I have been thinking about writing this up for awhile now as the cost of transportation is typically the second largest expense that people have after housing. When calculating our monthly expenses, usually the first few things that would come to mind is your rent, utility bills, your phone bills and perhaps the few other expenses that your occurred during the month. What may not be so immediately obvious, are the transport costs you incur on a daily basis. While there is only so much you can do to save on a place to live, there are lots of ways you can cut back on transportation costs.
Here are several alternatives to driving that you might want to consider to help you save money which you can put towards paying off debt and investing.
A person who switches from a private vehicle to public transportation for their daily commute can potentially save a substantial amount of money, according to the American Public Transportation Association. The annual savings is $9,797 for a person who switches his or her daily commute by car to taking public transportation. Individuals who ride public transportation instead of driving can save, on average, more than $816 per month. Think about how much you can save without having a monthly car payment, insurance payment and having to pay for gas.
The obvious downside to this alternative is that public transportation options become limited outside of metropolitan areas. Williams estimates that frequent and reliable public transportation is only an option for about 25% of Americans. According to the U.S. Census Bureau, only 5% of workers regularly use it.
What I personally recommend is weighting your options. Calculate how much you spend per year on your car expenses. Compare how much you are currently paying in rent compared to how much you would pay in rent if you were able to move closer to work and easily commute by either walking, biking, taking a bus a few stops or by subway. You might find that it works out being cheaper to do so, especially if you find a place and get a few roommates. I had made this same calculation myself and I moved closer to my work and I am able to walk to work everyday. I not only save money but it is also good exercise!
If you live within a reasonable biking distance to work, you can enjoy the savings associated with leaving the car at home while getting a great daily workout that could cut out gym costs too.
The number of people commuting to work by bicycle remains small but has been increasing as many cities have taken steps to invest in and support other transportation options. Many are creating bike lanes and more bike-friendly streets and supporting bike sharing programs.
Owning a bike is not without costs. For many, biking to work is not a realistic option because of distance, the weather or the lack of bike lanes or trails. Either way it is another option to save money on your daily commute.
If walking to work is an option for you, there is no cheaper way to get to work. You save on the costs of car ownership without even having to cover the modest cost of bike maintenance. And, as with biking, you will enjoy enormous health benefits. This is how I currently get to and from work.
Despite those benefits, the number of people walking to work has dropped by half from 5.6% of workers in 1980 to 2.8% in the most recent Census figures.
If the above options don’t work for you or if you aren’t ready to give up your car, ride sharing may be the best way for you to cut costs on your commute. Sites such as Ridesharing.com, OpenRide and Waze make it easy to find people going your way who can help share your commute costs.
Calculating the savings of car pooling depends on how often you ride share, how many people you’re able to share with and what costs are included. Sites like Waze Carpool factor in the costs of car ownership beyond fuel, and recommends a rate up to the federal mileage rate of 54 cents a mile. If you split the cost of a 50-mile round trip commute with one person every day, you could save about $250 a month.
Uber or Lyft
Uber and Lyft are also getting into the ride sharing game with UberPool and Lyft Line, respectively. While you still pay a driver, you and other passengers who are heading in the same direction can share the costs. Believe it or not, in some cities, such as Miami, Chicago and New York, it’s actually cheaper to ditch your car and use Uber or Lyft. Remember to do all of the calculations first before deciding to do this. You still have a bit of the convenience factor of owning a car but it is variable expense as each ride you take the cost is not fixed.
Remember the cost of transportation is the second largest expense that you have. If you are able to find ways to decrease this cost you will be able to allocate those savings to paying off debt and putting it towards investments.