Coffee heat rising

Moving for your financial health

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Writing for Wisebread, blogger Linsey Knerl suggests that one effective way to save money is to move a good long way from the Joneses, the better to delete the temptation to keep up with high-flying neighbors and peers. The gist of the conversation has to do with pressures to stay expensively in style, with Linsey arguing that moving to a rural environment, as she has done happily, insulates you from the social forces that urge you to waste money on status symbols.

Whether or not you really need to move away from the “Joneses” to protect your self-esteem and curb your spending impulses, for some of us there may be a very good financial reason to take up residence in a rural town. Just this weekend I ran across people living in this circumstance and, thanks to their setting, living pretty well. It goes like this:

If you are poor and you know you will never be anything other than poor, you may be able to make a better life for yourself and your family in a very small town. Housing and schools may be better and safer, and the overall environment may be a great deal more pleasant than anything you could afford in a city.

Saturday a friend invited me to visit her relatives who are living in a small high-desert mining and ranch town. A few years ago this pleasantly funky wide spot in the road was discovered by a few affluent big-city residents-briefly. After a period of low-key vacation-home gentrification, it was pretty much forgotten except by a small population of ancient old-timers, a few retirees, some refugees from the big city, and a coterie of artists. Quiet and companionably eccentric, the place consists mostly of old miner’s shacks, prefab cabins, and trailers set among picturesque boulders and chaparral beneath a clean sapphire sky. The atmosphere is low-key, much of the economy is based on barter, and if anyone has money, they don’t show it off.

Among the several residents we met was a handsome 12-year-old girl, just on the verge of blossoming into womanhood, who had befriended the relatives’ little girl and had spent the Fourth of July with the family, visiting a nearby small city to watch fireworks. Expressing her pleasure at the trip, she remarked that it was the first time in her life she’d ever seen a fireworks display.

This elicited some quiet clucking from the Californian refugees, who observed that her own family, a single mother with three children, was very poor and lived in a trailer.

But… When I was 12 years old, I’d never seen fireworks. Somehow I didn’t feel deprived. And so they live in a trailer: so do a lot of people in this town. Probably a third of the structures started life as mobile homes. None of them are in trailer parks: every home occupies a lot, some as large as an acre or more, and each stands among granite boulders, flower gardens, and pleasant shady streets. Some houses have spectacular views of the surrounding hills and distant mountains. The kids attend a decent country school with small classes and no gang activity.

If you lived in a trailer in my city — and you were too young to qualify for one of the quiet senior citizens’ parks — your home would be located in the toughest part of town, where you would pay rent for a slot of ground to park your trailer practically on top of the neighbors. The garden spot to the right, for example, is just up the road from my house and a notorious hot spot for crime. Your kids would go to a gang-infested, drug-saturated and violent inner-city school. Your neighborhood would be a noisy, crime-ridden hardscape where trees and flowers are rarities and cop helicopter fly-overs routine.

The point here is that if you don’t have a lot of money and you have no prospects of ever earning anything other than poverty-level wages, life in a rural setting has a lot to recommend it. Not in some shallow sense where you move away from temptation that you don’t have the self-control or self-esteem to resist. But in the very real sense that in a small rural town, your dollars may buy you a better life.

4 Comments lef on iWeb site

!wanda

Won’t gas prices kill you if you live far away from everything?I guess being more self-sufficient and needing to make fewer trips mitigates that somewhat, but if you or someone in your family, say, gets sick and needs to go to the hospital a lot, it can be a long drive.

But, yeah, rural seems to be the way to go if you want space for cheap.

Wednesday, July 9, 2008 – 01:38 AM

Journeyer

This is so true.There are so many things that we now expect and take for granted that were “special” when we were kids – trips to the movies, going out for dinner, getting driven around to every after school activity possible.

@!wanda – living in the country often means you discover that you don’t need all the things you had in the city, so no need to travel.

