how do you get 6% on short term savings? do tell.


s


"terry" wrote in message
...
On Apr 23, 10:15 am, Jim Elbrecht wrote:
On Tue, 22 Apr 2008 15:27:10 -0500, IGot2P wrote:
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?