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!
Pay Those Bills Late
November 3rd, 2009 at 02:39 pm
November 3rd, 2009 at 02:46 pm 1257259587
November 3rd, 2009 at 02:49 pm 1257259748
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.
November 3rd, 2009 at 02:53 pm 1257260014
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.
November 3rd, 2009 at 10:11 pm 1257286284
Now, some bills... like the property tax bill - I just pay early to get it out of my hair. Lol
November 4th, 2009 at 03:30 pm 1257348635
YEah, the mortgage is much more lenient!