Sunday, July 20, 2008 – 01:29 A

Funny about Money

Thanks for visiting, !Wanda and Journeyer.

@ Wanda: Within 30 minutes’ driving distance, there are two towns with decent infrastructures. One, reachable by a winding two-lane road, has the usual range of grocery stores, a Costco, and a respectable hospital. The other, on a safer road at the bottom of the hill, has a couple of grocery stores with inflated prices.

But if you’re willing to drive another 20 minutes — as our friends do — you reach the outskirts of the Phoenix metropolitan area, which has every urban shopping amenity you could desire: box stores, groceries, chain clothing and household stores, and even a few locally owned shops. People who live in the town own freezers. They drive to a larger town or the city once a month to stock up on household goods, staples, meat, and frozen vegetables. And most everyone has a garden. Because of the lovely climate, the produce defies belief: in our friends’ yard alone there’s a pear tree, an apple tree, two plum trees, a lime tree, and a fantastic vegetable garden. I came home laden with ruby lettuce, incredible little green onions with red bulblets, runner beans, carrots, and Swiss chard, all gifts from our hosts. The corn wasn’t ripe yet, but from a roadside produce stand we bought ears of corn so sweet you’d swear it just came off the plants and the best avocados I’ve ever had.

If these friends ever came to spend the day at my house, I could offer them no gift as handsome as the armsful of produce they sent me away with.

So, what about medical care? In an emergency you can be helicoptered to the nearest hospital or, in dire circumstances, to the major medical centers in Phoenix. Day to day? Well, you know…if you’re poor or even middle-class, you’re not going to have very good access to much medical care, anyway. So really, access to doctors and hospitals no longer is a consideration that should drive your choice of places to live

Sunday, July 20, 2008 – 10:18 AM

Linsey Knerl

What a very insightful post!Many of the things you mention are exactly why we love living rural (and Omaha is less than 40 minute drive from home.)Thanks so much for the mention

Wednesday, July 30, 2008 – 08:59 PM

Square Peg Revisited: Thanks to PK Sublime

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The other day after I held forth about my grand new scheme to force GDU’s dratted biweekly paychecks to fit into monthly bill-paying reality, a reader named PK Sublime commented.

What you do is save ALL your paychecks from month 1 and then pay ALL your bills on the 1st of month 2 that will/are [be] due in month 2. The concept of “living off last month’s income” is a great way to operate…

Uh huh, thought I, dismissively. Nice trick if you can do it.

But it was an idea that would not go away.

Is there, I wondered, a way to build a “pool” of funds from which you could pay your bills each month and that could be replenished every two weeks with your paychecks, independent of billing due dates? Could you pull off such a thing without risk of going broke?

It would take a lot of money, or so I thought: I guessed you’d need at least one month’s worth of pay to “grubstake” this fund. But…but the credit union has granted me check-bouncing protection in the amount of one month’s pay.

Doesn’t count, I continued: that’s debt, not a pool of real money.

But…my state tax refund is less than $200 short of one paycheck. I have plenty in savings to make up that $200. Could I fund such a pool with the amount of one biweekly paycheck, rather than with a whole month’s worth of pay?

An Experiment

I set up a mock account in Quicken and credited it with the amount of one paycheck: about $1500. Then, still in Quicken, I entered a debit to subtract enough from the real-life account from which all my EFTs are made (these pay utilities, the loan, and insurance premiums) to bring the balance down to $500, the emergency-fund “cushion” that resides there as my own first line of check-bouncing protection.

I just paid this month’s credit-card bills, and so the account that holds the money budgeted for credit-card purchases was already at its lowest possible ebb.

