Budget billing: it works for us

                             

We signed up for budget billing with our electric company a good number of years back and that is our sole experience with budget billing. 

I like it so much better this way because you are sent the same payment each month.  How does it work?  Well for us, the electric company sends us an averaged payment each month based on past bill amounts.  We know that our payment stays the same every month.  It’s the same during the summer months as it is during the winter months.

Now that being said.  That is not always the case.  If we go above our normal energy use for several months in a row, then somewhere down the road the electric company will charge us a higher payment.  That has happened before during the hottest months of the year and of course, our energy use climbed higher.  So then the electric company accounted for the energy use and thus, adjusted the payment to a slightly higher one.

I was able to get my averaged payment down once before.  I attempted to cut my energy bill by NOT using the dryer during the summer months.  I found out that I could save about twenty dollars a month on electricity by hanging my clothes outside to dry versus using the dryer.  So my average payment dropped considerably for so many months until I couldn’t keep up the effort.

Our payment for electricity this month is $98.00.  And it has been this amount for many months now. As you can see in the picture, that we actually used more energy this month.  In dollar terms, we went over the $98.00 budgeted bill amount.  So hopefully, we can get our energy use down so the payment will not increase. 

I am interested in hearing if anyone has been able to decrease their budgeted payment on electricity.  Tell us how you did it!! Or maybe you have experience with budget billing with a company other than an electric company. We would love to hear from you as well.

For more Frugal Friday tips, please visit Biblicalwomanhood.

Charlotte

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Expense Categories

Here’s two examples of categorizing your expenses.  Since using Quicken, I have a Main Category and Sub Categories.  So my Dining Out category has sub-categories (lunch, dinner, coffee). This helped clarify which meal time we spent the most on.  Since my husband loves coffee, we were also able to tell how much a month he was spending specifically on coffee.  The important thing when creating your categories is coming up with the order or grouping that best suits your life.  Instead of using the words “dining out”, you may prefer “eating out”.  We have a budget for purchasing books, so it’s important for us to track how much we spend on books.  You may never buy books but spend a lot on knitting, in which you really need a separate category instead of grouping it with something else.  If your categories match your life, you have a accurate picture of where your money is spent.

  • Auto – insurance, fuel, loan, service
  • Children – sports, college, education supplies, toys
  • Bank/Finance  Charges
  • Cell Phone
  • Childcare
  • Clothing – shoes, accessories, dry cleaning
  • Dining Out
  • Debt – credit card, student loan
  • Donations – church, ministries, other
  • Entertainment – camping, golf, movies, parks
  • Gifts Given – birthdays, Christmas, other
  • Groceries – food, paper products, cleaners, toiletries
  • Haircuts
  • Hobby – photography, scrap booking, knitting, gym membership
  • House – furniture, mortgage, improvements, pest control, garden, power washing
  • Life Insurance
  • Material Things – magazine subscriptions, books, music, décor
  • Medical – dentist, eye dr., yearly checkups, prescription medicine
  • Office – postage, printer supplies, computer supplies, internet svc
  • Pets – shots and food
  • Telephone – including long distance
  • Utilities – electric, gas, trash pickup, water, cable
  • Auto – insurance, fuel, service
  • Clothing/Health – shoes, accessories, dry cleaning for adults/parents, haircuts, toiletries, gym membership
  • Debt – credit card, student loan, car loan, bank and credit card finance charges
  • Donations – church, ministries, other
  • Recreation – dining out, camping, golf, movies, parks
  • Gifts Given – birthdays, Christmas, other
  • Groceries – food, paper products, cleaners
  • House – utilities (elec/gas/phone/cable/internet), furniture, décor, linens, mortgage, improvements, pest control, garden, power washing, lawn mower, repairs
  • Medical/Life – insurance, dentist, eye dr., yearly checkups, prescription medicine
  • Office/Hobby – postage, printer supplies, computer supplies, scrap booking, knitting, books, music
  • Investments/Savings
  • Education/Travel

“If a person gets his attitude toward money straight, it will straighten out almost every other area in his life.” Billy Graham

No Technology Finance Managing

A conversation with a blog visitor helped remind me that not all people track their expenses using a computer or finance program.  I’ve used Quicken for over 12 years to help manage our money.  There have been times where I briefly used the paper route way and I’ve taught how to manage finances without using technology.  It’s not worse than tracking on a computer – just different.  There are pros and cons to both systems. 

