It’s a task NO ONE is looking forward to this year, what with a yo-yoing stock market, government bailouts and debts, federal and state spending cuts, and skyrocketing energy and manufacturing prices.
But the time has come – time to finalize those 2009 budgets.
While the woes of Wall Street may not seem to matter to Small Town USA, the fact is that economic sputters trickle down to everyone, including rural communities.
The best way to navigate such dangerous water is with careful planning. It’s important to come up with a balanced budget for the next year, but it never hurts to take a peek into the future. Proper planning today can make rough economic days go much smoother in the future.
In this edition of eBulletin, we’ll offer a few tips and tools to help plan the best, most cost-efficient budget, as well as a couple of solutions to help pay for much needed capital improvements.
Up, Up and Away
The budgetary process is never an easy one, but this year it’s made harder by the steady rise in costs across the board.
A quick glance at the Consumer Price Index, or CPI, gives an idea of how high prices have gone. The CPI measures retail goods and services from different cities, and a report is released by the U.S. Department of Labor’s Bureau of Labor and Statistics every month.
The latest CPI figures, from August, show that prices in general were up 5.4% over August 2007. Doesn’t seem like much at first, but it’s the breakdown that makes you look twice. Food prices are up 5.9% from last year. Transportation is up 12.1%. All of that may reflect the biggest jump – energy costs. Those, including oil and natural gas prices, are up a whopping 27.2% from August of last year.
In a word – ouch.
How much of an impact will this have on your budget, and what’s the best way to figure out what you have and don’t have?
As it happens, there are some great online tools that can help answers those questions more easily.
How have the increased prices affected your planned projects? One way to find out is with the Inflation Calculator. This tool is provided by the U.S. Department of Labor’s Bureau of Labor and Statistics, and a link is available below.
Let’s say you started planning a capital improvements project a couple of years ago, but you had to delay starting it after getting the initial estimate. How much more will it cost now?
The Inflation Calculator can give you a general idea. Simply put in the original estimate and the year of that estimate. The calculator will give you an adjusted amount in today’s dollars based on the Consumer Price Index. It could show you where you stand on funding those major projects.
Additional Resources
U.S. Dept. of Labor Bureau of Labor and Statistics CPI Inflation Calculator
http://www.bls.gov/data/inflation_calculator.htm [1]
Taking Stock
The Safe Drinking Water Trust recently provided a chart of Annual Budget Activity. The chart gave a month-by-month list of tasks to prepare a solid budget without any last-minute panic. For those who may have missed it, the link is provided below.
According to the chart, this month’s major task is determining operating costs for the next year. Next, the revenue will be determined.
All this takes a lot of figuring, but there are a few tools out there than can help put the numbers into better perspective.
Dinkytown.net provides a slew of free, online calculators covering everything from personal finance to loans to automobile purchases and retirement savings.
Those working on the budgets can try the Business Calculators. There are some gems here to help figure out the budgets. For example, perhaps you’re trying to figure out if it would be better to rent computer and printing equipment for the office or buy it outright. The Equipment Buy vs. Lease calculator can show you how much you would spend on a purchase loan compared with how much you’ll spend on a lease over the same time period. The calculator takes into consideration the length of payment term, interest rates, fees and depreciation.
Maybe you should consider consolidating your debt this year. How much would it save? The Debt Consolidation Calculator can not only figure that out, but it can provide a chart so you can see how long it will take to repay a consolidated loan.
Other calculators include the Breakeven Analysis, Financial Ratios, Working Capital Needs, Inventory Analysis and Profit Margin Calculator.
These tools are all available in one spot, and they might help make it easier to determine your best options for balancing the budget.
Obviously, the budget will focus on needs for the next year. But it’s important to consider the years after that as well. Tucking away a little now can help ease major repair costs later.
Consider your asset management and strategic planning when working on next year’s budget. If you expect that you’ll need a second water tower in five years, see if there’s a way to start saving for it now. Every little bit counts.
Additional Resources
Business Calculators for the Web
http://www.dinkytown.net/business.html [2]
Show Me the Money
Spending wisely is a good way to keep the budget solid, but penny pinching doesn’t hurt, either. There are ways to trim the fat a bit. But you also have to make sure you get the money you’re supposed to get.
It’s vital to collect on overdue water bills. It may seem like no big deal to let your neighbor slip a month or two, but those months – and those neighbors – add up. It could mean hundreds, and even thousands, of dollars in lost income. That could mean a repair doesn’t get made, or a chemical doesn’t get purchased, or a water rate must go up to compensate.
There may be extenuating circumstances, and negotiations on payment plans aren’t out of the question. Whatever the solution, the bills must be paid to maintain the water system properly.
Collecting quickly also helps the customer. The longer the delay, the more it adds up. Eventually, they may not be able to pay at all.
The Safe Drinking Water Trust’s Web site has a list of tools and advice about collecting overdue bills. These tips, originally offered by New York Life, provide suggestions and methods on the proper way to collect on overdue accounts. The 10 tips are available through the link below.
The Trust also has some tips on pinching those pennies in an area where costs have soared – fuel.
The Tips & Tools page offers 25 fuel conservation tips to help ease the pain at the pump. Given the recent spikes in the cost of gas, every little bit helps. The tips touch on several factors that can increase gas mileage, such as keeping the air filter clean, keeping the windows rolled up at high speeds and making sure tires are at the proper pressure.
There are other little things that can be done. For example, clean out the trunk or the truck bed. More weight in the vehicle means more fuel is burned to propel it. Lightening the load may add a smidgen to gas mileage.
Making Things Easier
Of course, all the penny pinching may not be enough. If that’s the case, a rate increase may be needed.
It’s never a fun job to inform customers about a rate increase, especially in a rough economy, but it’s a task that must be done. A while back, we provided a PDF version of a form letter than could serve as a basis for correspondence to customers letting them know water rates were going up. The problem was, the PDF form wasn’t easily editable.
Seeing as how we want to help as much as possible, we’ve taken that form and converted it to Rich Text Format. This format can be altered in any standard text editor, including Word and even the free Word Pad. It will also open on Windows or Macintosh machines, and the text can be copied and pasted into standard letterhead if needed. Just insert the correct numbers, and you’re good to go.
A link to the new form is available below.
And you can be sure, we’ll continue to add to our Tips & Tools section to help water system. Of course, any suggestions or requests are welcome.