Tags: gas | oil | save | emergency

Capitalize on Low Oil and Gas Prices While They Last

By    |   Monday, 29 December 2014 08:11 AM

Lots of my friends are cheering about the low oil prices that are spilling over into low gasoline prices at the pump.

They're taking note of each gas station's low price as they pass them in the car and are so cheery about them. They're taking pictures of the gas price. And that's all wonderful. I'm truly happy for them. Heck I'm happy for myself too.

However, since I've watched oil for so many years, I know that this relief that we're getting at the pump is nowhere near permanent. It's a brief window of time.

In fact, as I've done some deep studying of the oil charts lately, I've determined that oil will likely only continue to fall for weeks to a few months and that's if it hasn't hit bottom already. And after oil bottoms, it's usually back to very high levels in a year or less.

So the way I look at it, you've probably got one solid year of low gas prices at best. Remember, this window of opportunity could fade even sooner.

Therefore, the question rolling around in my head when everyone is rightfully cheering about low gas prices is, "What are you going to do with the money you would have spent on gas that you now don't have to spend on gas for this next year (or less)?"

You see, most Americans will just party it up. They'll buy impulsive items and things that will erode away in value. And when the window of low prices of oil and gasoline end, they'll be beating themselves up again because they didn't capitalize on that opportunity. They were so busy being so elated that the price was low that they didn't do anything about it but spend and consume the difference.

Instead, make 2015 a strategic year and take advantage of this short window of opportunity that you've been given. What will you do with the break in gas prices? Decide now or your money will just slip through your hands if you decide not to be strategic about it.

Here are some ideas of what to do with the $500 to $1,000 you're saving on gas during the next year:
  • Start an emergency fund. Unexpected expenses/emergencies will come up during 2015. While we never know exactly when, we can still plan for them now. So be prudent and set aside money now that will help buffer the load of car repairs, new tires, deductibles needing to be met, etc.
  • If you're OK in the emergency fund department, then you might want to consider paying down some debt. Heck, you might be able to completely pay off your smallest credit card with just the gasoline savings that you'll have in 2015. Get rid of that high-interest debt now while you can.
  • And if you've got an emergency fund and you don't have much debt, then consider investing the money. Now some of you may say, "What good is $500 to $1,000 going to do toward my retirement?" Well, in the next 20 years, simply depositing $1,000 into an S&P 500 index fund would reap anywhere from $5,500 to $8,000 for you, for no extra work involved. Just invest it and forget about it. (Those returns are considering market average returns of between 9 percent and 11 percent per year.)
So for no extra work, the $1,000 you save this year could end up being over $5,000 to $8,000 down the road if you invest your savings this year.

But no matter what you do, seize the moment. The difference between successful people and unsuccessful people has more to do with being strategic than it does how high your IQ is or where you went to school.

So decide now where you'll allocate the money you save in gas and you'll never regret it.

God bless!

About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust.
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Lots of my friends are cheering about the low oil prices that are spilling over into low gasoline prices at the pump.
gas, oil, save, emergency
Monday, 29 December 2014 08:11 AM
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