UPDATED: Be Aware Of Montly Expense Changes (or Ramen Noodles Forever)
Posted on February 20, 2009 6 Comments
Our electricity bill in December and January doubled this year vs. last year; up from the $150 range to $300 per month. We’re not using more electricity; the cost of it must have gone up. But it begs the question: when a monthly expense suddenly becomes more expensive, how do you cope?
Eating nothing but peanut butter sammies, ramen noodles and soup is the old college way. But my own non-scientific research indicates that earning a salary directly negatively impacts one’s taste for ramen noodles.
Beyond returning to a college lifestyle, I see two short-term techniques for coping with an increased expense when reducing the expense itself is not an option.
1) Reduce expenses elsewhere.
2) Take it from what you were putting into your monthly savings.
Reducing expenses is obviously the better option. Figure out how much the increase is (in our case, about $75/per person, per month during cold months) and see what line items you can afford to cut… Maybe it’s having one less vacation for the year; maybe it’s one less night out per month; maybe it’s two dinner-date nights less in favor of home-cooked meals (Ramen, anyone?). Or maybe you delay the purchase of something you were saving for.
As is the case in the second option, you can also increase your monthly operating budget. Basically, if you were living off of $1,000/month (just an example for easy computing) and saving the rest, you now need $1,075/month to live, and you’ll save a little less every month.
Neither is a very good option, which is why they’re short-term solutions. The long-term solution is that you’ll need to make more this year to cover your new expenses. So ultimately, if you’re saving a little less this month, the idea is that your pay raise should cover the increase in expenses and you’ll ultimately even out. Taking on a second job or getting a new, better-paying job are options, too.
This year, however, I’d be willing to bet that few of us see pay increases. After all, if the work force continues shedding jobs at this rate, some of us will be lucky to actually have jobs (let alone extra jobs). So then we go back to tightening the purse strings and cutting expenses.
There’s a third option on the table, which could work for some short-term gains if you’re desperate (living VERY tightly month-to-month), and that is selling stuff. If I was really in a tight fix and needed money, I could always sell my Wii or my camera on e-bay. Some can sell designer clothes or shoes, or perhaps art, jewelry or furnishings. It’s the modern day equivalent of a garage sale. But clearly it’s short-term and the downside – loosing your stuff – negates the short-term fix in most cases.
A final option, which is not really an option, but people do it regardless, is to not change your spending patterns. How’s that possible? Credit. Once the bills are paid, some people put groceries, gas and non-essentials on credit. But again, what you’ll pay in the future for these items, considering interest, makes the long-term cost greatly outweigh the short-term relief benefits. I’d stay away from this one.
I think most people would do a combination of the first two options, reducing costs and saving less, if a significant expense suddenly came up. But in the case of my electricity bill, I don’t think people pay enough attention to notice the changes. In Chicago, our electricity bills swing wildly depending on the season. In Spring and Fall, they’re super cheap, while Summer and Winter are crazy expensive. So if you’re not paying attention, you might just think the price increase is part of the normal trend.
The point here is that even with small monthly budget changes, it’s important to review the costs, explore options and pick the best one. If your expenses are increasing each month and you’re blind to it, you could be unconsciously heading to the land of bad decisions, and ultimately costing yourself a whole lot more.
UPDATE: Two additional suggestions just came in from my super-awesome readers.
MOXIE says:
1) Double check that you don’t have a leaky window or something for the heating increase. That happened one month in our first apartment & we got a ridiculous heating bill.
2) You probably could use less of either utility, too, if you’re like most people. Look into energy vampires like always on appliances.
STEFANIE says:
If you plan ahead, you can put some extra money away during the cheaper electricity months to use for the more expensive ones. You can also reduce your energy use as much as possible (turn down heat and hot water temps, use power strips for multiple plugs and when you’re not using them, turn the whole plug off, take shorter showers, don’t use hot water in a washing machine, don’t use dishwasher, etc.)
— Stef: Great suggestions! We’re already in layers and wearing blankets, so I don’t think we can get any colder around here, which is probably why I forgot this one. Also, our washer/dryers are communal in my apartment, but good suggestions for those whose are not.
Category: Money
Tags: Spending
Comments
6 Responses to “UPDATED: Be Aware Of Montly Expense Changes (or Ramen Noodles Forever)”
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February 21st, 2009 @ 9:35 pm
Isn’t eating ramen and peanut butter sandwiches the same thing as reducing expenses elsewhere? I understand that you’re suggesting other areas to cut costs, but really, cutting costs on food is the same thing
February 21st, 2009 @ 11:01 pm
if you plan ahead, you can put some extra money away during the cheaper electricity months to use for the more expensive ones. you can also reduce your energy use as much as possible (turn down heat and hot water temps, use power strips for multiple plugs and when you’re not using them, turn the whole plug off, take shorter showers, don’t use hot water in a washing machine, don’t use dishwasher, etc.)
February 22nd, 2009 @ 12:08 am
Maybe I missed this, but you could
1) double check that you don't have a leaky window or something for the heating increase. That happened one month in our first apartment & we got a ridiculous heating bill.
2) you probably could use less of either utility, too, if you're like most people. Look into energy vampires like always on appliances.
February 22nd, 2009 @ 2:31 am
Electricity costs did go up this year but we also are having a colder than usual winter in NE IL.
March 1st, 2009 @ 3:30 am
Our utility offers a program where, after you have established 1 years worth of utility usage at a particular address, you can set up equal monthly payments. Basically, the utility estimates your usage for a year and divides it by 12. At the end of the term, if you go down in usage, your new payments become lower and vice versa.
December 6th, 2009 @ 8:18 pm
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