Wednesday, March 18, 2009

Budgeting and Bill Creep

I just read a rather interesting article on Yahoo's Finance pages called "In the Fight Against Bill Creep, Every Extra Fee is the Enemy." The concept is how bills can sort of gradually increase in size - either due to our own additions (like extra features on your cell phone) or added taxes, warranties and fees the company tacks on. I had that happen to me not too long ago with my cell phone - without warning they increased the cost of my warranty, so I canceled it.

One of the benefits of budgeting is that you can spot bill creep right away. My cell phone bill had been pretty close to the same amount each month, but when I saw a jump, even just a few dollars, I spotted it right away. I wasn't that diligent in the past. In fact, I am pretty sure that before I kept a strict monthly budget, I would have missed it.

Now that I have a budget I update daily, I catch all sorts of things I would have missed before...

Utility bills now fascinate me. I am always looking for ways to lower them, and I notice even a few dollars difference. I know there is sort of a movement in the personal finance blogsphere that a few dollars here or a few dollars there doesn't make a lot of difference, but I beg to differ! I bring in funds each month in $10 and less increments. I love small savings I can spot and make happen over and over again. I feel like I have already done all the "big" frugal things out there - dropping cable, not having a land line, reevaluating my insurance, changing my tax deductions, etc. The list goes on and on. However, along with those big things spotting little ways you can save money is not only rewarding, it can also be very valuable.

That's why I like my budget. It is nothing fancy - just spreadsheet with categories for each expense and fields for all the various ways I bring in income. However, I have every month at my fingertips - going back to June when I first started tracking expenses. Now I can instantly spot bill creep. If I were to add on a service, I would see instantly how that would effect my bottom line. In the old days, I wouldn't track month to month expenses that closely. I knew approximately how much things were and always had the previous months' statement, but small changes could easily slip by me.

I know a lot of people aren't particularly fond of budgets, but I have to say, they are a fabulous tool for preventing or stopping bill creep. My budget is one of the main things that has helped me stay on track, spot areas I could save, and makes sure I know the bottom line.

EDIT: One more reason to keep an eye on those statements - check out this article by Fine-Tuned Finances about Mysterious $.025 Charges Appearing on Credit Cards in the United States.

Photo by: Josef Stuefer


Fit Wallet said...

I know what you mean--my cell phone bill had crept up to $80 from about $55 over a year, after I got a newer, fancier phone. Then I realized I wasn't using half the features on the stupid thing! I dropped a $20 per month internet feature I had used perhaps twice. I have the internet at work and at home. Why on earth do I need it on my phone? $20 per month is nothing to sneeze at, either.

Dawn said...

It certainly isn't Fit Wallet! I know what you mean though - sometimes features sound so good at the time. For people who use the internet all the time I think that feature is great, but I'm like you, I'd never use it.

J. Money said... kicked Bill Creep in its a$$! you rock. and i love that term too now....i wonder if i can start saying it and look all smart ;)

enjoyed this post.

Kari said...

So how does that work? Do you have some kind of way of seeing or do you say go back to December and say "oh, that bill has gone up a lot in 3-4 months".

I'm a very visual person so something like this might work for me but I need to understand how you evaluate it all.

Dawn said...

Kari - I have my budget from June to now all in one document. You know how spreadsheets can have different pages? I have a page for each month. Instead of making out a full year, I copy and paste the budget from the month before into the next month. That's because I am still tweaking my budget a bit and that way I can bring the changes from one month to the next. So, for example, yesterday I copied March's numbers into a new page for April.

My budget has several columns - What the item is, how much I expect the bill to be, what it actually is, the difference, and a line for comments. So, I might have: Groceries: $100, Actual $105.30 Difference -$5.30

Now, say my cell phone bill comes in and it is at $5 more than it usually is. When I pay the bill, I will enter that amount in the "Actual" column. Because I cut and pasted from the month before, when I look at my cell phone line I will see the budgeted amount and what I actually paid the month prior. Usually I'll just clear that out and put the new number in, but if there is that $5 difference, you can bet I'll be looking through the bill and figuring out why!

Hope that helps. If not, let me know and I'll be happy to explain further.

Kari said...

Okay, I gotcha. That is what I'm doing too. I haven't noticed dramatic changes or anything which I guess is good.

Kristy @ Master Your Card said...

My biggest bill creep is the electricity bill and it's one I'm struggling to keep under control. I find it difficult to believe that my one bedroom apartment should be putting out nearly $180 worth of electricity expenses. That seems rather excessive to me. But, this is partly my fault to because I haven't done everything I can to decrease the expense either.

I talked to my apartment complex about weather stripping and they said they would do the project - free of charge - if I bought the material. I haven't done it yet. I've been busy and just need to set the time aside, especially before the Texas summer gets here and I start cooling off the trees outside.

At any rate, great article! I think you do a great job of catching the little stuff because you have to in your situation. Most people wouldn't think twice about a few dollars!

Miss M said...

We're getting that with our phone bill, pesky thing has creeped up from $50 to $70. And we don't even use it except internet, there's a problem with the wiring and incoming calls can't connect. It's inside the house so I'd be responsible for the repair. I've been meaning to switch to the internet only plan which is cheaper, need to put that on the to do list.

Laura @ no more spending said...

'Utility bills now fascinate me'

Me too!

we need to get out more, lol :)

Dawn said...

J. Money - of course you can! As long as every time you use it you quietly attribute it to me and under your breath mutter "as read on Dawn's blog." :)

Kristy - It sounds to me like something is definitely wrong there! I know you like your electronics, but my electric bill is $25-$35 for a 2300 sq. foot house! Of course the fact we are in different states might explain it, but it might even be worth having the electric company check your meter, or at least check with your neighbors and see if that is normal. By the way, a lot of times you can buy coupons for Lowes on eBay. Weatherstripping isn't very expensive, but it might be worth checking out.

You are right, because of my situation I track every dollar, I don't know if I will always be that way, but it has been a good learning process!

Miss M - that is exactly the stuff I am talking about. You know what? Sometimes I don't call on that kind of stuff out of a weird sort of fear - I don't want to or know how to deal with the situation. Sometimes it is easy stuff too. I am getting better at that though, thought there are still things I let go for too long. I'm not saying that's your issue, but it can be mine sometimes.

Laura - Hee!! I DO love getting bills now. Well, I shouldn't say I love getting them, but I love seeing the balances dropping and when I get them I am excited to see how they match up with my budget - it is a whole lot different than when I was scared of opening the mail!