Why are Gas Prices so High?

Budgeting No Comments »

No doubt about it, gas prices are high these days. But what is the problem, why are gas prices so high? Well it started with Hurricane Katrina. Most of the petroleum refineries in the U.S. are in the gulf coast region. When the hurricane hit, it wiped out many of those refineries, thus drastically shifting the supply of gasoline. With a shortened supply and no dramatic effect in demand for gasoline, prices soared. The U.S. refineries still haven’t recovered, but here is the most amazing part - U.S. citizens did not lower their demand for gas.

Question: But gasoline is a must have, how can I lower my demand / consumption of it?

Answer: By buying a more fuel efficient car and reducing unnecessary travel.

But the problem is, most Americans do not know how to downgrade. We think that we should always increase, and never decrease. Over the last 2-3 years, there has been no significant change in the sale of large automobiles such as full sized trucks and SUVs. Commercialism and the media have pounded it into our heads that must, absolutely buy the best and largest car we can (and usually cannot) afford. All advertisements focus on payment and interest rate only, nothing about maintenance, gasoline consumption, or longevity. So we as Americans just blindly follow the herd, trying to “keep up with the Jones’s” and buying that vehicle that is way too big, and way too costly.

I witnessed a news story that reported the answers that people gave to being questioned about their vacations and trips during a summer with expected increases in gasoline prices, and must responded by saying they would just grit and bear it. We must wake up if we are ever going to see any real changes. I know you have to buy gas, but limit your trips and joyriding. If we all cut back, then gas prices will fall to encourage more buying.

Political Problems

Another problem that is facing the gasoline market is potential pressures issued by democratic politicians. These politicians hope to reverse the tax break given to companies for oil exploration. Currently, most of the exploration expense can be depreciated over just a few years, giving companies an advantage to seek out new oil, and bring it to the market. But the democrats want to take this away to “”preserve the Eco-system”". This is ridiculous, and will cause oil producers to stop seeking out new oil deposits, and drive the price of gas through the roof!! We must not let this sort of legislation pass. Contact your representatives, and get the scoop on the latest legislation that is anti-oil and tell them you want low gas prices, not to save some species no one has ever heard about before.

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Financing a Car for College

Budgeting, Car Finance, Car Shopping No Comments »

Teenagers are great, all they think about (especially if they are boys) is 4 spinning wheels. They all have high aspirations for the expensive car, with the souped up engine, NOS (nitrous oxide) booster, and titanium alloy rims. They want it to go 100+ mph and have a hot, shiny finish. But they are ignorant, and do not count the cost of a vehicle. Many teens today have parents that will buy them most any car they want, along with keeping the gas tank full and paying for insurance. This is one of the worst things you can do to your child. They need to learn responsibility, and respect for the things that they own.

I am reminded of one of the teens that is a member of our Church. He was looking at an F-150 full size truck. The price wasn’t too bad, about $2,000, but it was full size truck, eg a gas guzzler. He decided to put a couple hundred bucks down on it and to finance the rest with the bank. Not a bad idea for one his age, use the loan on the vehicle to build a little credit before going on to college.

The Good

As eluded to previously, the positives related to this purchase are as follows:

  1. Low price. It was a used vehicle, and long term, the better way to go. See Should I Buy a New Car or a Used Car? for more details.
  2. Credit Building. Taking out a short term loan (1-3 years) on a used car at this price is an excellent way for first time borrowers to build credit without getting in too deep. Credit will be invaluable to him later.
  3. Utility. As we all know, having a truck will allow you to do all kinds of work and moving, that a car will not allow. This will come in handy as he moves out of state to go to college.

