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Pay Those Bills Late

November 3rd, 2009 at 06:39 am

What is one secret to squeezing out more savings? Pay your bills "late!"

Actually, the deal is, someone in the forums was asking about a budget problem and not getting paid for 30 days or something. They were concerned about their mortgage payment. If they were that tight for money, I figured they probably already knew their mortgage had a grace period. I didn't want to state the obvious, but brought it up.

The reply was something like, "I could never pay the mortgage late!" Like I suggested something pretty terrible.

Oy vey!

Anyway, I think it's a good tip and it got me thinking, so I had to share.

(I mean, come one MM blog followers - do I delight in paying my bills late? LOL).

Most mortgages (check with yours) allow a 15-day grace period. Meaning, you can pay your mortgage 15 days "late" with no negative consequences. I have always kept this in the back of my mind - it would be the first action in case of emergency - I would pay the mortgage ve after the 1st instead of before the 1st.

& yes, I have paid my mortgage "late" MANY times. I know for a fact that there is no negative consequences.

After that discussion I was thinking about it. Well, my $2150 property tax bill was due Sunday. But no penalty is assessed until December 10th. I mean come on, the REAL due date is December 10. I don't know anyone financially savvy who pays their tax bill in November, unless they just like to pay their bills super early. By waiting for December 1, I will earn $4 in interest. $4!!!!! If you collect pennies, why wouldn't you pay your bills on their real due dates???

So, anyway. I don't know if there are any other bills I habitually pay "late." Probably not. Everything else should really probably be paid on time, to avoid penalties and issues. & credit cards? The earlier the better.

Thing is, most people don't realize their mortgage company can be rather lenient compared to other types of companies.

I googled a bit to see how standard a 15-day mortgage grace period is, and it looks pretty standard. Late payment is not reported until 30 days.

If it were me, and I had no income for a month, and no savings, I would just pay the mortgage late. Even if over 15 days - take the penalty, and call it a day. Beats racking up credit card debt or a loan. If it doesn't affect your credit score, since you paid in 30 days, why not? I still think it seems like the easiest solution, given the scenario. But hey, what do I know???

Anyway, why have I often paid my mortgage "late?" To avoid touching my savings (generally in times of higher interest) for a simple, temporary cash flow issue. I find it easier than juggling all my savings around. I've had a years worth of savings in the bank, and paid the mortgage "late" so I wouldn't have to jiggle money around.

Obviously I take my mortgage very seriously. I wouldn't recommend paying it late, habitually, beyond using it as a money management tool.

I guess the other thing is being an accountant, I view the "due date" as merely a suggestion. I get the feeling that some people view it as a moral obligation. Believe me, as long as said company gets paid and doesn't have to send you a late notice, it's all good!

5 Responses to “Pay Those Bills Late”

  1. Caoineag Says:

    For most people that would work in a temporary squeeze. I am pretty sure my grace period is 10 days but since we are on auto pay not a big concern. (And even with autopay, most mortgage companies will let you set it up for whatever day within the grace period you want. I am just one of those psycho people who pays bills as soon as I get them so I don't have to remember them.)

  2. monkeymama Says:

    Paying bills when you get them is a fine strategy! Nothing psycho about it! Big Grin
    That's the thing - of the financially savvy people I know - they pay when they get the bill, or they pay at the last possible minute! (Maybe allowing a few days "just in case."). It runs both ways, and neither is a bad strategy.

  3. creditcardfree Says:

    I know our has at least 10 days...maybe 15. Actually, ours is paid automatically on the 5th of each month. I guess I technically haven't paid mine yet!!

    I think this is an excellent strategy for cash flow...as long as it doesn't cause one to get later and later as the months go on. Smile

  4. ambitioussaver Says:

    I do a little of both. Since we have two houses I pay one mortgage "late" on the 15th and the other on the 1st. Makes managing the cash flow easier while we work on getting out of debt.

    Now, some bills... like the property tax bill - I just pay early to get it out of my hair. Lol

  5. monkeymama Says:

    The other thing about the property tax bill, is they have no leniency whatsoever if you pass their second date. That's why I think I will mail mine the 1st instead of waiting until the 10th. But I can still save a month of interest in the interim...

    YEah, the mortgage is much more lenient!

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