Log in

No account? Create an account
Previous Entry Share Next Entry
Changes in financial plans
For years I've been dealing with my regular bills by setting up a weekly push-payment from my bank to my vendors so that the post-bill amount I have each week is consistent, and so that the bills get paid before end-of-work on payday so the funds aren't available for me to fritter away first.

This has been a vast improvement over the previous technique of forgetting to pay bills until panic and bad credit reports creep in. But it isn't without flaws. Because there is an unevenness in scheduling between weekly payments and monthly billing, I rarely, if ever, pay exactly the right amount for a month, and tend to bias my error towards overpaying (such as paying a $100/mo bill as $25/week, which works out to $1300/year, not $1200/year). As such, when I notice I have a large credit, I'll discontinue that payment -- and then I risk forgetting to start it again. I also lose track of how much things cost. I don't know how much I am charged for car insurance --- GEICO hasn't complained about not being paid, so I'm paying enough, but I don't know the costs.

So I'm thinking of making a change: Slowly, one by one, switching from automatic weekly push-payments from my bank to my vendors, to automatic monthly pull-payments from my vendors to my credit card, and weekly push-payments to my credit card.

So instead of paying $50/wk to AT&T, $35/wk to GEICO, and $50/wk to Visa, I'd pay $100/wk to Visa and $35/wk to GEICO and AT&T would bill Visa $200/mo, then the next month I'd pay $135/wk to Visa, and AT&T and GEICO would collectively bill Visa $330/mo. The total amount I'm paying per week stays the same, and (in this scenario) my outstanding Visa balance would still fall by $200/month (a bit more actually, since the amount which would accrue as a credit at AT&T and GEICO would go towards paying down the Visa balance).

I'd still get the convenience of consistent weekly payments, and my vendors get to deal with me in their preferred manner. I also get the credit-card benefits associated with pumping large cash-flows through the credit card. And the credit ceiling will allow things to get paid on time even if there are unexpected changes, or bumps in the schedule like missing a bank-holiday and having all my payments be unceremoniously cancelled.

  • 1
The advantage I tell people about push payments is that the "Checks" do not bounce.

I had an issue with the Gas company when I closed the old bank account and forgot to transfer over to the new one. They could Pull from my account. They tried to submit the bill 3x times with 3 bounced fees in 2-3 days. I did catch it and then argued the fees back.

I think a "Well bless their hearts" is appropriate here. At that point the only thing I left set up as pull is the credit card accounts since they vary so much and the cost of making a mistake of them is way too much.

There are some articles for Landlords about managing the fact that you can have many sets of utility bills and insurance bills all due at different times. More systems development stuff.

For me when I get bigger I am going to have an excel spreadsheet or a printout on the wall with each building and then check off as I do the bills. (And also check off when I get the rent)

I wish it was true that in push payments the "checks" do not bounce.

My CU switched bill-pay providers a couple of years ago. Before the switch if a scheduled payment didn't have sufficient funds it would try again the next day. After the switch, it would bounce the "checks", complete with NSF fees.

The payments are scheduled based on delivery date, not processing date, so I have to schedule a payment for Tuesday to get the "check" sent on payday Friday. Unless there is a bank holiday on Monday, in which case a Tuesday payment is sent on Thursday, the day before payday.

That's good to know when I teach a finance class. You would think it would go "Deduct X from account A, IF X > A.balance THEN account.owner.email("You have a problem");

I bet that generates less fess though for that bill-pay provider.

After complaints, the CU worked with their provider to "fix" the problem. Now, instead of generating NSF fees (I guess that supplements the cookware certification business), it merely skips the payment.

So what would be better to say is "check the bank's policies, they can vary."

  • 1