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  1. #1
    Join Date
    Sep. 11, 2011
    Posts
    2,456

    Default Paying bills ahead...

    So in light of a recent thread about financial responsibility, I've been wondering what bills are better paid ahead. DH and I have discussed it, and we're not comfortable paying our cell phone, electric, or cable bills ahead due to doubts about the companies and finding mistakes on our bills.

    We are comfortable paying insurance, homeowner's association dues, and our gas/propane bill ahead. Who out there does this type of thing, and how many months in advance do you pay? We're trying to reorganize our budgeting/bill paying, and this is one step in that process.

    Advice is appreciated!
    #Iaintafraidofnogoat



  2. #2
    Join Date
    Mar. 26, 2011
    Location
    Pennsylvania
    Posts
    5,517

    Default

    You know what; I'd be right there with you until this year. The first half of this year was nightmarish. I had half the classes I usually teach so my income was half for the spring semester. I didn't qualify for unemployment because they view all teachers the same, even adjuncts, and looked at my few contracts like they would a break between semesters. Ran through my savings and my buffer like a hot knife through butter. It got better in the Summer, but in a blind panic with all these overdue bills hanging over my head I started paying them down as soon as I got paid so I spent the summer broke. Why am I telling you this?

    A finance-savvy friend of mine talked me off the ledge. She said, "pay your mortgage, feed your animals, pay yourself, then settle those bills."

    What she means is this; build back up your buffer and savings as soon as you can. Give yourself some money every paycheck -into an account that is not easily accessed. Like a different bank for example. Then pay your debts.

    So I'm going to say, this idea of giving people your money ahead of time is foolish. If you have money burning a hole in your pocket build your buffer. If, G'd forbid, something happens to your income in the near future, you can't get your "paid ahead" money back. If, G'd forbid something were to compromise your income, you'll have your buffer, and if certain bills go by the wayside at that point, that's too bad. Take care of yourself first. When you have 6 months of income socked away, then revisit giving people your money to hold ahead of time.

    Paula
    He is total garbage! Quick! Hide him on my trailer (Petstorejunkie).



  3. #3
    Join Date
    Dec. 28, 2009
    Location
    VA
    Posts
    2,721

    Default

    The money you would use to "pay ahead", could and should be earning you interest through savings or investing.

    Why let someone else earn interest on your hard earned money?

    The only things I could think to pay ahead would be any loans that have a higher interest rate than you could find through investing or saving.



  4. #4
    Join Date
    Nov. 2, 2001
    Location
    In Jingle Town
    Posts
    36,414

    Default

    don't pay ahead unless you see considerable savings: I play an online game that costs 15 bucks a month (my only real vice, but at 50 cents a day, I am still better off than most) If I were to pay the whole year i could save some money (but I didn't because I anticipated taking a break and DH would have a fit...)

    Gas, power, phone is usually subject to change, depending on use.

    And that aside, the money is better off in my account, working for me than in the other guy's account not doing me any good.

    meaning if you were to take the money you consider paying say for gas for the month yet to come in a 30 day account of some sort, you would come out a couple of bucks ahead, paying your bill and maybe having enough for a star bucks coffee left over. Multiply by utilities. of course, we usually don't do that, but that is the economic truth.

    Some places (at least in Germany) pay you a percentage for paying on time. That is usually within 2 weeks of receiving the bill, and those 2% can be worth it. But seldom does anybody pay you to pay in advance. The only time it is advisable is when you have a contract, like a gym membership, that gives you a reduced rate.

    But in short, don't.
    Put the money in the bank, pay as you are billed.
    Quote Originally Posted by BigMama1 View Post
    Facts don't have versions. If they do, they are opinions
    GNU Terry Prachett



  5. #5
    Join Date
    Dec. 19, 2008
    Location
    Where The Snow Flies
    Posts
    2,855

    Default

    Quote Originally Posted by jawa View Post
    The money you would use to "pay ahead", could and should be earning you interest through savings or investing.