1.  To track expenses the paper way, get a notebook or accounting ledger. 

2.  Make a list of your categories/expense accounts and write each one on the top of a separate page.

3.  Every time you spend money (cash, credit, check), enter the date and amount spent under the category it reflects.  For instance, if you buy milk and bread ($8), then list on the category page “Grocery” the date you spent the money and the amount.  

4.  At the end of each month or week if you prefer, draw a line across the page and subtotal the amounts.

A 3-ring binder is also great for this because in addition to the category pages, you can add a clear zipper pouch in the back to collect all your receipts.  You can usually find in a school section of a store.

Check in tomorrow for an example of Categories.  You will see how “obsessed” (excuse me…”detailed”) I can be on dividing up expenses.  Ever buy makeup in the grocery store?  My brain refuses to let me list that expense under Groceries because my receipt says “Kroger”.    See you tomorrow!  Dana

Luxury Expenses

Yesterday we talked about what to do if your budget doesn’t balance…one thing to look at is what I call luxury expenses.  Here are some alternative ideas to cutting or reducing these expenses.  Some of these are not new ideas.  It all comes down to a person’s willingness to recognize their financial troubles or wanting a simpler life,  then having the courage and determination to change it.   

Cell Phone/Home Phone – Cancel one or keep both but cut all the extras on your home phone.  My family and closest friends have my cell number and call it if my home line is busy.  Most of my contacts know that we do not have call waiting.  If there are times when I am in the middle of something and don’t feel like answering the home phone, I let my answering machine pick up.  If it’s important enough, the person will leave a message.  I also registered on the www.donotcall.gov site to reduce telemarketing calls.

Cable/Satelitte TV– You can purchase a $15-$20 antenna from Wal-Mart or Target that will pick up most channels.  Our antenna picks up NBC, CBS, FOX, PBS and about 4 other local channels.  Be sure and get the kind that plugs into an outlet also.  This extra feature provides much better reception and reduces the need to adjust the “rabbit ears”. 

Dining Out – This is one of my priority luxury expenses.  For my husband and I, we were willing to do without cable so we could continue to eat out on a regular basis.  We enjoy trying new restaurants so this was a priority for us.  If eating out is not a big deal to you but cable is, then keep the cable and cut back on the dining out.

Lawn Treatment – Many companies now offer no contract.  I have heard that the best time to fertilize and help with weed control is in the Winter and Spring.  Therefore, you could actually limit or cut out lawn treatments in the Summer and Fall.  Or you could research gardening sites and do your own weed control.  I know that some subdivisions now require yards to be weed free so make sure you know all the homeowner regulations before buying in a subdivision.  Lawn treatments could be an added expense you did not anticipate.

Manicures, Spa Treatments – If this is a priority on your list, instead of cutting it out completely, look at reducing the number of times you have it done or look for a less expensive place to visit.

Shopping – I have a friend who uses part of her day off to bargain shop.  She manages her shopping well by 1) doing most of it at thrift stores and consignment places, 2)  usually only paying with cash and a set amount, 3) doesn’t use shopping to fill a void and 4) although she may buy something decorative for her house, she also pays much less for school clothing, books or other needed things for her household.  If you love to shop but overspend, set an allowance for yourself and instead of heading to the mall, find a nifty consignment or thrift store.  I can’t tell you the number of name brand items (some with tags still attached) or barely used items she has found.   Just as I have a hobby of scrapbooking, some people have a hobby of bargain shopping.   

EVERYONE has things they feel they can’t live without…things that make our lives more comfortable or enjoyable.  I’m not suggesting you cut out all these things (except in extreme cases) but to really look at all the extra “stuff” your money is going towards.  You might find that by cutting a few things, you come up with an extra $200 a month that enables you to save more, pay debt off faster, have your spouse quit a second job or in some cases keep your home.  Think what luxury items you have and evaluate if their cost is really worth the burden they are placing on your finances.

Until next time…have a joyful week!   Dana

My budget didn’t balance?

It’s been over 30 days since I challenged you to start tracking your expenses.   Last month I did a post on creating a budget or spending plan.   If you created a budget and found that your expenses exceeded your income, then one thing you can do is evaluate what you can live without.  Here are some examples:

Cell Phone
Cable
TiVo
Telephone Extras (call waiting, caller ID, voice mail)
Internet service
Dining Out
Lawn Care
Excessive Clothing or Accessories
Manicures, Spa Treatments
Shopping (how many times a week do you buy things that are not for basic needs?)
On-Line Subscriptions 
Gym Membership 
Monthly memberships for video rentals

I know you may think these items are necessary but if you are in a financial crisis, are they necessary?  If you have to charge groceries but sit down to watch a show on cable, is the show so important you are willing to acquire debt and interest to watch it? 

