Paying a few bills ahead seems to be working out so far

2012 was the first year I stopped living paycheck to paycheck.   I did pretty good not having to worry about shopping on payday or juggling bills to make sure they got paid on time.  I have a small emergency fund I could use but that was for emergencies not everyday bills. This became a bigger worry after reading about some of the banking problems in the EU.  England had empty ATMs and banks basically blew off their depositors for a week or more saying they were under attack by “hackers” and would not refill the ATMs nor allow withdrawals.  Italy had a major bank that froze all funds for 30 days because of “accounting errors”. Spain, Greece and Cyprus all have had banking issues and people could not withdraw money or a limits were placed on how much money a person could withdraw. This is not a sign of a healthy banking system and since I’m making less than 1% interest and losing ground via inflation it seemed a good time to try paying ahead.

Since Nov.2012  I started adding a little extra to some bills or paying smaller bills a month ahead of when they are due.  The whole idea for an emergency fund is to pay your bills. So if you get a month or two ahead on bills that will make that emergency fund stretch last a little bit longer. I have lost all trust and confidence in the financial and banking system of the USA. If it is paper I don’t like it and that’s everything from mutual funds to bonds, money markets and 401 k. This my choice!  I believe after MF Global and the Libor scandals no financial instruments should be trusted. I’m not a financial adviser or guru so you can do as you wish and evaluate your risks as you see fit. I’m only telling you this so you know what my basic reasoning is for paying ahead and should not be considered  financial advice for you and your situation.

Now a few downsides of paying early to be aware of:

  1. You lose the ability to use that cash and it will have an effect on your “cash flow”.  On thing like cable/Sat  TV, cell phones and other items that are not needs, you can’t cancel and get that money back.
  2. You might not have the cash on hand for a great deal/sale see #1
  3. Some bills may reset the due date if you pay early so make sure the new due date won’t be a burden if you need to go back paying month to month. Dish TV seems to do this to me.
  4. I have started small on bills that are less than $50.00 and I know that might not be a big deal to many people it’s given me some peace of mind to know that my car insurance is a paid for a month or two in the future.
  5. Many utilities will let you add a little extra when you pay your bills. In a way you are doing a level pay plan but you retain control if you want to pay ahead if you want or not.
  6. I hate Auto pay. While I do use online bill pay,  I want to be the one who decides when my bills are paid.  I would rather pay a small late fee because I’m late with a payment as opposed to a “bounced check fee”.
  7. If you decide you want to pay ahead on your mortgage, look at the breakdown between what you pay on principle and what you pay on interest on your loan. The difference can be quite large so be aware unless you designate to pay extra  on the ” principle” only you might end up paying  interest you don’t need to pay!

Power bills  are becoming a big deal here in Idaho with this cold snap. The local news is running stories on how people are having a huge energy bill and who to ask for help such as Salvation Army or the local power companies “Project Share”.  I did not pay ahead on power, but getting all those other little bills paid ahead leaves me a buffer for the next power bill. So it looks like this little plan of mine is working out!

It looks like the PTBs have decided to play ” kick the can” on the debt ceiling till May so it looks like SS and vets will get paid at least a few more months. So it’s time to get the seeds and things that you will need for gardening this spring along with all your other preps.  Getting the first drum of bulk food filled up has me darn excited about the 7 year project. I think my second barrel will be the dry beans as that’s my next weakest food. Once I fill the second barrel with a couple hundred pounds of  different beans and lentils I can start the next barrel. It’s going to take a few months to get done but I should be “food secure” for just about anything life can throw at me.

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8 Responses to Paying a few bills ahead seems to be working out so far

  1. I hope I can stop living pay check to pay check this was very helpful..

    • Jamie says:

      savy, It takes some work but once you get in control and can be proactive rather than reactive you will be amazed by how much peace of mind you have.

  2. T says:

    Jamie I can’t remember for sure, but I’m thinking you have enough farming down your way that there are elevators. If so you could probably go there and get your beans for cheaper than the groc strore. That’s what we do.
    Miss Violet

    • Jamie says:

      Miss Violet, I agree but finding those mills that sell only 50-100 pounds is my problem. Since the drought hit the midwwest most of those farmers seem to be selling out to the bigger bulk buyers.

  3. riverrider says:

    j, i over pay my power bill. like you said, it evens out the spikes. i pay insurance by the year. i set up an account with an automatic deduction from my checking into it. that account covers my property tax, car tax, and insurance. the rest of the few bills i pay as i go. that way i cut them off at will if something happens of their service gets yucky, like my internet right now 🙂 now to get started on my superpail plan….

    • Jamie says:

      river, I stay away from those contracts like the plague. I have to keep a watch for that third eyeball I seem to sprout when I refuse the “Great price deal” because I don’t want a 2-3 year contract.
      I’m kind of surprised how much difference this makes in my mindset and stress level just paying some of the smaller bills ahead of time as I only started doing this in November of 2012.

      I’m starting with the smaller bills but I’m going to try and get at least one month ahead on all bills and work towards 3 months paid ahead on all bills by the end of the year. It’s doable but it will be a little tight with all the other projects I have planned. I think we have 2013 to get ready though prices will be going up will make it tougher. I think 2014 is going to be really harsh, and I want to be as ready as I can be before it hits. I’ll be praying I’m totally wrong and the worse thing that happens is I don’t need to shop or pay bills for a few months!

      • riverrider says:

        i wish i shared your optimism regarding 2013. it all depends on this gun thing. you would not believe how many people are ready to drop the hammer over this, which is a good thing in my book. va is looking at its own currency. theres a bill to disregard any gun control coming out of d.c. its all over the country in small pockets and some not so small. dc can’t let this go on lest it spread. history is replaying itself. i hope you’re right tho, i need more food!

  4. Jamie says:

    river I was a bit of a basket case in 2011 always stressing out about the economy and what the PTBs were doing and it didn’t help me at all! I think setting my goals for 2012 helped me a lot because I focused more on what I had to get done rather than what the PTBs were doing. Overall I’m surprised they have been able to hold everything together so far!
    By having my goals written out for the year, I can easily shift what I work on. Because of the panic buying of guns and ammo, I have shifted my focus to filling the food drums or paying ahead on a few bills. If the SHTF tomorrow I know I will have done the best I can do and I hope it’s enough.

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