Have you found yourself doing a double-take lately when you drive past the gas station? You’re not the only one. Gas prices have fallen steadily for the past several weeks, and everyone has something to say about it, even Treasury Secretary Jack Lew.
“Like a tax cut to the economy,” Lew recently said of falling gas prices. He wouldn’t predict future oil prices, but he added that market conditions suggest a trend back to normal. That may be, but right now, the national average price for a gallon of regular gas is at its lowest level in about four years. Wow!
GasBuddy.com reports that in the past 3 months the national average price for a gallon of regular gas has fallen 88 cents to $2.49. Wow again!
If you’re driving around with a 16-gallon tank, you can save $14.08 per fill up. Some sports utility vehicles and minivans have up to 26-gallon tanks. That is $22.88 back in your pocket with each fill up. The question now is, what are you going to do with that money? Here are some ideas.
1. Start an emergency fund.
An emergency fund brings peace of mind in both prosperous and challenging financial times. There is no right amount that fits everyone. The rule of thumb is 3 to 6 months expenses, but an assessment of your needs, current expenses and savings will help you determine how much to save. Tuck a little away each time you fill up and grow your emergency fund.
2. Take a class.
Did ever want to learn how to paint with watercolors? Salsa dance? Update your computer skills? The savings at the pump may provide just the funds you need to take up that hobby or improve your skills. Taking a class can be relaxing and fun. It can provide a little social time or even give your resume a boost. Check your local government website, recreation centers or libraries for information on classes near you.
3. Give it away.
Hang on with me for a minute here, I’ll explain. Charitable donations can qualify for a tax deduction. Give your savings from falling gas prices to your favorite organization. The charity will get your contribution and you could get a deduction. Did you know you can donate your car to a qualifying organization and deduct up to the fair market value of that car? An up-to-date definition of fair market value and a list of qualifying charities can be found here. Your tax preparer is your best source to help you through the sometimes complex rules and regulations associated with tax deductions for donations.
4. Pay off bills.
It’s that simple. According to a GasBuddy survey of 100,000 people, 83 percent said they plan to save their gas-price savings or use them to pay off bills. Good idea, folks. You can never go wrong there.
5. Go see a holiday movie.
Call up your honey or pack up the kids and go. Hey, with that extra money in your pocket you can even spring for the popcorn and be the holiday hero.
Whatever you choose to do with the extra cash in your pocket from the falling gas prices, a little forethought can make your money work for you.
-- By Megan Clevenger