Financial Freedom in 2021! Take Action: Day 8
Transportation is #2 (behind housing) in the top monthly expenses incurred by most Americans. Car loans, car insurance, gas, repairs, and depreciation all lead to the high cost of car ownership. It’s estimated that it can cost over $9000 per year in addition to the base cost of a car. But most of us, especially with a family, can’t fathom managing our daily lives without the convenience of multiple cars.
There are a few ways to significantly reduce transportation costs, but these will require quite a change in lifestyle:
- Share a car – this option might be more do-able than in the past because of the increase in remote work and school situations.
- Sell or trade in your cars for smaller, older, or electric vehicles.
- Bike to work and to run errands. Maybe a cargo bike is in your future.
- Eliminate all cars and use public transportation or ride-share services. Rent a car for road trips /vacations.
- Switch to a job with a shorter commute or work out a plan to work from home 2-3 days/week to reduce gas charges and reliance on a vehicle.
However, if a drastic change isn’t in the cards this year, here are a few things you can take action on now to save on the high costs of transportation:
- Shop around for cheaper car insurance (consider raising your deductible and ask about all possible discounts, including safe driver, company/occupation-related, good grades for teenage drivers).
- Plan a weekly schedule for errands so that trips can be combined on same day to reduce outings and gas-usage.
- Change kids from car-rider to bus-rider (this is a battle in our house!).
- Pay off your car loan.
- Refinance your car loan.
- Vow to buy a used vehicle approximately 6 years old or older from now on.
Today’s action step is to shop around for car insurance, make a plan that reduces your car use, determine whether you can pay off or refinance your car loan to get monthly costs down, and plan to make one of the BIG changes suggested above in the near or distant future.
In our household, we continue to make the conscious decision not to inflate our lifestyle with regard to vehicles despite how embarrassed our 13 year-old is of our minivan and how cool our friend’s new Tesla looks. I currently drive a 2015 Toyota Sienna with over 100,00 miles on it. We paid off the loan on my van as one of our financial goals in 2018. My husband still drives his 2005 Ford F-150, which has over 250,000 miles on it. He takes great care of that truck, and we use it minimally so it can last much longer. Neither of our cars looks especially cool, nor are they stain-free. We could easily justify an upgrade, but it’s not worth sacrificing bigger priorities in our family’s life.
Tomorrow, we’ll dive in to how to save money on the third biggest expense for most households. Can you guess what it is?