Lazy Man and Money

Use Your Gas Savings to Save and Invest

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Yesterday, I was running an errand and I noticed something different about the local gas station. The prices they were advertising no longer started with a crooked number. Gas was $1.999 (I’m going to acknowledge that weird 9/10 of cent they sneak in there.)

In much of the country this is old news. And in other parts of the country the price still starts with a crooked number.

The point is that it was a catalyst for me to think about how low gas prices have gotten. If you work in the energy industry, this is a bad thing. I’m sorry for you. I feel a little of your pain as I’ve been buying oil stocks (ticker: USO) when it was more than twice the price it is today.

For everyone else, low gas prices probably mean you have some extra money left over each week. You could use this money to support the local economy (a nice meal out perhaps), but I’m going to suggest something different and very predictable:

Save and Invest it.

If you have a brokerage account already set up, you can probably automate $50, $75, $100 a month into it. Personally, I like to use My Dobot account as I can text “save $50” and be done with it. With the way Dobot works, it’s already saving money. To read more how Dobot works read my review.

It might not make sense to buy a stock with $50 as commissions can eat up a large chunk of that. You can set up an automatic deposit with a lot of mutual fund companies to avoid this.

You might be thinking that $50 or $100 a month isn’t going to add up to much. (Quick math: that’s $600 or $1200 a year.) Depending on your current financial state it may not mean much. It’s all relative right? Bill Gates is certainly not going to care too much.

However, it may mean more than you think.

The stock market has been moving down since the start of the year. This means that you can buy some stocks on sale. (Full disclosure, I’m pimping out the IBM stock that I own. It’s trading at 2008 prices with a P/E under 9… and it pays a great dividend).

It’s a perfect match. You have extra cash from the low gas prices and the stock market is low so your money buys more shares.

If you want to double dip, you can do some of what I’m doing and buy oil stocks with your savings. I’m not sure you should be investing in USO like I am (I’m starting to think I shouldn’t be investing in it), but some of the big gas companies like Exxon and Chevron could be safe bets. The beauty of this idea is that if gas prices recover and you can no longer put that extra money into those companies, you’ll be happy to see their stocks have very likely increased as well. It’s easier to pay more at the pump if you know that you are getting it back in your brokerage account, right?

What are you doing with your extra gas money? Let me know in the comments.

Devil’s Advocate: Give Me High Gas Prices!

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[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.

Gas Dryer Savings are Worth a Big Risk

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We are coming to the end of our time living on a military base. Our house is almost ready to move into. It only lacks a few small things… the biggest being laundry machines. That may sound weird, but military tend to bring their washers and dryers with them. It’s Uncle Sam’s bill, so I guess the theory is why not buy nice ones and bring with you. We bought the house from a military family who took theirs with them and rented to a military family who had their own.

I did some research on Consumer Reports and Whirlpool Duets with a model number of WFW94HEAW where very much near the top. The chrome color of that washer is running a hefty $1299 at Home Depot. The matching dryer is another $1400. If that sounds pricey for laundry it is. However, they are really nice and we intend to have them for a number of years. Also after yesterday’s crazy computer purchase, it is own fair to make sure the wife is happy with with the appliances. I had resigned myself to spending about $3000 with hoses, clamps, and taxes for the pair. Fortunately, due to a few deals and special buys, I was able to get the pair for $2350. I had to sacrifice the chrome look and go with basic white, but it’s well worth it.

I only hit one minor snag. While we have gas heat and a gas stove, the laundry hook-up for some reason is electric. I thought there must be gas running to laundry as well, but there isn’t. That was a major disappointment. Why? Gas is really cheap nowadays, and cheaper in general. How much cheaper is gas? Fortunately, I didn’t have to look too far to find this MSN article by Len Penzo. Having met Mr. Penzo very briefly at a personal finance conference, I knew I was at the right place when I started the article. The math is fairly complex (and the prices for electricity and gas differ throughout the country), but the conclusion was simple… the savings can be upwards of $200 a year. By going with gas, we’d likely save enough money to pay for the appliances themselves in a dozen years or so.

With today being the last day of the sale, I didn’t have time to get someone into the house and give me an estimate on moving a gas line in there. I called a few companies and they refused to give me any idea without seeing it. I did find this article on The Nest where a number of chimed in that it is usually around $250. I’ll glad give up the first year of savings to have it for the rest of the life of the home.

I bit the bullet and made the purchase. I have to hope that there’s no difficulty piping it through because Home Depot was clear that the dryer can’t be returned. I’ve got my fingers crossed.

Save Money on Gas

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[This is one of the many posts I have on saving money. There are more tips on how to do everything on cars here.]

Unless you’ve been in a coma for the last six months, you’ve noticed the pinch of gas prices. You don’t need to just sit back and watch your wallet grow thinner and thinner. You can take action and learn how to get more miles for your dollar than ever before.

    Be a More Efficient Driver

  1. Brakes are your enemy. When you step on them, you have spent gas to go nowhere. Think ahead to limit the amount of brakes that you need to use. Trust me, it becomes a habit very quickly and you no longer have to think.
  2. Coast to red lights. Why use gas when you are going to have to stop?
  3. Coast down hills. I see a lot of people gunning it just to have to brake when they reach person in front of them.
  4. Coast to green lights far ahead of you.   If it has been green for a LONG time, you might not make that light by the time you get there. That will force you to brake (see #1).
  5. Don’t tailgate… …In fact do the opposite. Leave plenty of room between you and the person in front of you. If the person needs to slow down a little, you can coast to catch up a little instead of using your brakes.
  6. Take three rights instead of a left. UPS drivers do this in metro areas like NYC and found that they save fuel that would have been spent idling. Only look to do this at those really difficult left turns.
  7. Use Cruise Control. A constant speed is the most fuel efficient.
  8. Drive between 40-60 miles per hour. If you have a lighter car, you can aim for the 60 MPH number. If you have a heavier car, you’ll want to go 40 MPH. Go here for more information why.
  9. Avoid Traffic. Don’t drive during times of high traffic if you can avoid it.
  10. Use a GPS tracker. Time spent lost is gas wasted.
  11. Avoid air conditioning (if you stand it). Some tests seem to show that it’s not a big factor, so if it really impacts your comfort level, you might want to consider using air conditioning.