This is just one example. I’m not saying that these things are wrong or that people who have these expenses are not spending their money wisely.  I’m saying that if you have to charge monthly things, borrow from family, continue to accumulate debt or not pay your bills, then one of the places you should look at are luxury expenses.

List all your expenses that are not required to live on and/or could be cancelled without penalties. Then number the expenses in the order of importance. Think about getting rid of 2-6 expenses that end up at the bottom of your list.  Tomorrow I’ll give you some alternatives to these things.

DANA

Create a Budget or Spending Plan

Most people hate hearing the word budget.  I noticed a few years ago financial books and counselors started calling it a spending plan.  No matter what word you use, it’s still a piece of paper with how much money you should spend every month and hopefully not have a negative at the bottom.

The easiest thing to fill in on a budget form is your expenses that have set amounts such as your mortgage or rent, student loan payments, car payments, cable bill.  The next items are things such as your water bill, electric bill and telephone.  These are items that may vary from month to month but you should still be able to come up with an average amount.  The hardest things to determine are items such as groceries, eating out and recreation, clothing, etc.  If you are tracking your expenses, this is where the tracking will help the most.

Another way to determine amounts is to do research on what the national average is for spending on groceries, housing, clothing, etc.  I have included some links below regarding averages and blank budget forms.   

http://cgi.money.cnn.com/tools/instantbudget/instantbudget_101.jsp

http://www.crown.org/Tools/Calculators/Budgeting_SpendingPlan.asp?frmIncome=50000&frmTithe=4500&frmTax=7000&selection=1&Submit2=Calculate+Budget

http://www.kluth.org/suggestedbudget.htm

http://office.microsoft.com/en-us/templates/TC010233411033.aspx?pid=CT101172321033

I know that budgeting is not fun for most people.  It’s boring and can be disappointing at times when you realize you don’t make or have enough money to budget for the things you want or need.  But if you manage and budget your finances, you will find there will be less stress on your life and marriage. 

I leave you with a great verse:

Luke 16:11
So if you have not been trustworthy in handling worldly wealth, who will trust you with true riches?

If you have any questions or need additional resources, please leave me a note!  Good day – Dana

My TOP 10 ways to cut EXPENSES!

1.  Cut cable or satellite (Yes, we have done this and currently use an $20 antenna that picks up all the major networks and some other channels)

2.  Increase your house insurance deductible (Yes, we have done this also – it really does not help your insurance rate to make small claims – it’s better to pay them out of pocket unless you have extensive damage).

3.  Take the extras off your telephone service (call waiting, caller ID).  If our line is busy, most people have my cell phone and call it.

4.  Commit to not buying anything decorative or electronics for the house for 3 months.

5.  For credit card debt:  Call your company and negotiate a lower APR.  This does work in most cases.  If you have received a solicitation in the mail from another credit card company with a lower APR, ask your company to at least match it.

6.  Increase your car insurance deductible (some companies such as Progressive, offer a coupon for $250 or $500 off on your deductible).  If your deductible is $500 and you have a coupon, technically you have a $0 deductible so perhaps raise your deductible to $1,000.

7.  Commit to spending a certain amount on groceries.  I know several families of 4 that are spending on average $100 a week.  If you are over this amount, try to make a goal for 3 months to reduce your grocery spending.

8.  Commit to only eating out once a week or sharing a dish with your spouse when you go out.  Another thing is to only order water.  Soda and tea at restaurants can cost up to $3 each.

9.  If you have a house phone and cell phone, consider cutting back your cell phone minutes/billing plan.

10.  Okay this is going to bother some of the women out there…consider not getting your nails done or hair colored in a salon for 3 months.  Ask your hair stylist what color she uses for your hair and go do it yourself.

11.  Sorry I have to add one more…If your vacation is draining all your savings or being put on a credit card, then skip it.  It will not ruin your child(s)childhood if you don’t have a vacation this year.  There are MANY MANY things you can do with your child(ren) or as a couple that don’t cost as much as a weekly beach or mountain vacation.  Go for a weekend instead.  Take a vacation day but splurge on a water park one week and a museum another week.   

My point in all this is to list all your extra expenses (meaning anything not necessary).  Cable and caller ID are not necessities.  These things may make our lives more enjoyable but they are not required for us to live unless your job requires it.  List these items and pick 2-5 to get rid of for at least 3 months.  PLEASE note that these are things I have experienced.  Each of you may have your own personal extra things you feel you can live with and without.

If you have other things to add, please post it.  I love hearing from you!   Have a great Monday – Dana