Five Hot Links for the Week!

Summer has officially arrived! Check out some of these summer articles on blogs and finance sites across the net.

1. Get Rich Slowly explores the benefits of vacationing near home. In today's economic challenges, you'd be surprised at what you'll find just around the corner from you.

2. Free Money Finance explains rightly why index funds are still the best mutual funds to have as a central part of your portfolio.

3. Five cent Nickel details what works in improving your gas mileage, and, exploring further-- what doesn't.


4. CNN Money asks if Obama's plan to match the savings of families (up to $500 if you make less than 75K/yr) will work.


5. And if someone asks you for money, should you give it to them? Bankrate says It depends. -

Summer Gas Tax Ax? Gee, thanks (sigh)..

Ok guys, some of the presidential candidates have an idea--they want to get the government to help you through these tough economic times by sending you a check for $3.68 (that's three dollars and sixty eight cents) each week during the summer. Why? Because times are tough and Every little bit helps, right? Any takers? No? Well, let's put it another way:

You've probably heard talk about a possible suspension of the federal gas tax over the summer, when prices are expected to be at their highest. Don't count on it making a dent in your fuel budget though. Let's take a look at why, using the great equalizer: straight arithmetic.

The federal gas tank is about 18.4 cents per gallon (and amounts to $10 billion deduction form the government's already deficit driven budget, if you care about such things.)

Let's say you have a 20-gallon gas tank, and you fill up once a week.

Saving 18.4 cents for every gallon you put in your car, you get (20 x $0.184) = $3.68

Over the 14 weeks from Memorial Day to Labor Day, we get (3.68 x 14) = $51.52.

People make a similar everyday decision when they drive 5 to 10 miles out of their way to save 5 cents on their fuel consumption, losing all the savings on the way (and probably costing more, especially if you don't fill the tank from empty once you do). So, over the entire summer, after spending over $1000 in fuel, you'll save $50, enough to fill your tank…a little over halfway one time, if we assume gas prices are at say, 3.75 on average for Regular Octane (87). If average fuel rises above this, you'll still only save $51.52 for the whole summer! $4 gas? You save fifty bucks over 14 weeks. $5 gas? fifty bucks back over 14 weeks.

What's worse, the idea that gas drops 18 cents will only drive up demand because people will "think" they're getting ahead—people will drive more and use more fuel, and prices will go even higher, all for fifty bucks...and more upset consumers. Suspending the tax may help make candidates for higher office look as if they care, but it either shows a lack of understanding of economics (which is unacceptable) or simply pandering for votes (which is expected).

So what should we do? I think we have to be honest that relative to the world we have always paid a lower price for fuel. I know, it sucks to hear that, but with other countries asking for more gas from the same people we get it from, and they are willing to pay more for it than we do, our demand for lower gas prices will be a lower priority in the eyes of the Oil Keepers. So, in the short term, we consumers should work to:

Drive Slower (which saves fuel).

Combine Trips by Planning ahead of all the places you need to go and find the best way to get there while conserving less fuel. Or Carpool, if you can.

Consider asking your employer if you can work from home once a week, if you have a job where you can work from home.

Use mass transit where it's effective, even if it may be a little uncomfortable.

In the long term,

Encourage your government officials to invest in sensible energy policies. By considering alternative energy sources that can replace the need for oil-based products, or seeking more efficient ways to heat and power your home, you can lower your energy bill, which can offset the increase in fuel costs.

What are some of your ideas and feelings on the possible gas tax rebate? Good Idea?

Can We Stop with the Gas Boycotts?

So it's that time again. Summer is approaching, and school is letting out--which means trips to theme parks, cookouts, family reunions, and the requisite increase in gas prices.

It's no surprise that the e-mail boycotts are back. This one calls for a strike on May 15th that for that day we don't buy gas, which will apparently (and inexplicably) lead oil companies adjust their prices down for the American consumer. From the Charlotte Observer:

A one day "gas out," the note claims, will cost oil companies billions of dollars and tempt them to lower fuel prices. A similar campaign 10 years ago led to a 30-cent drop, it alleges.

Of course, the 30-cent drop is unproven. More from the Observer:

Boycotting gasoline at the pump for a day is analogous to the fat guy who boycotts the "Biggie Fries" for one day as a means of dieting," said Tom Kloza, chief analyst for the Oil Price Information Service. "It accomplishes nothing."

Mr. Kloza is right. Boycotting gas for 1 day will accomplish nothing, especially when you consider most people will fuel up the day before or the day after, making virtually zero impact to any oil company's balance sheet. The money they didn't get on the 15th they get on the 14th or 16th.

Another newspaper states that the boycott is high on symbolism, and less on effect.

My advice?

- Consider purchasing some stock in these companies. They have a product that is always in demand, and the demand GOES UP as they raise the price. If demand stayed flat or went down, I could understand, but apparently people have too much "stuff to do" to bother changing their driving habits. Which also leads to...

- Consider changing your driving habits. Carpool once a week. Try talking your employer into teleworking once a week (or every other week). Use mass transit if you have access to it. Plan better driving trips. Slow down. All these can be helpful.

Ok, that's my rant.

I'd be interested if anyone is going to boycott on May 15th. Let's pay attention to keep note how the 15th Boycott impacts anything. I'm not holding my breath.