The bills you receive from companies require payment by a certain date. Any payment after the date may accrue a penalty. The penalty may include either a monetary fine or a loss of service. The penalties will result in an even greater monetary loss than reducing your other spending for the month to pay your bills on time. Also, late payments can result in a bad credit rating showing a history of late payments. Late utility payments can result in your service being disconnected. The re-connection fee, along with any monetary penalties, will also cause you to throwaway a lot money. The late penalties/fees do not penalize the company, only you. The companies can survive with a delayed payment because they know you will pay them more money later in the form of penalties and fees.
Do you realize many companies automatically give you a grace period beyond the bill due date? Many bills may be mailed to a corporate office in another city for the checks to be processed and deposited. The delay can be up to a week or more which may be enough time for you to have the money in your account for the check to clear (The technique is referred to as floating your cash). The mail will take about 1 to 4 days to be received, then about another day or so (maybe a week) for the check to be deposited and cleared by the bank. Be aware that in 2005 the banking laws changed allowing banks to clear checks electronically resulting in the funds being removed from your account the next business day (not weekends or holidays when the banks are closed).
Another trick to extend the payment duration is to ensure the date on the payment check is the same due date on the bill. Also ensure the postmark on the envelope is the same date as the due date on the bill. Your account will be credited without a penalty since you met the payment requirements even though the check is late. Keep in mind though, some companies may require receipt on the bill due date instead of a postmark on the bill due date. An example of why this works is because IRS taxes are due on April 15th and a late fee will not be charged as long as the letter is postmarked by April 15th.
Some bills, such as property taxes, provide discounts if payment is received by a certain date. If the discount is less than the interest the same money can earn in a bank account (minus the income taxes), then don't pay the bill on time. Instead allow the money to earn interest in your bank account, instead of the bill payee's bank account.
A disadvantage to paying your bills early is that you loose the opportunity to earn extra interest on that money if kept in an interest bearing account. Otherwise, paying your bill early allows the company to receive the interest when the money is in their account as opposed to yours. Therefore, delay your payments until the due date and receive the interest benefit for yourself.
Another way to ensure bills are paid on time is to sign-up for electronic payment through the company's web site or through a third party web site. The payments will post the date they are due giving you the opportunity to delay payment until the last possible date with a guarantee of being received on that date. Some companies will even allow for electronic payment via a credit card. Be sure, not to use that service if there is an additional fee and instead use an electronic check. Keep in mind, the electronic payment won't allow you to float your money to take advantage of the check clearing delay due to the mail and processing time.
NOTE: Do everything you can to pay your bills on time; you will save money in the long run even if you don't have the money now. If necessary, obtain a cash advance from a credit card for the amount that will allow you to pay your bills. The interest and fees for the cash advance will most likely be less than the penalties and fines for late payments of your bills or utility reactivation fees, not to mention preserving your credit rating. Don't get in the habit of that strategy. Only use it as a last resort.
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