Then I “deposited” my July 2 paycheck in the “pool” fund, and immediately distributed the ENTIRE month’s budgets of $840 to the EFT fund and $1,500 to the credit-card fund. Then I entered the pending July 18 paycheck in the pool. No distributions had to come out of that check, because I’d already moved the amounts that would be owing in July to the accounts from which the money would be disbursed. On July 20, I deducted the estimated July utility and insurance payments from the EFT fund. On July 31, I transferred my regular set-asides to monthly savings ($200), to the tax/insurance/car registration “escrow” fund ($300 a month toward annual bills), and to the Renovation Loan Payoff fund ($204 a month)

No sign that any transaction would bounce, anywhere.

Deposit, distribute, disburse, transfer: repeat each month for the rest of 2008 and the first part of 2009. Watch bottom line.

The lowest the pool fund ever fell was to about $680, but it was replenished well before any new bills came due. By December, though, I had “caught up” with one of the so-called “extra” biweekly checks, and this funded the pool solidly enough to guarantee the amount in the collector fund will never fall below $1440.

Migawd! It worked.

The New System

So what we end up with is three credit union accounts that look like this.

How simple is this? It requires only two manual online transfers a month: $840 to the EFT fund and $1,500 to the credit-card fund.

In fact, it’s not quite that easy: at month-end I also have to transfer money to three different savings kitties (one of them at Vanguard). But as a practical matter, the amounts that have to be there to pay bills are now always there at the start of each month, and I don’t have to figure out how to get half the amount, from each bizarrely precessing paycheck, that will be owing into the appropriate place at the time the bills are due. The regular monthly bills pay themselves through EFTs. If I didn’t distrust credit card companies with every fiber of my fibrous little being, I could have those bills automatically paid, too.

Any cash left over in the EFT and the Credit Card accounts (normally one to three hundred dollars remains) can be used to snowflake down the Renovation Loan principal or stashed in savings.

w00t! Thanks, PK Sublime!

Independence Day link love

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A Happy Fourth of July to everyone!
And while we’re partying and parading, let us not forget the men and women who have volunteered to serve in our armed forces to protect the principles of the Declaration we will celebrate tomorrow.

Funny is taking a day off for the celebration, the 112-degree heat having done something to the energy level around here. Saturday it’s off to the high country for a short break from the Valley of the We-Do-Mean Sun. So, I hope you’ll visit as many other PF bloggers as you can over the next couple of days. Here are a few that I’ve enjoyed this week.

Trent at the Simple Dollar weighs the pro’s and cons of banking your debt snowballs rather than using them directly to pay down outstanding debt; I’m gratified to see he comes down on my side of the question.

At Wisebread, Margaret Garcia-Couoh speaks eloquently in favor of the dear-sir-you-cur letter as a more effective way to get redress for complaints than telephone calls or e-mails. Roger that, sister!

Five-Cent Nickel posts a good rule of thumb and some thoughtful reflections on what a purchase really costs.

Money Smart Life has started a discussion about how much detail to put on your résumé, a good question indeed, especially for those who would tip their hand about their age if they listed all their experience.

At Queercents, Paula urges us to buy local produce and offers several avenues to do so.

Doughroller warns that the Roth 401k is not for everyone…indeed, not for most folks who earn less than $1 million a year. This interesting post contains several links to other articles on the subject of Roth 401k plans.

Speaking of Roth IRAs, Brip Blap offers a dark vision of evil future politicians reneging on the promise of tax-free Roth proceeds (can we spell “man the barricades?” how about “Boston Tea Party”?).

Moolanomy has a fresh take on the question of whether we’re better or worse off financially than our parents: what he calls “financial distractions.” This is a good insight that’s hard to argue with.

Be This Way brings up a topic I recently heard discussed on NPR: the practice of gathering information about your lifestyle based on your purchasing habits, and then using it to determine your credit card rates. Whatever you do, don’t buy a retread, get a massage, or visit a marriage counselor-or if you must, for heaven’s sake pay in cash, under the radar.

Mrs. Micah has opened a conversation on things to consider before taking on a mortgage, which has generated some good comments.

Paid Twice is discussing disability insurance. Today she focuses on long-term disability; a few days ago she had a post on short-term disability insurance, both important issues to understand.

