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save money on transportation costs

How to Save Money on Transportation

This article contains helpful information on how you can save money on your transportation costs.

For most people, transportation costs are some of their biggest expenses, exceeded only by housing and possibly food. But your transportation costs don’t have to be a huge drain on your monthly budget. Fortunately, there are many things you can do to decrease the amount of money you spend on transportation costs each month. Four of the main ways you can save on transportation costs are (1) saving when buying a car, (2) saving on commuting and travel, (3) saving on car maintenance and repairs, and (4) saving on auto insurance. Read below for 35 ways you can save money by cutting costs in each of these four areas in order to reduce your transportation costs.

Save Money on Transportation Costs When Buying a Car

1. Buy a smaller or otherwise more economical car.

If you’re driving a large vehicle or one with a low MPG rating, consider buying a more economical (but also less expensive!) car to save money on gas. Don’t buy a more expensive car (unless you were looking to upgrade anyway). And especially don’t go into debt to buy an expensive economy vehicle. The math just won’t work in your favor.

2. Buy a less expensive car to save money on transportation costs.

Maybe you don’t need a smaller car (but the same-size car or maybe your family has grown and you actually need a larger car), but just a less expensive car. If you’re currently driving a car worth $5,000 or $10,000 or more and can downgrade temporarily to a $1,000 or $2,000 that you can buy for cash by scraping the money together (by selling some stuff or working extra hours for a month or two if needed), not having a car payment will change your financial life.

Even if you’re upside down on your car and owe more on it than it is worth, it often makes sense to sell the vehicle and take out a small loan from your local credit union or community bank to pay off the difference so that you can buy a less expensive car to reduce or completely eliminate your monthly car payment.
I know this is probably a new idea to most of you, so let me restate that: even if you have to sell your car at a loss (if you’re upside down on it) and take out a loan for the amount you still owe on it, that is often a good idea.

And the reason is this: by buying an inexpensive car (in the $1,000 to $3,000 range) and then working very aggressively to pay off your loan for the difference on the money you owed on your previous car (minus what you can sell it for; sell it to an individual and not to a dealer so you can get the best price) and the small loan you may need to take out on the current car to pay the different between what you owed on it and what the car was worth, you will still be way ahead. You will have a big advantage over where you would have  been had you tried to slog your way through paying off an expensive car loan. And then once you pay off as quickly as possible the car loan from the previous car and the small loan if needed on the get-around car, you can work to save up the money for a vehicle upgrade with cash. And you can say goodbye to car payments forever.

As a general rule I don’t advocate debt—but this is actually reducing your debt by going from, for example, a $14,000 car that you owe $16,000 on to a $2,000 minivan, where you take out a $4,000 car loan (if you can’t scrape the cash together or at least not all of it) to pay for the $2,000 you’re upside down on for your current vehicle and the $2,000 to buy the new-to-you minivan.

Again, I know that you won’t want to drive a $2,000 vehicle forever, but you won’t have to stay in it for very long if you’ll then pay off the small loan very quickly so that you can start saving for a nicer, newer vehicle. Try to pay off the new, reduced car loan in less than a year. Since the average car payment is over $400 a month, there’s a good chance you’re paying this much already each month and can therefore accomplish this goal and be car debt free in less than a year!

Then once you pay off the personal loan to the bank for the leftover money you owed on your previous car (if you had to take out a gap loan on it) and pay back the small loan you took out for your current vehicle if needed, then use that same amount to you were paying each month toward your loan (or loans) to save up in order to move up in car with cash—no car loan—in the next one to two years (see more about this just below).

3. Commit today to never have a car loan again in order to save money on transportation.

I know that the idea of not having any car debt is going to be completely foreign to some of my readers, but stick with me and this one piece of advice will literally change your life forever. I’m not exaggerating. I know in our society today many people don’t even think about owning a car without having a car payment. But you don’t have to buy into this lie any longer. Beginning today, you can help change this trend in America and in the world.

