I mentioned looking over my annual budget last week and being over in a few categories and under in others. I said that I annually budget and track it monthly, and as long as by the end of the year I’m within 5% I consider it a success.
The monthly budget is a lot harder for me to stick to because I like to stockpile deals and honestly you never can predict visits from family or emergencies cropping up. So having flexibility to spend as needed is key.
But something I found easier as well was to sign up for my utilities company balanced billing service. Where they estimate my usage throughout the year and then charge me the same amount every month.
I’d never done this before, never having experienced such dramatic weather changes. I’d really only lived in areas where the weather was the same 365 days a year, so the utility bills only changed if the prices went up.
But then my first winter came. Seeing a $400-$500 heating bill was hard to take. Much harder to budget and estimate than paying $200/month year round. Yes the $400 month happened in December, than $500 in January, then $550 in February, then by March I was down to $100, and in the summer my heating bills were $13 for June, July, August, and September. So I had minimal bills.
But while I could swing some variance in groceries monthly, knowing if I went over by $50 it wasn’t such a huge deal. But coming up with $500 in the winter seemed a lot harder and I know I could do it myself and put the $200 into my savings account but I found myself not doing it.
So I signed up for the budget billing with my gas company and instead I know for the next year I pay $200/month and it’ll cover my heating. It’s not perfect and sometimes I have a credit and other times I have to pay a little, but in general I’ve found the company is pretty good at estimating the costs based on my prior usage and current rates.
I know it sort of sucks to pay $200 in the summer, and I could be “earning” interest off the money saved. But honestly it’s sort of nice to have my bills on auto-bill pay and know I pay $200/month for heat every month on the first and I don’t need to worry otherwise.
What’s the best way to manage your utilities in climates that vary so much? Is it easier to pay your bill as it comes in or do you use budget billing from your company?
15 responses so far ↓
1 savvy // Nov 23, 2009 at 11:05 am
I pay the bills as they come. I keep a budget spreadsheet so I know how much to expect and put aside for heating in the winter and cooling in the summer.
2 Jen // Nov 23, 2009 at 11:06 am
I live in the Northeast and pay the heat in my apartment in an old building. I decided to go with the budget payment. Coming up with $500 or $600 in the winter was a problem I could do with out.
3 Tiz // Nov 23, 2009 at 11:55 am
I live in Colorado and it seems to even itself out for me. I the winter I pay more for heating but in the summer I pay more for water and electricity (running an AC). So it seems to even itself out pretty well.
4 sara l // Nov 23, 2009 at 12:43 pm
I figured out our annual average last spring. That amount (le’ts say $150) is in our monthly budget. I pay what we owe that month (let’s say $70) and deposit the rest ($80) in a utilities subaccount at ING. Once our bills top $150 I’ll pull the extra money from that account.
Our budget spreadsheet does the math and it’s a part of my monthly transfers, so it doesn’t feel like a lot.
5 Rachel // Nov 23, 2009 at 2:30 pm
I budget as though every month were my most expensive month, in every category. This was difficult to do at first, but knowing the money is there to cover all my bills is worth it, even if it means I cut my spending quite a bit in other areas. When I don’t end up needing all the budgeted money for that month, I move the excess into a savings account earmarked for those occasional high bills, and that ensures that I can transfer the money back to my checking account if/when I’ll need it, but I haven’t had to touch it since as I said, I budget for the most expensive bill I’ve ever gotten for every category. It works for me!
6 JoeP // Nov 23, 2009 at 2:30 pm
Without budget on utilities, we simply keep the heat low and bundle up a little more. The highest bill we ever saw for gas and electric (combined) was $400. We usually keep the house at 65 when we’re in it, and 60 at night and when we’re away. We hardly ever use the AC.
I can see how the predictability of a bill can be a nice thing, though.
7 Stacey // Nov 23, 2009 at 4:11 pm
We use oil to heat our home, and have enough tanks to get us through the entire winter. I have an “oil” line in our budget and we set aside $100 per month to pay the bill. Then we call for oil in summer/fall when the prices are low and write one check for over $1,000.
