When budgeting for a fixed income, you need to track every penny you spend. You probably turn off the lights and conserve water to keep your energy bills low. Maybe you’ve cut back on grocery shopping and stopped eating out altogether. Yet, despite your best efforts, your monthly expenses continue to rise steadily.
This is because many modern bills are no longer tied to how much you use. Companies have shifted their revenue models to rely on fixed ‘service fees’ and ‘ratings’. These costs increase regardless of whether you use the service or not. You are fighting a losing battle against structural inflation that ignores your frugal habits. Here are the five bills that are quietly growing behind your back.
The property tax assessment
Your local government doesn’t care that you live in a paid-off house. They tax you based on the theoretical value of your home, not your income. As home prices in your neighborhood rise, your tax bill will rise along with it. You can live in the same house for thirty years and see your taxes triple.
This bill grows even if you don’t make any renovations or improvements to the property. It is a ‘wealth tax’ on assets that do not generate cash flow. Unless you fight the assessment, it will continue to eat away at your pension check.
The insurance premium creep
You may have a spotless driving record and no claims on your home. Still your insurance premiums probably increased by 20% or more this renewal cycle. Insurers are raising rates across the board to cover losses from climate disasters elsewhere. They spread the costs of hurricanes and wildfires to all policyholders in the country.
Your loyalty to the company is often rewarded with ‘price optimization’ algorithms. These plans slowly increase your rate because they know you are unlikely to switch. You pay more easily because you are a stable, consistent customer.
The HOA fee escalation
Condos and planned communities are popular with seniors because of their low-maintenance lifestyle. However, Homeowners Association (HOA) fees are a ticking time bomb for fixed budgets. Inflation drives up the costs of landscaping, pool maintenance and insurance for the complex. The board passes these costs directly on to you in the form of a higher monthly contribution.
In addition, many older buildings now have enormous appeal “special reviews” for deferred maintenance. You could get a $10,000 bill for a new roof overnight. These fees are mandatory and may result in exclusion if not paid.
The utility company’s “delivery charges.”
Take a good look at your electricity or gas bill this month. You will see a line item for “delivery” or “distribution” costs. These are the costs you pay to be connected to the electricity grid. In many areas, these fixed costs are rising faster than energy costs.
You can go without electricity for a month and still owe $40 in fees. Utilities increase these fixed rates to guarantee revenue as people use less electricity. Your conservation efforts are negated by their pricing structure.
The subscription price increases
You signed up for streaming services or software years ago at a low rate. Over time, these companies have slowly increased their monthly prices by a dollar or two. They send an email notification that you probably missed or deleted. Suddenly your $10 Netflix subscription is now $18.
Multiply this by five or six subscriptions and you’re losing $50 per month. These “zombie subscriptions” automatically drain your account. For services you set up in 2020, you will pay 2026 prices.
Check your fixed costs
You can’t just focus on cutting back on your variable expenses like food and gas. You must aggressively attack these fixed costs to survive inflation. These recurring costs are the silent leaks that decrease your monthly budget. Call your insurance agent to review your policy and request a revision of your discounts. Appeal your property tax assessment this spring, so that you can be sure that you will not pay for your neighbor’s renovation. One afternoon call can result in hundreds of dollars in savings throughout the year.
Has your homeowners’ association fee increased this year? Leave a comment below and share how much it has increased!
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