Transportation

Lesson: Save money on transportation

Rethink Your Ride: Could a Simpler Car Save You Big?

Cars offer freedom and flexibility, but that freedom comes with a cost. In the US, the average monthly cost of owning a car falls between $894 and $1,015.

That’s a big chunk of anyone’s budget! Considering the median take-home pay for American households is around $3,500 to $4,500 per month, your car might be taking a substantial 20% to 30% of your income.

Here’s the question: Does your current car match your true needs?

Most of us primarily need a vehicle to get from point A to point B. Could you achieve the same results with a less expensive car? Chances are, the answer is yes! You could save a significant amount each month on payments, fuel, and insurance – all while still driving a safe and reliable vehicle.

Should your spending reflect your values?

The money you spend should align with what you value and brings you genuine joy. Is owning a fancy car that sits in the garage most of the week truly making you happy? Or would having those extra funds allow you to pursue your passions or create lasting memories?

Think about the potential of that extra cash in your pocket!

That could mean:

Paying off debt faster
Finally taking that dream vacation
Investing in experiences that truly enrich your life

ACTION: Determine potential savings from downgrading

Step 1: What’s Your Car Costing You?

First thing’s first, figure out what you’re shelling out for your current car:

Monthly payments: Check your loan statements or bank app to see what you’re paying.
Insurance costs: Fancy rides aren’t just cool—they’re pricey to insure. Use tools like Progressive’s comparison tool to see average costs for different models.
Gas money: Track your monthly fuel expenses. Apps like Fuelio can help you keep tabs on fuel efficiency.
Upkeep: Older or luxury cars are often pricier to maintain.

Step 2: Hunt for a Cheaper Vehicle

With your current costs in hand, look for a more economical car:

Better gas mileage: Aim for cars with excellent fuel economy—sites like FuelEconomy.gov let you compare models.
Reliability is key: Opt for cars known for their longevity like Toyota Corolla or Honda Civic. Check out reliability ratings on Consumer Reports.
Cheaper insurance: Smaller, less pricey cars usually have lower insurance rates. Get quotes from multiple insurers via sites like Compare.com.

Step 3: Crunch the Numbers

Calculate your potential savings:

Cheaper payments: Use auto loan calculators like Bankrate’s calculator to figure out new monthly payments.
Fuel savings: Estimate annual fuel savings by checking out the gas mileage on new options.
Insurance savings: Get quotes for your potential new ride to see how much you could save.

Step 4: Ditch Your Current Car

Ready to switch? Here’s how to unload your current car:

Get an appraisal: Use Kelley Blue Book to find out what your car is worth.
Private sale: You might get more money by selling privately. Websites like Craigslist or Autotrader can facilitate this.
Trade-in: Trading in at a dealership is less hassle but be prepared to negotiate. Tools like TrueCar offer insights on fair trade-in values.

Step 5: Smoothly Shift to Your New, Cheaper Ride

Transitioning to a less expensive vehicle? Keep these tips in mind:

Avoid negative equity: If you’re underwater on your current car, try to clear the debt before taking on another.
Secure the best financing: Shop around for auto loans with the best rates. Websites like LendingTree can help you compare offers.

Case Study: Cost Comparison

Imagine you’re currently driving a mid-size SUV with a monthly payment of $500, an average fuel cost of $200 per month, and insurance costs of $150 per month. Your total monthly vehicle expense is $850.

Now, consider switching to a compact car with a monthly payment of $300, estimated fuel costs of $100, and insurance at $100 per month. Your new total vehicle expense would be $500 per month.

Annual Savings Calculation:

Monthly savings: $350
Annual savings: $350 x 12 = $4,200

Utilize Alternative Transportation

Explore other modes of transport that can provide health benefits along with cost savings:

Biking: A bicycle is a cost-effective investment that incurs no fuel costs and offers a healthy way to commute.
Walking: If possible, consider walking to nearby destinations to completely eliminate transportation costs.

Leverage Technology

There are various apps designed to help you save on transportation:

Ride-Sharing Apps: Apps like Uber and Lyft often offer ride discounts and promotions.
Fuel Price Apps: Use apps to find the cheapest gas station near you.
Public Transit Apps: Stay updated on schedules and routes that can save you time and money.

Negotiate Remote Work

If your job permits, negotiate for a few remote work days each week. This can drastically cut down your transportation costs and also save you a lot of commuting time.

Step 1: Calculate Your Daily Commute Costs

Fuel:
- Estimate the miles you drive round trip for your commute each day.
- Divide the miles by your car’s average miles per gallon (MPG).
- Multiply that number by the current average gas price in your area.
Parking & Tolls: Add in any daily parking fees or tolls you pay.
Wear and Tear: This is harder to quantify, but consider adding a small ‘estimate’ (e.g., $5-10) per commute to account for extra maintenance due to mileage.
Resource: Commute Calculator

Step 2: Factor in Occasional Costs

Meals out: Do you often grab breakfast or lunch while commuting? Estimate how much you typically spend on those meals per day you’re in the office.
Coffee Runs: If you stop for coffee on your commute, add the average cost to your daily total.

Step 3: Determine Time Savings

How long is your commute one-way? Double that to get your total daily commute time (in minutes).

Step 4: Imagine the Possibilities

Extrapolate: Multiply your daily commute costs by the number of days per week you might work remotely. This gives you an idea of weekly savings. Now multiply that by four to get a rough monthly savings estimate.
The Value of Your Time: Consider the time you save on your commute. Could this be used to make extra money in a side hustle? Could those extra hours improve your productivity or mental wellbeing?

Example:

Let’s say your commute is 40 miles round trip, your car gets 20 MPG, gas is $4/gallon, you spend $12 on lunch, and treat yourself to a $3 coffee on your commute. Your daily cost might look like:

Fuel: (40 miles / 20 MPG) * $4 = $8.00
Lunch: $12.00
Coffee: $3.00
Total: $23.00

If you worked remotely two days a week, you could potentially save around $46 per week, translating to roughly $184 or more saved per month!

Important Notes:

These calculations help visualize the potential. Your exact savings will vary based on commute distance, car efficiency, and spending habits.
Remote work isn’t feasible for everyone. Consider if your job and situation allow for it.

Additional Considerations:

Longer commutes have a higher potential for savings.
Even small adjustments to spending, like bringing coffee from home, add up.
Consider wear-and-tear on your car due to mileage, and factor potential maintenance savings into your estimate.

Example email for negotiating remote work

Subject: Request for Flexible Work Arrangement: [Your Name]

Dear [Manager’s Name],

I’d like to discuss the possibility of incorporating remote work into my schedule on a [specify days of the week – e.g., Tuesdays and Thursdays]. I believe this arrangement could benefit both myself and the company.

Here’s how I envision this working:

Remote Work Days: I would work from home on [specified days].
Communication & Availability: I’ll maintain open communication throughout the day via [email, company chat, phone, etc.] and will be available for any necessary meetings or calls.
Productivity & Focus: I believe working remotely could enhance my productivity and focus by reducing commuting time and potential office distractions. I am confident I can maintain, if not exceed, my current work output.
Improved Work-Life Balance: A flexible arrangement would also positively impact my work-life balance, potentially leading to increased motivation and job satisfaction.

I’m open to discussing this further and creating a plan that ensures seamless workflow and collaboration. Would you be available for a meeting to discuss this potential arrangement?

Thank you for your time and consideration.

Sincerely, [Your Name]