Convert petrol price savings into a 22% guaranteed return!!!

We as a country import 95% of of oil needs and therefore are totally dependent on exchange rate as oil is bought in Dollars with Rands and the weaker our rand the more expensive oil becomes.

However, the price of oil has dropped by half in a very short space of time resulting in a notable drop in the petrol price. The pump price this year has fallen by R1,27 and indications are that the next review of our petrol pricewill drop by another 50 cents.

So what should we do about it?

Take control of what we can while petrol is cheaper as indications are that the price will increase again. Some pundits seem to think that we have a window period of around a year or two. Who knows?

Already we are seeing oil producing countries starting to struggle with job lay offs and widening deficits on their balance sheets.

It points to the fact the current price cannot sustain certain economies whilst it is benefiting others.

So what is the current saving?

Unleaded 95 on the reef peaked at R14,33 in August 2014. The current price is R11,01 providing a saving of R3,32 per litre. If your average usage per month is R100 litres then you are R332 better off.

If you divert the savings into your high interest bearing debts you squeeze out even more savings as you effectively earn the same rate of interest of the debt. So, if your credit card balance is costing you 22% per annum then you effectively save this on interest over a year. Where else can you currently get a 22% guaranteed return onan investment.

Don’t forget the emergency fund. If you don’t have debt then you should allocate the savings to your emergency fund so that you can tackle unforeseen expenses into the future. This fund is an essential provision in your financial plan and should be saved in cash and enough to provide between 3 to 6 months of your monthly expenses.

Why? Well, if you have any unforeseen expenses then you have immediate access to funds and don’t have to borrow. There are more savings to come. The current drop in the fuel price should start to translate into lower prices in goods and services which depend on fuel to transport their products. This should improve your cost of living for the year providingmore relief onthe family budget.!

Take advantage while prices are low. Enjoy this economic gift horse whilst you can.

Read more from Financial Fitness Coach Paul Roelofse at www.investforlife.co.za


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