you only have to spend time paying bills once per month.
- Helps you take control of your finances: When you are unaware of when your bills hit each month, you can prevent the hidden, unnecessary charges from overdraft or insufficient funds charges, which can range from $10 to $30 per transaction!
All of these steps have helped to save my family $174.00 last year, and as I plan to continue this trend, will help me to come that much closer to recouping my 10% extra savings goal for 2015!
Here’s to saving,
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