Hello income streamers! Today I’ll be presenting part two in the Ultimate Penny Pinching Guide. Part one, on food, can be found here. Part two tackles transportation!
Transportation is necessary for all of us to function as members of society – but whether that means leaving the house only to purchase necessities, or driving to work every day and taking road trips every weekend, is entirely up to you. Either way, there’s plenty of options for saving on transportation when you do have to get places:
1. Skip the car whenever possible
Taking walks or biking places are some of the lost joys in the modern world. When you choose to walk or bike somewhere, it becomes a deliberate and conscious action and gives you quiet time to think as you travel, contributing to a calm and meditative experience. Second, it’s healthier for you, and burns fat. According to the National Household Survey, 60% of Americans choose to take the car on a trip of a mile or less. That’s a 15 minute walk! I understand that sometimes we have to hurry places, but I’m sure we could all leave the house a little earlier and burn some fat while saving some money for those trips.
If you’re afraid to spend the money on a bike, you can begin with baby-steps of just walking those short trips. I’m sure you’ll soon realise how much more enjoyable life is on the sidewalks. And if you need financial reassurance, the average American drives 13,476 miles. If you purchased a top-of-the-line, excessively expensive bike at $2500 you’d still only have to convert a third of your driving trips to bicycle to recoup the cost in about a year,* and that’s not even accounting for health and environmental benefits. That seems doable to me, and if you search on Craigslist I’m sure you could find an option around $700.
2. If you drive often enough to make paying for a car less expensive than Uber or public transit, purchase a used one.
There is never a reason to buy a car new. Used cars in the 4-6 year age range show the same amount of mechanical issues as new cars, and yet cost far less. The only reason to buy new is pride. For me personally, I’d rather put the 5-10k difference into a retirement account and take pride in reaching financial independence earlier.
3. Consider more costs than the sticker price when shopping for a car
It’s worth considering all the costs involved with a car when comparing prices. Does one car get significantly better mileage? Does one car require fewer repairs? Will one car cost less to insure? If you track your yearly mileage, you could calculate how much the difference in gas consumption will cost you, and see if one car may be surprisingly cheaper although it’s more expensive at the outset.
For me, if I were to purchase a car, I’ve found that a 4-6 year old Prius or Volt would do very well in my measures of gas consumption, repairs and current price. A 2012 Prius would cost me 12k, which probably means I could pay in cash. I’m sure I could get a better deal if I was willing to go back farther in model year, but I’m not interested in buying a car right now given that I’m able to bike or use public transit to get where I want at the moment.
4. Buy in cash
This one’s always seemed simple to me. Who spends more than they have on something like a car? I understand taking out debt for a house, and for an education, given that they’re both necessities and that, with houses at least, its hard to cut costs to a point where saving up and paying in cash makes sense. But with a car, it’d be pretty straightforward to save up 10-15k and purchase a nice, usable car with no more than 50k miles on it. I’d much rather have that and skip paying interest than overspend and get a fancy car with features I don’t need so I can impress people I don’t care about, all while pushing my financial goals further away.
5. Where applicable, skip out on your car’s insurance
So, if you are following logical advice and have decided to become a financial Star in a Reasonably Priced Car, the worst damage you could ever pay for your own car would be totaling it: 10-15k. Ideally, you’ve already saved up to purchase this car’s price once before, so it’d make sense to avoid paying insurance companies to save for you and instead save up about 1.5 times the car’s purchase price and put it in an easily withdrawn fund, like a bond or stock index fund. Insurance companies have to make a profit, so clearly, you must be wasting SOME money on the premium that you pay, when compared to what you would be saving if you socked the money away yourself. And if you can put the money to work and invest it while you wait for disaster to strike, you can end up with too LARGE an insurance fund and actually get to withdraw some money and sock it away towards retirement.
This option isn’t legal in every state, as some states require you to carry insurance. Also, you should definitely purchase insurance for damaging other people’s cars – there are idiot drivers who made idiot purchases on expensive cars all over the place, and it’s not worth it to try and pay for their repairs. But, given that your car is a depreciating asset, you can save a lot if you pay yourself a monthly premium and park it in a fund that makes money rather than letting some company squeeze a profit out of you for not saving up for damages.
Carpooling whenever possible allows you to share travel expenses while also giving you a great chance to socialise and bond with coworkers and friends. Carpooling is an absolute must if you drive to work daily, and is also a great way to save the environment!
Some states also offer tax incentives and special highway lanes for carpools. Google around to see if you can gain from this!
7. Work on your own car
In the day of YouTube and public libraries, there is no such thing as “I don’t know how to” – only “I’m too lazy to learn how.” There are countless guides online for every kind of repair, and in the long run investing in repair tools will absolutely save you money on mechanic trips. Many of the tools can also be used for home repairs, and your friends may even ask you to repair their cars for a little cash too!
8. Buy gas gift cards
Last post, I mentioned that you can purchase unwanted gift cards on Raise.com and other sites to save on buying food. The great news is that you can do the same for gas chains!
9. Plan parking ahead of time
Parking can be a hefty hidden expense in a day out – use the site SpotHero to find cheap and free parking near your destination. It may involve a little bit of a walk, but like I already mentioned, walking is a great chance to appreciate your surroundings while you slow down and think.
10. For consistent public transit use, use monthly passes
This one is pretty straightforward. Bust out a calculator, estimate how much you spend on individual transit tickets per month, and see if a monthly pass could save you money.
Those are all the tips I have for now folks. Do you have any ideas on how to save on transportation? Am I wrong about anything? Do you think anyone ever has a reasonable excuse for a 50k car? Let me know in the comments!
* This estimate uses the IRS’s official cost estimate of 55 cents per mile driven. That figure accounts for gas, depreciation, and insurance. 13,476*.55/3 = $2470.
For more money-saving tips and tricks, check out @StevesStreams on Twitter!