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A Step by Step Guide to Managing Your Bills

Finance | 11/02/2022 23:00

A lot of us feel anxiety every month when the bills start coming in. Maybe you’ve had a recent change in your life that has made your budget tighter than normal, or maybe you are just more conscious of your bank account lately. Either way, we are here to help you manage your monthly bills and get on track with a savings plan.

Here’s your step by step guide to managing your bills and getting your savings started (or restarted!)

What are normal monthly bills?

If you are just starting your budget, you may be wondering what bills you should include in your spreadsheet. And the short answer is: everything you spend money on. There are a lot of expenses that we tend to overlook in everyday life. Here are the most common monthly bills that you should consider in your budget:

  • Housing (rent or mortgage payment)

  • Car payments and/or car insurance

  • Gas, parking, and other transportation expenses

  • Health insurance

  • Groceries

  • Utilities (heat, gas, water, electric, cable, and internet)

  • Cell phone

  • Childcare

  • School costs (tuition, books, supplies)

  • Pet food, care, and insurance

  • Memberships and subscriptions

  • Homeowners insurance

  • Life insurance

  • Student loans

  • Credit card debt

  • Emergency fund

  • Retirement

While an emergency fund (and maybe even retirement) aren’t bills that you receive every month, you should treat them as such. By including them in your budget as bills, you will encourage yourself to add to the savings.

What is the smartest way to pay bills?

There are two main ways that you can pay your bills: all at once or as they come in. Some people prefer to pay them as they come in to ensure that they do not miss a payment and ensure that all payments are on time. Others prefer to pay them all at once so they can keep track of all expenses at once. Either way is fine as long as you remember to pay them all, and remember to pay them all on time.

How can I manage my monthly bills?

If you are struggling to make your monthly payments, having a system in place can help you gain some control over your situation. 

Step 1: Set Your Goals (Both Short Term and Long Term)

First things first: what are your financial goals? Are you trying to make ends meet every month, pay off credit card debt, or trying to save for retirement? Some goals will take longer than others to accomplish, so it’s good to break them down into short term and long term.

Short term financial goals may include:

Paying off credit card debt

Saving for a down payment for a new car

Boosting your credit score into the next bracket

Building an emergency fund that could cover 3-6 months worth of expenses

Long term financial goals may include:

Saving a certain amount for retirement

Saving for a down payment for a house

Paying off a mortgage

Defining your goal can help you create a plan, and a solid plan can help you succeed in your financial future.

Step 2: Make a Budget

Making a budget is the best way to get a handle on your monthly bills. Budgeting has a lot of benefits:

  • It helps ensure you don’t spend money you don’t have

  • It helps you see where you may be spending too much money

  • It will help you stay organized

  • It will help you to see your financial goals and the pathway to them

Many people put off creating a budget because they view it as a waste of time. After all, it does take some work up front to get one started. But in reality, a little work up front can save you a lot of time and frustration later on. By knowing exactly what money is coming into your household every month and what is going out, you can more clearly see what changes you need to make in your spending.

When you are trying to manage your bills, you want to take a detailed look at your budget to see where you are spending the most. Is your grocery bill unnecessarily high? Are you spending too much on electricity every month? Are your streaming services adding up? Determining where your money is going is half the battle sometimes.

Step 3: Slash your Budget 

Once you have identified where you are spending a lot of your money you can start making adjustments and looking for places to slash your budget. There are a number of places you can start making small adjustments.

Slash your Grocery Bill

When you look at your overall budget, you may be surprised at how much your grocery bill is. But the good news is there are a number of easy and effective ways to cut this number.

  • Switch to generic brands on whatever you can.

  • Try to be more mindful of food waste.

  • Start clipping coupons.

  • Sign up for your store’s reward program

  • Go online to look for manufacturer’s coupons.

Slash your Entertainment Bill

If you are spending a little too much on entertainment every month, look at how your spending breaks down. If you are spending a lot out at restaurants and bars, consider staying in and cooking or hosting a wine night at your home. If you are spending a lot on streaming services, see which ones you can cancel and which ones you can split with friends and family. 

Slash your Car Payment

Most people are overpaying on their monthly car payment. But if you are able to refinance your car loan, you can save a lot every month. Refinancing can help you in a few ways. If your credit score has increased since initial financing or the market rates have decreased, you may qualify for a lower car loan APR. This can add up to a lot of money back in your pocket every month. But refinancing can also help you change your repayment period, which can reduce your monthly payment as well.

If you have a $20,000 car loan at 8% interest that you have to pay back over 36 months, your monthly car payment is $626.73. But if you stretch that payment out over 60 months, your monthly payment is cut to $405.53, even if you are not offered a lower APR. You will end up paying more in interest over the life of the loan, but that breathing room can make all of the difference in your monthly budget.

Step 4: Prioritize Payments

If you know you don’t have enough money to pay all of your bills, determine which ones are the most important to pay in full. In general, you should prioritize the payments with the highest interest rates and harshest missed payment fees. If some of your bills can be deferred, see what the details are for this. This can be a good option to get some space and get your head above water. Some loans, such as student loans and mortgages, will still charge interest during deferment, which can end up costing you a lot more in the long run, so weigh out your options.

Step 5: Negotiate

It never hurts to call and try to negotiate rates and fees. Look at your bills and see where you might be able to negotiate. You may have luck with the following:

  • Your cell phone 

  • Credit card interest

  • Your cable or satellite bill

  • Car insurance

  • Newspaper subscriptions

  • Gym memberships

By looking online for competitors rates you can get some leverage beforehand. They can help guide you on ways to cut your bills. Your cell phone company may allow you to reduce your data plan (which can save you a lot), while your car insurance company may allow you to increase your deductible, lowering your monthly payments in return. 

Step 6: Consolidate debt

If you have a significant amount of debt, it might be worthwhile to consolidate it. Not only will it be easier to keep track of, but it may help get you some breathing room. You can contact a debt consolidation company, or you can do it yourself by opening a credit card that offers 0% on balance transfers. By transferring all of your debt to this card you will have time to pay off the balance before you will have to pay interest (these promotions typically last for 12-24 months). That’s one to two years of money going towards your principal rather than towards interest, as it would be if you did not consolidate. But be sure to pay off your balance by the time the promotion is over or you will pay a lot in retroactive interest. 

That’s how you can better manage your monthly bills.

Monthly bills can be overwhelming, so taking the time to get organized and manage your payments is important. Be sure to analyze your budget to see where you could be cutting costs and saving money. And if you have a monthly car payment, chances are you could be saving a lot by refinancing your car loan. Contact Auto Approve today to find out just how much money you could be saving. 


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