3 Ways to Smooth Out Big Expenses

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.


  1. Sinking funds… never heard of it, but interesting concept. I just put three reminders in my outlook/blackberry one day, one week, and one month before anything big is due.

    It does the trick. Don’t want to go past due those 0% interest free loans or credit cards!

  2. Happy Labor Day!

    I have actually “negotiated” my “budget” amount to the gas company. It’s important to look at your usage & what the company perceives you potential usage to be. We had about a $800 credit with the gas company after a long winter (gas is our major source of energy for heat & hot water). The gas company wanted to raise our monthly budget amount????? So I called & after finally getting someone in the US (had been routed to an overseas rep), I said “hey, we have a credit after our highest season of use, why are you upping our monthly payment?” To which, the rep said, “you’re right” & I negotiated it down. Contrary to the gas company’s perception that the cost of fuel would go up,(it did, but not at their anticipated rate), we broke even.

    Soo….don’t accept the utility company’s monthly amount if they are going to become your “savings account” i.e. large credits at certain times.

    Great ideas….thanx again…

  3. Levelized billing is the only possibility to pay the utiltity companies here in Germany. And automatic deduction (is this the right word?) from your bank account. So this is one problem I don´t have.

  4. I use sinking funds for all my annual and semi-annual bills, including car maintenance, insurance bills, car registration, Christmas gifts, water and trash bills. It works great!

  5. I think that the tips on levelizing one’s billing with the utility company is a great idea that I have never thought of or hard of. This would really help reduce the very extremely high bills during long summers when the air conditioning is overworking. I’ll consider this option.