Outa here! Have a happy Fourth.

How higher gas prices save money

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Here I am thinking that four-&-a-half-dollar gasoline is driving me to the poorhouse…but WAIT!

Wai-wai-wai-wait! Not so! Whereas ’tis all too true that more of the Budget is going to support my driving addiction, something odd has happened: because of the changes in driving and buying strategies forced by the run-up in gas prices, I’m buying a lot smarter in other ways. Groceries, normally my biggest indulgence, have dropped by 50%; spending on yard items is an eighth of what it has been.

In fact, over the past month I’ve saved way more on these items than the extra amount I’ve had to spend on gas.

What is going on?

When the cost of gas headed for the stratosphere, I decided to shop for necessities only at stores that are on my way to and from the Great Desert University. No extra trips would be allowed: whatever I needed would have to come from someplace along the commute.

This cut out Home Depot, the scene of many an impulse-buy frenzy.

All my other regular stops in fact are along the route from here to GDU. However, the “no extra trip” rule eliminated an amazing number of junkets. Using Quicken’s transaction detail shortcut report feature (right-click on the category!), I compared June 2007 spending with June 2008’s in several areas. Here’s what happened.

Groceries

Here’s the biggy for me, since I don’t eat out and I very much relish food. I don’t hold the horses in the grocery store: this is my only indulgence, and I do indulge. I’m given to shopping in gourmet specialty stores, and I do not worry myself with such details as how much food costs.

But within the constraints of the “commute-route” rule, AJ’s, a local retailer, is the only fancy grocer on my way. It suffices: you can bankrupt yourself there just as easily as at Whole Paycheck.

In June of 2007, my grocery bill was (hang on to your hats, frugalists!) $721.99.

Done hyperventilating? O.K. In June 2008, it was $334.96.

Wow! In 2007, I made 17 trips to purveyors of groceries, three of them to the dangerous AJ’s. This year, I made 12 grocery runs, five of them to AJ’s. Even though I made more hits on the fancy store, I spent less than half as much on groceries this year as I did a year ago.

Why? In June 2007, the Great Chinese Dog Food Scare was peaking. That was when I decided to make real food for Walt the Greyhound and Anna the Ger-shep, both 90-pound dogs. This would be about the equivalent of inviting a couple of 12-year-olds (or petite adults) to your dinner table. In May, shortly before the Scare, I spent $417.25, a more normal figure. But still: way more than I paid out last month.

In any event, restricting grocery-store runs to stops on the way home from work cut out five trips to the store, which evidently limited grocery spending

Yard Items

In this category, Home Depot is a real menace. I love plants. It’s almost impossible for me to walk through Home Depot’s nursery without buying a plant, a pot, or both. And the swimming pool chemicals are located in the garden department, so you have to walk past the plants to get to the chlorine, acid, and diatomaceous earth. Cleaning goods and some electrical gear are right next to the plants. Meanwhile, the whole store is laid out like a medieval street bazaar: impulse buys as far as the eye can see.

On the other hand, Ace Hardware, which unlike HD is on my way home from campus, has no garden department. I started buying at Ace to avoid the 8-mile round trip to HD. Ace carries almost everything one needs from Home Depot, but the store layout is pragmatic, boring, and untempting. The place encourages you to get in, pick up only what you need, and get out.
June ’07: $61.62 (3 trips)
June ’08: $7.58 (1 trip)

Why? No Home Depot!

