Ideas to Reduce Transportation Expenses

After taxes and housing, transportation is generally up there on the list of significant household expenses.  Similar to some other parts of my life, I took an unconventional approach to optimize my transportation expenses.  I’ve detailed this below, not for people to use as a guide, but more to share my experience and how this approach has and will continue to save me a lot of money.  A lot of people don’t realize how much a car actually costs when you add it all up: 

  • Depreciation
  • Insurance 
  • Maintenance
  • Interest (if financed)
  • Opportunity cost on equity tied up in the car 
  • Roadside assistance 
  • Parking
  • Gas 
  • Registration 
  • Opportunity cost on renting out the parking stall 

For some people, not having a car is a non-starter – they need a car (e.g. due to their work or where they live) or they just really value having a car.  That’s perfectly fine, to each their own.  

I chose not to buy a car until I was 32 years old.  I thought that if I could eliminate a major expense category (even if it was just for a few years) I would be able to kick start my savings and accelerate my journey to financial independence.  It was never my plan to be car-less forever.  Looking back I am quite surprised I was able to go as long as I did without a car (16 years since getting my drivers license).  

How did I get around without a car? 

  • I lived close enough to work to walk
    • When I originally moved out of my parents house, I was very intentional choosing where to live.  I found a place that was within walking distance from work – with a grocery store on the way home.  This eliminated a need for a car for most of the week!
    • If you live in a city and relatively close to work/family/friends, this can save you a boatload of money.  Not only did I not need a car (hundreds of dollars per month savings), I didn’t even need a bus pass (~$100 / month in Edmonton)
    • When choosing to live downtown, I paid a premium over the rent I may have paid being further out (or could have paid the same and got a nicer place further out), however, I decided that I valued my time more and being closer to work and not having to commute were important to me
    • An added benefit of walking was the exercise.  My daily walk to and from work allowed me to get a baseline of 30-45 minutes of exercise each day and was a good time to think on the way to work and unwind on the way home
  • I rode my bike
    • I love cycling and chose to ride my bike all year round in Edmonton (yes, I’m one of those crazy ones).  A picture from 2017 to prove it: 
    • I once cycled to work when it was -46°C/-50.8°F with the wind chill.  At that temperature, I wore my snowboard goggles so my eyes didn’t freeze!
    • After University, while I was still living at my parents house, I would ride my bike ~10 km each way to and from work, all year round.  Similar to walking, I thoroughly enjoyed the added benefit of the exercise and the fresh air – the best way to start and end my day!  I found that, even on the snowiest and coldest of days, I could still cycle to work in less time than it would take for me to take public transit (bus alone or bus/light rail transit combo)
    • Nowadays, even though I have a car, I still ride my bike for leisure and to visit family and friends within the city
  • I used public transportation
    • All throughout University and the early years of my career (before I figured out I could cycle to work or just live closer!), I took public transit, specifically the bus and the light rail transit system in Edmonton, or “ETS”
    • In my view, the worst part of taking the bus was the waiting time – I found that the bus was very often not on schedule (not necessarily the fault of the drivers, but rather often weather / traffic related).  Technology has improved this significantly through time as the buses are now equipped with GPS trackers so you can check the status of the bus before you leave home
    • Some people are above taking the bus and even embarrassed to take public transit.  If you are one of those people, I think you care a bit too much about “what other people think”
    • I found the bus ride itself was quite enjoyable. I would often enjoy a cup of coffee while I read the news or a good book or catch up on e-mails 
  • I used rideshare services / taxis
    • I mostly stuck to public transit unless I was in a rush, in which case I would take a taxi or an Uber
  • I borrowed my parents’ cars – given my parents lived close by in the city, I would sometimes borrow their cars when needed.  Unlike when I borrowed their cars in high school, I filled them up with gas and occasionally washed them.  Thanks Mom and Dad! 
  • Lastly, I rented cars
    • Just because I didn’t own a car, it certainly didn’t mean that I didn’t want to drive around.  I love driving and going places on weekends   
    • I rented cars very often – since I lived downtown, there were several car rental companies within walking distance from my apartment
    • Similar to my housing “rent vs. buy” analysis, I ran the numbers on car ownership.  I concluded that it was cheaper to rent a car every single weekend vs. owning a car and parking it downtown.  When you rent a car, you have:
      • A nominal per-day rate – I generally only rented on weekends where the per day rates were much lower (~$15-$30/day)
        • In my case, depending on the month, my costs were mostly or completely offset by the fact that I rented out the parking stall that was included with my apartment for $175 / month (heated / underground parking close to a nearby university and downtown)
      • No car payment 
      • No insurance cost (I used a travel rewards credit card that included free rental car insurance)
      • No money tied up in a depreciating asset  
      • No maintenance costs 
      • No annual registration fee
    • Other benefits of renting cars:
      • Always get a newish car that is full of gas when you pick it up
      • Never have to wash the car or maintain it (no twice a year tire rotations, oil changes, etc.)
      • Can tailor what type of car you rent based on your needs (e.g. I got a big SUV when I had multiple people to transport, got a nice Mercedes to drive down the coast of California, got a van for moving, got a hybrid if I wanted good gas mileage, etc.)
      • A great chance to test drive various cars before buying one

