Gas-Saving Myths

 

I was reading the new July issue of Money Magazine and ran across an interesting article. The following 5 gas-saving tips are all FALSE. Myths. And I’ve heard them all:

Gas up in the morning.
A gallon of cold gas has more molecules because it is more dense at the lower temperature. Because gas is stored in underground tanks where it is kept cool hiding from the sun, the temperature of the gas that comes out of the pump varies very little regardless of the time of day.

Replace your dirty air filter.
Thanks to modern technology, newer cars have sensors to adjust the fuel-air mixture. This compensates for clogged / dirty air filters. By no means does this mean you should stop changing your air filter (which should be done as standard maintenance), but don’t expect it to boost your gas mileage.

Use premium gasoline.
Some newer cars recommend premium gas but do not require it. Just as newer cars have sensors to adjust the fuel-air mixture, sensors are also triggered to compensate for lower octane gas.

Use additives. 
If there was a gas station that used an additive that claimed to give you better gas mileage and actually worked, everyone I know would be in line waiting to fill up right now. If people sell additives on the internet claiming their MPG miracle really does work, why aren’t gas stations buying these additives truckloads at a time?

Avoid using the air conditioner.
Apparently this myth is true in town. But on highways at higher speeds, driving with windows down creates enough drag on the car to make driving with the air conditioner blowing just as efficient.

Positive effects of a recession

Sound like an oxy moron? That’s what I thought. But according to an article I ran across over at Bankrate titled “10 reasons to love a recession”, there are actually pain releivers for the economic pain that is caused during a recession:

1. Family dinners
2. Shorter gas lines
3. Less junk mail
4. More coupons
5. Free fitness
6. Bargain SUVs
7. Business startup opportunities
8. Growth in gardening
9. Musical inspiration
10. New perspectives 

See, a recession is not as bad as it sounds. Right? I hate to say it, but that is dead wrong. Check out an article I ran across over at CEPR (Center for Economic and Policy Research) that highlights the many negative effects of a recession. They talk about even a minor recession having major negative effects on employment, health insurance, inflation, etc. 

So even though there are some (but not many) positive effects of a recession, Jay MacDonald, who wrote the article on Bankrate I mentioned above, put it well:

“We may not be the ideal stewards of the planet yet, but we’re making progress. Temporary setbacks like recessions prompt our collective course corrections.”

You (yes you) decide what I write about

I wanted to thanks everyone that has been reading my articles and leaving comments. Since my blog has only been live for a couple weeks, it’s exciting to see feedback already! So here’s where I am calling out the readers.

What topics would you like for me to review and post about?

Over the next few weeks I will be taking ideas from readers and creating articles from them. If there’s anything you would like me to discuss, please feel free to drop me a line with your idea at djmike805@hotmail.com, or feel free to leave a comment here on the site. 

I am open to discussing any topics having to do with credit cards, savings, investing, retirement, the economy, 2 dollar bills, monopoly money , anything. If it has to do with money, I will write about it.

Thanks for your support and I look forward to your ideas!

Trade in gas guzzler for more fuel efficient, worth it?

I ran across an interesting calculator over at Edmunds.com. They have come up with what they call the Gas-Guzzler Trade-In Calculator which calculates how long it will take to completely pay off a new more fuel efficient vehicle and actually start saving money. I ran the calculator on my current situation, and I can confidently say I will not be buying a hybrid any time soon:

Vehicles used in my calculation:

Trade-In Vehicle: 2000 Dodge Interpid (fully paid off).
Fuel Efficient Vehicle: 2008 Toyota Prius.

Fuel-Efficient Vehicle Sales Price: $28.176
My Trade-In Value: -$2,188
Cost of Fuel-Efficient Car Minus Trade-In: $25,988
MPG of Fuel-Efficient Vehicle: 47
MPG of My Trade-In: 22
Number of Miles Driven per Month: 800
Price of Gas: $4.30/gallon
Amount Saved On Gas (per month): $83.17
Number of months to break even and begin saving money on gas: 312 (26 years)

In my personal situation, buying a hybrid would not make much financial sense at all. So to see the impact of trading in a true “gas guzzler”, I ran the same calculation on my work vehicle:

Trade-In Vehicle: 1992 Chevy Suburban (fully paid off).
Fuel Efficient Vehicle: 2008 Toyota Prius.