And I’m going to teach you how to do it. It’s simple, even if it may be a little hard at first. (But I don’t think it will be too hard when you compare it to the huge benefits of being car debt free forever!)
From here on out, starting today or as soon as you possibly can, I want you to be your own bank for your car purchases. That means that instead of paying the bank a car payment, you pay yourself a car payment every month. If you don’t have a savings account already set up for this, go to Capital One 360 or another bank or credit union where you can easily set up multiple savings accounts, and do this today. Then start putting a little money into this account every time you get paid, even if you start with only $5 or $10 a week or $50 a month or whatever you can currently do.
So if you can save $300 a month, for instance, from no longer having a car payment, you can buy a $5,500 minivan a year later. (That’s by saving $300 for a year; $300 x 12 months = $3,600 plus the $2,000 value of the current get-around car = about $5,500. That’s still not an expensive car, I know, but it’s definitely one that can get you around and be safe and comfortable and all of those things.) And then by doing the same thing, you can buy a $9,000 car a year after that. (That’s $5,500 + $3,600 = about $9,000.)

Do the same thing for one more year, and you’ll be in a car worth nearly $13,000, or hold on for two more years and keep saving, and you’ll be in a car worth close to $17,000 after just four years of saving up and paying for your vehicles with cash. If you want to have a vehicle that’s even nicer than that, then keep saving in this same way, and even add more to your monthly car savings fund over time. In just five years after buying your $2,000 get-around vehicle you’re in a $20,000-plus vehicle, and you can keeping saving this way indefinitely. And you did it all with cash—no car payments! No car debt!
If you’re a two vehicle-family and you want two nice, $20,000-plus vehicles, alternate car saving—that way every 5 years you can buy a $20,000 vehicle (plus the value that your current vehicle still has after the five years, so potentially $25,000 or more).

4. Negotiate the purchase price if you’re in the market to buy a car, and use the power of cash to save money on transportation.

When you are looking to save money on transportation costs, don’t just accept a car (from a dealer or an individual) at the asked-for price. Do your research, know what a really great price would be, and go after it. Even if you don’t talk the person down to what you hope to pay, you’ll still end up paying less than what you would have paid otherwise. Learn to regularly ask the question, “Can you do any better than that?” In some cases, if you go in with cash, you can get a better deal. And don’t forget walk-away power. Don’t get emotionally invested in a car you’re interested in buying—the seller will likely be able to tell that you’ve already decided to buy. Instead, remember that there are cars for sale all over the place, and you’ll be able to get the best deal possible. Fall in love with your car after you buy it.


5. Don’t buy a brand-new car if you want to save a lot of money on transportation.

Unless you have a net worth of at least $1 million, let someone else take the steep depreciation hit from buying a new vehicle. In general, new cars lose about 60 percent of their value in the first four years after purchase. That’s one reason that even most millionaires—who have way more discretionary money than the rest of us—buy a car that is two years old or older. Because they understand the value of money (that’s how they became well-off in the first place), they don’t want to waste it buying something that goes way down in value.

Save Money on Commuting and Travel

6. Drive less to save money on transportation costs.

Combine trips when running errands. Use Road Warrior Route Planner, Route4Me, Badger Mapping, or a similar app to map your routes to get to save time and money by getting to your multiple destinations as efficiently as possible. And shop online whenever you can. The cheapest, quickest errand is the one that never happens.

7. Carpool to save money on transportation costs.

Another great way to save money on transportation costs is to carpool when you can. If you have coworkers who live in the same town, talk to them. Or if you work for a large company where you don’t know everyone, post your search for carpool buddies on the announcement board or in the breakroom. You can also take advantage of ride-sharing and similar programs offered through your work or in your community.

8. Telecommute to save money on transportation costs.

If this is an option at your work and you are one of those who can work from home, take advantage of this option! And even if no one is doing it in your office currently, ask if it’s a possibility. I’ve been able to telecommute part-time for the last several years, and it makes the job that I love even better!


9. Walk and bike more to save money on transportation.

Walking is one of my favorite ways to cut spending on transportation because you spend nothing at all—you can’t get better than free! Many people live in walkable communities, especially if you expand your definition of what “walkable” means. If you can walk or jog to work in 45 minutes but can listen to an inspiring podcast or audio book while you do it, which is something you would do while you’re relaxing on the couch after work anyway, that’s a trade-off I’ll make any day!
The same goes for biking. If you want to begin biking more and you live in a larger city but don’t yet want to buy a bike of your own, look into bike-sharing programs.
And I know it may be a little extreme, but if you’re worried about getting to work a little sweaty when your workplace doesn’t have a shower, consider this trick used by long-distance relay race runners: take baby wipes and give yourself a mini “shower” in the bathroom when you get to work.

