Why you want to keep a list of how you pay bills

Keeping a list of payment sources, what you use to pay bills, will eliminate any payment issues when you inevitably have to update your info.

I find that a good deal of people’s money anxiety can be traced to feeling overwhelmed. And directly related to feeling overwhelmed (either cause or effect, or maybe both) is not knowing where you stand.

And it makes sense; anxiety and panic shut down the more rational, logical parts of our brain.

That’s why a lot of the work I do involves quieting the panicked part of people’s brains to see what is right in front of them. And once there, we build simple systems and promote small tasks that will help people gain clarity.

And knowledge is the enemy of panic. When you look under the bed and see no monsters there, you no longer need to worry about there being monsters under the bed.

So here’s one small task that I recommend that we all do. It’s one of those seemingly-not-crucial tasks that add up over time to help you get control of your financial situation.

It involves making a list of payment sources. Because you know you have them, but you don’t know what they are.

How you pay bills

We all have Bills. (I sometimes like to capitalize the word because Income, Bills, and Expenses are the model in which I frame our personal financial picture.)

And in almost all cases, you can automate payment. Long gone are the days where you had to mail out checks each month (even to your landlord, since you can now use your bank’s “bill pay” feature).

But here’s the thing: how you pay all of these might differ. For example, whether you used a debit card or your bank account.

(I’m going to assume that you’re not using a credit card to pay any bills. If you are, I recommend you switching to a debit card. It’s simpler, and you can never miss a payment that way. Remember: using a credit card means that you haven’t paid for it yet!)

• If you’re using a debit card, then the payment processor has your card details, such as your expiration date and that weird 3 or 4 digit code that we all started using a few years back.
• If you’re using your bank account, then the payment processor has your account number and your routing number. (This is sometimes known or written as “ACH”.)

I recommend you keep a list of which Bills are posted by which payment methods.

Why a list?

Now, hopefully it’s clear that no matter which of these payment methods you use, the money is still coming from the same place.

So why bother keeping track? For updating.

You probably don’t change bank accounts that often. I moved to a credit union about a decade ago, and have had the name account number since.

However, debit cards expire all the time. Typically every few years, but now that identity theft and fraud are so rampant, you probably get a new card one a year or so now.

And every time you get a new card, some number will be different. Maybe the expiration date, the card number itself , or maybe you moved and changed the billing zip code.

All of this information will need to be updated, for every single merchant that uses this card.

Are you starting to see why this is important?

If you don’t update your info, then the next time the merchant goes to charge you, they won’t be able to.

That could mean a suspension of service, an angry letter, or just some extra administrative work for you.

But the point is, it’s a pain. And an avoidable one.

If you have a list of all of your payment sources, then you know exactly which one you will need to update when you get a new card, or a new bank account.

How to make the list

The list is not hard to generate, but it takes some upfront work.

For monthly Bills, you already know all of them, through your tracking, right? (Right??) If not, you can log in to your bank and look at your statement. Your statement won’t divulge which payment method used (card or account), so you’ll need to do some sleuthing, maybe logging into each merchant’s site to see what payment method you’ve used.

It’s important not to forget about the yearly bills here too. They come much less frequently, making it all the more likely that you’ll forget about them. So you might need to scroll back pretty far in your bank transactions to find everything.

The nice thing is that this list is trivially easy to maintain once it’s set up. And every time you add a new merchant, you’ll remember to add it to the list.

Now here’s where it pays off: When you get a new card, say, you look at this list of maybe 10-20 different merchants, and see which ones are paid with a debit card.

Then you go, one by one, to each of these merchants, and update your info. Give it an hour, and you’re done.

Or, if you have a new bank account number, you look at this list and see which ones are paid with a bank account, and update your info. Quick and painless.

Start now, save time and anxiety later

A little time spent setting this up now can save you hours down the road, lessen your anxiety as to what to do when your payment info changes, and keeps you from missing payments.

Small effort, big impact, less anxiety. That’s the stuff I love to do with people’s finances.

Have you set up a list of how your pay your bills? Did you run into any issues setting this up? Or do you hate the whole idea? Let me know in the comments below.