Two MM Questions: Utility Equal Payments and Retirement Planning for Contractors

AprilZ81

Question 1: Equal Payment Utility Plans

DH and I don't have any trouble paying our utility bills but the drastic changes get old fast.  We have now been in our house a year so we should be able to switch to an equal payment plan (for those who aren't familiar the utility company will take your utility usage and divide it equally, at the end of the year you may owe some or they may owe you).  It has always made me a little nervous because of the chance that we could still owe money at the end of the 12 months, but the ease of budgeting is very, very tempting at the moment.

Question 2:  Retirement Planning in a Contract Job

I'm **STILL** waiting to hear back from the two jobs I'm a finalist for .  I'm going bonkers and desperate to start working again to restore our budget to "normal".  

One of the jobs is a 6-8 month contract job with the chance of being hired full time after the contract expires.  I would be eligible for medical benefits after 30 days, but I doubt I would mess with the hassle of changing from DH's plan for a temporary job.  I would not have access to a 401(k) until I was hired full time.  I would max out a ROTH (roughly 10% of my income) but I would rather be closer to 15%.  Other than DH increasing his 401(k) do I have any other options?  I would want to contribute another 2,300 over the course of a full year (which of course is longer than the length of the contract).

If it makes a difference I would be paid via a W-2 from a staffing agency, not a 1099.

MommyLiberty5013

I can relate to your first question. DH and I do the levelized billing for our gas bill. We don't have to do it, we have the money to pay for variations in usage each month, but I like knowing the consistent figure. We have the option to do levelized billing on electric, but we don't on that one. I'm not sure why though...

I think the only drawback to levelized billing is that in some months you are technically paying the utility company for goods/services you haven't yet received. So it's like "free money" for them. I guess it doesn't really bother me, though, in this case because it's such a small amount of money and I'd be paying them it anyways in a couple of months when I did owe it to them for real.

AprilZ81

@mommyliberty5013 How long have you been doing it with your gas bill?  Have you ever owed at the end of the year?  If you over pay what do they do?

MommyLiberty5013

AprilZ81 said:

@mommyliberty5013 How long have you been doing it with your gas bill?  Have you ever owed at the end of the year?  If you over pay what do they do?

A portion of the year our gas bill is $78. Then, another portion of the year it is $42. Then, once or twice I think it goes into the low $100's.

We live in MN, though. Summers are in the 70s-90s and winters have wind chills of -35. We also have a gas range and 2 gas fireplaces, so this may account for our wide variations even within levelized billing.

We started it when we moved in in the summer of 2012. It's never been an issue for us.

simplyelise

1) I'm planning to do this once DH and I are in our place for a year. My city utility does the true-ups in March, so I think that would work out with us probably getting a small refund usually. They also readjust a bit quarterly if they need to so you won't have a huge payment/credit at the true-up.

2) Couldn't you do a traditional IRA? I'm not super knowledgeable in this!

AprilZ81

@simplyelise It is my understanding that you can contribute to a ROTH or a traditional IRA, but not both at the same time.  I could be wrong...

hoffse

AprilZ81 said:

@simplyelise It is my understanding that you can contribute to a ROTH or a traditional IRA, but not both at the same time.  I could be wrong...

You can contribute to both, but there's an annual max across all IRAs.  If you hit the annual max with your ROTH, then you can't contribute to another IRA that year.

If it were me, I would probably have your H increase his retirement contributions in the 401(k) to make up the difference until you can contribute to a 401(k) again.  H and I view the each of our retirement accounts as "ours" collectively - for us, it doesn't really matter whose is larger.  If you and your H feel similarly, that is probably the easiest way to do it.  Otherwise, you may need to open other accounts and make less tax-advantaged investments.

Side note - if I were an actual financial adviser, I probably wouldn't advise having your H make up the difference.  That's because if you guys ever split, you would want to have as much in your name as possible, rather than his.  But I mean.... what I would personally do is have my H contribute more.  We've been together long enough to know we're really unlikely to split, and I'm not going to make financial decisions that assume we will.

