I did it again. I let a small utility bill slip through the cracks and got dinged with a $1.50 late fee. I know, it is only a $1.50, but since I'm on a daily mission to spend less and save more every little bit I have to pay in "stupid tax" gets in the way of success. Most of our household bills are on autopilot, but this is one of the few than I have to keep up with manually and send in a "snail mail" check. Over the years I've implemented eleborate tickler systems, email reminders and various other ways to remind myself not to forget to pay these few paper bills. At some point they all fail, usually due to my own procrastination or some technical or procedural glitch. That was, until I implemented a fool-proof plan I refer to as the "One Touch System" for household budgeting.

When a Bill Reaches Your Hands, Pay It

I used to be the world's worst at picking up a bill, reading over the numbers, and then returning it to the stack without resolution. My streak of procrastination extended into other areas of my life as emails sat in my inbox waiting for response, voicemails went unanswered, and a number of small household projects added to my "honey-do" list stacked up incomplete. This latest scheduling screw-up was the last straw. From that point forward I vowed to pay things immediately as I received them. No more stacks of bills and unopened mail. From now on I would force myself to stop what I am doing, sit down and write the check, address the envelope, apply a stamp and move it to my dresser so I would remember to drop in a mailbox on the way to work in the morning. The first few times I stuck to this routine really annoyed me. It seemed I was always in the middle of something, or simply not in the mood to sit down and pay a bill.

No More Paycheck to Paycheck

Of course, this approach also required some changes in our household finances in order to pay a bill as soon as it came in. In the past, bills stacked up and were paid once or twice a month, usually around the time I received a paycheck. The thought of paying something early seemed impossible because I usually needed the next paycheck to cover the next set of bills. To implement our new "One Touch System" we would somehow have to get ahead and accumulate a sum of money in our checking account to provide a "float" from which we could pay monthly bills. To do this, we saved $1,000 in a savings account over the course of a few weeks by moving some from each paycheck, selling a couple small items on eBay, and saving any "found" money we encountered from rolled coins to the occasional gift. Once the $1,000 was in place we moved it to our checking account in a single transaction, and then moved the amount left over back to savings. This left us with exactly $1,000 in our checking account the night before my next paycheck was scheduled to be deposited.

The $1,000 deposit from savings would become the floor amount for our checking account, instead of the usual zero-dollar balance we occasionally approached. The newly implemented floor amount allowed us to occasionally dip below to pay a bill that would be covered by a paycheck a few days away, without fear of an overdraft fee from our bank. Before implementing the "One Touch System" we would let that bill sit until pay day, which depending on billing cycles could be dangerously close to the bill's due date, as was the case with the last bill we were late paying. Critics point out that by giving up this "float" we are losing some opportunity costs that our money could be earning. Perhaps, but by paying these bills as they arrive I no longer have to manager the open loops in my brain to remember when they are due, and I don't have to rely on software to remind me when to pay. For me, this is worth any gains we could realize by investing these relatively small amounts elsewhere.

I'm proud to report that implementing this budgeting system has eliminated late payments and "oh-crud" moments from our monthly budget. Now, if I could just apply the same system to this stack of emails in my inbox.