Ask The M-Network: Make Multiple Small Payments On Monthly Bills?

My Two Dollars reader Jaimie sent in the following question to the M-Network’s new feature “Ask The M-Network“:

I have always lived paycheck to paycheck. I am paid weekly and in extreme desire to enable financial security I have instituted a new budget plan. I pay a portion of every bill I have (utilities, car payments, credit cards, insurance, etc.) each and every week. I have worked this forward for a few months and it seems that if I stick to it strictly I will be doing very well. Is there any reason I should not do this?

Jaimie, I totally understand and even wrote about doing that for credit card debt in my series “The Get Out Of Credit Card Debt Challenge” as a way to make it easier to pay more each month. You might want to check out that series for a little more information. And here are the responses from several of the M-Network members to try to answer Jaimie’s question…

Plonkee Money says:

This sounds like a good idea I think. There are two potential flaws that I can see.

Firstly that you might fall off the bandwagon forget on week. That’s definitely the sort of thing I might do, and there’s a risk that you won’t get back on top of things quickly. You can try to prevent that by making as many payments as possible automatic. Secondly, some bills don’t allow you to pay more than once a month. I’m not sure whether you’ve already started on the plan, but if not you need to check your terms and conditions to see if that’s the case (or try calling and asking).

Patrick from Cash Money Life says:

Jamie, so long as your creditors allow multiple payments in a month, then I don’t see a problem with it. You can even come out ahead a little bit with your credit cards because the credit card companies are required to process your payments and apply the payment toward the principle the day they receive the payment (meaning your principle is lowered bit by bit, which reduces the amount of interest you are required to pay). The next thing I encourage you to do is to begin paying yourself as part of your weekly budget. Even if you are only able to put away a little bit, include yourself when you pay your bills. This will help you save up an emergency fund to help pay for those unexpected expenses. For a more long term financial goal, I encourage you to read about Dave Ramsey’s 7 Baby Steps, which is a financial plan that can help you achieve financial freedom step by step – starting with getting out of debt. Good luck!

Mrs. Micah says:

As long as it’s allowed and doesn’t incur any fees, then I think it’s an excellent idea. If a creditor doesn’t take weekly payments, then reserving that amount of money in the bank account (marking it for yourself, or using a subaccount if your bank allows for them) is another option. For instance, because it costs more to pay by the month, we put a portion of our renter’s insurance aside each money in an ING subaccount. You’ve noted that this takes discipline, so I encourage you to find ways to keep yourself doing it. For example, there are a number of excellent remidner systems out there like GoPingMe.com or Google Calendar which allow you to send reminders to yourself. I find them very helpful in keeping track of monthly bills or just remembering to bring the rent check to the office before the 1st.

The only way I see that you can improve on this is by finding small ways to pay yourself every week. It doesn’t have to be a lot, just little bits that add up. I’d keep that money in a separate account or use a spreadsheet/simple file to keep track of it. If you’re not familiar with the concept of snowflaking, I encourage you to check it out on Paid Twice. She has a number of excellent and encouraging articles.

Gather Little By Little says:

I don’t see any problem with it at all as long as your bills allow you to do this (as others have already said). It does seem to be fairly high maintenance though, but if it works for you and you can keep it up, great. The only downfall I see to this is that you’re losing interest if you’re paying bills early that don’t incur interest. Depending on how much money you keep in your accounts, this may not be a big deal. If it works for you and makes you feel good about what you’re doing, than do it!

Paid Twice says:

I don’t have a problem with it, but it seems a lot of work. And it also locks you into living forever in a paycheck to paycheck mentality. If the work involved in maintaining this system is not an issue, I’d keep it up for now, but slowly start to think beyond each paycheck and move towards living where paying bills isn’t directly, exactly tied to the money coming in *right now*.

Hope these answers can provide a little guidance, Jaimie. Do you have a question you would like to have us try to answer? Send it in to Ask The M-Network!

And please remember that our answers are opinions and should not be considered professional advice and we assume no responsibility of any kind. Please consult a certified financial expert as needed.

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