10. Cut your commute to save money on transportation.

Move closer to work. A common theme among many of the FIRE (financial independence, retire early) bloggers is that they live (or lived, if they’re already retired early) close to work so that at least one of the spouses can bike to work. This allows them to have just one car, which can save you literally hundreds or even thousands of dollars a year. In my own family we have been a one-car family for more than five years now (and had just one car for most of the time before that, as well), and it has helped us to save and invest for other important financial goals on just one income.

11. Avoid rush hour to save money on transportation.

If you have the flexibility to, travel to and from work before or after rush hour. You’ll save money on gas and help keep your sanity, as well.

12. Buy cheaper fuel to save money on transportation.

Unless you have a luxury or high-performance vehicle, the lower-octane fuels are usually just fine. Your car really won’t notice the difference, but your savings account will.

13. Use Gas Buddy or similar apps to save money on transportation.

Save money by using online apps such as GasBuddy, Gas Guru, or Waze. These apps tell you the current best prices for gas in a given area. They’re particularly helpful when you’re planning road trips and aren’t familiar with the cheaper places to buy gas in the area.

14. Slow down, and lay off the brakes.

You can save a lot of money on your transportation costs by following the speed limit (or even driving a little under the speed limit—a kind of crazy idea, I know—to drive less than the limit ) and by accelerating and decelerating smoothly, rather than constantly revving up and slamming on the brakes.

15. Use public transportation to save money on transportation.

Usually you can save a significant amount of money (especially when you factor in wear and tear on your car) if you use public transportation, so use it whenever you can. If you use it often, get a monthly pass. And better yet, see if your employer will pay for part or all of it as an employee perk.

16. Use Uber and Lyft when traveling to save money on transportation.

By using Uber or Lyft when traveling or when you have visitors in town, the amount you save over taxis can be significant. Using one of these car rental services is also a great option when you need a second vehicle only occasionally. Sign up for Uber or for Lyft today and receive ??!

17. Drive for Uber or Lyft.

If you have used and like Uber or Lyft for your own traveling needs, consider driving for them as a side hustle to earn extra money and defray the costs of car ownership.

18. Go easy on the air conditioning and heater to save money on transportation.

Especially if you’re not traveling far (if you’re running around town), roll down the windows and turn off the AC. Keep a blanket or jacket in the car and you may be able to get away with leaving the heater off on short trips or on days when it’s not too cold.

19. To really save money, make the switch to one vehicle to save money on transportation costs.

As I mentioned above, if you can do it, one of the best ways you can save money on your transportation costs is to downsize to one vehicle (or never upsize to two vehicles). With the many other options available, this is becoming a viable option for many families. Even if it means that you have to use Uber or Lyft occasionally or even rent a car sometimes for travel or when family or friends are in town, remember that you’ll still save a ton of money in the long run by not having to pay maintenance, insurance, and registration costs on a second (or third) vehicle.
For example, if you have an SUV or van in the garage that you use primarily for when your in-laws visit, sell it, put the money in a savings account, and use it for occasions when you need to have access to a second vehicle.

Save Money on Routine Car Maintenance and Repairs

20. Get regular maintenance done to save money on transportation.

You have the potential to save thousands of dollars over the years on your transportation costs by getting regular maintenance done. This can help prolong the life of your car. And the longer you are able to drive your car, the more bang you got for your purchasing buck. Get your oil changed, have the tires rotated and aligned, replace filters, get recommended or needed tune-ups, and so on.

21. Save money on needed car repairs.

Another one of the main ways that you can save money on transportation is by choosing carefully where to have your mechanical work done.

