When I was a working woman with few budget woes, I always paid my bills as they came because I had the money available (oh how I miss those days!!). Things changed after I quit my job almost 2 years ago to stay at home full time with my daughter. I obviously had to find a way to cut back on any little thing that I could to minimize the pain of reducing our income. One of the first things that I did was contact my electric and natural gas companies to inquire about being put on a budget plan; because our new (and tighter) budget had little room for surprises!
If you are not familiar with utility budget plans, here is how they work. Basically your yearly utility expenses are averaged over 12 months. For example, if you pay $1080/year for electricity, your monthly bill on the budget plan would be about $90/month. While this might pain you in the winter time when your bill would typically be around $20/mo (as an example), it is a welcome relief in the summer time if your bills top $100 or more!
So what else should you know?
* Anyone can sign up for a budget plan. There are no income restrictions, and enrolling is free.
* Budget plans help take the pain out of seasonal fluctuations and allow you to have more money in your pocket around the holidays...when heating costs are often higher.
* You will have to reconcile your account at the end of the budget year based on your actual usage. For some, that means a higher bill at the end of the year. For others, that means a smaller one. It has been my experience that my last bill of the year is usually slightly lower or right on target. The utility companies seem to do a good job of adjusting your amount slightly as the year goes on in order to compensate for your actual usage.
* You should be able to sign up any time.
* Check out your utility company website for details about how things work in your area. I am writing this post based on my personal experience, and plans could vary based on where you live and which company provides your service(s).
I have learned over the last few years that being in control of our family finances (or at least knowing where the money is going!) is a huge relief to me. It is hard to have goals and work toward them if you don't know where you currently are and how you plan to get there. Utility budget plans are one of the many things that have worked for me when creating a budget for our family.
What are your thoughts? Do you use a budget plan for your eligible utilities? Are you afraid to sign up? Please share your thoughts in the comments section!
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11 comments:
I love this post. We have also been doing the "equalizer" plan as it is called by our utility company since we went from 2 to 1 incomes 4 years ago. This is awesome for people who like to budget and don't want any unexpected surprises. We actually had ours re-evaluated a couple of months ago and it dropped by $35.00 a month. This was a direct result of some energy efficiency changes we made to our home i.e. CFL, Cellulose insulation, air sealing, etc. My FIL owns an energy efficiency company and is an expert on this. It has been in the news around here lately that our utilities should be dropping by 13-20% due to decrease in cost of natural gas. I am pumped about that!!!!
I don't do the budget billing. Our electric bills range from $55 to $89 at their lowest and highest, but I'd rather not pay $70 per month or so.
Instead, I budget for $89 or so per month (it's only been that high once) and I try to keep our electric usage to a minimum.
Most months, I have a little extra wiggle room in my pocket, and I don't have to wait for a refund check at the end of the year.
I just signed up with our electric company to do this. I think it is the only way for our family to go!! I love your site and visit daily for great new ideas.
We live in the desert, so, after we had lived in this house for one year (the minimum you have to before signing up), we signed up.
Rather than facing $400 electric bills in the summer, we pay $200 a month all year around.
It is so worth it when you do not live in a year-round temperate climate. I also see it as a challenge to get my usage down each year so when the settlement time comes, they owe me money!
I love "level pay", the only downside is that you have to have lived in your house for at least a year.
After living a few years where utilities were covered in our rent, we bought our own home. The first few years the highs were awful and I couldn't wait for the lows. I recently signed up for the budget for both are electricity and gas. It was just too hard durning the winter heating season. I think I will be happier having a steady budget.
WOW, this is a smart idea.
I have a question though, we are getting ready to move into a house, would you need to be using the same company for a while to do this since you wouldn't have any previous bills? If you know something about this I would love to get the info!
Coco - from what some of the other commenters are saying, you have to be in your house for 1 year to sign up for the budget plan. I would go ahead and call your local companies to check regardless. It wouldn't hurt to ask.
Thanks so much to all of you for commenting and sharing your thoughts! :-)
I do the budget plan too- the only discouraging thing is every July you make "catch up" payments if energy costs go up- as they have every year!
Here's another idea- buying things on layaway
http://theworkingmomblog.blogspot.com/2008/10/making-purchases-on-layaway.html
Marcy,
I love your site. I was not aware of this program. My husband and I are going to sit down to see if it will work for us. We were a dual income family but, now I have decided to stay home with the new little one. So, budgeting and savings has become my new middle name. This may just be the thing for us. Thanks so much for all your posts I really enjoy checking your site out daily. Hannah
Like Kacie, I've been budgeting a set amount each month for a moderately high amount. During the months when the bill is lower, I transfer the excess money to my ING Direct "electric" fund. During the highest-costing summer months, I can draw whatever is needed from that fund. Fortunately I never needed it this year, so that means I have extra savings (earning interest) I wouldn't have had otherwise! But even though I have that extra savings, I'm going to stick with this plan for the sake of self-discipline, and I'll reap the rewards over time. That will come in handy if the country's economic woes affect me personally.
One more note: I've also dipped into my ING Direct "electric" fund for winter preparation, because it's an investment in lower heating bills.
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