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August 5, 2005
Stamp Out Your Spending
Reader Michael suggests another great money-saving tip: save the cost of postage when paying bills. If you use the "auto-payment" feature offered by many bill payees, or a free bill payment feature offered by some banks, they will deduct the money out of your checking account instead of requiring you to mail a check.
Not only does this protect you from forgetting to pay your bill on time, but it nets you a cool 37 cents, if you're in the US. No, it's not much, but it sure adds up. If you've ever had to send wedding invitations or thank-you cards, you know.
But How Much Can You Really Save?
What do you wind up with if you take that 37 cents and save it? Well, it depends on how many bills you pay, how long you're saving, and what interest rate you can get. You can use Hello, Dollar's Savings Growth Calculator to see what your own results would be.
For me, I pay 9 bills a month regularly, so that adds up to $3.33 a month. Over 40 years at 5 percent interest, that's $5,081. Not a ton for 40 years, but hey, it's free money! If you invest in the stock market and can manage an average of 11% interest, we're talking $28,638!
There's also some protection from inflation built in to this plan, because the price of stamps will go up with inflation. This will only help, of course, if you increase your saving amount to match.
The Larger Plan
This is the same principle as the brown-bag tip -- save a little bit regularly and watch it grow dramatically.
Of course, you're not going to retire on $28,000. This is just one more place to find money to save. If you really want to build wealth, take all these little tips and apply them together.
This is about developing the habit of frugality. Once you start living below your means, it's easy to maintain that lifestyle. You save some money, and it just builds on itself. And in the meantime, you're saving more money. It's a cycle of goodness that ends in you being rich!
Posted by Frank at August 5, 2005 12:43 PM
Comments
Posted by: Amit Patel
at August 5, 2005 8:48 PM
I do automatic bill payments, but I also use Microsoft Money to account for every single cent on my credit cards, bank accounts, mortgage accounts, and invesment portfolios.
Posted by: Jose
at August 6, 2005 6:32 AM
Good point. You always want to make sure you scrutinize your bills for errors and areas where you could save money.
Bill payment services usually allow you to choose an option to manually assign payment for each bill. You'll lose the insurance against forgetfulness, but perhaps that is a better route because it will remind you to look over each bill.
Posted by: Frank
at August 6, 2005 8:34 AM
Hey,
I use online bill pay, but not automatic online bill pay. I get my bills in the mail, or I go to the various sites and download a copy of my bill...THEN i go to my online bill pay service and put the numbers in myself. Helps me track when and where my money is spent.
Love the blog!
ncnblog.blogspot.com
Posted by: ncnblog
at August 6, 2005 10:53 AM
By paying your bills online you not only save on the postage (37ยข)... but you also don't have to buy the checks!
I like online paying... its easy and fast.
Posted by: topher
at August 10, 2005 12:28 AM
You should never have to pay for checks anyways. Your bank will negotiate with you. Just threaten to leave, you should have free online billpay, free checks, no fees for transactions, etc.
Posted by: brian
at August 11, 2005 12:27 PM
Many instituitons phone, electric etc. charge a service fee for electronic payments, usually a dollar.
Posted by: bill
at August 16, 2005 9:54 AM
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The downside of the automatic bill payment is that you don't have to look at your bills every month. That reminder helps me spend less, keep my electric use down, etc. You have to keep the discipline of looking at your bills every month.