Too Broke To Pay Attention

Thoughts on personal finance and how to avoid having it take over your life

Waste as few brain cycles as possible and ensure your bills are paid on time

19 Mar 2018

TL;DR - if you only want the strategy descriptions, jump straight to the Summary section at the end of the post.

This post is somewhere between a rant and a strategy. What it isn’t is my secret sauce recipe for paying all your bills in full when there is too much month left at the end of the money, either. What it is is a bit of a rant about the US payment system that ends up adding a time tax to everybody’s life because it’s so backwards in certain cases that you’re forced to choose between trusting the companies that you do business with with all your money in your checking account, or you end up manually paying bills until you’re blue in the face.

Of course there is a middle ground between the two that takes some initial effort, but will make things easier in the long run. The first step is to break down your bills (and eventually, investment purchases) into three distinct categories:

  • Bills that are the same every month or rarely change. Typical ones in this category would be your mortgage, a car loan, your cable bill or money you put into savings regulary. Yes, I’m actually throwing savings in with “bills”, because in order to develop a regular savings and investment habit, grouping savings with monthly bills is actually a bonus
  • Bills that change on a month-by-month basis. Especially in the US, that would be credit card bills.
  • Bills that occasionally show up, usually when you don’t want them to. Car or other vehicle repairs, medial bills, home repairs would fall into this category.

Strategies for dealing with fixed monthly expenses

The strategy is pretty simple - automate as much as you possibly can. You want to make sure that the payment goes out on time and is the right amount, and you don’t want to have to wonder if you mailed the check for the mortgage in time and if your servicer will also apply it on time. What I like to do is to break these bills into two parts - ones that I have to send payment to, usually via my credit union’s bill pay system, and those that are willing to charge my credit card. Please note that I said credit card and I mean it - despite what a certain talk show host postulates, running your debit card as a credit card does not give you the same protections as using a credit card.

The complexifying by using a credit card as much as possible instead of just paying all bills via bill pay is one of my personal quirks, namely because I tend to use reward credit cards for these payments, so each one of those payments generates a little bit of cashback every time. Just keep in mind two things - do not use that strategy if you do not pay off the card you use for paying bills every month, especially if it is a reward card. And if you want to keep it simple, especially with certain companies that take several months updating their payment records (yes, Charter/Spectrum, I’m looking at you), just pay everything by bill pay.

In all of the cases above, I just set up a reoccuring bill pay for the correct amount, and if necessary, adjust the amount. My credit union ensures that the payment is sent on time and will even send a check to payees that do not accept other types of payments. As long as you keep enough money in your checking account, you will not have to worry about your mortgage not being paid or your car being repo’d.

As mentioned above, I do include saving and investing into this category, too. I’m fortunate enough to be able to manage my money in such a way that there is enough left over each month to do so, but I remove the money and the temptation to spend it from my direct reach as quickly as possible by having set up automated transfers.

Strategies for dealing with variable monthly expenses

At least in the US and the UK, that mainly means credit cards. A lot of credit card companies really would like to draft your checking account (or debit your current account if you’re in the UK). In the UK that’s a no brainer as long as you’re sure you can keep enough money in your current account - just have them auto-debit your account. The direct debit guarantee will or at least used to take care of the credit card company messing up.

In the US, the situation is somewhat different - if you pay your bill(s) by letting a company draft your checking account, you’ll run into the issue that ACH transactions don’t have much in the way of checks, so worst case the company can help itself to all your money in your bank account and you’ll end up fighting both the company and your bank to get your money back. That’s why I’m not a big fan of these arrangements, even though I do use it for one monthly payment. But that payment comes out of a second checking account that mostly has enough money in it to cover these expenses and I don’t have to use that account for other, day to day expenses.

Anyway, my normal strategy for dealing with bills like these is that as soon as the bill shows up on my desk, I schedule a payment. It’s not foolproof, but mostly foolproof enough that I can get the payment out right on time and for the correct amount. Plus I don’t have to worry about missing a payment on a card.

Strategies for dealing with unexpected expenses

That’s a whole blog post in itself, so I’ll just provide a rough sketch here. In my case, I put unexpected expenses on a credit card, usually one that either gives me cashback or some other sort of reward. If the bill is small enough to be paid out of my savings or checking account, then I’ll just treat it like part of a normal credit card bill.

In the cases where it isn’t, I happen to have one credit card with a fairly low APR, so usually the bill ends up on there and I pay it off as quickly as possible.


My preferred approach to pay fixed montly expenses is as follows, in order of preference:

  • Have the company automatically charge your (rewards) credit card
  • Set up an automatic payment in your bill pay
  • Draft your checking account, but only if it’s from a separate account that you keep a fairly small amount of money in it. Don’t do this on your main checking account!

For variable monthly expenses, there is really only a single method, namely setting up a bill payment as soon as I get the bill so I can forget about it.

For variable unexpected expenses, pay them in a way that minimises the interest you have to pay first, then think about potentially paying with a rewards card second.

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