Saturday, June 28, 2008

Little Man Syndrome, Revisited

Last month I posted about LMS in regards to the face of current rising gas prices. Here in Virginia, 3 public utilities have announced that they are raising their price of service as much as 18% - Including Gas, Electricity and Garbage collection. Of the three, Garbage Collection would seem to be reasonable and expected.

Again, my cynical side does not believe that this is a matter that can be solved politically, but the free market will drive a solution (people will reduce their demand).

But, more importantly, what are you doing to insulate you and your family from these changes? Budget is an ugly word in most households. Some of us do a budget in our heads. But, a budget could be the single best communication instrument with your spouse that you have. It is a means of putting down on paper, on purpose, what we value. It is a contract with your spouse that you will not spend what is not on the budget. And don't forget to budget your "blow" account – this is money that you know is just going to get spent. And if you have a Starbucks vice, figure out how much you spend and work some of that into the budget.

Again, I point you to Dave Ramsey's site: The Quickie Budget will help get you going, and the Monthly Cash Flow Plan is really detailed (seriously, only Bill Gates has enough for this one). Follow the instructions and stick with it for about three months. And don't be afraid to fine tune the budget as you go through the month – just make sure you and your spouse agree on the changes.

Blessings!

9 comments:

Rick said...

I don't think this will be a "supply/demand" issue in the end. With India & China emerging into all this, it's like there are huge countries with new cars - all 15-yr-olds :) - who are not going to stop driving. So even if we bring down demand, prices will stay up because it's not all about us, or US.

Rick said...

Ack - stopped too soon. Your advice is spot on, given that this is much more longterm than we've probably realized. We need to get a handle on what we're spending, what the $$ is going for,

Chuck said...

Mmmm...We'll just have to disagree on the supply demand...however, what I was really aiming for in that comment was moving away from was that the Free Market will drive the R&D for alternatives quicker to market. The demand for an alternative is going to rise sharply. Much like Gasoline has in the past two years.

Chuck said...

I can not believe how long I lived my adult life without some kind of financial gameplan.

And, I apologize if I talk about that, or DR, too much, but it was totally one of those "Wow, I could have had a V8" moment when I finally "got" it.

Todd said...

I agree, Chuck, and I think I see where Rick was heading too. The bottom line is that this gas problem is NOT going to just disappear after the November elections, and we must plan ahead financially.

I still haven't received my stimulus check, by the by.

Rick said...

The problem with supply/demand in this instance is that there are 2+ billion new drivers in Asia - imagine all those new "15 yrs old" getting a new car. We can drop demand here, but overall it won't drop much. Something on the national level where there's more of an incentive to fund alternatives - that's where I was going with it.

You and Todd want to carpool?

Chuck said...

Those SSN's ending in 9999 take a while. I held on to the Stimulus to offset the summer's electricity. Hope I held enough.

Alan said...

I have decided to save money by cancelling my Chuck Ramsey subscription and to replace it with the very free "Creative Loafing" blog. As for saving gas, I have decided to outsource my job to India. Wait, that's already being done for me...

Chuck said...

Wow! I wonder if we are gonna plan those meetings utilizing India Speaker Bureau?? No Speaker Caps.

Chuck Ramsey, I am honored.