Pool

In these parts the weather heats up the first part of May. Warm weather consumes chlorine tablets and, unless you stay on top of things, grows algae. Until the gas run-up, I’d been buying chlorine tabs, shock treatment, and acid at Home Depot. Lately, though, I’ve been stopping for those things at Leslie’s, in the same strip mall as the Safeway that’s directly on the way home from GDU.
June ’07: $92.78
June ’08: $55.98
Why? Lest you think that specialty-store pool chemicals are cheaper than HD’s, the truth is that in 2007 I spent $42.50 for a service call, and so the real cost for chemicals was $50.28. Still, that’s only five bucks less than I paid this year.
HD’s shock treatment contains a chemical that causes the filter to clog up, and so every time I use it, I have to backwash and then add 8 pounds of new diatomaceous earth (DE), which HD does not give away for free. A DE filter in theory is not supposed to need backwashing more than about every three months, and so having to do that noxious chore once a week got old real fast. Not only that, but the HD shock treatment turned the pool into a puddle of Clorox that was unswimmable, even in the hottest weather, for at least three days. Since I’m in the water two or three times a day, I found myself putting off shock treatments until the walls were coated with green stuff, not a good habit.
Leslie’s has a non-chlorine shock treatment that does not contaminate the water and does not clog the filter. You can dive in the water right after you dump the stuff in. And thanks to this stuff, I managed to delay the quarterly filter clean-out ($100) for about six months.

So, even though I paid $5 more in June 2008 than in the same month of 2007, over the long run I’ve been paying less on pool maintenance because I haven’t had to buy giant boxes of DE every time I turn around and I haven’t had the pool guy over here every three months. And now I can use my pool every single day, with no hiatuses to wait for scary levels of carcinogens to drop from ungodly toxic to only mildly poisonous.

Gasoline
June ’07: $ 83.45
June ’08: $138.20

That’s a $54.75 increase.
Grocery savings: $ 387.00
Yard item savings: 54.00
Pool savings: 36.80
Less gas rip: -54.70
Result: $423.10

Approximately: when I copied and pasted these posts out of iWeb into Word, the last character before each hard return disappeared, so I have no idea what appeared in the ones columns. At any rate, when I wrote this I appeared to be $423 to the good, thanks to the inflated cost of gasoline.

If This Is So Great, How Come I’m Busted, Disgusted, and Can’t Be Trusted?

Those of you who’ve followed my whining know I’m up to my eyeballs in red ink. Last month’s budget cycle ended $111 in the hole. So far this month, I was $126 in the red at the end of the first week and, with three days to go am $17 in the red against this week’s budget.

I’ve blamed this on the run-up in gas and food prices. But a closer look reveals the actual cause: a long series of extraordinary expenses biting into cash flow over the past two months.

Between April 21 and June 20, I racked up $1,012 in veterinary bills for the dying German shepherd. In May I pledged $100 to a charity, Andrea’s closet, thinking the amount would come out that month; instead it was charged against American Express in June, when I had to cover $332 of those vet bills. While I might have been able to handle around $300 of unplanned charges, $432 broke the bank. And so far in the first week and a half of this month, I’ve had to pay $55 for car service and $87 for pool service.

So, while I may have saved some $430 in a few categories these past couple of months, it’s as nothing compared to the $1,254 in unplanned expenses ($1,012.33 vet bills + 54.72 car repair + $87 pool service + $100 donation) that I’ve been trying to cover with cash flow and emergency fund savings.

Without those extra expenses, I would be doing just fine…thanks to the gas prices.

Why there is no cross-over point

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For most of us, the goal in building wealth is to reach the “crossover point,” where passive income from investments equals the amount you need to live on. The sooner the better: early crossover point = early retirement.

It’s times like these, though, that give me pause about that idea. To retire with little risk of a gigantic cut in living standards, you would need to have so much money invested that, unless you’re an entrepreneurial wizard, it would take an entire lifetime to accumulate it. Most of us will never manage to do so. The amount needed to support you reliably through an extended retirement would have to far exceed the actual crossover point.

Why? Two reasons:

  1. Inflation
  2. The vagaries of the stock market

Either of these can destroy the purchasing power of your investments; since high inflation and unstable market conditions often occur together, you can expect that sometime during your retirement, you’ll watch both of them sit down side by side to the dinner table that is your life savings.

