How are you doing with those New Year's resolutions? Did you resolve to save money, reduce stress and make more time for what really matters?
Here's something that accomplishes all of those goals: Efficient bill-paying.
Spending smart is not only about what you buy, but how you pay. And when it comes to paying bills, the old ways just don't work well anymore. Being unorganized isn't an option today, with sizable fees for paying late and bouncing checks and the possibility you can do expensive damage to your credit score.
"The punishment for not being organized keeps rising because it keeps getting more expensive," said Liz Pulliam Weston, author of the new book Easy Money: How to Simplify Your Finances and Get What You Want Out of Life.
Like many processes nowadays, efficient bill-paying means moving from pen and paper to keyboard and computer screen.
"Technology really does make it easier to run your financial life," Weston said. "For a while, it was just for us geeks who liked [personal finance software] Quicken, but now there's something for everybody to make it easier."
The big idea is to eliminate as many paper checks as possible. Here's how:
Use direct deposit.
If you automate nothing else, at least have your paychecks and other regular income deposited automatically into a bank account. It cuts down on the time and hassle of going to a bank or automated teller machine. More important, it gets money into your account quickly, which could avert overdrafts and the accompanying fees.
"Banks and credit card companies have really loaded on the fees in the last 10 to 15 years," Weston said.
Pay regular bills automatically.
For trusted payees, such as your mortgage company, use an automatic monthly withdrawal, or debit, from your checking account. Not only will you ensure a vital bill is paid on time, you also avoid the hassle and expense of checks, envelopes and postage.
If you can use credit cards wisely, which means paying off the balance every month with no exceptions, you can have some recurring bills charged to a rewards card, which pays you back in the form of cash, airline miles, merchandise or other perks.
Automatic charges to a credit card offer more robust consumer protections than direct-bank debits if a dispute arises.
Pay irregular bills online.
Most banks offer free bill-paying, or you could use a third-party service. This is good for infrequent bills. It's also good for people who like to have more control over which bill is paid and when. It's fine to pay recurring bills this way, too.
A clumsier way to pay bills is to go to various vendors' Web sites each month to pay by bank debit or credit card.
Debit, credit card charges and online bill-paying are all superior to the mailing-a-check method, Weston said.
"You have no control over how quickly a check gets to its destination," Weston said. "Electronic payments are much more predictable, and you have this electronic trail. You can tell when the money left your account. You can tell when it hits the vendor's account."
Pay carefully with paper.
If you won't go digital with bill-paying, at least create a routine that won't allow bills to go unpaid.
"A lot of people find that paying bills as soon as they come is a very good way to make sure that everything gets taken care of," Weston said. "Whatever benefit you get by earning interest from having money in your account a little longer could be wiped out by a late fee. And if you skip a payment and it ends up on your credit report you could end up paying thousands of dollars more for your next loan."
And be cautious with personal checks, which include enough information about you for a thief to steal your identity and wipe out your bank account. That means not leaving checks in a mailbox and making out checks with a special pen, such as the $2 Uni-ball 207, whose ink can't be chemically "washed" off checks.
A problem with automating your financial life is the curse of recurring payments that involve regular charges for products and services you don't want or need anymore.
They might include gym membership, video-rental club, wine-of-the-month club, satellite radio subscription and premium TV channels. Because those payments are automated, it's easy to do nothing and be charged month after month for services you don't use.
A second, minor drawback is any risk you might incur by being online. "Once you are online, you do have to keep your dukes up," Weston said.
Gregory Karp is a personal finance writer for The Morning Call, a Tribune Co. newspaper in Allentown, Pa.