Rising Fuel Prices, Are You Adjusting Your Budget?

Heather says:

Instability in the Middle East, oil futures speculation, fears of peak oil whatever the actual cause, once again it’s getting a little more costly each time we have to put fuel in the car. Some of the pain associated with rising fuel prices is immediately felt, right there at the pump. Ouch. Other effects are not quite as immediate, but all consumers should be aware of the following trends:

Food prices will rise

It takes fuel to plant, care for, and transport food. Sure all consumer goods have a fuel cost associated with them, but due to the relatively high turnover rate, food -specifically perishable food- is where people will next feel the impact of rising fuel prices.

In the past, it seems I notice the cost of milk and other dairy rising first

Individuals who work for tips will likely see their income fall.

As budgets get tightened to deal with the increase in food and fuel prices, the amount of money left over for eating out and other discretionary spending will fall. Some people continue to go out and just reduce the tip, which they view as non-essential. Is it right that consumers make this choice? Of course not, but it happens. I spent ten years in food and bev, it’s just a part of the business.

Those who deliver pizza will likely be hit on two fronts.

Households who live on lower incomes will disproportionately feel the impact of rising fuel costs.

Why?

Think of everyone’s income as a pie. Regardless of how big that income is, there is a minimum that must be spent on necessities. With a lower income, that minimum is a larger piece of the pie.

So, what can you do?

The answer is not running out and buying a brand new, fuel efficient car.

Think a little more long term. The additional 15 or 20k that would be spent on that new car can buy a lot of gas. If you have any extra discretionary income -money that could be spent on treats or non-essentials- it is time to make sure you stop the outflow. Pay off any small debts, store credit card for example. Sure it’s only $20 or $30 a month, but that may be what keeps your budget in balance with the increase in fuel costs. Get rid of it, yesterday. Go all Dave Ramsey debt snowball if you can.

Check your budget for any forgotten recurring fees. Do you have membership to something you’re not using. The gym perhaps? -raises a guilty hand-

Stopping the bleeding while it’s an annoyance can save a lot of stress.

Use all of the fuel saving tips we learned the last time around.

  • Walk or bike when possible
  • Use mass transit when possible
  • Cut all extraneous car trips -don’t make that mid-week run to the grocery store
  • Plan your route – this is especially helpful if you’re going somewhere new
  • Pool errands with neighbors -offer to return their library books or dry cleaning if you are going to be in that area. Chances are, they will return the favor. -This tip mostly applies to those of us who live outside of city limits.
  • Before the prices trickle down, stock up on non-perishable foods -only the kind you actually eat and not outside your food budget. Get rid of one treat and buy something on sale that will last instead. Please don’t act like I’m saying run out and prepare for the zombie apocalypse. This isn’t that. This is going to be another summer with high fuel costs.  If the budget to get to work has to come from the food budget, wouldn’t it be better to be ready?

Lastly please keep in mind that sometimes the lowest immediate cost has the highest price of all.

This summer look for chances to spend some money on local food producers. Maybe joining a CSA is an option you haven’t considered before. Sure you will end up with some vegetables you may not have seen before, but consider that you could be one of the individuals or families that helps prevent one more farm from going to the auction block.

Are you thinking about the cost of fuel or is it something you’ve managed to avoid?

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10 Comments

  1. Deepak Gupta on April 25, 2011 at 2:23 am

    Another point you may want to add for job seekers is to conduct their first couple of interviews face to face via Skype. That's a really good way to save on fuel, dry cleaning and so on.
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  2. Heather on April 15, 2011 at 11:44 am

    Thank you for mentioning joining a local CSA. If it is in your budget to do so, supporting local farmers helps all of us. We are blessed with a CSA that delivers to our door (woo hoo!) but I also share trips to another local farmer for milk and eggs. These farmers have certainly have their own expenses go up in feed prices.

    We are also blessed to live in a walkable neighborhood and within walking/biking distance to our post office, library and a grocery store. Admittedly fuel prices sometimes have to go up to remind us not to take the car, but it is nice to get out and get the exercise. Two benefits in one! Thanks again for an excellent post.

    • Heather on April 15, 2011 at 12:08 pm

      Oh, and I just realized you are a Lowcountry gal. I grew up in the Upstate and have many fond memories of vacationing all over the Lowcountry. Alas, I now live in a landlocked state and do not get back as often as I would like.

