Ask almost anyone about their “spare cash” and I bet they laugh and say, What spare cash?
The difficult part with a tight budget is there’s not much wiggle room for most people especially if there is a billing rate change, interest increase or price hike such as groceries or living expenses.
It’s been a while now that we’ve paid off our mortgage and living debt free which has opened up some avenues for us financially. Our budget is lean and any savings left at the end of the month gets distributed into our savings account.
I received an email from a guy who uses our family budget and wanted to know how to go about adjusting the budget when the net income he earns along with any income from his wife covers just about everything they have to pay every month.
I just wanted to shoot you a quick email to ask you a question about your budget and how I go about making changes to accommodate rate increases such as the current Hydro pricing increase.
I’m not sure what more we can do so we could free up some cash in our already tight budget. We pay online for our bills according to when we get paid trying to avoid any interest but that’s not always possible. Right now we have little savings but we’ve tried to save more money. Quite a bit has changed in our home since reading your blog especially how we manage money but it’s still tough at times.
Our son was born in June and even when we figured out how maternity leave was going to impact our budget we knew things might get a bit rough. Now with the electricity billing rate increase we don’t know how we will juggle our budget.
We do not qualify for any assistance for our hydro bill as we apparently earn too much money so we will have to find a way to make it all work. Everything seems to increase in price and it can get worrisome when your hourly wage is stuck in the same spot every year.
Until my wife goes back to work full-time our budget is a temporary budget that we need to balance before our debt gets out of hand. How do you suppose we go about re-working the budget to accommodate these billing rate increases when there is no money to spare?
Such a timely post as my wife and I both gasp at our monthly electricity bill we just received in the mail which also includes water usage. When we first bought our home a two month Hydro bill would be just over $300, but that is now history.
Our most recent Hydro bill is a whopping $300 for one month and we are quite diligent when it comes to watching our usage. The bigger the house the more costs you have so thankfully we didn’t buy the biggest home we could afford. We don’t qualify for the Ontario Electricity Support Program because we earn more than $28,000 after tax for 3 people living in our home.
Electricity bills are only expected to get higher and for those of you who have bigger homes I hope you’re prepared to get slammed with these horrendous bills. Even if you don’t have a big home the increase will affect your budget because you’re spending more money. For some homeowners it may be no big deal but to others it may mean less food in the cupboards or juggling bills.
Since we track our expenses it has been clear the last few months our Hydro bill has gone up and we aren’t doing anything different from last year. Since January 2013 our bill has since doubled with billing rate changes and time-of-use implementation.
Related: Get Smart with your Smart Meter
We did however cut back on watering the garden during the summer months this year which was reflected on our bill compared to last year even though the rates are higher. We like to stay with-in the proposed time-of-use guidelines so we aren’t using too many resources during peak-time although at times it’s hard to do.
We still hang all of our clothes to dry teven in the winter except for towels which I throw in the dryer. We hardly ever use the bath as we love to shower so it’s quick. Lights are on only when we are in the room. We do what we can to decrease paying any more than we have to.
Looking at our billing history it’s clear to us that just the last few months we were billed more money for our electricity and water usage. When we had a look at what the time-of-use was costing us we weren’t surprised as prices have significantly gone up since the first pretty time-of-use refrigerator chart we received years back. I wish I had kept that chart to compare further but I tossed it in the bin earlier this year.
In 2016 it has been said that Ontario Hydro bills are going to cost us on average another $137 yearly for most people. If we add that on top of what we are paying now that’s one heck of a pricey utility bill. A drain on anyone’s budget especially when you have a house full of people.
On an average Hydro One bill, a $5.60 debt retirement charge is what’s being scrapped. But, at the same time, the government is also killing the Clean Energy Benefit. That’s another line on the bill that typically credits an average customer almost $17 per month.
The bottom line is monthly payments are likely to increase, on average by $11.- CBC News Toronto
Billing rate increases and your budget
It’s not just the electricity bill that is going up almost every bill we get has a billing rate increase but we typically see the jump at the onset of the new year. If you don’t read the fine print or any inserts provided with your bills you might even miss a billing rate increase and not even know you are paying more money.
The smart thing to do would be to track your expenses so you know exactly where your money is going and how much of it. If you auto-pay your bills you may also miss any billing rate increases since your bill is out-of-sight and out-of-mind.
I recall our Rogers bill going up unexpectedly one month with one reason being that we forgot one of our promotions was coming to an end. They also had us review a previous online bill only to find out that we missed our billing rate increase for cable and internet which drove our monthly bill up by almost $10. So much for those savings. We did eventually work out a plan so we were paying the same rate as earlier but we had to lose our VIP cable for a lower package in the process.
Another example of an increase may be at the grocery store because prices are always going up and packaging shrinking. If you have credit cards and most people do you can easily miss an interest rate increase unless you read that tiny print on your monthly bill.
My PC MasterCard Elite Credit Card was just increased recently a month after getting it. That doesn’t bother us as we never pay a lick of interest to any credit card company. We use credit cards only for reward purposes plus less pit-stops at the bank and ATM. If you are someone that has a tight budget that rate increase may mean it takes you longer to pay your credit card bill if you don’t pay it in full.
Example: My Canadian Tire MasterCard interest rate is 16.99% and if my bill is $300 and I only had the cash to pay the minimum balance every month it would take me over 2 years to pay that off. Shocking, isn’t it?
Starting in 2016 our new family budget will have to accommodate the Hydro billing rate increase along with any other increases so that we can balance our monthly budget. If we have rate increases throughout the year the money comes from our savings.
If we didn’t have the cash to spare we’d have to chop, chop, chop the budget. We tend to review our budget yearly but if you are working with limited funds you may have to review it every few months to make sure you are hitting your target. If you find you are juggling your bills I would suggest you take the time and do a thorough budget review.
Any billing increases still dips into our retirement savings goals because that is eventually where most of our savings will end up. I suppose we can’t expect our bills to stay the same forever and we all know that prices aren’t going down.
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For those who are not getting a Hydro rebate through the support program they will have to find ways to come up with the extra cash if they don’t have savings in the bank or can’t balance the budget.
It’s time to tighten the budget belt even further folks!
Ways you can tighten or support your budget
- Evaluate your savings potential and grocery budget
- Evaluate your telecommunication bill and services
- Lower the heat/ wear heavy socks and sweaters
- Turn off the A/C when not needed, wear light clothing or use a fan
- Unplug what you don’t use in your house
- Upgrade to energy-efficient appliances and light-bulbs that would be a super investment
- Use as much as you can during off-peak time for electricity
- Take shorter showers and don’t fill the bath
- Walk to work if you can, take the city bus and sell the car (you will also save on your car insurance)
- Buy second-hand all year so go on a “new shopping-ban” which means you buy nothing new unless it’s necessary but you can buy used.
- Spend less money on crap you don’t need ex: coffee, expensive make-up, cologne, clothes, eating out, vacations.
- Move somewhere less expensive to live
- Sell your house and downsize
- Get a second or third job
- Minimize what you own and sell the rest
- Rent rooms in your house
I’m sure I could keep cutting and chopping a budget if someone needed to save money every month to balance their budget. There may be things you don’t want to get rid of or compromise on but you may be left with limited options. An emergency savings account is fine but again it’s not meant to be an ongoing savings account to fund billing rate increases.
So to answer your question Chris all I can tell you is that you are not alone. Many Canadians are feeling the budget crunch and it will only get tougher. What I would do is review all the above suggestions which should significantly help most people slash some cash in the budget. Remember the only way to get back in the finance game is to play it right. If you want to save money or find money you will do it!
How do you accommodate billing rate increases with your budget?
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