That’s the case right now. At the end of March, my total investments came to about $583,000. Today, with the belated 403b statements from TIAA-CREF and Fidelity finally in hand, the total comes to $551,700, a loss of $31,300. Meanwhile, costs for food and gasoline are pushing my daily expenses past my budget.

What Dependence on Passive Income Would Mean to Me

If I tried to live on 4% of savings (the amount recommended as a safe drawdown) plus Social Security, I would experience a 35% pay cut. Not that it would matter, because I couldn’t live on 4% of what I have in savings anyway. Four percent of $583,000, the pre-stock fall amount, is a grand $23,320. Add my projected Social Security payments of $16,608 to that, and you get a munificent income of $39,928: a $22,072 cut in pay at retirement.

I can’t live on that. I’m barely living on what I earn.

In fact, as we speak my week-to-week budget is again in the red and about to go deeper therein: this afternoon the pool repair guy will clip me for $105, leaving me $4 in the hole against a budget supposed to last until the sixth. Today is the first. Thursday I have to go to the doctor; that will be a $20 copay, putting me $24 in the hole. If I have to buy prescription meds, add another $20 to that: $44 in the red. That means that even if I buy no food, no dog food, no gasoline, no toiletries, no cleaning goods-if I buy absolutely nothing-I will start next week $44 short. And this month I’ve had no extraordinary expenses, unless you call this afternoon’s overdue routine pool maintenance extraordinary.

I can’t let the pool ride until next week, because the pump and filter have slowed to the point where they’re not driving the system efficiently enough to keep the pool clean in an Arizona summer’s extreme weather conditions. Letting your pool go green is a violation of the law; the county flies over the city in helicopters, checking pools from the air. The fine for neglecting the pool would demolish my budget permanently.

The costs of gasoline and food are now so high that my budget will not cover all my routine needs. That’s while I’m earning $22,000 more than I will see during retirement, when about two-thirds of my income will be based on an optimistic projection of investment income.

These needs will never change: I always will have to eat, I always will have to maintain the dwelling I occupy, I always will have to transport myself around the city to purchase necessities.

You might say I simply haven’t reached my crossover point. I would reply that for most people, there is no crossover point.

What This Means for All of Us

The longer you work, the more you appear to earn: inflation alone pushes your salary higher through cost of living increases, and if you have a decent employer, you get occasional merit increases. But the more you earn, the more it takes to live. Even though my salary is high in absolute terms (the median income for a four-person family), the truth is that relative to the cost of living, it is the same or even lower than it was a year ago. So, probably, is yours.

Lower, indeed: since May 2007, when I started the weekly budget plan, I was consistently in the black until the March/April 2008 cycle. Every budget cycle ended in the black overall…until inflation ticked up and income stayed static. Since April, I’ve been in the red almost every week. Because state employees received neither COLAs nor merit increases this year, costs have risen but my income has stayed static. Remember, if you retire when you reach the crossover point, income always stays static.

Let’s imagine, for example, if I were retired and would never see another merit pay increase; if the only increase I would see would be an occasional cost of living increase in Social Security, not necessarily granted every year; if every time the stock market dropped, I saw a cut in pay. Add to that the ever-increasing cost of Medicare.

If I work until I’m 66 and we grant that I need about as much as I’m earning now to stay where I’m living and not be forced to move someplace cheaper, then the crossover point that would allow me to remain in my paid-off home would require income-generating savings of $1,134,800, and that amount would have to increase annually to keep up with inflation! In other words, the recommended 4% drawdown from life savings of over a million dollars combined with Social Security would not suffice to provide a person with enough income to live in my current modest (some would say “ascetic”), debt-free style.

Thus I would argue that unless you are part of a married couple, both of you are earning in the six figures, and you live frugally, stay out of debt, and save exuberantly, you are unlikely ever to see a real crossover point at which your passive income will cover your expenses for the rest of your life. This applies to most people who think of themselves as members of the middle class: teachers, midlevel administrators, shopkeepers, sales staff, police officers, fire fighters, most people in the trades, most government employees, just about anyone who inhabits a cube…virtually all of us.

