We're definitely living in CRAAAAAZY times. Economically the world is upside down right now. Personally, I'm not afraid of the coronavirus and the media is blowing it waaaaay out of proportions. When you stop looking at the media and start listening to the doctors who are speaking out online and looking at real numbers and statistics, you can get the real story. Soon, our people and our land will heal from all this. However, in the meantime, the economic impact is real...very real. This morning, my wife and I ran a few errands. Yes, you can survive and not get sick if you run errands. I noticed how low the gas prices have gotten. $1.45 per gallon for regular unleaded. Wow! Gas prices haven't been this low since the mid 2002. https://www.creditdonkey.com/gas-price-history.html Now, if you live in Franklin, TN, for some reason the gas prices are $2.00 per gallon. (A little price gouging going on in Franklin FYI) But that's not the end of it. The price of oil has hit a rock bottom. Perhaps this twitter post expresses it best of all. https://twitter.com/pindi_se/status/1252321454420570112?s=20 There is a silver lining in all of this. This US uses 145,000,000,000 (that's 145 billion!) gallons of gas annually. At an average of $3.50 per gallon (pre-2019 and 2020) That's $507 Billion going into American gas tanks and out the pipes as CO2. However now with gas prices cut by 1/2, that leaves a $250 billion in gas savings for the consumer. Yes you. That's roughly $21 billion per month back in people and families pockets that will flow into other areas of the economy as our country and the world heal.
From my own personal perspective, my wife and I can spend as much as $800 a month on gas for our cars. I have two sons who drive. They drive significantly less than I do, so lets say $200 a month for both of them. That's a total of $1,000 a month spent on gas for our family of 4 drivers at an average gas price of $3.00 to $3.50 per gallon. Gas prices are now down by 50% from their peak. That puts roughly $500 a month back into our pockets. It allows us to save, invest, pay off debt, enjoy life a little more, or help someone out. Annually, that's $6,000 a year more money in our pockets!
There's no telling how long these lower gas prices will last. Make sure you use the money wisely. During this time, you may want to take a different approach from the conventional financial advice you receive during a good economic situation.
Financial Priorities During Coronavirus
Establish financial security. Hold on to your money and build up your emergency fund. With so much uncertainty, it's best to hold on to your money until we know more about what will happen in 2020. Uncertainty can put you at risk. Number show we jumped from less than 4 million people unemployed to over 20 million unemployed in the first month of social distancing and the economic shutdown. We want to believe that everything will return to normalcy soon, but that may not be the case. Establish financial security as your first priority. In this season, six months to one year of living expenses is ideal. If you have more than a year saved, you're even more secure!
Pay off consumer debt. It's always a good idea to pay off debt. It lowers your emotional stress and your financial risk. I paid off my house in 2012. No house note felt pretty good way back then. It feels even better now. Some people believe paying off your house is a bad idea, but those people didn't foresee the corona virus. All debt carries some level of risk. Some of that risk is unpredictable. If you have plenty of money for your financial security, look at accelerating and paying off some of your debts.
Look for good investment opportunities. The stock market is down. Oil is down. During a down economy, the smart and savvy investor knows everything is on sale. They're looking for the rebound that will come. It's a great time to make money in the future. A well placed investment can exceed normal growth over the next 3-10 years. If you have the money, it's a great time to take advantage of investing opportunities.