22. Be very wary of car mechanics.

Another way to potentially save a ton of money on transportation costs is to shop around for good car mechanics. I generally call half a dozen places or more when I’m looking at repair work that needs to be done. And I also look at the price of just the cost of the part, separate from the labor.
So, when they tell me it’s going to be “$842 for parts and labor,” I ask them to break that apart for me, parts separate from the labor. I’ve had mechanics straight-up tell me that the high cost is because of the labor, which is itself very cheap, they claim. And so I ask them for the exact part name and as much info as I can get about it so that I can look it up for myself. And so I’ve looked up the cost of the part online at that very moment and can see that it’s much less than the amount they quoted me. I’ve found that generally the parts costs at least 50 percent less than the number the mechanic quoted me. So I’ve learned over the years that most of the car mechanic shops, even the honest ones, even the ones with good or great Google or Yelp ratings, greatly inflate the cost of the parts. This is a huge profit margin for them. Please, please do your research and don’t just take what they say at face value.
So how can you combat this challenge? Shop at awesome online parts discount stores like RockAuto (I’ll talk more about that below). I love RockAuto! Even the chain auto parts stores like Napa, O’Reilly Auto Parts, and AutoZone have much better prices than the mechanic will quote you—but in my experience RockAuto has always trumped those prices, hands down. Sign up for a free account with them today!

23. Look on Craigslist or in your local classifieds ads to find mechanics (but be careful).

You can also save money on your transportation costs by finding a reliable, trustworthy small-time or independent mechanic from word-of-mouth referrals from your friends (ask for recommendations on Facebook), or check Craigslist (but as with everything on Craigslist, be cautious!). I’ve had only good experiences using services from Craigslist, but always do your due diligence. Especially for large projects, ask for references, look for online ratings, and check websites like the Better Business Bureau.

24. Don’t use the dealer for car repairs.

I’ve just explained how expensive auto mechanics can be. The dealers are even more expensive. My general rule is simple: avoid them. Instead, look to RockAuto and other online parts stores for amazing deals.

As I mention above, these online sellers generally offer a much better price than buying the part from a mechanic and even much more so than from a dealer.

Save Money on Auto Insurance

25. Be loyal to the auto insurance company to save money on transportation.

You should also look to save money on transportation with your auto insurance. In many cases your auto insurance premiums with your insurance company will go down over time as you remain with the same agency for an extended period of time. So if you like your current company and they offer a competitive rate, consider sticking with them.

26. Reshop your car insurance regularly to save money on transportation costs.

That being said, just because you found the best deal on auto insurance five years ago doesn’t mean it’s still the best deal today. Insurance companies have to stay competitive, so there may very well be cheaper options available. You may also be able to pay less because of changing life circumstances—becoming older (than 25), getting married, buying a home, having a baby, and many other situations can lower your auto insurance premiums. It’s a good idea to shop around once a year to make sure you’re getting the best value for your current circumstances. Two of the agencies with the lowest prices that you might not have considered are USAA (the insurance company we have been getting our insurance through for about the last 10 years) and Amica Mutual. Both of them are great companies with good prices. Farmers, State Farm, Progressive, and Geico are all competitive, as well.

27. Bundle with homeowners insurance to save money on transportation.

Many insurance companies give you a discount on your different policies if you purchase two or more insurance policies from them. In many cases, you’ll save money on both your homeowners and your auto insurance, for example, if you purchase them through the same insurance agency. Depending on your situation, you can also look into bundling with life insurance or renters insurance or other types of insurance they cover.

28. Increase your deductible to save money on transportation.

When you can afford to increase your deductible, it’s generally a good idea to do so. This helps you to self-insure for more minor expenses and use insurance for only the major events (which is often the best way to go). And not only will you generally save money by paying lower premiums, you’ll also save money by filing fewer claims, which can save a great deal of money over time. If you can raise your auto insurance deductible from $500 to $2,000, for example, you can save a significant amount of money. Before you raise your deductible, though, make sure you have an adequate emergency fund in place.
Filing fewer claims is also important when you are looking to save money on transportation costs because if you file too many claims, your insurance company is likely to drop you, and you will have difficulty getting coverage from other insurance agencies, as well. This is because your claims will likely be shared with other agencies through the CLUE (Comprehensive Loss Underwriting Exchange) report, which is a database of insurance claims.

