One of my side gigs is writing for Lending Tree. I recently put together an informational piece on budgeting for transportation costs that was as eye-opening for me as it was for the audience.
The gist of the research I combed through is that, as a country, we’re spending a lot of money on getting from A to B—very often, even more than we spend on housing! While the guidelines suggest spending no more than 15% on transportation, many people are squarely in the 25-40% range, putting a huge strain on their budget.
As we continued to save for a house and look forward to buying one eventually, transportation was as afterthought. Clearly, that’s no longer the case, as I now realize where we live has a huge impact on what we spend when it comes to getting around.
Taking Little Steps
If you’re like us, you approach trimming transportation costs by trying to do the little things right:
- Combining trips and carpooling
- Maintaining your car
- Using a fuel additive
- Driving carefully and slowly
- Buying gas at warehouse clubs
The idea is that doing all of those things in combination will have a noticeable effect on your bottom line. It turns out that a lot of the time, that’s simply not enough.
Taking Big Steps
We (collectively) need to suck it up and think bigger. We’re not going to cut 10-25% of our budget by using diligent driving habits. Here are five solid ways you can make a really noticeable dent in your car budget:
#1: Move closer: As the research I did for Lending Tree suggests, where you live, and specifically how far you live from work, has a direct impact on how much you’ll spend to move around. I would also guess that your distance from work is well-correlated with your distance from shopping centers, banks, and anywhere else you might drive to regularly. While living closer to town might be “more expensive” in rent, you’re likely to end up ahead overall.
#2: Replace your car: It’s exactly what thousands are doing right now as a result of climbing gas prices. Buying a more expensive hybrid isn’t always the right option though, since car payments are still part of your overall budget. Opting for a smaller or newer car could pay off as part of your overall strategy if the mileage is substantially better.
#3: Get rid of your car: Most two and three-car families, and even some one-car families could, with some degree of effort, get rid of a car. Just be careful and evaluate whether eliminating the car actually results in more expenses or a reduced quality of life you’re not willing to put up with. With some sacrifices, you could definitely make an impact.
#4: Change jobs: Consider getting a job that’s closer to where you live, or if you drive a lot for work—find an employer that’s willing to let you have a company car or allowance for travel expenses. You could also negotiate with your existing employer for days you can work at home or a car allowance. If you’re able to do so, working from home every day reduces or eliminates any costs of getting to and from your job.
#5: Change your buying habits: While this isn’t a short-term option for many people, buying a car for cash could mean a huge savings every month in terms of interest costs you don’t have to cover. On a smaller scale, consider joining a warehouse club to take advantage of cheaper gas, and find a better, less expensive mechanic to take care of your car. Stop buying premium gas if your car doesn’t require it and keep your car well-maintained to avoid unexpected surprises.
I understand all of these are “easier said than done.” That’s kind of the point—big effort should result in big results. I learned an amazing quote at a recent seminar:
“Change will not occur until the pain of staying the same is greater than the pain of changing.”
I invite you to re-visit your own transportation costs and see if the effort is worth getting rid of the pain you feel on your budget.
Photo by epSos.de
5 thoughts on “5 Ways to Radically Reduce Your Car Costs”
As great as these sound, some of these options won’t be as financially sound. Relocating costs lots of money and changing jobs isn’t as easy as we’d like it to be. Sometimes you have to bite the bullet.
That’s true, and it all depends on so many variables. I also think though, that once people sit down and truthfully and completely figure out what they’re paying for transportation costs and what they could be paying otherwise…the tradeoff threshold might be surprising.
Like you said though—I don’t plan on changing jobs or moving anytime soon just to lower these costs. But next time I change jobs or move…this is going to be a lot bigger of a factor than it has been ever before.
In all aspects of our financial lives, we absolutely must be sure we know what are priorities are and what we are trading when it comes to our money. Wojo, you do a great job of presenting out-of-the-box options when it comes to reducing expenses. No, for some people the options simply won’t work. But for others, even taking some time to sit down and think about is a step in the right direction toward achieving financial freedom. Looking forward to reading more!
Moving closer to home and driving a shorter distance to work should reduce one’s car insurance premiums. Its also important to examine one’s insurance policy closely to see if some small tweaks cans be made. For instance for an old car not worth much perhaps collision coverage isn’t necessary if one can afford the out of pocket replacement cost.
Good point, and exactly what we did for one of our older cars a few years before we finally got rid of it! 🙂
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