Bills, also called expenses, are financial obligations for the goods and services in your life on which you are required to make payments.
Most of the bills you will have are predictable, such as:
There are also unpredictable expenses. You may not know in advance when unpredictable bill payments will be due, how many payments there will be and/or how much the payments will be. Examples include:
Then there are the emergency expenses that are totally unexpected. These bills could require only one payment. A large, due-on-receipt bill payment often translates to unexpected debt payments.
Regardless of how or when you incur expenses, bills can be categorized by whether or not the payments are due on a relatively fixed schedule with fairly consistent payment amounts.
Regular bills have payment amounts that are fairly consistent and for which payments are due on a predictable schedule. The payment amounts for regular bills may vary slightly from one payment to the next, but there is a predictable maximum for each payment that can be used for budgeting. Examples of regular bills with fixed payments are:
Examples of regular bills that normally have variable payment amounts could include:
An unscheduled bill has either sporadic payment amounts and/or payment due dates that are on an inconsistent schedule. Examples include:
As discussed previously, there is no standard schedule for when employers will pay their employees. Bill payments, on the other hand, are universally scheduled on some form of a monthly schedule. Changes to these monthly schedules are typically the result of a due date falling on either a Saturday, Sunday, or holiday. When that happens, the due day might be moved to either the following or the preceding workday.
Scheduled By Month
Bill payment due dates are typically scheduled on the same day:
A due date for a bill is the date by which the payment is to be received and completely processed by the payee.
The date on which you send or personally make a payment doesn’t matter. If the company to which you are making a payment cannot process your payment on or before your due date, your payment is late. For example, having a payment postmarked a week before a payment is due does not matter if the payment does not reach the company on or before the date on which it has to be received and processed.
The main reason for paying attention to payment due dates is that late payments often result in you being charged a late payment fee and/or paying interest. In the case of credit cards, for example, when a payment is one day late, in addition to a late fee, you will also be charged interest on your total unpaid balance before the payment amount is deducted.
Not paying your bills on or before the payment due dates can cost you a great deal of money.
When planning to make bill payments, the method of payment will have a lead time. This is the time before a payment is due when a payment must be submitted to ensure that the payment is received and completely processed on or before the due date.
For example, a person lives in Idaho and mails a monthly payment to a subscription service in Florida. Payments are due on the fifteenth of each month. The usual time for a letter to get from Idaho to Florida is four days. Payments could be mailed on the eleventh, but that is assuming payments will always be received within four days and that the company will open and process the payment before the close of business on the same day the payment is received.
In the example, there is no allowance for unexpected mail delays or for due dates falling on weekends and holidays. When the fifteenth falls on a Saturday, does the company move the due date to the following Monday? If not, payments that could have arrived on Saturday will probably not be received until Monday. Because of the weekend, the person gets dinged with a late fee.
One solution could be to always mail the payment that is due on the fifteenth by the first of the month, thus allowing a two-week lead time. But that does not eliminate the ever-present hazard of a payment getting lost in the mail.
A much better solution would be to take advantage of electronic payments.
Not paying attention to bill payment lead times can result in late payments, which to reiterate can cost you a great deal of money.
There are many options for making bill payments differentiated primarily by how much effort is required on your part.
Internet (web browser)
Manually (payment is mailed or you hand deliver)