Gas Prices and Your Finances

Gas prices have reached a level that is causing real pain. I take mass transit to work and if it weren’t for the weekly trip to my summer home every Friday I wouldn’t even notice the price of gas. My wife on the other hand drives 40 miles to work (which means another 40 miles home) every day. That comes out to 400 miles a week and with a truck that gets 20 miles to the gallon the bill has gone up a whole lot lately.

But is this enough to cause us real pain? Have we missed any credit card payments because of this? Are we in danger of not being able to pay our mortgage? No, no and no.

Looking back to a time when we thought gas prices were high but seem cheap today, I remember when we were paying $1.70 a gallon. Now at $3.10 instead of paying $34 each week for those 400 miles my wife is paying $62. If these prices were to continue for a year that would cost an extra $1,456 a year. Yeah that’s a lot of money but part of managing your finances is having enough to deal with emergencies or change.

If the struggle is too much then you can cut back in one area to deal with this jump in gas prices. But do you? I suspect most people just complain about the price and continue spending money like nothing changed.

Dealing with this now, before you notice any difference in your bank account is the best way to proceed. Done early the amount of sacrafice is quite small. If you go to Starbucks every day and spend $3 that will save you $15 of the $28 extra you’re spending for gas.

Skip takeout for one night and you’ve probably saved more than what the extra price at the pump is costing you.

For those of you who say this is a much bigger burden, I think you’ve got more problems than just gas prices. For those who are in danger of missing a credit card payment or paying rent (or mortgage) then you have some serious financial planning to do. You have to get a handle on your expenses and figure out how much money you have coming in and how much is going out.

Like an athlete who can change direction quickly, you must be able to identify areas to cut back or change your spending to combat any situation that is beyond your control. The only way to do this quickly is know exactly where you’re money is going.