Come In from the Cold by Budgeting for Bad Weather

Spring's arrival not only marks an end to a frigid winter, but it also soothes another kind of frost bite — high home heating bills. Americans from Portland, Ore. to Portland, Maine, endured a 2007 winter that featured 12-foot snow drifts and even more alarming heating costs. Many were unprepared. Now, that it's spring, what can we do?

Paying a $50 heat bill in July and a $300 bill in January can wreak havoc on most budgets. Budgeting is easiest when the costs are the same each month. Money that gets left over when bills are low tends to get spent. When bills rise again, a budget shortfall for a few consecutive months can cause a financial crisis or, at least, eat up that year's savings.

Make your bill fit your budget

One way to fix this is with "budget billing." Check the website of your gas or electric company to see if they have this service. With budget billing, they will look at what you've paid over the past 12 months and bill you at more of an average amount, greatly reducing the price jumps from bill to bill. Those with high winter bills, will pay less in the winter and more in the summer. Folks in the south, who have high summer cooling costs would have increased winter bills and decreased summer bills.

Another reason to save

Budget billing will help, but it might not be a cure-all because energy prices can spike severely. So, if you had a hard winter when it came to paying bills, consider it another incentive to build an emergency fund. If you have $5,000 in a money market fund and you run into a handful of high heating bills next year, you can borrow the money from yourself instead of having to use a credit card.

Weatherize your home

Now, that it's warming up, you might consider better winterizing your home, too. Caulk, weather stripping and insulation are relatively inexpensive ways to improve a home's heating and cooling efficiency. They can pay for themselves again and again in just one season. Also, by lowering your thermostat in the winter and raising it in the summer just one or two degrees, can make a big difference in your heating/cooling costs.