Lazy Man and Money

Devil’s Advocate: Give Me High Gas Prices!

by 7 Comments

[For the next couple of weeks, I’m going to mix in a few devil’s advocate posts in here. It’s been done a few times in the personal finance space, but I think it breaks up a little of the monotony of the everyday post. I’ve only got a couple of ideas to start, so it could be a short-lived series. If you have some ideas you’d like me to cover, please contact me. Finally, let me warn you in advance this article is a little two articles in one. You’ll see what I mean.]

In this month’s Kiplinger’s magazine (well October, 2013 since magazines seem to live a month in the future), I noticed an interesting article about fewer buyers for cheap gas. The author, Knight Kiplinger, states that every time gas prices go up people drive less and conversely when they go down people drive more. This is not amazing. In fact, it’s common sense.

He thinks that’s going to change. That caught my attention.

The nerdy folks in Kiplinger Business Forecasting Group think that oil prices are going to drop 30% by 2016… which would lead to about a similar price drop in gas prices. If all goes according to the prediction we’ll have more money from the savings. Awesome. Kiplinger thinks you won’t put that money into driving more, but instead towards other expenses.

In the discussion of one of my article published this week, Are We Financially a “Lost Generation”?, readers noted that the price of health care has sky-rocketed. As a military family, I’m thankfully insulated from the rising costs, at least for now. My friends mention seem to mention it at least once a month. It wouldn’t be a surprise to see any money saved on gas to go towards their health care bills.

Give Me High Gas Prices

In thinking about the gas prices going down, a small part of me was disappointed. Over the last few years, I’ve had some conversations with my friend Kevin and he’s convinced me that high gas prices are a good thing.

Why could high gas prices possibly be a good thing? When the price of gas gets high, people and companies adapt. Companies put more money into hybrids and giving us more MPGs because the people are buying those cars. It sparks change. Change for the better as we invent new solutions to combat the problem.

If gas prices stay low for an extended period of time, there’s no urgency to improve. Things stay stagnant. The need for progress is limited and the money goes towards other things.

So give me high gas prices now. Get them high enough that manufactures are doing whatever they can to put a SUV out there that can get 50 MPG (or MPGe), even if it means I have to plug it in over night. Let’s see smaller cars consistently get over 75 MPG. I want to a super-efficient solar panel on the roof of the car and a wind turbine on the antenna. Give me some sort of magnetic system in the engine to reduce friction. Give me whatever is going to get us there even if these somewhat far-fetched ideas can’t.

And when we have cars that are super efficient, I’ll take lower gas prices please. Then we’ll be able to go 500 miles on $15. Our wallets and the environment will love us.

“… and I’m Like, ‘[email protected]#% You!'”

by 7 Comments

I’ve been writing this blog for nearly 5 years now and up to this point, it’s been pretty G-rated. I’m going to move that up to PG, by getting a few F-bombs out there. It seems to be the right time for a couple of reasons.

Last week, Jonathan from My Money Blog caught my eye with his post about [email protected]#% you money. It was a great article about how when you have enough money, you can tell your employer to “[email protected]#% you.” Plus it featured the unlikely combination of Dilbert and Humphrey Bogart. I’ve had a taste of this experience over the last couple of years. Income from blogging and other websites has created a stream of income that effectively serves as an emergency fund or pension. Maybe that’s better called, “Go shove it money”, rather than “[email protected]#% you” money.

[email protected]#% you gas prices and iPads

While on the subject of declaring a “[email protected]#% you”, I had a conversation with my wife this weekend. (No there were no F-bombs dropped.) We noted that the news in Silicon Valley couldn’t seem to get off of two topics:

  • The escalating gas prices and people’s complaints about them.
  • the release of the iPad 2 and people’s elation over very minimal changes. I invite you to check out the hilarious Conan parody that includes a censored “[email protected]#% off” to keep with the theme of the day.

It’s an interesting dichotomy. I realize that the people complaining about gas may not have iPads. People having iPads might not be the people complaining about gas. However, there are a couple of times in our daily lives where we’ve seen it be that same person. My wife pulled out a pen and paper and put together a little parody.

To the tune of “F you” by Cee Lo Green:

I see you tweeting from your Macbook ’bout the price of gas, and I say “[email protected]#% you”
You say that 4 bucks a gallon is just too much, and I say ‘F’ you

You say “I have no money” well isn’t that funny,
well that some S#*! (that some S#*!)
I see your Gucci purse and I just have to curse, and say “[email protected]#% you”

Well I don’t feel bad, you own and Ipad and you’re in line for Ipad 2
You have and ipod and an iPhone, hey you can play music on both them.

Well can’t see-hee, you own an SUV, and it’s a gas guzzler, a gas guzzler

Whoo-Hoo you say you just can’t pay
Hey go sell your S#*! on Ebay!

How can you strike back? Use these tips on how to save money on gas and buy an original iPad on Ebay.

Does America Need to Wake Up Financially?

by 17 Comments

I might not have mentioned it, but I’m in Los Angeles this week, staying at a swanky hotel called The Omni. (I’ll tell you more about it after my stay, but it’s essentially free.) They dropped off a copy of USA Today yesterday and for the first in months, I read a physical newspaper. It’s a general interest newspaper, but the front page seem dominated by financial concerns. There is a “Nation’s gas gauge” in the top left showing how much the price of gas has changed in the last day and the price a year ago. (It’s 37% more expensive for the regular stuff in case you were wondering.) The cover story was, As food costs soar, it’s back to basics for meal planners. At least they didn’t have an article on adjustable rate mortgages rising and people foreclosuring on homes. Maybe the editor didn’t want to depress everyone on the same day.

