The Rent-To-Own Method to Paying Bills

The Way Bills Were Meant to Be Paid – Part 4

How can we come from behind or get this bill ahead?

We knew we wanted to stop being delinquent with our bills.  We were behind in many of them or as we like to say, the payment is crossing in the mail.  Nonetheless and in either case, it’s not a good feeling month after month. So we decided to do something about it.  In normal fashion we applied a “your life is your business” method. We found the solution at Rent-A-Center.

My brother managed a Rent-A-Center location and hearing how their business model worked fascinated me.  Listen to this. Say you’d like to purchase a washer and dryer combination and you don’t have the $1800 you need to get the front-load washer you’d like.  Rent-A-Center offers a service where you can rent to own for only $29 a week.  So you can get the set you desire for just $29 a week. Sounds good right?  The key here is to keep the payments small and doable.

Here’s the part most don’t think about and why this isn’t a good idea.  You’ll sign a contract for 130 weeks. You pay 29.99 for 130 weeks which brings your total to $3898.70.  You end up paying more than double the amount. While this works against you, this process isn’t evil or bad, but ideal if you learn to use it in your favor.  Keep reading.

The Coming-from-behind Methods That Don’t Work
We tried coming from behind in two ways that just don’t work.

1. Income tax return.  Did you know, no matter how much you get back on your income tax return, it’s never enough?  It’s never enough for all you have planned because normal people overestimate what they can do with what’s in their hands.
2. Company bonus or raise.  No matter how many raises or what that company bonus is, we find a way to spend it on something totally different than getting control of our bills.  We end up spending more than what we have in hand. In most cases we simply put a bandage on the problem if anything.

How We Got Ahead on Our Bills
Now for what you’ve been waiting on.  How we did it.

• Write down your current rate.  Let’s say your electric bill is roughly $300 a month.  
• Calculate a year’s worth of payments.  Multiple the $300 by 12 to get the total for the year.  You pay around $3600 in a year.
• Decide how many months you’re behind or desire to get ahead.  We will say that’s just 1 month.  Now add 1 month to the annual total (3600+300=3900).  Your new total for the year now comes to $3900.
• Divide by 12 months.  Divide this new yearly total ($3900) by 12 month and see your new payment of $325.
• Pay just a few dollars more.  In this example, pay $325 each month forward.  Instead of paying an extra $300 all at once, we’re going to do like Rent-A-Center and pay just a small portion more.  You have to admit that an extra $25 is more manageable than $300 all at once.  

Following this process and applying it over a year will have you ahead or no longer behind in 12 months time.  The key is to find a way to begin today. If you don’t, a year from now, 2 years from now, 5, 10 and so on, you’ll still find yourself in the same shape you’ve been in, chasing bills that don’t have to be chased.

Today is Friday!
You just learned a valuable principle that can be used to get you out of the arrears and/or put you ahead.  In our next installment, we look at applying this across your total financial obligations and see how it can improve the way you do bill pay altogether and forever.
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