It hurts to write that check, but we don’t really have an option. Too many oil companies have gone bankrupt in our area – and everyone who “prepaid” was out of luck. Only use a reputable company! This is obviously less of a problem with electric heat…
8 Meg from FruWiki // Nov 23, 2009 at 5:21 pm
I’m like Rachel; I budget for the upper limit I’d ever expect. Then I put the difference towards debt, savings or unexpected expenses.
We don’t have such high bills, though. Here in Florida, summer is the worst but our entire utility bill has stayed well under $200 a month this year. It had been double that a few times in years past, but we’ve been working hard to cut our bill and we also insulated the den finally (though the rest of the house could use some insulation as well as double-paned windows, but that’s just not in the budget yet).
9 LAL // Nov 23, 2009 at 7:52 pm
How do you manage if it’s really cold or hot savvy?
Jen, that’s exactly why we do it too.
Tiz, for some reason I’m just not as hot in the summer.
Sara1, what happens if it’s a record cold winter? Last year was record snows topping 100 inches and 4-5 dumps of 20 inches, so it was really cold.
Rachel, sounds good, but painful. I don’t think I could stand to set aside $600/month every month, even the summer.
JoeP, we leave the house at 55 home or gone. We bundle up, and sit upstairs. Our house is poorly designed, furnance in the attic because it’s a townhouse. Lack of insulation because it’s 1880s, remedied this year. Also because of age there are tons of leaks from settling. We sealed and replaced windows, but did a floor at a time.
It’s not like we’re living large at 68 or even 65! That sounds tropical! Most of our neighbors pay more than us to keep their homes at 55 to boot! And our furnace is relatively new!
Stacey the other problem with oil is if you lock in too early you could get a bad price! Ugh, oil is painfully expensive!
Meg, I think this year with the insulation blown in we should be saving a lot. I can already feel the difference in the drafts.
10 savvy // Nov 24, 2009 at 8:54 am
@ LAL – The upper limits of my bills are generally $200 (for AC in the hot summer months or heat in the winter). However, I use the numbers for the last year to predict the cost for the upcoming year. So if last December’s gas bill was $175, I budget $175 for this December. I generally leave ’slush’ in the checking account so I’m prepared if a bill is much higher than usual (somewhat unlikely).
We’ve only been in our house three years so over time, we’ve been making small improvements to improve energy efficiency. We use programmable thermostats and installed an attic fan to help with the heat in the summer. We’ll be installing insulation on the garage door soon (our bedroom is above the garage and is colder than the rest of the house). I also use a space heater in our bedroom (because that’s the only room we use upstairs) vs heating the whole floor.
11 LAL // Nov 24, 2009 at 9:41 am
Gotcha. Here average runs $400-$600 for us at 55. I know our neighbors they told us leave it at 68 and pay $600-800/month in the winter. Ugh.
12 Stacey // Nov 24, 2009 at 10:39 am
I’ll admit that we’re a bit obsessive about oil prices – I call once per week and when the price starts inching up, I order.
With all due respect, oil isn’t that much more expensive. You’re paying $600 for one month’s worth of electricity, or about $200 per month. We’re paying $80 for electricity and $100 for oil – not much difference!
We keep the house at 6o-ish.
I’d love to get away from a non-renewable resource like oil, but electricity is mainly produced by coal-fired generators around here. It’s all bad for the earth in my mind…
13 LAL // Nov 24, 2009 at 10:46 am
I heat with natural gas $400-600/month. Then our electric is $200-400/month for heat pumps in the winter which we rarely use.
And we keep our house at 55! Everyone says 60s, 60s is BALMY for us. It’s the age of the house.
14 Jen // Nov 24, 2009 at 11:28 am
My heat is set at 65 in the winter. It still costs a lot.
15 LAL // Dec 1, 2009 at 11:53 am
65 is 10 degrees higher than where we set it. I can’t imagine what our bills would be like.
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