How much does each one of your cars cost you each year? Does that amount make you want to consider other options?
A couple of recent conversations have got me thinking about the cost of transportation, specifically owning a car. For the average American family, transportation is in the top four largest budget categories. For the average military family, transportation is in the top three (because we don’t have high health care costs), and often in the top two. Heck, for some families, transportation is THE biggest monthly expense.
Now, on some level, transportation is essential. Most of us can’t live within walking distance of our work, and even if we could, it’s hard to find a place where you can walk to work and school and the grocery store and all the other things that you need for life. Sometimes, you need even a car for the job itself.
And, no matter how hard I wish, we still don’t have amazing public transportation in most of America.
So, therefore, most military families living in America have some need for a car, or two cars. Heck, sometimes even more. (Though we’ll get to that.)
Which brings the important question: Just how much are you spending on your transportation? And then follow-on questions: Can you bring that cost down? Will you do something different with your next car purchase, or your next PCS move?
Cars Are Expensive
There are a lot of different expenses that go into the total cost of car ownership.
First, you have to buy the car, and pay the taxes, and get it titled and registered. These costs can range dramatically, from a free-to-you hand-me-down to those shiny new muscle cars and trucks. (Not that we ever see those on base…) Whether you save up and pay for the car outright, or use a loan to pay for the car, it is still an expense. And if you use a loan, there’s the added expense of the interest.
Then, there is the cost of insurance. Insurance costs vary wildly, based upon a wide variety of factors, including state law, the vehicles being insured, the age, gender and experience of the drivers, the location of the vehicle, driving histories, and even credit scores. According to insurance shopping website The Zebra, the average cost of car insurance in the US is $125 per month per vehicle. Obviously, some of us are paying a lot less or a lot more than that.
Next comes maintenance and repairs. The average cost of maintenance on a new car is just under $1,200 per year, and then it increases as the cars get older. Yes, you’ll go months without spending a penny, and then suddenly you need new tires and new brakes in the same week.
And then there’s gasoline. It’s not cheap.
There are annual expenses such as registration, and maybe property taxes and/or inspections. And, depending on where you live, tolls. (I’m looking at you, Northern Virginia.) And , it is wise to have the amount of your deductible in your emergency funds, just in case you need to use it. And don’t forget that you should probably be saving for your next car while you’re using the current car.
Which brings me to the main point of this whole conversation:
Do You Know What You Spend On Your Transportation Each Month?
Let me tell you what we pay.
We bought our cars outright, so no monthly loan payments. Thank goodness.
Our insurance is $129 per month for the two vehicles, and I’m happy with the cost-to-coverage balance that we have right now.
We budget $200 per month, per car, for maintenance. And we generally use it, eventually. Sometimes, we’ll even get a couple of thousand dollars built up in that account and then it is time for a new timing belt. In theory, extra money in that account becomes car replacement funds, but in reality, it never really builds up that much. That same account also gets $100 per month for deductibles and car replacement.
Our gasoline budget is $400 per month, and that doesn’t always include enough for long trips. (That comes out of travel. Or college, if we’re college hunting.)
We are fortunate that we don’t pay property tax or do inspections, and our registration is only around $60 per year for both cars. We do spend about $50 a month in tolls, because two different doctors offices are best accessed by toll roads and bridges.
All told, we’re spending around $1,084 per month on the costs of these two older, paid for cars. That’s almost $550 per month EACH.
And it doesn’t even encompass all our family’s transportation costs each month. My husband sometimes parks at the DC Metro, and takes the Metro, or takes the commuter bus, or has other transportation costs outside the car. Sometimes, our kids take an Uber or Lyft, or I throw a couple of bucks at their friends for a ride.
And none of our kids have driver’s licenses yet, so we’ll be adding that expense here in the near future. And that’s not cheap in this state.
What Do You Do With This Information?
In a lot of situations, there’s nothing you can do about the expense. If you’re in a house, and in a job, it is expensive and difficult to change that distance. However, there might be some small things that you can do now, and it is useful to have this information for your next move, where your options might be different. Or maybe you know exactly how much you are spending, and that fits into your big picture – higher transportation costs for better schools, or a more comfortable car because that’s important to you.
Ways to save today:
If you have two cars, try to use the more fuel-efficient car for more driving.
If you have multiple options, balance the cost to convenience of driving vs. your other options.
Plan your errands to eliminate unnecessary trips. Nothing worse than driving from point A to point B to point A to point B again.
For regular trips, find closer options if they work as well. For example, my daughter has physical therapy twice a week. We’re looking for a new therapist, so I’m exploring folks here in our town. While we’re sad to leave the old therapist, it has to happen anyway, and I’m hopeful we can eliminate that 45 miles from our weekly total.
Keep track of ways to save on the gas you are buying. Maybe the gas station by your work is a few cents cheaper than the gas station by your house. The gas station closest to our house has a rewards program that gives us 5 cents off every gallon, every day, and they discount regular gas by 5 cents a gallon on Thursdays. Our cell phone carrier has a promo that gives us 10 cents off per gallon for one fill-up each week. If we combine those thing, and fill up a full tank on Thursday, we can save $4 on that tank of gas. Using those programs saves us about $25 a month. And we use a specific credit card for gas that gives us 5% back, so that’s another $20 each month.
Keep your tires properly inflated.
Ways to save in the future:
Consider transportation costs when choosing your next home. The cost of housing is often less expensive if you go further from the areas with the jobs, but does that make sense in the big picture. Are there tolls? Are there public transportation options, and are they cheaper?
Choose more fuel efficient vehicles.
Try to set up your life to decrease the amount of driving that you do.
Be sure you are prepared for the additional costs when adding another driver or vehicle to your family. Not every child needs to drive at 16, and definitely not every child needs a separate car. Delaying those events can produce big savings. (The insurance part varies dramatically based on state law, so do your research.)
There’s no right or wrong answer when it comes to the costs of transportation. That’s not my value judgement to make – it’s yours, just make sure you are making that judgement with complete information. Knowing how much something costs is always the first step to deciding whether it is a cost that you want to have.
This conclusion reminds me of one of my favorite personal finance books, Your Money or Your Life. It has recently been updated, but remains a thought-provoking classic. If you haven’t read it, you might find it interesting.
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