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During the past few weeks we have seen gas prices decline.  There is talk that the Department of Treasury is planning to infuse banks with money with the intent to reduce credit card rates, among other things.  Based on this news, some of us may be giving a sigh of relief.  The rest of us are taking a deep breath and moving forward with our plans to re-create our financial realities.

We welcome the reduced prices at the pump.  A reduction in credit card interest rates will be appreciated if it should happen.  The word of caution is “Don’t be fooled into spending more than you have.”

This is a wonderful opportunity to take advantage of a bright spot on the horizon.  First, as noted in an earlier post, a reduction in gas prices gives us an opportunity to add to our savings plan.  The lower prices at the pump should not be looked at as an incentive to drive more.  Currently, in my area we are paying exactly half the price for a gallon of gas that we paid just two months ago.  For example, today when I fill up my gas tank I am spending a little less than $32.00.  Two months ago it would have cost $65.00 to fill up.  The savings is $33.00 per fill-up.  Assuming that you only fill up once a month and can save $33.00 based on today’s prices versus the prices two months ago, at the end of one year you will have saved $396.00.

The other point of interest is that with the cash infusions, should they come to fruition, Treasury Secretary Henry Paulson has indicated that he expects credit card interest rates to come down.  I will not discuss whether I expect this to happen or not.  However, I will suggest that we all keep an eye on credit card interest rates.

If the banks begin to free up credit a little, it is the prime time to call your credit card banks and negotiate lower interest rates.  Although the government would like for all of us to go out and spend, spend, spend, my suggestion is that you negotiate lower rates and begin paying off your outstanding debt and start your savings plan or add to it.

We should not be fooled into believing that the hard times are over because it costs less to fill up our cars with gas or if you should negotiate for a lower interest on your credit card debt.  Before we rejoice, perhaps we should get our household finances in order.  This is a great time to add a little extra to the savings account, or pay a little over the minimum balance on our credit card statements.