What Can Be Done

If you are a young person, get out of debt, stay out of debt, and save every penny you can. Max out your employment-related savings plan, fully fund a Roth IRA every year, and put everything else you can into non-tax-deferred savings.

Angle to get yourself into a decently paid job that’s not too obnoxious, so that you can contemplate working until death do you part from your employer without wincing at the very thought of it.

Why not simply plan to work until you drop dead and just spend everything you earn? Because few of us will stay healthy long enough to work until we die. Because we live in a culture that abhors age and discriminates against the elderly, and so few of us are likely to be able to hold a decent job until we die. Even though you probably will need to work well into old age, you had better have enough savings to live on between the time you can no longer land and hold a job and the time you shuffle off this mortal coil.

If you are my age (born during the Cretaceous Period): do not even think about retiring unless you have well over a million dollars per person to generate passive income.

I’m now planning to work until I’m 70 and to bank after-tax Social Security income starting at 66 1/2, when I’m eligible for the full amount. If I can hold my job that long, I can maintain my lifestyle for a while longer. If I die before then, at least I won’t have had to choose between going hungry or moving to cheaper housing in a ghetto for the elderly. If I live that long, the number of years remaining to me will be few enough that a larger draw-down probably won’t consume my entire savings before I die-and maybe I can even stay in my home.

2 Comments left on iWeb site:

frugalscholar

The crossover point from YMYL is based on absolute certainty of income: the book recommended Treasury Bonds, which at the time paid a guaranteed 8-10%.Those days are long gone.

YMYL also said not to be afraid of inflation: I am tracking this right now.

Tuesday, July 1, 2008 – 10:31 A

vh

IMHO not to fear inflation is to wear blinders.

My father thought he had plenty to carry him and my mother through a long and comfortable retirement. Then came the 1970s and double-digit inflation. His formerly generous savings, which indeed were invested conservatively, bought him a poverty-level lifestyle.

Tuesday, July 1, 2008 – 12:51 P

Buying futures at the gas pump

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One of the local television Play-Nooz programs reports on MyGallons.com, an online membership plan wherein you can buy gasoline in bulk at today’s rates and pump the fuel later, when everyone else is paying more per gallon. You buy a virtual stockpile of gasoline; then you draw it down at the pump with a debit card the company issues to you. Almost any gas station that takes a credit card is participating-there are more than 50 within five miles of my zip code.

On its face, it sounds like a good deal. Except of course you’re betting on the come: with your purchase you subscribe to the theory that gas prices will keep rising and never come down or even stabilize. And you pay $30 (or, if you don’t want a “refill” automatically charged to your credit card, $40) for the privilege. So just to make this pay for itself, you would have to save $30 or $40 on future gas purchases. That’s before you start actually saving money on gasoline itself.

Let’s say a week after you buy in, 10 gallons worth of gasoline rises from $4.05 (current price at Costco) to $4.55 a gallon. At that rate, your saving on the next 10-gallon fill-up is $5. You would have to buy six times that much to pay for the base $30 membership fee: 60 gallons. How long it would take you to break even, before you started to make a “profit,” would depend on how much driving you do in what kind of vehicle.

I drove 266 miles last week and bought 9.9 gallons of gas. So earning back the membership fee would take me six weeks…assuming the cost of gas jumps 50 cents a gallon and stays there. Only after the first six weeks, after I had consumed $60 worth of gas, would I start to see a real savings at the pump.

But…will that savings still be there in six weeks? Some observers think the gas price inflation is driven by yet another economic bubble, one of these days to burst. Others scoff at the very idea. So whether you buy in to buying futures with MyGallons.com depends on who you believe.

You pays yer money and you takes yer chances.