My wife, the truly frugal one, makes me dollar cost avg at the pump (even though we don’t call it that) b/c I’m always filling up at the convenient location and she says only put in $5 now and I’ll take it to Kroger (where we get .10 off sometimes) next week.

a physics prof at GMU did the math and he found that dollar cost averaging at the pump didn’t make any sense:

http://mason.gmu.edu/~xambrogg/NumbersBlog/index.html

I’m glad someone looked at my post and it’s too bad I took it down! I did a quick search and can’t seem find it again.

To sum up my methodology and findings, I downloaded many years worth of gas price data and wrote an algorithm that simulated dollar cost averaging over various intervals (like for 5 years, from 1999-2001, for a few months, while gas was expensive, cheap, etc.) and found that sometimes you saved money, sometime you lost money. The amounts were never significant considering the time periods (although ‘significant’ is relative of course).

One thing you always lose by dollar cost averaging is time, and that’s the most precious resource of all.

Speaking of the gas/money/time conundrum, my wife, who is an OB-GYN resident, resets her trip odometer to zero when the ’empty’ lights up on the fuel gauge and then fills her tank after ~40 mi because she knows that she has 50 mi left after the ’empty’ light. She does this to minimize the number of times she has to fill up. Now that’s extreme!!! It drives me nuts. 🙂

I think that if you do the math, the smallish differences in gas prices don’t make that big a difference in the cost of running a car. If your car gets 30 miles to a gallon, a 10 cent difference in prices doesn’t add (or subtract) that much. This is one area where my frugal spouse and I relax.

My wife shops at our local Vons and gets cash off an already low price…we then use our PenFed credit card that gives us 5% for using it on gas. We usually save about 20 to 30 cents per gallon.

Since you the amount of gas you buy doesn’t vary, I don’t think dollar cost averaging will work. However, when prices are rising, I fill up more frequently and when prices are falling I wait longer. I doubt any of this makes much difference.

My scooter requires premium fuel, and I balked at buying this at first until I realized the “premium” was $2.30 per YEAR based on my use of 15 miles 4 days a week for half the year.

I expect saving a few cents at the pump by changing your timing to have a similar effect, unless you have a gas guzzler. But then you have a bigger problem.

Dollar cost averaging in any rising price environment has a negative expected result (pay more for gas, earn less on investments). The benefit of DCA is reduced volatility from local price fluctuations by increasing the sampling rate. I don’t see much benefit in reducing volatility on smallish gas payments. DCA shines in situations where say a risk adverse individual has to invest a lump sum received from a non repeating source (inheritance, bonus, gift).

In colder climates, it is best not to let the fuel level get too low. When your tank is almost empty (and there is a small amount of water in your tank or fuel lines), you run the risk of it freezing. Not good.

This post seems more like a parody of dollar cost averaging purchases of mutual funds rather than a helpful personal finance tip.