Yesterday's Wall Street Journal online had a page one poll asking at what price would gasoline make you cut back on other purchases. Here are the results as of this posting.
The correct answer is "at any price, gasoline causes you to cut back on spending." Money spent on one thing is not available for spending on something else. If the price of gas goes up and you don't change either your spending or driving habits, then where do you get the extra money to pay for the gas? Why, your credit card or your savings, of course! Either one has a limit.
If you're smart and you pay cash for everything, then the money for the gasoline comes out of your cash and it automatically changes your spending habits on everything else. Meanwhile, 27% of the poll participants from the WSJ website said they'd just keep spending, no matter what. Well, that explains the current mortgage mess. Even some of the WSJ readers are financial dunderheads.
For more frugality fun, check out this week's Festival of Frugality.