When our financial turnaround was underway there were a couple things that often derailed our plan. Emergencies seem to come in waves of twos and threes, constantly draining our emergency fund. But emergencies weren’t the only thing that got us.
The big expenses that managed to sneak up on us are what really gave us financial fits. That unusually high power bill two summers ago compliments of a prolonged heat wave. The annual car tag renewal I completely forgot about, even though it is due on my birthday every year. And each month it felt like we were always needing to replenish groceries and household items that were not on sale, or that we never had a coupon to use.
In an effort to sort of smooth out these financial highs and lows (well, mostly highs), we implemented the following relatively simple steps.
Sign up for levelized billing with your utility company. This was as easy as a phone call to our utility company and the completion of simple form. “Levelized billing,” as it is commonly referred to, involves the utility company averaging your last 12 months of utility bills and using that average amount as your next bill due.
The beauty of this system is that your utility bill hovers around the same amount each month, even in the extreme highs and lows of summer and winter. A particularly high-usage month averaged against eleven previous months has little impact on the new amount due.
One note about levelized billing plans, utility companies require at least one year of history, and often require no late payments within that time.
Use a sinking fund for large annual expenses. We use sinking funds for those large, annual or semi-annual expenses, such as insurance premiums, taxes, etc. Rather than being hit by a $600 insurance bill at the end of the year, sock away $50 a month in a sinking fund at your favorite online savings account, and when the bill is due simply transfer the full amount to checking and pay the bill.
Watch for cyclical coupons and sales and stock up when prices are low. Coupons tend to run in cycles of 12 weeks or so, and often times grocers match sales to available coupons in an effort to attract shoppers.
For instance, a monthly P&G coupon circular is included in our newspaper around the first of every month. Flipping through the store sale ads you’ll likely find sales on P&G items to match up with those coupons.
It might also help to keep a price book. Jot down the price of items your household routinely purchases. Start tracking the cost each time you purchase, and soon you will be able to determine if that “sale price” is really a bargain. If it is, stock up, refuse to buy when prices are high, and wait until the price drops or a cyclical coupon is available again.