Blog: Minimizing Financial Clutter
Hiding Money from Yourself
They sneak up on us - those bills that only come every quarter, or twice a year, or annually. We tend to forget about them until, uh-oh, we find one of those periodic mega-bills in the mailbox.
If you find yourself wishing that you had remembered to save money to pay those bills, here is an easy way to organize your finances so you'll be prepared next time.
Make a list of all of your periodic expenses. Here's my list:
· Car insurance (2 cars, 2x/year)
· Homeowner's insurance (1x/year)
· Liability umbrella insurance (1x/year)
· Husband's life insurance (4x/year)
· My life insurance (1x/year)
· Long term care insurance (1x/year)
· Auto registration (2 cars, 1x/year)
· Estimated federal & state taxes (4x/year)
· Real estate taxes (2x/year)
After you've made your list, calculate the estimated amount you spend annually for each of your periodic expenses. Add the annual totals for each expense, and then divide the grand total by 12. That figure is the amount you need to save on a monthly basis in order to be able to pay your periodic bills. Let's call that amount your Periodic Bill Payment (PBP).
I have found that an easy, practical way to be prepared for those periodic bills is to set up a separate checking account to use ONLY to pay those bills. (That means NO DEBIT CARD for that account! Also, do not use the second checking account as an overdraft account for your primary account.)
Set up your second checking account at the same bank as your primary checking account. While you're at the bank, ask them to arrange for an automatic transfer of your PBP amount on the same day of every month (such as on payday).
In a short time you will have the funds at the ready to pay your periodic bills, and you'll never be caught off-guard again.
posted on: 2/28/2010 11:30:00 AM by Katherine Trezise
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Minimizing Financial Clutter
by Katherine Trezise
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Katherine Trezise is president of Absolutely Organized, based in Baltimore, MD. She is president-elect of the National Study Group on Chronic Disorganization. Katherine holds a masters degree in business administration, is a Certified Professional Organizer® and a Certified Professional Organizer in Chronic Disorganization®. Absolutely Organized specializes in helping people organize their homes, paperwork and financial records to make room in their lives for the things, people and activities that are most important to them.