Here is a collage of various cars that I rented over the last several years:

If renting was so great, why did I buy a car?

  • Convenience eventually took over – I always knew that once I was married and had kids, I would value the convenience of having a car.  I made a guilt-free decision to buy a car in April of this year, a month after we found out my wife was pregnant with our son.  Definitely no regrets so far, it has been great
  • I’ll detail my used car buying experience in my next post 
  • I’ll still consider renting cars in the future if I need a specific vehicle (e.g. a van or a truck) or if I will be putting on a significant number of kilometers – since the depreciation of the vehicle for a long mileage trip may exceed the cost to rent:
    • I once rented a brand new Volkswagen Golf and put on 8,132km over 23 days (drove it down to Arizona and back up the West coast of the US)
      • Cost for the rental = $538.36 = $23.41 / day = $0.06620 / km
    • Another time, I rented a Toyota Yaris in Australia and drove 6,270km from Sydney to Cairns and down the East coast of Australia – another great road trip!
      • Cost for the rental = $498.41 or $0.07949 / km

As a car owner, there are still yet a few things one can do to minimize transportation expenses – for example: 

  • We chose to be a 1 car family instead of a 2 car family (so far!) – obviously this is a significant saving
  • We bought a used car rather than a new car to avoid the initial steep depreciation in the first couple of years 
  • We paid cash for the car rather than financing it and incurring financing charges and interest 
  • Maintenance
    • We bought a reliable car that is less expensive to maintain (Toyota Camry) 
    • We take it easy on the car – for the most part, we avoid putting the pedal to the floor and slamming on the breaks
    • We conduct regular preventive maintenance 
  • Fuel economy
    • We fill up with gas at Costco – generally we find that the cost of gas at Costco is 10 cents / litre less than elsewhere.  That said, we only fill up at Costco when we are there anyway
    • We are smart about driving – when we have to go multiple places we will route out to try to minimize backtracking.  Also we don’t drive across town to save $2!
  • Insurance
    • We bundle our tenant and automobile insurance policies to save money
    • We don’t drive to work – I still walk to work and my wife works from home.  This saves gas, parking, and insurance costs (generally your insurance premiums are less if you do not commute daily and if your mileage is lower)
  • Parking
    • We have parking included in our apartment rental and don’t drive to work

Other ways that you can save money on transportation are:

  • Carpool – if you choose not to live close to work, carpooling with a co-worker or a spouse can save a significant amount of money and is better for the environment

I hope this article gave you some ideas of how you can potentially save money on transportation expense!  

2 thoughts on “Ideas to Reduce Transportation Expenses

  1. Pingback: How to Buy a Used Car – JBFI Inc.

  2. Pingback: Financial Coaching the Average Canadian Household (Part 2 of 6) | JBFI Inc.

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