Monday, September 15, 2008

Money Monday!

Everybody has their own way of paying bills. I just might take a couple of weeks to mention some of the things we do with...our bills.

We pay ours one month ahead. Basically, I enter all our bills in to our Quicken register a month in advance. Once a very long time ago, we pinched and squeezed a bit to get on the one-month-ahead-train and have tried to remain disciplined with it ever since.

I take our bill sheet (I'll maybe talk about that next week) and highlight each bill as I enter it into the register, so I know they're all in there. Then if it's not a bill that is deducted from our account automatically (every bill we can do that with, we do) then, I enter it in to the register anyway, and pay it if I can. Most of the time though, I can't pay them then, because the new bill cycle hasn't started yet. So, I put a ##### in the memo line for those bills that are accounted for in Quicken, but not actually paid. Then, as I get those bills, I pay them, and make the adjustment in Quicken as needed.

I also add in projected deposits from paychecks, etc, (Jim is salaried, so they are consistent, but for our first 5 years he wasn't- so I just projected it for the lowest amount it could be, to be safe...).

I don't forget to take out the projected tithe and budget money for expenses either. Then, when I really pay them, I just tweak it. But it's usually right on.

Why do I do this?

Basically, I want to know how much money we actually have. Not what we have right now, showing up in the bank statement, and my register, but what do we really have to spend- after all our obligations for the coming weeks. I think we have all had moments where we thought we "had" money to spend, then when it came time for bills, we were all, "Shoot, I don't have enough money." This keeps that from happening.

Also, it's a cushion, in case something out of the ordinary happens, like an unexpected expense, or if you lose your job. You're a month ahead, so you've got some time, you have some room, and you aren't a mere half-step from losing your home. It just gives freedom from those situations.

If you want to try this out, but think it would be too hard financially to do this all at once, I'd suggest doing it one bill at a time, working your way into it, and it won't take long at all before you've got them all one month ahead.

It's not any harder or more complicated than paying your bills right before they're due. It's just taking the same time to do month earlier.


Lisa said...

We're really trying to stick to our budget right now too. Another thing that we do is max Hubby's 401k immediatly...and never even consider that money that we have/had. When you don't see it, you don't miss it. And the more money you tuck away when you're young, the more time it has to grow for college & retirement!

Last month I paid our utility bill a month in we're one month up on our big one. We're also keeping a balance. I had a little left over in the clothing budget last month, so it came on over to this month. Fun!

Good post, Megan!

Lauren W said...

I've been looking for a better way to budget. Do you like Quicken? I've toyed with starting to use it, and I just haven't yet.

kelly said... month ahead...good idea!

Unknown said...

How do you pay one month ahead for bills that aren't the same amount every month?

Megan said...

lauren- yes, we like quicken. we've used it for 6 years, and have never had written checking account registers- we just bring the receipts home and enter them in, and then balance our account by checking our transactions online regularly. it's a big time saver for budgeting, since you can make graphs etc in a snap.

lara- most of our bills are the same every month- maybe they vary by more or less than a dollar etc. for bills that are different througout the year, i just enter in the average that it's been recently, and probably estimate on the high side. it's not too big of a deal if i'm off, bc it's just a "fake" transaction to give me an idea anyway, so i can just correct the amount later when i actually get/pay the bill. otherwise, we don't really have bills that vary much from month to month, just season by season, so it's easier to guess!

Kimberly said...

Great ideas, Megan! Thanks for sharing:)

Anne Elizabeth said...

This is a great idea, but there is no way right now we could be a month ahead. I have trust that God is going to provide every month.

Grammy Staffy said...

good advice and great example