If you’re juggling student loan debt, a mortgage, rising health insurance premiums, and more, you’ve likely turned over many a stone looking for ways to trim your budget. Maybe you’ve already begun to curb your discretionary spending. Getting to and from work is essential, right? Absolutely. But have you considered whether you’re spending more than necessary en route? You may be able to relieve some of the economic pressure you’re facing by making different transportation choices.
You Could Do Something Drastic
If you’re one of the 45 percent of Americans who have access to public transportation—and you’re not using it—you’re leaving a lot of money on the table. According to the American Transportation Association, you can save an average of $10,000 a year for every car you don’t own and drive. And there are other benefits, too. Taking public transit is 10 times safer than driving. The environmental impact of being your own private island in the transportation sea is enormous. On average, a passenger vehicle emits 4.6 metric tons of CO2 a year. Leaving the driving to someone else also has the potential to make you more productive. Think of all the calls you can return and emails you can send when you don’t have to keep your eyes on the road and hands on the wheel. So, if you live near a subway or commuter rail stop, use it. Or at least try it. You never know where it could take you.
Drive More Efficiently
Driving a more fuel-efficient car can undoubtedly save you money. It costs less than half as much to operate an electric vehicle versus a gas-powered one. Joining a carpool is another excellent way to lower your driving expenses. But how you pay for the privilege of driving your car ultimately has an impact on your transportation costs, too.
The low monthly cost of leasing a car can be attractive, as is the prospect of driving a new car every few years. But leasing is rarely the most financially conservative way to go. Many drivers get socked with bills for exceeding their mileage allotments when they turn in their leased vehicles. What’s more, at the end of your lease, you’re left with nothing. Purchase a car and, even if you finance it, at the end of your loan term, you have a tangible asset. Most leases do allow you to purchase the car at the end of your term, but the “residual”—the price you have to pay for it—can be thousands more than the car’s fair market value.
Is That New Car Smell Really Worth It?
By some estimates, a new car loses 10 percent of its value during the first month and 20 percent over the first year you own it. When you buy a “gently used” car, its previous owner absorbs that depreciation. That’s a great reason to consider purchasing a Certified Pre-Owned (CPO) vehicle. Only used cars in the best condition generally qualify as CPO cars. While CPO cars may cost a little more than standard used cars, they have been thoroughly inspected and reconditioned. Many come with extended warranty protection, and some come with free maintenance service for a specified period. The cost of financing a CPO may also be lower than the cost of financing a standard used car: many dealers offer the same low-interest rates on CPO cars that they do on brand new cars to incentivize buyers. The best rates are usually extended to the most creditworthy customers. So check your debt-to-income ratio and other factors that make up your credit score before applying for an auto loan.
How to Lower Your Insurance Costs
Insurance is one of the largest expenses associated with car ownership. Still, many of us don’t put a tremendous amount of thought into buying it. You may be able to get better auto insurance for less than you’re paying now. The auto insurance market has become more competitive. Insurers are now offering a wide range of discounts your agent may not have mentioned when you took out your policy. You might be able to save 5 percent or more by signing up for paperless billing. Paying your policy in full can save you an additional 10 percent. Downloading an app might reap you a bit more. And if you’re driving far less now, a lower-cost, low-mileage policy might suit your needs.