Everyone knows that writing a budget is the best thing to do. But in all my efforts it is hard to make a monthly budget when you are unable to foresee emergencies and so bills are not fixed -- like this winter with my gas bill!
This is a common problem, people don't plan for the unexpected. When writing our monthly budget, we should be expecting the unexpected. A savings account should be set up for such "emergencies," this savings should not be touched at all. It is only for such emergencies as the car breaking down, the water heater needs replaced, etc etc.
Start with building this savings to $1000. Then Dave Ramsey advises saving enough in this fund equal to 3-6 months of your salary.
As for utilities, what I called both the gas and electric companies and asked to be set up on level payments. This means that in the summer when gas bills are almost Nil, I am paying more, but in the winter time when gas prices are high, I am paying less.
There is still some fluctuation, but not nearly as much. For example, my last gas bill, which I received last week, was $70. If I was not on level payments, it would have been $150 considering the mild December. When I get my next bill, it will probably be $5 more, but that is better then the $200 bill I would have received with the harsh January winter we have been having.
If you are behind in your utility payments, the best thing to do is call the utility companies that you are in arrears to and ask for payment arrangements. They will take the past due amount and divide it by 12. You will then be required to make full payment (or more) of each months bill plus the 1/12Th payment until your account is brought back current.
I hope this explanation helps. However the key to all of this is to write a monthly budget and the beginning of every single month. We don't write one budget and think that covers every month. The best place I know for free monthly budget forms is here.
I'm on level payments for gas and electric, too. It makes budgeting so much easier.
ReplyDeleteOne thing I like is if they notice I'm trending lower in my usage, they lower my bill. For example, the electric company just dropped by bill by $5 per month.
Also, I won't end up overpaying, because every twelve months, we settle up. If I've overpaid for actual usage, I get a credit. If I've underpaid, I get a bill. Since they make adjustments to the level payments based on my usage trends the credit/bill is a pittance.
We're on the managed payment plan as well (which is what they call it here) and it does make it so much nicer.
ReplyDeleteI'd argue though that a car or water heater breakdown is not an emergency. Those things have a life expectancy, and so it's not really unexpected that they WILL breakdown. It's more a matter of when...
I think ur comments would be so nice, but very trite! Not everyone can afford to set up saving acct.
ReplyDeleteThe level payment plan is such a great tool that all too many people don't take advantage of.
ReplyDeleteThat is great advice. I need to get another emergency fund as my medical bills have been arriving.
ReplyDeletebleck.
I think the "Budget Billing Plan" ( What my utilities call it) can be a good idea for a lot of people.
ReplyDeleteIn my case, my utilities are pretty much naturally the same every month. I have both a gas and electric bill. The gas is high in the winter and almost non-existent in the summer. The opposite is true for electric. So usually they pretty much total the same. For example maybe in December my gas is $100 and my electric is $50. In july electric is $120 and gas is $30. It doesnt really matter to me that I pay a didferent amount to each utility as long as the total expens is the same.