Okay, so now that you have your budget set ~ it’s time to make a payment schedule to prevent you from paying bills after their due, or running out of money before you get paid again. First things first: Determine how many times you will get paid in a billing cycle. Do you get paid monthly, twice a month, weekly, or every two weeks? How often do you want to pay your bills?
Based on the sample budget I created in my earlier post, I’m going to show you two ways to set up a payment schedule. One is really more helpful for those of you who are already on track, and the second is for those of you who need to get caught up on bills, and see your balance at the end of each pay period.
Let’s get started!
Open up your budget. If you’re in Excel then create a new tab titled “schedule”.
You’ll want to copy your monthly operating budget into this tab so that you can create your budget.
With the first method I’m going to show you quickly how to balance it, and then I’m going to show you how I keep track of everything on a month to month basis. I will assume that you will pay your bills twice a month. Let’s say the 10th and the 25th.
In our sample budget, our total operating was $2,600.00. This means we will want to break up payments on the 10th and the 25th to be as close to $1,300.00 as possible.
Mortgage $ 1,000.00
Utility #1 $ 50.00
Utility #2 $ 50.00
Utility #3 $ 100.00
Savings $ 250.00
Auto Payment $ 250.00
Auto Insurance $ 100.00
Auto Savings $ 100.00
Gasoline $ 200.00
Groceries $ 300.00
Clothes/Hair $ 100.00
Entertainment $ 100.00
Based on these numbers let’s assume that your mortgage and utility #1 are due on the 1st of the month. Let’s say Utility #2 is due on the 15th, Utility #3 is due on the 14th, your Auto Payment is due on the 17th and your Auto Insurance is due on the 10th.
Look at how I created the chart below to line those items up so that they will be paid on time. You’ll then notice that I added all of your savings transfers to the beginning of the month (the payment date with less moneys going out) and split your expenses that are meant to carry you through the month.
If you’re not confident with paying less in the beginning of the month, I recommend putting your entire entertainment and clothing/hair budget in an envelope in the beginning of the month to make everything an even $1,300.00.
Now onto keeping track of this every month:
The first three columns will be exactly the same, so copy those into a new spreadsheet titled X Month 2012. Create the following columns: Day Paid, Actual Amount, Variance.
What does that mean? You’re not always going to pay a bill on the day that it is due. By seeing what day you pay a bill each month, it allows you to know A.) when you should pay it again and B.) whether or not you’re making payments on time. Actual amount ~ this one is a bit obvious. While your budget number is pretty close, your utility bills are not going to be identical each month. This is why we keep track of how much we actually paid, and then the variance.
You can fill it in just like I have done below.
To get caught up, you will still need to follow the initial steps above of getting your schedule set, you’re just going to need to do things a little bit different in the tracking section.
Create a new spreadsheet titled Running Balance. This is going to have a section for each paycheck you receive. Let’s say you start this when you get paid this Friday, May 18th.
Your first line will be May 18th. Under the date you will put beginning balance. To the right of that, put in your actual beginning balance before you got paid.
Next line: Paycheck. Type in the amount you got paid (in the same column as your beginning balance. After that you’ll want to put in everything you’re paying from that and two columns over the amount you spend. You’ll end that section with a Checking balance column which you will see in my example below. It’s up to you to figure out how to pay things to get caught up, whether you leave your savings funds alone for a few months so that you can use that to pay your mortgage the week before it’s due instead of later in the month where you may incur a late fee. Here’s an example.
So, as you can see above: Our sample is paying May’s mortgage at the end of the month, undoubtedly hitting a late fee of at least $40. There isn’t a lot of wiggle room in the budget to begin with, and those unnecessary fees can really kill it for you. So what do you do?
Here’s where a bit of planning comes in. If you’re one of those people who gets paid every Friday, you can look ahead and see that June is one of those months where you’ll be getting that extra paycheck. That’s $650 right there to help you get on time on your mortgage. You would still need to make that payment at the end of the month in the full amount, but then you would also put that extra $650 towards your mortgage as well. That way August’s balance is more than half paid for. In August if you think you can, you could not put any money into either savings, and you’ve found the other $350. Pay that extra towards your mortgage and when you make that payment at the end of September? It will actually go towards October’s mortgage instead of being late for September!
I know that was a lot, but I hope it helped. Please don’t hesitate to contact me if you’re struggling!
Sincerely,
~Nikki
