Jan 28, 2010

The Second of 3 Little Budget Secrets (Carole)

The Second Secret to making and keeping a realistic budget is getting each monthly bill to be the same dollar amount – every month.  

For instance, living in the desert southwest, our electric bill swings wildly from the winter months to the summer months.  In the winter (October until March) our bill is nice and low, typically well below $40 per month.  However, once we start hitting our hot months (April until late September) and the AC is running around the clock, it is easy for an average electric bill to be well over $500 per month.  Those are budget-buster months! 

I used to really revel in the winter savings, but I finally decided that the astronomical bills during the summer were just too stressful – yet another reason to dread the summer heat in southern Nevada!  So, we finally contacted the electric company and got ourselves on their Budget Plan.  They take your prior year’s bills and average them out.  So, now for the next 12 months, you pay only the average cost each month – closer to $250/month.  It may seem high, but at least you can plan for it.  And that makes all the difference!

You do not have to wait until the beginning of the calendar year to begin the Budget Plan.  As long as you’ve been a customer for at least 12 months, utility companies will allow you to join at any time.  And if you end up having paid a little over or a little under your actual consumption amount at the conclusion of the billing year, the utility company will either bill you the (usually small) difference or credit your account.  You might be surprised to find that your yearly consumption is extremely similar from year to year.

This plan works well with the electric, water and gas companies – any utility where your usage swing wildly as the seasons change.

Remember, the goal is to get your budget to be realistic and consistent.  And with this method, you’ll never again break into a cold sweat when the electric bill arrives in the mail – even when it’s 115 degrees outside. 


Bart said...

This is definitely something we'll want to do when we have a house again. It might even be worth it in the apartment, though only time will tell.

Great post!

Sara said...

You ladies are really getting me excited about money saving! I appreciate the different points of view and levels of experience. Thanks for the great ideas!

Tasha said...

I had never even heard of this. I am excited to talk it over with my husband. Thanks for all the tips!

megan said...

I tried to do this averaging on my own once (you know, a few years ago when I tried a budget last time), but it was hard to keep. I think having the companies themselves do it is a great idea.

Nathan Pralle said...

Going on our utility's budget billing was the best move I've ever done. Here in Iowa, winter is the killer with gas bills going upwards of $300-$500 in a month if you hit a cold snap. Going from $35 in the summer to that was deceiving and hard to manage. Now we pay around $200/month year-round and it's marvelous.