The Bad

Now let’s look at some reasons why this is not a good purchase:

  1. Gas Mileage. After the issue of price has been settled, gas mileage is the most important factor for teen. They have no money and therefore have to take steps to keeping the gas budget down, especially with the price of gasoline here in Texas approaching $3/gallon. With the F150 getting less than 20 mpg even on the highway, this teenager is facing an enormous cost of gas per month.
  2. Standard Maintenance. Oil changes and air filters won’t be much different for this teen, but when he needs to replace the tires, he is in for a rude awakening. 13 inch radial tires for a small car may cost as little as $30-40 a piece, but he will be lucky to get decent tires for his truck for less than $100 a piece.
  3. Insurance. This is the real downside to financing a car for college, or for any other reason. Banks will not lend money on a vehicle without full coverage, and the cost of full coverage vs liability only coverage is staggering.

The Ugly

F-O-R-D (Found On Road Dead). Ford’s are terrible vehicles, especially the F150, their most notorious flop. Do not, I repeat, do not buy a Ford F-150. They are among the worst vehicles on the road. If you do, expect high, high maintenance costs, as they love to break down. Also, and I’ll throw this in for free, Ford is one of the largest financial supporters of the homosexual cause. The company is tearing at the heart of Christianity, and I have added my name to AFA’s boycotter list.

To close, I recommended to the youngster that he not buy the truck. However, against my counsel, he bought the truck anyway. I have talked to these teen boys for a long time about buying a small car that is cheap and gets excellent gas mileage, but they just will not listen. I guess they want to make their own mistakes. Only time will tell…


A home based business is often not enough to get a car auto insurance. Ideally, one should get free insurance quotes prior to committing to anyone. With luck, one can get instant loans as well. People having health insurance jobs usually of sort such deals instead.

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Skip a Payment: Holiday, Gift, Marketing Breakdown

Paying Off Debt, Budgeting 2 Comments »

Many credit lenders (credit card companies, credit unions, banks and so on) offer “Skip-A-Payment” options for borrowers.  Every lender has its own terms and conditions (how many payments per year you can skip, what type of credit is included or excluded in the program, and the amount of fee charged for the privilege), but you typically can skip one payment per year for $10-$50.  Sounds like a great deal?  Well “Skip-a-Payment” can be good or bad – it depends.

Why They’re Bad

The way these services are sometimes marketed towards the financially foolish is disturbing.  The credit lender may send a happy sounding letter, or post on their website something like:

“Dear valued customer, It’s summertime, and X-Bank wants to say thank-you for your business by offering you a vacation from your bills!  That’s right, you can choose to skip this month’s payment on your current account listed above.   Upon receipt of your extension agreement we will waive your payment for this month and apply a $25 extension fee to next month’s invoice.   There’s no need to send any money at this time.  Just think of what you can do with the extra cash!”

 “Take a vacation from paying your bills” subtly sends the message “get out of your responsibility (because we all hate responsibility) – hey why not take a vacation with the money you save because you deserve it!”

Of course not everyone will use the money for a vacation, but many will believe they are getting a break, when really, they’re going to end up paying more than that $25 extension fee.

Meanwhile the credit lender gets a few quick bucks from the borrower that will NOT be applied to the outstanding balance.  The lender successfully extends the life of the loan by one month (at least) and earns even more interest on the money not paid that month.

Why They’re Not So Bad

Skip a payment services can also be beneficial IF they’re used for a good reason and not as an excuse not to suffer paying a bill:

1. Emergencies
There may be a month where you absolutely just CANNOT make a payment – maybe you’re in between jobs, had to take time off work for health reasons or needed emergency surgery for a loved pet.  These things happen. Skip-a-payment services can help you avoid a delinquent account.

2. Paying Off Higher Interest Debt
It makes sense if you have credit card debt (which is usually much higher interest than other loans) to take the money you would have applied to a mortgage or car loan at 5% - 10% and reduce your 18-29% credit card balance.

So next time you get that tempting offer to skip your credit card or loan payment consider the consequences against the benefits. If you don’t have any higher interest debt to which the “savings” could be applied, don’t be suckered into thinking your credit lender is doing you a favor.  If you are facing rough times, remember that you likely can actually miss a payment to avoid damaging your credit history.

