Take Advantage of Falling Gas Prices
by Gary Foreman
Choosing a Roadside Assistance Plan
18 Ways Money Slips Through Your Fingers
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. According to the U.S. Energy Information Administration "the average U.S. household is expected to spend about $550 less on gasoline in 2015 compared with 2014." That means consumers have a wonderful opportunity to take advantage of falling gas prices.
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 what the future holds. But the less you owe on your home the better off you'll be no matter what happens. If things stay the same, 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 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. And, may set yourself up for that raise you've been wanting for years. 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, IRA's can be unpredictable. We all took a hit back in 2008/9. 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 regularly adding to your account should pay off later.
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!
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter. Gary is also available for audio, video or print interviews. For more info see his media page.
Take the Next Step:
- Have a little extra money now that gas prices are coming down? Let's take the money that's no longer going into our gas tank and put it to better use.
- Stop struggling to get ahead financially. Subscribe to our free weekly Surviving Tough Times newsletter aimed at helping you 'live better...for less'. Each issue features great ways to help you stretch your dollars and make the most of your resources. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist And What You Can Do About It for FREE!
Share your thoughts about this article with the editor.