Finding the Best Way to Pay

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Finding the Best Way to Pay

The companies you owe money to are very helpful when it's time to pay them; most provide a number of ways to give them money, whether by mail, phone, their Web site, your bank's Web site, or in person, and most will take various forms of money as well: paper check, one-time or recurring automatic transfer from checking, credit card, money order, cash, chickens. (Chickens are the least common.)

With such a dazzling array of fabulous ways to separate yourself from your funds, how can you choose which is best? Consider these questions:

• How comfortable are you with technology? – Are you able to retain control when weird things start happening with your computer, or would you panic if your screen went blank just after you entered your credit card number and just before you clicked Submit? Would it be better for your blood pressure to stick with paper checks and the good ol' postal service?
• How important is saving time to you? – Are you willing to endure some new processes and additional expenses if they will save you time? In your experience, has the so-called time savings of a computerized system actually taken longer than doing the task the old-fashioned way?
• How reliable is your Internet connection? – If you get the unexpected "Goodbye" from AOL on a regular basis, think twice before you delve into online banking and bill-paying.
• Do the particular workings of your mind require that you choose one payment method and use it for all of your bills? – Or are you okay with using different methods for different payees, depending on the circumstances of each?

This should give you some idea of which of the payment options in the next section will be best for you.

Less Painful Bill-Paying
Next I'm going to give you three examples of bill-paying systems. Keep in mind that you can mix and match components from each if you choose, but to be effective, whatever system you end up with should have

• A foolproof method for getting the bills into the system. (This is covered in detail in the next chapter.)
• A cue for when to pay the bill.
• Up-to-date financial data to tell you whether you have the money to pay the bill.
• Supplies for paying the bill and sending the payment.
• An easy way to check whether and with which method you paid the bill. (I call this a "Did I Pay That?" document.)

Keeping those points in mind, begin with one of the following three options and customize at will.

You'll need list

• Your bills and bill-paying supplies: checkbook or bank card, stamps, blank envelopes, and return address labels
• Your computer and Internet connection
• The income and expense tracking document HYPERLINK
• Personal finance software such as Quicken or Microsoft Money (optional)

Option 1: An All-Paper System
Here are the steps you'll follow if you choose to pay and record bill payments by hand:

1. Receive paper bills via regular mail.
2. Open each bill and discard the outer envelope. On the return envelope, write the amount and date due in pencil where the stamp will go. Stuff the bill into the return envelope and add it to the others waiting to be paid.
3. If you don't already have a schedule for paying bills, create one: Consider when you will have money (your pay dates), when you have to give money away (the due dates on the bills), and your temperament (sprinter or jogger) to determine how often you must tend to this task; then write it into your calendar.
4. On bill-paying day, gather your bills, checkbook and register, blank envelopes, return address labels, and stamps. You'll also need the income and expense tracking document you created HYPERLINK
5. Write a check for each bill and enter it into your check register and your bill-paying tracking document.
6. File the statement portion of the bill if you keep them.
7. Put the bill in the return envelope, stamp it, add your return address, and mail it. If you want to wait until closer to the due date to mail it, don't put the stamp on yet: Set the bills aside in a designated place, in order by the due date penciled in at the stamp spot, and each day choose the ones you're going to mail, stamp them, and send them out.