Everyday Cheapskate: Youthful Drivers, Level Pay Plans and Windfalls

Get ready for another round of your burning questions and my hopefully not-too-scorched answers as we tackle the financial dilemmas that can make even the savviest penny-pincher break into a sweat -- from the joys of insuring your teenage driver (and by joys, I mean sticker shock) to the temptation of throwing every windfall at those relentless credit cards, I've got some tips to help you navigate these tricky waters with your sanity -- and your budget -- intact.

Dear Cheapskate: We need help figuring out how to get a better deal on our teenage daughter's automobile insurance. Learning how expensive it is nearly took our breath away. -- Nancy W.

Dear Nancy: Welcome to the world of teenage drivers -- a place where your heart races not just because they're behind the wheel but because you're the one footing the insurance bill. While I can't magically make it cheap (because insuring a teenager is just about as pricey as their taste in clothes), there are a few tricks to soften the blow. First, make sure you're with a company that dishes out discounts for good grades. Then, lay down the law: no good grades, no car keys. Next, if your insurer offers a discount for taking driver's ed, sign her up for a qualified course faster than you can say "parallel park." Lastly, consider bumping up your deductible. Going from a $250 to a $1,000 deductible could knock about 20% off your premium. Just be sure you can actually come up with that deductible if, heaven forbid, she finds out what the bumper of the car really does.

Dear Cheapskate: My electricity company offers a level pay plan. They take the average of my bills for the past 12 months to determine my flat monthly amount for each month in the coming year. I've become very budget conscious and wonder if you would recommend that I accept this option? -- Linda F.

Dear Linda: Level pay plans are like the comfort food of budgeting -- they just make everything feel a bit more predictable. If you like knowing exactly how much your utility bill will be each month, then this option is your new best friend. It's great for planning and avoiding those nasty surprises when the air conditioning's been running 24/7. Just remember, once a year, they'll tally up your actual usage. If you've been frugal, you might get a little refund. But if you've splurged on keeping the house at igloo temperatures, you'll have to cough up the difference. The only downside? You might get a little too comfy with that steady bill and forget that cutting back here and there could save you even more.

Dear Cheapskate: I will be receiving a windfall of about $8,000 in the next couple of months. I do not have any type of savings or what I know that you call a "contingency fund." I've been using every spare dollar to rapidly pay off my credit card debts. Should I start a contingency fund with this money or use it to pay down my debts even faster? -- Donna G.

Dear Donna: Ah, the sweet, sweet temptation of paying off those debts! I get it. Slapping that windfall onto your credit cards would feel like a victory lap. But here's the thing -- without a safety net, you're one unexpected disaster away from falling right back into those debt-laden arms. Trust me, it's a lot less fun the second time around. So, as much as it might sting, I'm going to play the responsible adult card here and say: Stash that cash. Start building your contingency fund with at least three months' worth of expenses -- six if you really want to sleep soundly at night. That way, when life throws you a curveball (because it will), you can dodge it without messing up your debt payoff progress. Park that money somewhere safe, like Ally Online Savings or SmartyPig. Both are Federal Deposit Insurance Corp.-insured, and they'll let you build up your fund bit by bit, making it easier to stay on track and out of debt.

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Mary invites you to visit her at EverydayCheapskate.com, where this column is archived complete with links and resources for all recommended products and services. Mary invites questions and comments at https://www.everydaycheapskate.com/contact/, "Ask Mary." This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of EverydayCheapskate.com, a frugal living blog, and the author of the book "Debt-Proof Living."