That’s what America is faced with today. Food prices through the roof. Gas prices through the roof. Home prices through the roof. It’s going to cost you more money to commute to your job. The money you make there is going to less quantity or quality of food. Then you come home and worry about how you are going to pay the mortgage. At least basic clothing is relatively cheap, right?

As Ben Stein says, this isn’t so much of a problem for the highly skilled/educated lawyers, doctors, investment bankers, etc. When you bring in six figures or more, you can usually a few hundred dollars a month. However, if you are on the lower pay scale you likely have bigger problems. The rise of gas and food is huge. When you might have been scraping by before you might be in even bigger trouble now. In the aforementioned article, Ben Stein is quick to point out that “Since [1974], real wages both hourly and weekly for all non-government workers, on average, have fallen by about 5 percent, very roughly.”

I’d like to revisit that USA Today article on food costs. It is filled with anecdotal evidence of people reacting to food costs:

  • Retirees Sally and Robert Jones reverted back to some of the menus that got them through graduate school, living on beans, stews, and soups.
  • Nancy Sierra eats peanut butter and jelly sandwiches for lunch.
  • Tiffany Nicosia whips up new recipes with whatever is left in her refrigerator.
  • Rebecca Woods and her family of five saw their grocery bills double from $800 to $1,600 a month.

However, the part that I want to focus on is the Rebecca Woods quote:

“We were eating whatever we wanted “” yogurt, bagels, name-brand cereals. I wasn’t looking at the price of anything. I was at the point where I bought the same thing every week. I ran into the grocery, I bought what I needed and ran out.” Later she says, “I realized we were sinking financially and couldn’t go on that way.”

Are you like Rebecca was – spending money without looking at the prices? Do you know someone who is? Do them a favor and use the little e-mail icon at the end of this story to send them this article.

Ask The Readers: Did You “Staycation” to Save Money on Gas?

by 28 Comments

gas-pump.jpgMemorial Day weekend is over… *Sigh*… back to work. The local news last night interviewed a number of people about how they spent their Memorial Day weekend. I was surprised by the number that were really cutting down their driving to save money on gas. One family decided to cut down their vacations from 3 to 1.

My wife and I don’t drive very much for vacations. We might go 45 miles north to Napa for some wine tasting this summer. When/If we do, we’ll hopefully find a cheap motel or perhaps even camp out. We also might look into more activities in the nearby San Francisco. Even thought we’ve lived here almost two years, there’s still so much we haven’t seen.

So let’s turn the questions back to you… are you reducing your driving this summer? What is your budget for travel this summer? Do you want to punch me in the face for using a cutesy term like “staycation” in the title? Let me know in the comments.

Chrysler’s $2.99 Gas Promotion

by 15 Comments

Chrysler is touting a new promotion that promises to make $2.99 gas available to Americans who buy a new car from them. The timing couldn’t be better. With gas averaging over $4.00 in my area of San Francisco, I can personally say that I’ve witnessed some concerned people. So is Chrysler’s promotion a good deal?

Chrysler’s 2.99 Gas Offer in Detail

Chrysler is offering a gas credit card. Use the card where you buy gas and your statement will reflect the $2.99 rate (Chrysler pays the difference so the gas station still gets their money). The offer is only for the first 12,000 miles a year for three years. It excludes some vehicles like gas guzzler Dodge Viper, the popular Chrysler Crossfire, and some others. If your gas requires premium, the $2.99 cap becomes $3.29.

Math of Chrysler’s Offer: Two Examples

  • Great case – Let’s try to make a compelling case for this offer. Assume that you live in San Francisco and pay an average of $4.25 gas over the next three years. While gas could always jump to $6.00 a gallon, I think this may be realistic given how much it’s already jumped. Let’s assume that you get 20 miles per gallon in the car that you choose to buy. This is low for many of the models, but I’m being conservative. Let’s assume that you drive the full 12,000 miles each of the three years. Given this scenario you’ll use 600 gallons of gas a year or 1800 gallons. Saving $1.26 a gallon leads to $2,268 in savings
  • Average case – BusinessWeek offers a good average case example. It assumes you drive a more average car, use all the gas, and that gas prices stay at the national average, $3.61. It’s not exactly an average case as you aren’t likely to use the full benefit and gas prices aren’t likely to stay at today’s national average for three years. Those two may cancel each other out. BusinessWeek’s scenario says that it will save you $858 over the three years.

Buy or Don’t Buy

I imagine very few people will be able to take advantage of the best case scenario. There’s also the risk that if gas prices somehow drop, the benefit goes down greatly. On the other hand, what if this Goldman Sachs analyst’s $200 oil prediction is right? In that scenario, Chrysler may regret it’s offer. I think too many factors have to fall into place for this to pay off. I’d rather negotiate for cash savings at the time of the car’s purchase than take this gamble. However, if this does sound enticing to you, maybe you should also look at Suzuki’s free summer of gas promotion.

Two Better Plans

If you are really worried about gas prices, I would suggest buying a depreciated used car. Saving $2,000 when you are spending $30,000 is not something to celebrate too much. Buying a $30,000 car a couple of years old is still a better deal in my mind. If it has depreciated 30%, you’ll have saved around $10,000.

Five months ago, Generation X Finance told you how to make money with high gas prices. If you read the article and bought Powershares DB Oil Fund (DBO), you’ll notice that your investment has grown about 30%. If you invested $10,000, you’ll have $3,000 in gains – which buys a lot of gas. In my opinion, this is the best way to guarantee yourself low gas prices.

I would suggest that your best plan is combine these two ideas. Buy a used car and use the money you save to invest in oil and other gas related stocks. Oil may seem expensive now, but 10 years from now, we’ll look back at the good old days when we only paid $4.00 a gallon for gas.