Erikan73

I can only respond to your first question. We do the budget plan and I love it personally. It has made it so much easier for me to plan my monthly budget. Granted we do take the risk of owing at after the annual review, but we deal with that when it happens. But in the mean time, enjoying the ease it provides for budgeting.

als1982

We do the equal billing plan for both our gas an electric. It makes things really easy for the budget. I believe they reset the amount owed per month annually, but we haven't seen a change yet that would reflect the new HVAC system we installed last April.

AprilZ81

@hoffse

DH and I do think of it as "our" money.  DH makes almost double what I make and started saving more and earlier than I did (and I thought I was doing awesome...  lol).  

DH would probably only need to increase his contributions 2-3% to make up the difference.

This year we didn't have enough to fully fund both ROTHs and we chose to fully fund mine and put the remaining money into his.  Our financial advisor said that women live longer and it was better to have more money in the woman's name than the man's name.

AprilZ81

I will run the utility thing by DH tonight.  I doubt he will care, I take the lead in our family finances and I pay the bills.

We try to do a budget that accounts for the year long average for utilities, but it makes me nervous in the winter when the gas and electric bills are higher than normal. 

smerka

I would just do the utility thing yourself.  Take the total you paid last year, divide by 12.  Pay that each month to the utility company and then your savings account for the remainder.  On the months it goes higher than the average, pull it from savings.  The months your bill is lower, move more into savings.  And enjoy that penny or so you will earn each month in interest. 

For the retirement savings, there isn't much you can do since you will be paid via W-2.  You would have options if you were 1099'd.  Since it sounds like this will be short term, I would just have DH up his 401K for the year or whatever time it will be. 

hoffse

AprilZ81 said:

@hoffse

DH and I do think of it as "our" money.  DH makes almost double what I make and started saving more and earlier than I did (and I thought I was doing awesome...  lol).  

DH would probably only need to increase his contributions 2-3% to make up the difference.

This year we didn't have enough to fully fund both ROTHs and we chose to fully fund mine and put the remaining money into his.  Our financial advisor said that women live longer and it was better to have more money in the woman's name than the man's name.

Yeah that's probably true to some degree, but if you are each other's beneficiaries, then eventually it will all become one person's someday.  Each person needs enough in their own name to float through the post-death distribution process, but I think the accounts can still be pretty lopsided as long as you guys plan to stay together.

lyndausvi

::lurker ways hi to April::   

I have semi-equal payments for our gas bill.  We moved to CO last year and rented a townhouse.  I've never had gas heat before and had no idea what the costs would be. What can I say I lived in the islands for 14 years not much need for heat in down there.    They offered us semi-equal bills based on the last people who lived there.   I took them up on the offer so I would not have any  major surprises.   

They make small adjustments each month.  The first few months it was $35.  I guess we use less gas then the last guys, because it's pretty much been dropped to  between $20-25 a month.  Sure there are some months where we have a decent sized credit ($70), but it doesn't bother me.  Now that we have hit a year I just kept it.

We were offered it for electric when we hit a year, but opted out.  Our bill only had a swing of $40.  Not a big deal.   Plus I play the electric game.  When it hits over $100 I start making sure I find ways to cut.  Now i'm air drying my clothes.  Making sure things are unplugged.  I'm not sure I would pay enough attention and make changes if I had a set amount all year. I think I would pay and move on.

Gas is only for heat, stove, oven and hot water.  None of which I'm going to make major changes to cut the bill.

AprilZ81

@lyndausvi  I was confused for a minute why you said you were lurking...  lol  I forgot for a minute this wasn't TK.  

You should play more here, we're a friendly bunch with way less drama!

hoffse

AprilZ81 said:

@lyndausvi  I was confused for a minute why you said you were lurking...  lol  I forgot for a minute this wasn't TK.  

You should play more here, we're a friendly bunch with way less drama!

Truth