Great post!

I take 1/6 of my car insurance premium and put that into an ING Direct sub account each month, and I take 1/12 of my renters insurance premium and do the same, for example.

That way, I keep making monthly payments–just to myself. I earn a few bucks in interest and the money is ready for me to use without it being a shocker to my regular budget.

I even save a little bit by avoiding installment fees!

I would suggest, however, that bils that come up quarterly, semi-annually, or annually, I need more notice on than just a month. For example, it saves money if I pay my insurance premiums annually, so I try to do so, but it is such a large sum I could not pull together all the money at once even if I wanted to. Therefore, I set up a system similar to the escrow created by your mortgage company when you pay, in addition to your mortgage payment, an amount each month to pay for property taxes and home owners insurance. I looked at my regular expenses that do not occur weekly or monthly, added all the totals together and then averaged what I would be paying if I paid them monthly. Then, I set up an automatic transfer out of my checking into my savings of that average amount each month. Therefore, I am not spending this money prior to the bill arriving. When the bill arrives I have the money available in my savings account paid in 12 equal installments to cut down the pain of paying all at once and transfer the money from savings to checking to pay the bill. It works for me, and it is automatic. I just have to get a new average each year for bills that increase or decrease in cost. Then, I am not caught by suprise when the bill arrives, I just pay it with no pain or need to readjust my budget for the month.