29. Consider dropping collision and comprehensive (full coverage) insurance to potentially save a lot on transportation costs.

Collision insurance pays for the cost of repairs if you crash into another vehicle or object. Comprehensive insurance pays you if your car is stolen, damaged in a storm, damaged by vandals, or damaged when hit by a deer or other animal. If you have a good driving history and especially if you’re driving an older vehicle that you can afford to replace (even with an inexpensive car, at least temporarily, if needed), consider dropping collision and comprehensive coverage (full coverage) from your auto insurance and carrying liability only. The savings are often dramatic.

30. Maintain good credit to save money on transportation.

Another factor that often helps to keep your car insurance premium lower is to have a good credit score. Many insurers use information from your credit report in determining your insurance cost. This is because those who have better credit tend to make fewer insurance claims. Remember to check your three credit reports (for free) at least once a year so that you know your information is correct and you can get the best auto insurance and other rates possible.

 

31. Purchase a pay-per-mile insurance policy if you don’t drive a lot.

You can potentially save money if you don’t drive a ton each month by switching to an insurance policy where you pay per mile. With this type of policy, you pay a base rate for coverage plus an additional amount depending on how much you drive. This type of automobile insurance policy is offered through Metromile, Esurance (an Allstate Insurance company), and Progressive (but Progressive does also take into account other factors, such as hard braking, so theirs isn’t solely a pay-per-mile policy). Though there currently aren’t very many insurance providers who carry this type of policy, it may be something that becomes more common in the future, so if you are a car owner who doesn’t drive very many miles, look around each year before you renew your auto insurance to see what options are available.

32. Ask about available discounts to save money on transportation costs.

Many insurance companies offer discounts for those who drive less than a certain number of miles per year, for a clean driving record, and for younger drivers who maintain good grades, for example. Your agent may not think to tell you all of the discounts that might be available to someone in your situation, so be sure to ask.

33. Stop paying insurance premiums for your children.

Even if they’re still teenagers (actually, especially if they’re still teenagers, because they will be expensive!), consider making your children pay for their own auto insurance. You can still keep them on your policy if you prefer because that will save them quite a bit of money, but consider this: your children (teenaged or adult) are much more likely to drive more carefully if they are the ones footing the bill. It’s important for them to understand just how expensive insuring a car is. My parents always paid my car insurance and never gave me any idea how much it cost, but I’m sure I would have been a more conscientious driver if they would have allowed me the opportunity (said with a smile) of paying part or all of my own insurance premiums. Try letting your kids foot the bill themselves—it will be good for them!

34. Buy a less-expensive car to save money on transportation.

Auto insurance premiums are often affected by the value of a particular model of car, the cost to make repairs to it, how likely it is to be stolen, and its overall safety record. In general, if you own an older, less-valuable car, you’re going to be able to save a lot of money in insurance costs. On the other hand, if you have a newer car, advanced safety and anti-theft features can also save you money with insurers. So do your research, and know what your approximate cost of insuring your vehicle will be before you make the vehicle purchase. The cost of insurance could be a significant percentage of the overall cost of owning the car.

 

35. To potentially save a ton of money, downsize (right-size? :)) to one vehicle to save money on transportation.

If you downsize to one vehicle, you can save a lot of money not only in auto insurance but in gas, registration fees, maintenance, and more. We have been a one-vehicle family for most of our marriage, and I know that owning one car has been one of the factors that has enabled us to stay out of debt (#debtfreeforlife),  live on one income and still invest at least 15 percent toward retirement, fund our children’s education savings accounts, and save to pay for larger purchases (such as a car) with cash.

 

Conclusion

Overall, transportation costs are often the second or third most expensive thing that families have to pay for, after housing and sometimes food. Fortunately, however, there are also a lot of ways that you can save money on transportation expenses because many transportation costs are discretionary (such as the age and the make and model of the vehicle or vehicles you choose to drive and whether you choose to buy a car for cash or to finance it). Consider small or big changes that you can make to your transportation expenses that will keep more of your money in your bank account so that you can work to reach your financial goals and achieve your dreams.

Invitation to Share

Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help a family member or friend or people in general? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being with others. Thank you!

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