In most parts of the country, gas prices passed the symbolic $4 mark in June, providing us with one of those "teachable moments." If you live in Arizona or California or in the Northeast, maybe you've gotten comfortable with the notion of $60 fill-ups, but it's still a shock here in the Midwest where I live.

So I was thinking about the real cost of gasoline. I don't mean the number on the pump, I mean what we really pay when we settle up for our gas-up. An informal survey tells me that few, if any, pay much attention to the real cost of a tank of gas. Here's the scenario:
You pull into a convenience store or name-brand gas station, and there's a sign on the pump that says something like "Pay at the pump" or "Pay before fill," so you whip out a credit card and swipe it through the reader on the front of the pump. A few seconds pass. Voila! You're ready to fill.

If you don't like paying $4 a gallon for gas, how would you like to pay $4.50, or maybe $4.84, a gallon? There's a chance you already are. If you don't pay off your credit card balance every month-without fail-what you really pay is not the pump price, but a self-inflicted $4.50 per gallon (if your card carries an interest rate of 12.5 percent) to $4.84 per gallon (at 21 percent interest). Depending on your credit card's interest rate, you could be paying even more (see graphic).

So, while the high cost of gas has been leading the evening news for several months, we've been making matters even worse by our own financial bad habits. And gas prices are just the tip of the proverbial iceberg. The same is true for every purchase you make on plastic, from a morning latté to a new refrigerator. That's why I have been such a pest about this over the years. Running a tab with your credit card company is a formula for disaster.

Is there anything you can do about this? Sure, the obvious answer is to pay with cash or pay every card balance every month. Not as easy is to cut back on the things you thought were essential to your lifestyle: cable TV, cell or landline phones, dining out, new clothes-eliminate whatever you can until you regain some equilibrium in your financial life.
You also need to get a grip on saving for your retirement goals. You may be years or decades away from retiring, but the time to be thinking about how you will live out your life after work is today. I mean right now.

In previous columns, I have documented the fact that Americans are not saving enough for retirement. Depending on your age, you should be saving and investing at least 5 percent, preferably 10 percent or more, of your income just to meet your retirement needs.
Assess your situation and set some realistic goals. Figure out how you can capture 5 percent of your salary and put it aside every month. Pay yourself first. Do it through automatic payroll deductions and you'll never miss it. Then, every year, boost your set-aside by at least 1 percent. Invest in a low-cost, no-load mutual fund that mirrors the market, and after a few years, you'll have a substantial foothold on the path to a sustainable retirement.

If you don't start right now, you'll be among the 75 percent of "near retirees" (ages 58 to 65) who are predicted to outlive their savings, according to a recent survey for a coalition called Americans for a Secure Retirement.

Then what do you do? Work longer? Cut back on your standard of living? Go without needed medication? Depend on your children or grandchildren to support you? The prospects are not pleasant.

While many people say they are on track for a comfortable retirement, few have made any serious calculations or saved more than a few thousand dollars toward that goal.
A couple retiring today will have to spend over $215,000 just on medical costs after retirement. Medicare and Medicare Part D (prescription drug benefits) will not cover the full cost of maintaining your health as you age. Then, of course, there is the cost of housing. And I assume you are going to want something to eat.

In the past few years, Americans have been funding their lifestyles by maxing out credit cards, borrowing against the value of their homes and living paycheck to paycheck, saving little. Even then, that was a formula for disaster, but today, with home values plummeting, that source of "easy" money has dried up.

According to a 10-city composite index compiled by S&P Case-Schiller, housing prices have dropped 16.9 percent compared with a year ago. But in some areas-like Las Vegas (down 28.4 percent), Miami (down 28.3 percent), Los Angeles (down 24.5 percent) and San Francisco (down 22.9 percent)-it's even worse.

Joel Naroff, president and chief economist at Naroff Economic Advisors, was quoted recently in the San Francisco Chronicle predicting the "bottom" for this market may be in the area of 40 percent from the peak.

In July, the National Association of Realtors reported an 11-month supply of new homes on the market. That's the highest level since 1985. In a normal housing market, there is a six- to seven-month inventory. As long as the supply of houses exceeds the demand by this much, prices are going to have to come down even further to reach a balance.

If you are in a position to buy a house, this is a wonderful opportunity. If you thought you could borrow against your house, through a home equity line of credit, for example, you're probably out of luck unless: (a) you live in one of the markets where housing prices have held up, or (b) you have a very good FICO credit score (780 or higher) and enough equity in your home that you represent a minimal risk to a lender.

The current cycle of rising energy and food costs adds to the frustration of living on the financial edge. These are hard times for employers-especially public employers-to fund salary increases that meet or exceed the cost of living. It's a stew of bad news for the typical American family.

So where do you turn to fund your lifestyle? More and more Americans are dipping into their retirement accounts. Loans against 401(k) plans topped $31 billion in 2004 (the most recent figures I could find). Now that other forms of quick cash have dried up, I'm sure the numbers are astronomically higher, as people scramble to make ever-increasing house payments on adjustable rate loans and to keep gas in the family car(s).

Whenever there is a financial crisis in this country, there is no shortage of sharks to prey on the uneducated and unsuspecting. A recent development is the 401(k) debit card that converts part of your retirement assets into a line of credit and provides you with the "convenience" of a piece of plastic to use with the simplicity of any other debit card. Stop! Bad idea. Do not take out an equity line against your retirement account for any reason. Period.

Have I gotten you attention? How you manage your resources and make your money work for you are the keys to a satisfying retirement. Face the facts: You are going to live a very long time after you stop working. You may need 20, 30 or more years of resources to live on.

Social Security and Medicare will not meet all of your needs. It's your money, and only you can guarantee that you'll have enough when you really need it. You do that by making smart choices now.

Don Kuehn is a retired AFT senior national representative. For specific advice relative to your personal situation, consult competent legal, tax or financial counsel. Comments and questions can be sent to dkuehn60@yahoo.com.