    Why let someone else earn interest on your hard earned money?

    The only things I could think to pay ahead would be any loans that have a higher interest rate than you could find through investing or saving.
    Exactly this. I "pay ahead" into an interest bearing checking account and use either the biller's auto-deduct feature or use the banks free bill pay to set up automatic payments. I get electronic statements in my e-mail so say, like this month, my natural gas bill is $21. I have auto deduct with my gas company, so they tell me in my e-bill that the deduct will happen on the 28th. I transfer that from my active account into my bill pay account and voila - bill is paid. Nothing more for me to do. I build a little buffer into that account in the event something unexpected comes up, but it's my money and I have free access to it. No overpaying creditors and having to fight for a refund should circumstances change.



  6. #6
    Join Date
    Feb. 28, 2006
    Location
    The rocky part of KY
    Posts
    11,513

    Default

    Ummm, I had my mother, who is on a fixed income but not impoverished, pay her homeowner's assoc a year in advance even though it was a loss of interest. At $1500 a year it was a loss in interest to her of about oh, $30 and from my perspective it was worth it to have her not forget it and get a late fee of oh, $30. Potentially times 12.

    When we had a berth at a marina they offered a 10% discount to those who paid annually in advance, so that was a free month's berthing or about $200 and it was worth it.
    I haven't ever heard of a barn doing that but we have had accounts at hardware stores and feed stores that offered a 5% discount to accounts paid in full by the fifth of the month. And my dentist used to offer 5% off for cash payments on my crowns.

    Otherwise I would pay down my mortgage or possibly increase my retirement contribution, but really you are better off "hiding" your money somewhere so you don't think you have it and try to spend it and build up that seven months' buffer that the financial wizards say you should have.

    You can pay the utility companies such as ATT in advance and they will repay you once you close the account, but it takes a good six months to get it back.
    Courageous Weenie Eventer Wannabe
    Incredible Invisible



  7. #7
    Join Date
    Aug. 14, 2000
    Location
    Rochester,NY,USA
    Posts
    8,514

    Default

    Quote Originally Posted by jawa View Post
    The money you would use to "pay ahead", could and should be earning you interest through savings or investing.

    Why let someone else earn interest on your hard earned money?

    The only things I could think to pay ahead would be any loans that have a higher interest rate than you could find through investing or saving.
    This^^

    The only bill I would even consider paying in advance would be one that would give me a substantial break. For instance, my cable and internet company bill runs ~$86. I would be willing to pay ahead for say, 6 months for a $43. break or a yr for one free month. To be honest I'm not even sure I'd do that as I could drop over dead tomorrow then they'd still have a yrs payment that I couldn't use.

    Ok, realistically, a mortgage or any other loan is probably the only bill to pay off as early as possible because the amount you save on interest is money back in your pocket.
    Sue

    I'm not saying let's go kill all the stupid people...I'm just saying let's remove all the warning labels and let the problem sort itself out.



  8. #8
    Join Date
    Apr. 9, 2012
    Location
    NYC=center of the universe
    Posts
    2,300

    Default

    Other posters have pretty much said the same thing... Absolutely do NOT pay bills ahead of time. Put that money into savings. If possible, do an interest bearing savings account. Keep enough money "liquid" in case of an emergency. This will help you if anybody gets sick, loses their job, etc. If you've already paid bills ahead of time, you won't have that money in an emergency.

    Of course, health insurance, home insurance, auto insurance, equine insurance, pet insurance, and even personal liability insurance can all be key in helping you weather an emergency financially.

    Edit: obviously you DO want to pay off your credit card in full each month and any other interest-charging accounts should ideally be paid in full so you are not charged interest.
    Born under a rock and owned by beasts!



  9. #9
    Join Date
    Dec. 12, 2007
    Posts
    4,388

    Default

    We're going to close this thread as it's not horse-related.

    Thanks!
    Mod 1



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