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Posted by S. Barker on April 25, 2008, 12:40 pm
how do you get 6% on short term savings? do tell.
s
> >Just got a call from my supplier here in SE Iowa and their contract
> >price for next year (if prepaid) is $1.929.....current price off the
> >truck is $2.099. For comparison purposes we contracted 800 gallon at
> >$1.569 last year. I realize that propane is normally less expensive in
> >this part of the country than in most other parts but was just curious
> >about prices elsewhere.
>
> Yeah- I guess it's cheaper. Here in upstate NY I paid $2.70 last
> July- and by Jan it was $3.30. [and stayed there through last month.]
>
>
>
> >The bummer (besides the price) is that each year they keep wanting all
> >of their money earlier in the year if you prepay. This year you must be
> >paid in full by May 1st even though we will probably not start using the
> >propane for heating until mid October.
>
> They want to use your money for free. My gas company doesn't offer
> 'prepay' or 'budget plans' for the little I use. But my fuel oil
> dealer does. I've passed on the deal every year, but have noted the
> offer and prices for the last 5 years. This is the first year it
> would have saved me anything. I used $1300 worth of oil this year
> & would have saved $150. But I would have had to pay$1200 last July
> instead of pay-as-you-go.
>
> In my extremely frugal moments I have considered buying a second 275
> gallon oil tank and filling them both in the summer when I can get the
> best deal from whoever I choose.
>
> Jim
Seems like the best thing would be to calculate how much interest it
would cost you to borrow the cost of a fill-up, from say the bank, six
months in advance of when you will need it?
If, for example the interest rate is say 6% and it will cost $500 for
the fuel, buying it six months in advance. 6% annum. on $500 = $30.
So for half a year; it will cost you, in interest, about $15 to fill
up 'now' rather than wait for start of next burning season?
And if you could save that, or more, by the 'now' decision it's a no-
brainer.
Since many bank LOCs require a minimum monthly payment your monthly
payout until heating season might be 2% = $10/mo, so that after six
months you will have paid out $60 (principle plus interest) and will
then owe at the time you would be buying fuel anyway, a remaining
balance of about $455.
Of course with the prices of all fuels going up and the value of the
dollar somewhat in doubt maybe a supply of fuel on hand would be a
good decision?
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