Rising Gas Prices

There has been a lot of angry discussion recently about why gas prices are going up. In our area, they are are up 7% in just the last week. Many predict they will to go higher still. I understand your anger, but after you scream and yell and stomp your feet you must face the problem and decide what to do about it.

How is this going to affect you?

If your gas budget has been $200 a month you are going to be $14 over budget if prices stabilize. Or, maybe you operate a small business with a $2000 a month fuel budget, in which case it’s a $140 problem. Either way you must determine where you are going to get the additional money.

Maybe a 7% increase in your gas budget won’t break you, but that money comes from somewhere and living intentionally requires that you acknowledge the increase and make a decision what to do about it.

I have been told by small business owners about similar increases that they will “just absorb” them. What exactly does this mean? Does this mean they will reduce their profit predictions by the expense increases? That is a perfectly acceptable way to handle the increase if that’s what the owners want to do, or they could increase prices or they could reduce another expense or they could find another way (other than price) to offset this expense. The one thing they must do if they what to run an efficient and profitable operation is to make a reasoned decision about the situation. If you don’t take notice of a 7% increase for a single expense, what is your threshold, 10%, 20%?

Like a business, you personally need to be aware and decisive when the cost of an expense increases.

Here are some possible courses of action:

I will take the difference from my blow money. This means a couple less coffees this coming month or skipping a lunch out or missing a movie, if these are things you buy with your blow money.

I will drive a least 7% less. If this is your plan how will you accomplish it? How much is 7%? What trips will you eliminate?

I will carpool this coming month saving _______ miles, which is ___________% of my gas budget.

I will ride my bike either to work or for errands, saving _______ miles, which is ___________% of my gas budget.

I will use public transportation for the following trips_______________ saving _______ miles, which is ___________% of my gas budget.

This is what living intentionally is about. It is making decisions and controlling your life and your money, not just letting things happen to you.

The first step in all of this is to know what you have been spending on gas. Do you really know or are you guessing?  Can you quickly and easily tell me what you have spent the last year?

Be aware. Make decisions. Follow through.

Need a ride?

This is a graph.

Let’s call it our “How People Get to Work Graph”.

Most people live under the big fat part of the graph. They are driving financed or leased cars to work. They are obligated and indebted. They are normal.

Normal Sucks. (Please remember this highly technical financial phrase; it can make you rich).

If we move just a little to the right, we find people driving their paid off cars to work. These people are not entirely normal, they are not indebted (at least not for their car) and they have given themselves a chance to win. Dave approves of these people’s transportation.

Out to the right a little further, we might find two or more people car-pooling, sharing their transportation expense. Most of you are still with me here, that’s a scenario that you can wrap your head around.

But let’s go way out under the long tail. Here we can find people who have sold their car. They don’t have a car. They don’t have car insurance or maintenance or parking or gas expenses. They don’t have finance costs or depreciation draining their net worth. They are car-free. These people are way Beyond Dave.

Could you do this? Before you answer please notice I have my fingers in my ears. Go ahead a rattle off your 52 rationalizations why this is crazy and the people who do it are nuts and why it would never work for you. Done?

The average American spends nearly 20% of the income on transportation. Twenty percent, how much is that for you?

Edmunds True Cost to Own can give you an idea what it really costs to own different models.

These people without cars plan to live without cars. They live relativity close to work. This means not only do the save on transportation costs, but they may also save on commute time as well.

What would more time at home mean to you?

Would it mean you could get a load of wash done in the morning so everyone is less rushed and stressed in the evening? Would it mean you could cook dinner more often instead of picking up unhealthy and expensive drive through food? Could you get an extra hour with the kids?

Add this value to your twenty percent.

So, how do you get to work if you don’t have a car?

Buses, trains, subways and car pools work in some places.

Electric Bikes, bikes and walking work in others.

A combination of any of the above works in even more places.

I commuted by bike 10 miles each way for a number of years. I usually rode at least 3 days a week. It was good for my health and good for the budget. It wasn’t as good as being car free but it was much better than normal.

How far can get you from normal?