Next in budgeting: Let’s talk bills, and how to improve your credit.
In my first budgeting guide, I gave you the jist about how to create your budget, and tips to stick to it. Let’s zoom in and focus on one particular category now: monthly bills.
Some of you may not see the connection between bills and improving your credit, but that is one of the BEST ways to improve your credit. So we’ll help you manage your bills first, then we’ll discuss more about tips on credit improvement.
- A group of bills are set around an inconvenient time of the month
- No organization for your bills (maybe automatic payments at the most)
- Fixed due dates on credit cards/bills
- Too many bills going out at the same time
- Too many bills in general
How can we fix/use the budgeting basics to help you with those problems?
- We’ll organize all your bills in a way you can visually see and easily track
- Set up a “bill” calendar you can easily reference and track/manage
- Give you some tricks on how you can change your bills due dates (yes, you read that right)
Let’s get started! Pull out your calendar, and go to t he current month, or next month if you want to start on the 1st.
1. Outline your “bills”
I’m a fan of lists (as you can tell in my other budgeting post). I also like to visualize what I NEED to take care of first. I mean, really, there’s no way to work around paying your rent and utility bills, so might as well face them head on, and get them out of the way and accounted for first.
On the current month (or next month), write down all your bills for the month, on their due date. Don’t worry about amounts just yet.
Let’s look at an example:
- Rent: 1st of every month
- Bill 1:Every 3rd
- Bill 2: Every 8th
- Bill 3: Every 9th
- Bill 4: Every 10th
- Bill 5: Every 21st
- Bill 6 & 7: Every 23rd
- Bill 8: Every 23th
- Bill 9: Every 23th
You can organize your bill calendar any way that is most convenient for you:
- Written in a planner
- In your phone’s built-in calendar
- Using an app
- On a calendar
Take the time to analyze and start to look for any problematic dates, such as those where 3-4 bills are all due on the same date.
2. Write in your paydays
This ones always fun to write down, because who doesn’t love to think about when we get money deposited, right? Not only that, but you will also get the other half of the picture.
So go ahead and add this to your calendar depending on your pay dates:
- Some of you may get paid once a month
- Some get paid every two weeks, whether it’s every 1st/15th or every other Friday
- Some lucky peeps get paid every week (whatever day that is)
3. Add in the amounts
Now that your dates are all listed, write down whether money is leaving (-) or incoming (+), and how much (remember to under/over estimate a little bit).
- Looking at an example: I’ll write that every 3rd of the month, bill 1 will remove -$100 from my account. Every 15th; however, I’ll add $900 because I get paid.
Do this for all bills and paydays.
Once you get those down, start to look at your calendar and analyze how the flow out compares to your money in every week. Maybe on one week, more bills go out than money comes in, and that’s the tight week where you only get $10 to make it through the week.
4. Adjust as needed
So now you should get a really good picture of how much leaves and enters your account. Do you have any weeks where you’ll go negative? Do you have some leftover cushions every week just in case? This a good time to write yourself some notes in your calendar, such as:
- When to spend less/go out less
- When to set aside money for savings
5. Adjusting your bills dates (if necessary)
There’s three ways you can do this (two if you’ve had your bills for awhile):
- Pay one month ahead
- Request a date change
- Your very first payment on a new credit card
Let’s go a little more into detail on what I mean.
Pay one month ahead
NOTE: For this option, you have to make an extra payment in the same month.
Very often, we might pay the minimum due, right on the due date. One thing to check for is the possibility of pushing your “due now” amount.
This way, if you make an EXTRA payment, your new due date is pushed forward a month. I noticed this option in my student loans. Once I pushed the date forward, I made the next payment on my preferred date either that same month, or before my new due date.
Request a date change
Typically if you have a good standing and you’ve been making faithful payments for awhile, you can easily request and get your date changed. My husband did this with our car payment, because it was a large amount that came out too closely to other bills. He contacted the bank, and was able to set it to the one we wanted.
It was pretty easy, and sometimes if you already paid the bill for the month, they’ll let you change it on the next one.
Again, some banks might not allow you to change it, but I have yet to see a case where they didn’t (I have A LOT all my dates moved). I prefer this method for larger bills as well as my older ones. And it doesn’t involve dropping more money that I DON’T have.
Use your “no-date set” period (if you just got the credit card)
If you recently opened a new credit card, this will be perfect for you.
Your first payment usually isn’t due for more than a month after you make your first purchase. This may be due to the amount of time it takes to generate your statement.
But you can usually create your online account and begin managing your account almost immediately after getting your card. Ideally, you would make your first purchase, and then make a payment soon after, on the date you want your monthly payment to be. If your account allows it, then it will set your current amount due to “0”, and you can do something similar to our first option.
And that’s it! You’re on your way to a more organized way of managing your finances.
Tips for maximizing your credit
So you’ve organized your bills? Now what?
- Keep your balances low: Your goal should be to owe LESS than 30% of your total allowed credit.
- Create a history: My recommendation is to use your credit card to pay for bills, and then make monthly payments to your card every month. The longer monthly payments you make, the more it will help your credit.
- Consolidate if possible:
- Some credit cards have a “balance transfer” feature. This means you can use one credit card to pay for another, at a particular rate. If one of your credit cards has a lower interest rate, you may want to consider putting a few together, reducing your interest, and also getting rid of having to pay multiple bills.
Any other tips you have to offer? I’d love to hear more!