Why is it that January finds many families taking a serious look at their household budget? Are there cheaper options for telephone? Do you really need all those cable channels? Should you change your time-of-day price plan with your electrical utility? What priority does Prime Rib have on your grocery list? For parents of college-bound students, there is that in-state/private college decision also.
Of course, we all want more money and there are two ways to have more money available for your lifestyle and/or your retirement.
1 – make more
2 – spend less
Making more money has the added complication of a higher income tax bill, but it is still a great way to amass more wealth. For many though, it isn’t an option. Employers have laid people off, imposed furloughs or frozen wages. Self-employed individuals have to struggle with a more competitive marketplace in this weak economy. It’s not uncommon to count yourself lucky to just have the income that you did five years ago.
This is part of the answer to “Why January?” As you gather your information to prepare your income taxes, the numbers can be discouraging. I only made that! They took what in taxes! I paid that much for mortgage interest! For health care! It’s a time of reckoning. It’s also a time for Resolutions and a New Start. In short, it’s a great time to set a family budget.
If you can’t increase your inflow, you can certainly decrease your outflow. Start by sorting your expenses into four broad categories.
A – Necessary and the cost cannot be easily adjusted, i.e. mortgage or rent
B – Necessary and the cost can be controlled/managed, i.e. Healthcare, groceries, utilities
C – Optional but desired (within a budget), i.e. entertainment
D – Optional and dispensable, i.e. more magazine subscriptions than you can read in a month
My strategy for Category B is to pull out the bills and take a serious look at how much we are paying and what we are paying for.
For instance, my electrical bill is composed of my Kilowatt Hours (kWh) consumed, the time of day that they were consumed and a whole raft of taxes and fees. Our household is on the APS (Arizona Public Service) Time Advantage 9pm to 9am Plan. My July 13 2011 bill shows:
On Peak kWh – 1325, Off Peak kWh – 1549, Total kWh - 2874
Generation of electricity used - $225
Delivery, Fees & Taxes - $159 for a total bill of $384
Our July 14 2008 bill showed:
On Peak kWh – 1368, Off Peak kWh – 1992, Total kWh - 3360
Generation of electricity used – $211
Delivery, Fees & Taxes - $187 for a total bill of $398
We are in the same house, with the same number of people and have a small pool with a 1HP pump. So, what changed? Three things changed. First, the cost per kWh increased from 2008 to 2011. Second, the utility built higher delivery costs into the ‘cost of electricity’. Most significantly, we reduced our consumption by 486 kWh or 14.5%. If we hadn’t reduced consumption, our power bill would have increased to over $448/July.
We reduced our consumption by weather stripping a couple of doors and significantly reducing our pool pump runtime. In 2008, we ran our pool pump 9 hours/night. In July 2011 we ran it 3.5 hours/night. We were able to do this because we are using a Solar-Breeze solar-powered robotic pool skimmer to clean our pool. Click here to find out how Solar-Breeze works to save you energy.
Between these two energy saving actions, we spent $1,365 less on electricity in 2011 than we did in 2008.
Our electrical bill is under control. Our pool is sparkling clean with little or no effort on our part. So this January I am tackling the phone/cable/internet cost. If only there were a Solar alternative for that!!
