Personal finance 101: How to pay your utility bills
J.D. is on vacation. This is a guest post from Wanda, who wrote to tell me that a shocking number of people have trouble paying their utility bills correctly.
How do you pay your bills? My father taught me to pay them on time and in full. That's great advice, but there is so much more to correctly paying your bills. As a small town municipal employee, I have assisted people with their water bills for many years. Most of the problems that people have could have been prevented or solved simply by following the following steps.
Read Your Bills
When you receive your bill, read it from top to bottom. The bills that I send out have a lot of information on them. They have last month's amount due and the amount the town received for that bill. Those two numbers should match each other and the amount you paid.
Check to make sure you were credited correctly. Call immediately if your records indicate that you were given too much or too less credit. Many people will call for being under-credited, but don't when we credit them too much. Eventually, the mistake will be caught and you account will be adjusted. So the next month's bill may be higher and blow your budget.
Next, the bill gives the previous and current meter readings and the charges for that month. Make sure this months charges are for your normal usage. If they are higher or lower than normal, call immediately to ask for a reread. If you wait until the due date of the bill, an accurate reread can not be done.
Again, people are quick to call and complain when their usage has doubled, but no one calls when they have only been billed 100 gallons. Remember that next month the usage will catch up and the bill will be extremely high.
The bills I use have a total amount charged and a total amount due. These two numbers should be the same. The total amount charged is the amount you are charged for this month's services. The total amount due is the amount charged plus any previous balance or credit. Many people get confused when they are not the same. Usually the difference is from over or under payment of the account in a previous month. Remember that you pay the amount due and not the amount charged.
One customer paid the same amount every month for a year. They were looking at the previous payment amount. As the bill fluctuated they started adding up a high unpaid balance. This accrued late fees and they were eventually placed on the disconnect list. Even though they paid every month, the balance they owed had slowly crept up to over $40. Of course, they were furious and blamed us. By the time they left our office, they were extremely embarrassed but still blamed the hard to understand bill.
Pay Your Bill on Time
Now, back to what Dad taught us: Pay your bill on time! Yesterday a customer came in complaining about how high his water bill was and that he used below the minimum amount of water billed. Sure enough, he used less than the 2,000 gallons that generate a minimum bill. He has two meters and has not paid a bill on time in over two years. That is $480 in late fees a year! No wonder his bill was so high. The late fee was over fifty percent of his bill.
There are many ways to get funds to companies that bill us each month. If you pay with cash, remember to hand to money to someone and to get a receipt. Making a copy of your cash before placing it in an envelope and putting it in the night drop or the mail is not a smart option. Other options include:
- Checks are great and provide an opportunity for you to put your account number on the memo line. Just remember that if you mail the payment in, you are assuming the risk that the check can get lost in the mail.
- Bill-pay services are great if you read the fine print. Many companies need up to a week to process your check and then mail it to the company. If your due date is less than a week away, this is not a good option.
- Debit cards are also a good way to pay. A receipt is automatically printed. However, many places (like my town) charge an additional fee. A few dollars a month for a year can add up! One customer computed the additional fees that she was paying on all her bills and was able to save over a hundred dollars a year just on the $2 to $5 dollar additional charges.
If you are sending your payment by check or bill pay, make sure that the correct account number is on there. One customer had their water disconnected for non-payment, but was able to produce cancelled checks showing proof of payment. The customer had a common last name and had put the wrong account number on their check. Each month their payment was applied to someone else's account.
Always include the portion of the bill that should be returned. This will also help ensure that your payment is applied correctly. And never staple your check to the bill stub. Checks are made from a thin paper that rips when you try to remove the staple.
Call your utility provider as soon as you realize that you are going to have a problem paying in full by the due date. Our town has a policy to help people if they call or come in before the due date. After the due date, the balance must be paid in full or the utility is subject to disconnect.
If you do need help, always offer what you can pay. This shows that you are trying to pay the bill. Then, do your best to make next month's bill lower. If you are asking for an extension every month, but your usage is not going down the town will stop granting you extensions.
If your usage is up, look for a leak. Most people assume that water leaks are drips that make noise or puddle in your yard. Here in Texas during July, a water leak in your yard may not make a muddy spot until the fall. Toilets are notorious for leaking and most of the time they are the quiet culprits. A leak 1/16” of an inch in diameter can waste 74,000 gallons in three months. So don't think that the small drip from the kitchen sink couldn't be the reason you usage went up by a thousand gallons.
Lastly, be polite if you have any trouble with your bill. The people that you are depending on for help don't like to be yelled at or cursed at anymore than you do. I will personally drive to your house and reread your meter, spend days going over history, and anything else that needs to be done — if you are nice to me. When you come in or call and you start yelling accusations at me, I'm not going out of my way to help you.
Most of these things are obvious. We either just forget them or just never thought about it. So remember, pay your bills on time for the correct amount — and include your account number.