Fuel-Efficient Vehicle Sales Price: $28.176
My Trade-In Value: -$329
Cost of Fuel-Efficient Car Minus Trade-In: $27,847
MPG of Fuel-Efficient Vehicle: 47
MPG of My Trade-In: 13
Number of Miles Driven per Month: 800
Price of Gas: $4.30/gallon
Amount Saved On Gas (per month): $191.42
Number of months to break even and begin saving money on gas: 145 (12 years)

So in the long run, yes you can save money on buying a hybrid. But in the short run, you are better off sticking to your clunker, gas hog, fuel mule, etc. It will be interesting to see what kind of gas mileage they squeeze out of cars in the future. When vehicles hit a 60-80 mpg average, I’ll re-visit this calculator.

Chase Freedom cash back credit card

For some, credit cards can be a financial nightmare. For others, credit cards are a way to earn cash back on day to day purchases. I choose to use cards for the latter. And Chase Freedom is my credit card of choice. Here’s why:

1. No annual fee.
2. 3% cashback on my top 3 spending categories (see below for further explanation).
3. 1% cashback on all other purchases.
4. Redeem cash back with as little as $50 in rewards, or if you accumulate cashback totaling $200, redeem it for $250! (a 20% bonus).

The top 3 spending categories for the month that earn 3% work like this:

Say in June you spent the most on gas, groceries, and movies. You will earn 3% cashback on all gas, grocery store & movie purchases. In July, you spend the most on drugstores, utilities, and department stores. So for the July billing cycle you will earn 3% cashback on all those purchase categories. ALL other purchases for each month will earn 1% cashback.

Other 3% bonus cashback categories include: grocery stores (that are not affiliated with or departments of superstores, warehouse clubs or discount stores), gas & convenience stores, quick service payment/fast food restaurants, telecommunications, cable/satellite TV/Internet Service Providers, video rentals, department stores, dry cleaners, drugstores, movie theatres, local and suburban commuter passenger transportation (including ferries, bridges, tolls, parking garages, taxis/limos), pet supply stores and veterinary services, utilities, beauty shops (salons and spas), or gym/recreation memberships.

Make sense? Great. Here’s the best part…

You can redeem a $50 check when you have accumulated $50 in cashback (the equivalent of approx. $1667 in purchases at 3% cashback). But if you can hold off redeeming your cashback rewards and save up to $200 in cashback (the equivalent of approx. $6670 in purchases at 3% cashback) you can cash in for a $250 check, a 20% bonus! Not too shabby…

Chase Freedom let’s you choose the cashback system I have described above, or you can choose to earn points. Points work the same as the cashback structure (3 points for purchases in the “top 3″ categories, and 1 point for all other purchases). Points can be used towards travel, gift cards, merchandise, and even cashback.

3% on top 3 categories, 1% on everything else, no annual fee. If you use it for gas purchases alone, you can enjoy a $0.13 per gallon discount on $4.50/gallon gas. Who in today’s world doesn’t want to save money on gas?  

This is why I never leave home without it.

Find cheap gas in your area

I ran across a very handy website called Gas Buddy. You can search by either zip code, city or state. The results will list local gas stations with the cheapest gas which is updated daily. So where is the cheapest regular unleaded gas today? The QuikTrip station located in Tulsa, OK @ $3.69/gallon. This sure beats what I paid yesterday here in southern California, $4.65. It’s hard to find cheap gas around here when the cheapest gas in the entire state of California is $4.37.

The average price for regular gas in the U.S. is $4.07. One year ago, the average was $2.97. That’s a 27% increase over the 1 year period. If gas continues to rise at this same rate, be prepared for the average price for regular gas to be around $5.58/gallon in June 2009.

Bill Gates is filthy rich (understatement)

Bill Gates owns over 800 million shares of Microsoft. That is a total value of over $22 billion! This is only a mere 7.5% of the total outstanding shares for the company. Microsoft has over 10 billion outstanding shares, giving them a market capitalization of roughly $300 billion! So what does someone that has accumulated a fortune of this size do with it?

The Gates Foundation, directed by Bill and his wife Melinda, is a worldwide program that “focuses on improving people’s health and giving them the chance to lift themselves out of hunger and extreme poverty.” It’s main focus in the U.S. is ”to ensure that all people have access to the opportunities they need to succeed in school and life.”

So how much money has the foundation given out / donated? Since it’s inception in 2000: $16.5 billion.

Next year, the foundation will be giving away an additional $3.5 billion.

Here’s an interesting fact: The population of Los Angeles, CA from the year 2000 U.S. Census was 3,694,820. Bill Gates could of taken his $22 billion, given EVERY PERSON in Los Angeles $5,000 dollars, and still had $3,525,900,000 left over. That’s over $3.5 billion extra!

That is why “filthy rich” is an understatement.