Q on overpayments to bills...
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Q on overpayments to bills...
| Fri, 04-14-2006 - 1:08am |
Hi, all. WELL, DH has decided that paying "extra" to gasoline bills, electric bill, cable, cell, etc. is stupid. I tried explaining "snowflake". He gets the part about rounding up, but thinks it's a dumb idea to have paid over on the gas bill so that we have a "credit" balance of $45!!! That's $$$ in the tank, not the bank, BUT everything is paid ahead at least thru May 5th, and on the cell, until June. Taxes-paid! ($1500!). There are expenses coming up (more doc bills for skin); BD parties (three this month). Gas has gone up 11% since last yr, ($3.00+/gal), and airfares, groceries, etc? Up. Extra $$$ in paycheck? None. Sooo--ladies, am I doing this all wrong? I did pay $100 extra to the big kahuna cc, but it will take me 8 months to pay it off. But, it sure is nice not to get socked each month with huge gas and electric bills. Ideas? Whiz.

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I have to agree with your husband here...
I think it would be a better use of the money to either deposit into a slipping fund account, or better yet apply it as your snowflake payment to your credit card. (or finish paying those medical bills)
I have slipping funds that I make deposits too each week (At ING), car expense, vacation, home improvement, emergency fund, and then I have a small emergency fund at the local bank.
Hope this gives you an idea.
Shannon
Hi,
I think the only time I read about people snowflaking toward utilities on this board is when their credit cards are paid off. I could be wrong though! For me, I would not want to snowflake on anything with no interest - or at least not until everything else is paid off.
Once I have an efund, I plan to snowflake to all my credit cards, the to my truck loan, then to my student loans. Once they are all paid, I will send the snowflake that was going to all those bills to my efund or investing. Just my two cents - for me if there is no interest being charged, I would rather pay myself and let my snowflake to myself accrue in the bank.
I would have to agree with the other posters, I would only send extra payments to bills that are charging interest. Why not make that extra payment to something that is costing you money to hold onto or, if you don't have any bills with interest being charged, let that money earn you some interest in a savings account. By prepaying on non interest bearing bills, you are letting those companies earn money on your money. Just my 2 cents! :)
~leanne
~leanne
deciding to be happy doesn't mean that everything is perfect, but that you had decided to look beyond the imp
Having breathing room on bills is never a dumb idea. Now giving your terrible boyfriend all the money you have from your savings to bail him out of a financial mess once is a bad idea. Taking a loan out from the bank at 21% interest to bail him out of another finanical jam 3 months later and never getting paid back either time is dumb. $4000 later....no wonder I am in debt...
This EX boyfriend was from years ago and now I am forunate to be dating someone wonderful.
Whiz,
You aren't dumb. You were trying to do what you thought was best. It's a good sign that your husband and you are talking about this sort of stuff and no harm was done. I agree though that snowflakes should go to interest charging accounts not paying ahead on bills. I know that the energy bills were nice to give yourself some padding since we all knew they were going to spike and there is minimal harm in the fact that you did it this winter. I wouldn't do it as a practice though. And I definitely wouldn't pay ahead on more predictable expenses like the cell phone.
As far as the 'slipping' accounts (I've also heard them called sinking accounts or freedom funds), you don't necessarily have to set up physically different accounts for that. I think you said you got Quicken. You could simply set up accounts in Quicken to 'send' money into on paper and leave it all in one savings account. I wouldn't leave it in your checking account because that will make it difficult to balance it but if it was all in one savings account at the bank but you divide it up in your system, that would work. Then the thing to do is to look at intermittent, recurring expenses (license plates, insurance, bigger utility bills than expected, etc), total them, divide by months or paychecks and 'deposit' that amount in this account.
Do you have a payoff plan for the credit cards/medical bills? If you haven't figured out a budget amount for what is a reasonable payoff plan, you might want to do that too. Then you'll have a goal snowflake amount and even if you don't hit it every month, you'll have a target.
Peg
Whiz,
None of my utilities or my cell phone accounts appear on my credit report. I'm sure if I had a deliquency, it would eventually turn up on there (probably when it got sent to collections) but they do not report positive info to the credit bureau. Therefore, you cannot be getting any effect on your credit report/score. Have you pulled your report so you are familiar with what is and isn't reported? Actually overpaying your bills doesn't directly impact your score. What impacts your score is the fact that you are decreasing that all important outstanding debt vs. available credit ratio and that you are making another on time payment. Again, the fact that you paid more than the minimum is not reported so it in and of itself is not what is helping your credit.
Hope that makes sense.
Peg
Great! Give it a try and let us know. I know it is nice to have the utilities paid ahead, but I don't think it is helping your credit score in anyway. Keep paying off those darn interest charging bills and you will be money ahead in the long run. Great job, and you are not dumb! :) Have a great weekend!
~leanne
~leanne
deciding to be happy doesn't mean that everything is perfect, but that you had decided to look beyond the imp
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