Linda Bustos is an Editor for Creditorweb, where you can learn about credit cards, discuss personal finance in the credit forum, read reviews on credit card offers from multiple lenders and apply online for a credit card.

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College Kids and Credit Cards

Budgeting, Credit Cards 1 Comment »

College kids and credit cards are a dangerous mix, especially these days. Children in today’s society are more irresponsible than ever before. I wouldn’t even trust most adults in their early twenties to take $20 down to the store to get milk and bread. Kids just do not have any sense of responsibility or care in the world, and it is mostly due to bad parenting. Families today have both parents working, and typically a solid income that will allow for some extra spending money, and debt in the five digit range - yes I said five digits, as in over $10,000 in debt. What happened to our morals, where is our sense of financial management? These are core issues here at Personal Finance Resources. But let’s discuss some key points that will help your child to be aware of their spending, and have a notion of what the value of a dollar really is.

Teach Them How Debt is Like a Prison

Debt really does enslave the borrower. The Bible says in Proverbs 22:7 “The rich ruleth over the poor, and the borrower is servant to the lender.” What would happen to you if you lost your job? Would your finances crumble? Would you lose your house and car(s)? These are very important points that you can discuss with your children. Let them know how dangerous it is, and how it is like a house of cards that can fall at any moment.

Train Them in Personal Finance Management

Small amounts of debt (like a few hundred dollars on 1 or 2 credit cards) can be very beneficial to a first time borrower, like a college kid. This will help them to establish credit, and later they will be able to get approved for a loan for a house, car if necessary, and other things. Running these small balances allows the credit card company to earn a little interest, while building up the college kid’s credit rating. But be very, very cautious and monitor your credit card account, because all too often we fall into the trap that the credit card companies set, “Go ahead and buy it now, you won’t have to worry about paying for it until much later.”

Set Low Balance Maximums

This will help to curb the bliss notion of using a piece of plastic as a license to go on a shopping spree. If you as a parent are helping your child to build credit, set a balance of maybe $250-500 on your child’s credit card, thus forcing them to come to you for additional funds, and allowing you the opportunity to further teach them about financial responsibility.

Today’s lesson, in a nutshell, is focused around teaching. As a parent, we must teach our children all things, including financial responsibility. The earlier they learn, the better off they will be. Take the time to teach them, setup chores and allowances, make them work for things they want to buy. It will make them place the appropriate value on a dollar, and they will need that training later in life.

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Texas Electricity Rates

Budgeting 3 Comments »

As some of you may know, I live in Texas, and the Texas electricity industry has been deregulated. Thus, Texas electricity rates have become a “shop able” commodity. But why does TXU still get the lion’s share of the electricity market? Because people do not know that they have a choice. I want to address this, and tell you which company I am currently with, why it is so great to go with a different electrical provider, and how much money you can save. I am even going to provide you with a link to be able to shop today’s rate for many different electrical providers.

  • Will Another Energy Company Have Blackouts?
    A lot of people have this concern, and therefore do not want to switch. But in Texas, the generation of the electricity is still regulated. Thus, regardless of the provider, the electricity comes from the same power plant, along the same electrical lines, and if there is a failure, you would call the same 800 number to have the lines repaired. So, the only thing that changes is who the bill comes from, how much they charge you per kilowatt hour, and the terms of the contract. So let your mind at ease, each energy company out there provides the same delivery of electricity.
  • Making the Switch is Too Much Trouble
    I assure you, it isn’t, just make the call to the new company (some even allow sign ups online), complete the contract within a few minutes, and presto, done. Just make sure that you get all the details like how long the contract term is, how much per kilowatt hour, is it a flat/progressive/average kilowatt hour charge, are there any early termination fees, is there a guaranteed kilowatt hour price, etc. I recommend going month-to-month, at least in the beginning, to try the company out.
  • Which Electrical Provider am I With?
    Well, to me, price was the most compelling factor is my choice of electrical providers. After that, I did not want to commit to a one year contract, so I chose Star Tex Power as my provider. At the time, there was only one company cheaper than them, but the name of the company was Amigo Energy. I just couldn’t trust a name like that, so I went with Star Tex Power. One simple phone call, and I was up and running. They also have free online payment processing, which makes the billing very simple.