  3. Sue on April 13, 2011 at 5:10 am

    Hi Heather!
    You bring up an EXCELLENT point about not going out and buying a more fuel efficient car. Though we would certainly love to get better mileage, we have a perfectly good truck that we can't bear to get rid of. And coming up with 30K, well, that's just not in the budget! We just pool our errands and go to town less.
    All the folks in our neighborhood call each other BEFORE heading to town (20+ miles away)……and we pick up items for each other. It works out well for us.

  4. Keter Magick on April 12, 2011 at 12:54 pm

    Things have already gotten interesting here. This economy has not been kind to us, and we've already cut back as much as we can before it starts impacting our ability to function: for example, cutting Internet access or cell phones will hurt our ability to earn a living.

    Food is a big issue here. I live 15 miles from the nearest urban area, and our reliable neighborhood grocery is selling out to an unknown chain…and prior to the sale, their inventory is dropping, so for the last month, shopping has been an adventure to see what may still be available. Prices on everything have gone up at least 10% and some things, like eggs, have doubled. It's a little over a mile to this store, and can be visited regularly while doing other errands. If it becomes unusable, we're in trouble. On the plus side, our town's dollar store has expanded its food section to nearly half of the store. Most of it is junk food, but they also carry staples and a house brand that is very good and half price or less (6 full size cans of tuna for $4 and it was meat, not water).

    The price of gas means we avoid driving whenever possible. Buying a full tank of gas even for my old Acura, which gets over 30 MPG, is now almost $40. There's bus service out here, but it runs at ridiculous times in the middle of the day and late at night, and is unusable for commuting or specific errand-running. Mostly it is structured to get college kids to campus (and back from parties) and maids to their employers' homes.

    For my local errand running, I use an ancient Honda scooter that gets amazing gas mileage and is not street legal, but my town allows scooters and golf carts on residential streets where the speed limit is 20-30 MPH. The gas tank holds about two cups, and it needs to be refilled about twice a month. I'm not sure how many readers live in areas where they can use these little scooters to get around, but they are a great way to save on gas money now that spring is here and the weather is improving. And yes, I look like a dork on it and it sounds like I'm riding a chainsaw, because that's about what size motor this thing has! 😀

    • HeatherSolos on April 12, 2011 at 1:09 pm

      Around here mopeds are the vehicle of choice for those who have had their license taken away for DUIs. I can definitely see how practical they would be.

      Some of the talk I hear says that many consumers have already cut as much as they can and that the cost of fuel could be the straw.

      I don't know, it's just speculation on my part. . . I hope you and your family catch a break, soon.

  5. Alice Dick on April 12, 2011 at 11:04 am

    If you live in a high traffic area (I live in Los Angeles), I find it helps to time errands for early, early in the am. Like six. This way there's no traffic and it all gets done faster. Examples:

    * returning library books
    * hitting the ATM
    * gassing up the car
    * mailing stuff at the post office
    * dropping off donated magazines at my hospital; also Goodwill donations (mine opens at seven)
    * church duties (OK, I have keys, but you get the point. Whatever you can do early, go ahead and do.)

  6. Marsha Seiberling on April 12, 2011 at 9:49 am

    Hello! I just wanted to stop in and say how much I loved reading your book even though I only got chapter 20! It's reviewed on my blog. I can't wait to save enough and buy the book in it's entirety! I only have one daughter left at home, and she is 14. She's been bored with other home ec book I've tried to use with her, but she loved it when I read chapter 20 of your book out loud to her. We can't wait for more!
    I've also subscribed to your email notices here as well and will use those with her as well.
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  7. James Moffitt on April 12, 2011 at 9:43 am

    This is a very informative and realistic view point on how rising food and gas prices are affecting our budgets. Several years ago my wife lost her teaching position with Charleston County. We suffered a huge setback to our budget. When the income goes away the bills do not go with it.

    Needless to say, we lost two new cars and we wound up spiraling into survival mode. I was forced to take a hard look at our budget and redefine what our needs were vs our wants. I am happy to say that several years later things are slowly but surely stabilizing for us. We are still in debt, and it may take us years to pay that off, but at least we are at a place where I am able to take care of the living expenses, and have a little bit left over after each pay check.
    I have had to make adjustments here and there to make sure we have enough money for food and gas. Katy takes her state board exam to be a teacher in SC at the end of this month and we are hopeful that she will be gainfully employed as a Special Ed teacher in SC this next school year.
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  8. Laura on April 12, 2011 at 9:08 am

    Good article! And yes, ouch on the food and gas prices. Kids have already been told that this summer, we will not be jumping in the car to dash to places. I have set them the task to plan things we can do in one go.

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