Annual Bills and anticipating them

One of my main resolutions for 2018 was to take a long hard look at my budget and become better at anticipating expenses. Personal Budgeting one of my favorite topics, not because I excel in this area, however it is something I’m always working on getting better at. It’s a lifelong goal. I love learning how other people budget and I devour books that give me different tips and tactics on how to budget.

This year I decided that I was going to make it my goal to start anticipating annual expenses better. For instance, I know that there are two times a year where I always get tripped up, late summer and Christmas.  August is the month where all my annual bills come to hit me, it would've been smart if I had them all spread out but it is always August where I am hit with all my annual insurances, amazon prime, car registrations, (and occasionally a summer vacation). I always find myself in late July getting overly stressed as I check the mail and "remember" all of my annual financial obligations that I had let myself forget. Then as all of those are finished being paid BAM!! we are hit with Christmas time and the obvious financial obligations that go along with that. In January of this year, I decided I was going to start putting a little bit aside from each pay check so that when the summer came I wasn’t going to be stressed and leave myself in a tight spot. 

My first step was to make a list of all my annual expenses. Then I left it alone for a day or two as I wanted to make sure I wasn’t forgetting anything. I occasionally would go back and add to it as I remembered different things. Also during this time I evaluated each this as to whether it was a necessity or a want. I also evualted each item to see if I could get it cheaper, ie/insurance. 

Some of these bills include (Incase you want to do it too):

Car Registrations- necessity. Our state only has one option for registration, one year renewal. Some states (like Arizona) allows you to pay for more than one year and it saves a little money. We have fairly inexpensive cars so it’s not a huge expense but it is something that does come up at the same time as other big expenses.

Car Insurance- necessity, but can be negotiated. As I’ve written about in other blog posts you always want to stay on top of your bills and make sure you are always getting a good value. Calling your insurance company and negotiating is always a good thing to do each year. I’ve done it recently and made sure that the coverage and price is not only a good value but it also meets our needs.

Amazon Prime- somewhere between a necessity and a want. Not something everyone needs but for my husband and I we seem to get more than our money’s worth each year. At $99/year you have to evaluate for yourself whether or not you will save that much for yourself in shipping and other prime services. We save it at Christmas time alone, making it super worthwhile for us.

AAA- necessity. I categorize it as a necessity for a few reasons, one is we drive a lot and as I mentioned our cars are older and I find that it is a great money saver for us. We don’t want to have to use it but when we do it pays for itself. Also, it is a necessity if you purchase your insurance through them. They have very good prices on their insurance and if you go that route you are required to have a membership.

Sam’s/Costco- want for me, necessity for some. Some people have large families, lots of pets or a business and a membership to these stores is a major money saving tool in their life. For someone like my husband and I we like to go there a few times a year to stock up on bulky expensive items such as toilet paper, paper towels, toothbrushes, and rotisserie chicken. Haha, that last one isn’t a bulky expensive item, I just love Sam’s Club rotisserie chicken. Try it, thank me later.

Insurances (earthquake, flood, life, rental, homeowners, pet, etc)- necessity. You obviously don’t need all of these insurance, but chances are if you are like me you have a few of them. Some of them you have on a monthly plan but some you probably have as an annual bill. For us, Earthquake Insurance is another of our annual bills. Living in California, I have a major fear of a big earthquake striking and ruining everything we have. Living at the eastern edge of California we are far from a fault line so the cost of earthquake insurance is practically nothing. Like the other bills I’ve mentioned, my Earthquake insurance bill comes once a year and at the same time as everything else, each little bit adds up. The peace of mind is worth it for me.

I thought of another one while I was writing this post:

Deductibles- while writing this post I was thinking a lot about all my insurance premiums and I realized it would be good to also set aside some money for insurance deductibles if I ever need it. You never know when an accident/disaster could strike and it is good to have your deductible payment set aside, just in case. If you have it set aside in a separate place from your regular savings then you won’t have the extra struggle of parting with a chunk of your savings when something bad happens. The money will be right there waiting. I would suggest figuring out what your largest deductible is and save that amount. Additionally, I would suggest to set this (and all this other money I mentioned) in a savings account that you don’t use often and can forget about until it’s needed. Don’t just leave cash laying around. 

Once I wrote down all the annual bills I have to pay, I figured out the complete total. I took that total and divided it by the number of paydays until the first annual bill was due and I came up with a number to save each payday. 

Example (not my real figures) 

$500 total owed

7 months (4 paydays a month- 2 for me, 2 for my hubby) = 28 paydays 

The total is $17.86 (it’s an easy amount to round up to $20)

How simple is that to save?

When you start to plan a head like that you can also put any extra money you receive towards this goal. For example, last week I received my escrow statement in the mail and they included a check for overpayment. I don’t always get a refund, some years I owe, but since I was already saving for these goals I was able to put that check towards this goal and I am almost done saving for these annual bills. You never realize the little bonuses you receive from time to time and if they are put towards existing goals you really accomplish what you set out to do very quickly.

I’d love to hear your tips and tricks in the comments. Like I said it’s a topic, budgeting is a topic I am really interested in.

Happy Sunday