Saturday, December 18, 2010

Our Annual Bill Paying Plan

For most of my financial life, I have got by just paying the "minimum payment due". Obviously not a good thing, especially when paying credit card, car, and other debt because you can justify any loan amount if you are only looking at "small monthly payments" as opposed to the total amount owed.
Fortunately, our debt is just about paid off so there won't be any minimum monthly credit card or car payments, however, now I am looking at the monthly payments on our regular bills and have come up with a new annual bill paying plan. Here's how it will work:
  • Our current debts include a mortgage payment (which includes property tax and house insurance), health insurance, car insurance, water, garbage, sewer, electric, gas, cable, cell phones, tithe, school for a grandchild, and taxes.
  • As soon as we move (our house is in the process of being sold) and we become nomadic, our bills will drop to health insurance, car insurance, cell phones, tithe, school for the grandchild, and taxes.
We plan to pay these remaining six bills on an annual basis. We are doing this for a couple of reasons--one, while we are traveling, we won't have to worry about paying monthly bills, and two, often when you pay annually instead of monthly, you get a discount. In January we will pay $600 for a year of health insurance and $200 for six months of car insurance, putting $200 in savings for the second half of the year's car insurance since this can only be paid bi-annually. I have already put aside $500 for our grandson's school (in the Philippines, you have to actually pay to go to school, even elementary school), and we also have money in savings to pay our 2010 taxes which will be due in April (since I am self employed we always end up paying something to the IRS). The only things that we aren't paying annually are the cell phones (they are still on a contract so we will be paying this bill monthly), and tithe (since I tithe 10% of my income and have no idea how much income I will have in the coming year).

I hope to reduce these bills even further in a few ways: obviously health insurance will be a constant bill and at this low price I am more than happy to pay it however it will drop in half in a couple of years when hubby goes on Medicare. We think that eventually we may sell the car and be totally car free so that would preclude the need for car insurance. Our cell phones will eventually be of the pre-paid variety and I think our taxes will be reduced significantly beginning in January because I won't be working (my goal is to live so minimally and need so little that we end up paying zero taxes). Tithing will continue as usual at 10%, and while we are in the Philippines next month, I will talk to the grandson's family about setting them up a small business of some sort with some seed money so that they can pay for his school out of the proceeds of the business thus ending our commitment to pay his school fees for the next decade or so.

Obviously there will be other variable costs we will pay just for living like food, clothes, sundries, and "rent" of sorts to whoever we are staying with but these will be reduced as much as possible (and will be some good topics for future blog posts!).


  1. Just stumbled on your blog and I've been reading it for the past 1/2 hour. Our family of 3 is trying to minimize to prepare for our eventual relocation south. Just when we think we can't find anything else to get rid of, I wind up filling another box to add to the garage sale pile and hubby fills the trunk with stuff to take to the dumpster. Recently we had some extra time waiting to see a movie, so we went into a store to kill 15 minutes. We walked around the whole place and relaized there was nothing in there we needed or wanted. Shopping for entertainment is a hard habit to break, but we're slowly replacing it with other things like eating out (which we rarely did in the past). We're trying to focus more on enjoying life together rather than just working to pay bills and cleaning the house. Can't wait to get a smaller place and enjoy long strolls on the beach. I'm going to follow your blog and I hope you don't mind, but I put a link to it on mine. Happy holidays!

  2. Thanks for the nice comments. I totally understand about shopping as entertainment. When I switched to cash only, it really helped to cut down my shopping (and buying) because I literally didn't have the cash to buy stuff. Now that we are clearing out our house I have an even better excuse since I won't have anywhere to put the stuff that I buy. I still, however, like to walk around the mall occassionally and look at all of the pretty stuff!