February 16, 2007, Newsletter Issue #52: Bill Paying Routine

Tip of the Week

The best way to pay off your bills depends on your goals. First and foremost, you should pay your bills often enough to avoid incurring any late fees, particularly credit card late fees. For most people, paying bills twice a month is often enough if you are writing out the checks and mailing the bills. If you don't think you can stick to a twice-a-month schedule, you may want to set up your bills to be paid automatically using your bank's bill pay service or your creditor's autopay service.

While most bills are due only once a month, if you are trying to pay off bills to get out of debt or build equity, it may be worth your while to pay more often than once a month. Let's say you have a thirty-year mortgage that you would normally pay once a month. If you split the total monthly payment in half and pay that amount every two weeks, by the end of the year, you will have paid an extra month's payment. By doing this, you can shave as much as seven years off the life of your loan and build equity much more quickly.

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