I guess everyone has noticed how much gas prices have fallen in the last few months. Seems only yesterday that every media outlet was screaming about $4 a gallon gas. Now that gas is back in the $2 a gallon range you don't hear much about it. And, that's a shame. Because lower gas prices create an opportunity for consumers.
Back when prices were high we all made adjustments to our lifestyle to handle the extra money that was going to the oil companies. We drove fewer miles and paid more attention to auto maintenance. We cut back on other expenses. In short, we did whatever we needed to do to solve the problem.
But, now the problem is gone. So we have a choice. We can go back to our old ways of doing things or we can take the money that's not going into our gas tank and put it to better use.
If you go back to your old ways there's a good chance that you'll waste the money. It'll disappear leaving hardly a trace.
On the other hand, you could continue with the changes that you made when gas prices were higher. If you're the average driver (about 11,000 miles per year) and your car gets 25 mpg that means you'll be buying 440 gallons of gas a year. And, at today's prices you'll be saving about $880 per year.
What to do with that extra $70 a month? Here are some options.
You could apply it to your credit card debt. Not only would you reduce your balance by $70, but you'd also reduce the amount of interest that you owed for this month (and every month thereafter). In effect adding that $70 to your minimum will save you way more than $70!
Or you could add it to your mortgage payment. No one knows how tough the economy could get. But the less you owe on your home the better off you'll be no matter what the future holds. If things bounce back quickly more of every future mortgage payment will go to reducing principal so you'll have more equity (and more options available to you). If things get really tough and house prices continue to slide you'll be in better shape if you don't owe so much.
You could take that extra money and invest it in your future. Take some classes that will make you more valuable in the job market. If unemployment increases you'll be happy to have more skills to offer potential employers. If you don't have a college or trade school nearby consider online courses.
How about accumulating an emergency fund? We all know that we're going to have 'unexpected' expenses. We just don't know when they'll occur. Without an emergency fund they end up on your credit card. Wouldn't it be nice to have hundreds of dollars sitting in a bank waiting for the next 'expected' expense?
Or you could put it in your retirement account (IRA or 401k). Yes, I know that your account hasn't been performing very well lately. In fact, you're thinking of trading your broker for a dartboard. But, if you have any faith in the U.S. economy, then you'd have to expect that some companies would do well in the future. So now could be a good time to buy in while prices are low.
Or perhaps you have an even better way to use the money that's been freed up when gas prices fell. If so, we'd love to hear your ideas. After all the pain that higher gas prices caused, it only seems fitting that we turn lower prices into something good!
Keep on Stretching those Dollars!
Gary