    12. Make Your Car More Efficient

  12. Don’t carry extra weight in your trunk. I do like to have some emergency supplies in the my trunk, but I won’t leave a bunch of weight in there if I’m not going to use it.
  13. Don’t carry extra weight around your waist. (Yes, this is more of a health tip, but it will still save you money in gas.)
  14. Convert your car to run on vegetable oil. Then filter your own oil from the stuff that restaurants don’t use.
  15. Remove any obvious wind resistance. This includes any bike racks, antenna ornaments, etc. Some say that rolling the windows down creates drag and others say it’s not a significant factor.
  16. Get low rolling resistance tires. These are tires designed to minimize the wasted energy due to the normal friction with the road. Check out Green Seal’s PDF report for more information. This can lead to some significant savings.
  17. Check the tire pressure  Air pressure matters. Follow your manual and you’ll get more miles for every gallon. You can get a highly-rated tire pressure gauge from Amazon for less than $15.
  18. Use a fuel injector cleaner.  You can pick this up an any car part store. Add to a tank full of gas or as instructed.

    19. Get the Best Price on Gas

  19. Get a credit card with gas rewards. The Chase Perfect Card with give you 6% cash back on your gas purchases for the first 90 days, then 3% after that. That’s like getting a 12 cents a gallon discount.
  20. Consider not using a credit card. This goes against the above idea. There are gas stations near me that give discounts if you pay with cash or debit cards. Find what works for you.
  21. Use the web to find the cheapest station near you. I like to use GasBuddy myself. I have a friend who uses his cell phone to get prices while he’s already out on the road.
  22. Don’t drive out of your way for the best price. It doesn’t make sense to spend a gallon of gas driving out of your way to save a couple of pennies. You’d have to have a huge tank and a very fuel efficient car to make it work.
  23. Find cheap gas in unusual places. When I lived in Boston, the cheapest gas was from a local grocery store chain. My wife, who lived a little further out west, found that the warehouse club she belonged to had better prices most of the time.
  24. Don’t buy premium grade… unless your car requires it.

    25. Pick the Right Car

  25. Consider a different car.  Do you drive great distances in an car that gets poor gas mileage? If so, you might save more money selling your current car and buying a different one. It’s not a common situation, but one worth checking out.
  26. Buy a Hybrid Car. Note that all hybrid cars don’t have amazing gas mileage.
  27. Buy a Small Car. Smaller cars weigh less.  They also typically come with engines that have four cylinders which often get better gas mileage.
  28. Buy a Motorcycle. Though I consider them quite dangerous, it is a way to save on gas.  As a bonus you may get to ride in many high occupancy vehicle lanes
  29. Don’t buy a car that requires premium grade gas.

    30. Don’t Drive as Much

  30. Use a bike or walk.  It’s also good exercise, so you kill two birds with one stone.
  31. Park far away. This is typically a health tip, but I see too many spending their gas going up and down the lanes looking for the best possible parking spot.
  32. Reduce your commute by moving closer to your job. My Money Blog did a great example on commuting showing the math vs. living in higher cost cities. Since he did it in March, his cost estimate for gas is conservative.

    33. Get Gas at the Right Time

  33. Follow the price of crude oil. I like to look at CNBC every now and again, but it looks like you can look up crude oil prices here. If it rises today, there’s a good chance gas prices will go up in 3-4 days. If it drops, it might be wise to wait for that to filter to your local gas station.
  34. Explore buy gas on Wednesdays. I’ve read that statistically gas is cheaper on Wednesdays. That’s helpful, but others say that there are so many other factors to consider that it’s worthwhile. Perhaps you might want to futher investigate yourself or just do it if it’s convenient.
  35. Buy gas a few days before a holiday. Have you ever tried to get gas on Memorial or Labor Day weekends? It seems like gas station always raise rates, knowing that you are going to pay it.

Two Bonus Myths

  1. Check your air filter. I’ve seen conflicting information about this. Consumer Reports says it’s a myth. About.com says that it can reduces gasoline mileage up to 10%.
  2. Fill up when it’s cool.  People think that cooler gas is more dense, but some studies show that the temperature coming out of the tank is the same.

Did I miss any gas saving tips? Let me know in the comments.

Hedge Rising Food and Gas Prices with ETFs

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I’ve been following the financial news a little more lately than I have in past. I don’t like what I hear.

An interview with a Shell Oil representative is claiming we might be paying $5 a gallon in two years. I shudder to think about what that means for me for California because we are up there with the most expensive gas in the nation. It’s a good thing that I work at home and don’t drive too much.

Then earlier today, I came across this article that predicted food costs more than ever and the United Nations says prices can go much higher.

Great googly moogly, higher gas prices and higher food prices?!?! What can be done about this? I’ll tell you what I’m doing: hedging my investments. When gas was cheap, I bought some PowerShares DB Oil Fund (NYSE:DBO). I also bought some PowerShares DB Agriculture Fund. Investing in these two commodities takes some of the sting away from rising prices.

Looking for a great way to complement that strategy? How about implementing these tips to save money on groceries and save money on gas?

What do you think? Are you hedging your bets against higher prices or not? Is now the time buy or have prices of these ETFs already risen too much? Is this six straight question I’ve asked? Yes it is.