Minding the Details so You Aren’t Stuck Financially

Here’s the thing: for a lot of us, managing our debts and budgets isn’t about knowing what to do. We know what to do. We know that we need to pay our bills on time. We know that we need to pay more than the minimum amount due. We know that we shouldn’t spend more than we earn. It isn’t a lack of knowledge that trips us up. We’ve got lots of that.

What trips most of us up (and I’m a probably the President of this particular club) is putting that knowledge into a workable daily routine. There are just so many details to manage. Bill X is due on the 9th. Bill Y is due on the 10th. Don’t forget about your automatic Netflix withdrawal! It takes three days for the cable bill to clear your account. You get paid on the 10th and the 25th of the month. Your favorite foods cost a couple bucks more, on average, at this store than they do that that store. Argh! There’s so much!

It is incredibly common for even the best intentioned to accidentally overdraw their bank accounts, especially as they’re getting used to new budgets and actually paying all of their bills instead of floating them against each other every month. Not only is that overdraft embarrassing (a lot of us only find out when we’re trying to pay for stuff and our debit cards are declined), it’s expensive! So here are some things that you can do to keep it from happening to you.

Consolidate All of Those Bills

“If your credit is solid enough, you might qualify for a consolidation loan from your bank”, says Natalie Cooper, Editor of BankingSense.com.  “It is better to create a manageable solution before your finances spiral out of control.” Consolidation loans, not only turn half a dozen individual bill payments into a single bill payment, it often does so at an interest rate that is several points lower than you were paying on those individual accounts. Trust me when I tell you that paying one bill every month is much easier than paying six (or more!).

If you aren’t able to qualify for a consolidation loan, that’s okay. You don’t have to resign yourself to trying to remember a bunch of different due dates. Instead, call your creditors and ask to have your monthly payment due date moved. Schedule all of your bills to be due on the same day (or within the same 3ish day period) and then, create a calendar alert a week before that day to remind you to sit down and pay your bills.

Automatic Withdrawals

You can also set up your individual bill payments to be automatically deducted from your bank account on a given day. It is important, though, when you do this that you set up your payment amount as well as the withdrawal itself. Otherwise the creditor will simply deduct whatever the minimum amount due is and you’ll be trapped in debt forever.

The Envelope Method

You’ve undoubtedly heard of the envelope method–the method Dave Ramsey insists is the best way for managing money and getting out of debt. It’s a great method but it’s a little outdated. So much is done digitally these days that using the literal envelope method for bills and shopping actually creates more work for you to do and more details for you to manage. Instead, one of the best things you can do is, instead of cashing out your entire paycheck, use re-fillable gift cards.

For example: buy one gift card for groceries. Buy another for clothes shopping, another for dinners out. Yes, you’ll have to keep track of a few cards but you won’t have to pay ungodly high fees if the card gets declined. Simply refill them each month and then leave your bank account alone and let your automatic payment system do its work.

Have you come up with a surefire system for making sure you pay everything on time and don’t accidentally overdraft your account? Share the details with the class! Let’s learn from each other.