To sum up, since the deregulation of the energy industry in Texas, electricity rates have been a lot better. If I were you, I would definitely make the switch. You may shop the rates of many providers at powertochoose.org. Sign up for my RSS feed for more great personal finance tips and help to come in the near future! So long for now…

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Free Groceries Coupons? Nah…Master the “Fresh or Free” Program

Budgeting 1 Comment »

Forget free groceries coupons, instead master the art of the “Fresh or Free” program provided by our friends, HEB. In this post I am going to detail the method we use to get the most out of the program. The basic overview of the program is provided in my Groceries for Free post.

The basic principle we use to maximize our gain is the law of large numbers. My wife and several lady friends assemble, usually in a group of about 6 or 7 ladies, and go out at night. They usually go out around 9 or 10 PM, with the goal being to collect items that are already expired, as well as targeting the midnight hour, to get items that have just expired.

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Groceries for Free

Budgeting 13 Comments »

Want to get groceries for free? HEB has a spectacular policy called “Fresh or Free”. This is not a joke or hype or any kind of sales pitch. This grocery store actually provides an opportunity for anyone to get groceries for free. If you do not know of the HEB grocery chain, it’s probably because the chain is only located in Texas. My wife and I shop there almost exclusively, especially because of the Fresh or Free program. Here is a basic rundown of how to take advantage of this great policy:

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Tips for Monthly Saving Part 2

Budgeting No Comments »

Before continuing, you may want to catch the previous entry:

Tips for Monthly Saving Part 1

In the previous entry, I focused on small changes that you could make on a daily or a monthly basis that could save you significant money over time. Now I want to address larger savings that could be made. The key concept that is the hardest for Americans to learn is to delay gratification - you really don’t need it, at least not right now. The following is not rocket science, but it sure does make sense:

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Tips for Monthly Saving Part 1

Budgeting 2 Comments »

Does it seem like you just can’t get ahead?  Like its paycheck to paycheck, and zero room for errors?  I’ve been there.  When I was in college, I was living on 59 cent bread and 49 cent lunch meat.  I could barely make rent and pay payments on the thousands of dollars I racked up in credit card bills.  The financial pain of higher education is incredible these days.  But you may have other reasons why there isn’t anything left at the end of the month…

Today, I want to look at some possible cost cuts you can do to increase your monthly saving habits (or generate some new ones).  I have compiled a chart that will show you how small monthly or daily cuts in your budget can really save a lot of money over time.  But it takes discipline, and you must be ready to commit to saving money as a daily habit, to achieve any real monthly savings.  Here’s some things to ponder:

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Free Home Budget Spreadsheet

Budgeting 2 Comments »

I am proud to introduce my user friendly, simple, free home budget spreadsheet.  I took the home budget spreadsheet that I have been using for the last few years, and modified it so that it is dirt simple to use, and helps you to predict your future savings!  Just a few instructions to follow, to make sure there is absolutely no confusion:

  1. Line 5 of the spreadsheet is where you enter your after tax or net income.  It is entered by month, so that if you have a job that is not salary and your earnings vary month to month, this home budget spreadsheet will still work for you.
  2. Column B of the spreadsheet is where you enter all the line item expenses that you are budgeting for.  Try to come up with an average for the year, as you don’t want to change these items as the year progresses, if possible.  All the automatic calculations assume that the budget items will not change.
  3. Cell B22 of the spreadsheet is where you enter your bank account’s balance at the beginning of the year.
  4. Columns C through Y are where you will be entering your actual monthly expenses, as they happen.
  5. Check the automatic calculations for your predictions!

With regard to the automatic calculation area, here are the definitions of what is being calculated:

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