How much does it cost you to commute to work every day? Do you end up paying to work? In our post, The Cost of Working, we saw that that it costs a lot to go to work. And in our last post, How much do you pay to work?, we looked at career decisions that could result in actually earning a negative paycheck. One of the biggest expenses of working is the commute, so we are going to tackle how to lower that cost. In 2019 the IRS estimated the cost of driving at 58 cents per mile (source). This includes gas, depreciation of car, and maintenance. This 58 cents/mile figure is an average so your costs may be higher or lower depending on a few factors. So let’s look at 4 tips to help cut your commuting costs.
Never borrow money to buy something that costs money to use.
The IRS estimates the cost of driving at 58 cents/mile, but they are assuming the average price for cars, the average gas mileage, and the average price for repairs and maintenance. The average new car costs over $40,000 so a good portion of that 58 cents/mile comes from depreciation. The average gas mileage has continued to trend upwards and is now about 25 mpg. They also take into account insurance and maintenance. You as a smart car buyer have at least some control over all of these components of car cost.
1. Don’t Buy a New Car
New cars are incredibly expensive, and unless you are independently wealthy you will most likely have to take out a loan to buy it. Never borrow money to buy something that costs money to use. That just doesn’t make sense. AAA estimate that a new car loses $3,721/year in depreciation. A good way to save lots of money is to buy a reliable, gently used car. If you are primarily commuting to work (like most working Americans) then you don’t need a new fancy car, a giant SUV, or a pickup truck with the towing package. All you need is a small used sedan that gets you to and from work.
2. Buy a car that gets good gas mileage
Gas prices are going up quickly and gas mileage may be increasing, but the average is still only 25 mpg. At $3/gallon if your car gets 25 miles per gallon, that comes out to 12 cents/mile. At 32 miles round trip per day that comes out to $960/year in gas. If you ‘re driving an SUV that only gets 17 mpg your cost jumps up to $1412/year. Obviously getting a car with better gas mileage will save you money on gas, but what most people don’t seem to understand is that you can save money on gas, just by driving safer.
Coast up to red lights, accelerate slowly after the light turns green, try to drive a constant speed, don’t speed up and slow down to weave in and out of traffic. In high school I had an old car that got 16 miles to the gallon, but by following these rules, I was able to squeeze an extra 4 miles per gallon out of it. This also has the added benefit of needing less maintenance. If you aren’t driving your car as hard you won’t need to change oil, tries, or breaks as often.
3. Don’t get full coverage insurance
Full coverage is a scam. Average full coverage for a good driver with good credit is $1,592/year. It almost doubles to $2,812/year for bad credit, even if you’re a good driver without a wreck! Why do people get full coverage on their cars? Usually it’s because it’s mandatory for a car that is financed. If you don’t own the car outright, the dealership will require full insurance on it because they still own it. That’s a good enough reason on its own not to finance a car; you’re throwing your money away on insurance.
The other reason people get full coverage is that their cars are new and shiny and they want to keep them that way. That makes sense. If you bought a new car, even if you bought it with cash, you spent a lot of money on it, you’d hate for it to get wrecked. They way around this is to not buy a new car. I bought a used car that had $9000 in hail damage. The car was in perfect shape other than having dents in it from the hail. Instead of $20,000, the car only cost me $5,000, and now I don’t feel the need to get full coverage on it because it’s already dinged up. I only pay for liability and it costs me $400/year.
4. Save on Maintenance and Repairs
The biggest cost of driving a car (after depreciation) is maintenance. All cars require routine maintenance, but some cars are cheaper to maintain than others. It’s pretty true across the board that cars with lower prices are also cheaper to maintain. Luxury cars come with luxury parts, and it costs luxury prices to replace those parts. Cheaper cars have cheaper parts and since they’re easier to work on, the labor costs are lower as well.
This is true for repairs as well. A 2005 Toyota Corolla will cost less to repair than a 2020 Audi A8 for the same issue. Since the primary purpose of this car is to haul you to work and back, the primary thing to look for is a car that can do that reliably. The best way to save on maintenance and repairs is to buy a car that doesn’t require a lot of maintenance and repairs. Generally over the life of the car expect to pay the same amount in maintenance and repairs as the initial price of the car. So a $20,000 car will typically cost $20,000 to keep running over the life of the car.
Save on Maintenance by DIY
The next best way to save on maintenance and repairs is to do some of the maintenance yourself. The average cost of an oil change according to Kelly Blue book is $55. For a synthetic oil change it can cost up to $125. Manufacturers recommend you change your oil every 3000-6000 miles. If you drive 15,000 miles/year that’s about $275/year just on oil changes. Changing brakes can cost anywhere between $500 and $1000. Brakes should be changed every 40,000-60,000 miles. Then there’s things like changing transmission fluid, spark plugs, timing belts etc. All of which cost a good amount to replace.
I don’t like working on cars and don’t know enough to repair big issues like engine or transmission problems, but I change my own oil and replace my own brakes. A jug of full synthetic oil and a filter will cost you about $30 at Walmart and a set of brake pads costs like $40 from the auto parts store. Changing oil is pretty simple, and while changing brakes can be a little more difficult, YouTube makes it much easier.
Over the lifetime of a car, I can save thousands of dollars just by putting in the least amount of effort over literally one weekend. By doing just a little bit of your own maintenance, you can make driving a whole lot cheaper. And if you really don’t want to work on your own cars, find a cheap independent mechanic: never get repairs done at the dealership. That is just throwing money into a fire.
How much does it cost me to drive?
I did some calculations on how much it costs me to drive per mile. Obviously these are estimations because it’s hard to project for big ticket repairs, but I came to about 30 cents/mile. I have 2012 Hyundai Sonata that I bought in 2017 for $5,000. Since then I have put on about 35,000 miles
| 2012 Hyundai Sonata | 2006 VW Jetta | |
|---|---|---|
| Miles driven | 35,000 miles | 23,000 miles |
| Initial cost of car | $5,000 | $3,000 |
| Cost of maintenance and repairs | $2,500 | $2,000 |
| Cost of gas | $3,000 | $2,000 |
| Total spent on car | $10,500 | $7,000 |
| cost/mile | 30 cents/mile | 30.4 cents/mile |
If I take the total amount spent on these cars $10,500 + $7,000 = $17,500 and divide that by the total miles I’ve put on them, 58,000 miles, I get about 30.2 cents/miles. That’s a little more than half of the IRS estimated average of 58 cents/miles! And in fact it’s actually probably less than that because the initial price paid for the cars is a fixed value. The gas and repairs will go up with mileage, but the largest cost, initial price, stays the same.
So if I can get another 10,000 miles out of both of these without a major repair, my cost of driving decreases to 25 cents/mile, less than half of the federal estimate! My general goal is to spend less than $1000/year on maintenance and repairs. If you pay $20,000 for a new car, $20,000 to keep is running for 200,000 miles the cost to drive will be 30 cents/mile.
Other Costs not Included
You might ask why I don’t have Insurance, taxes, or registration listed on here as costs. I went back and forth as to whether I should list them but ultimately left them off because they are yearly costs rather than costs per mileage. I keep these costs low by driving old cars and only holding liability insurance, but those costs are the same regardless of how many miles I drive. Technically if we were able to go down to one car those costs would go away so there is no one right way to think about costs.
Another option is reducing the number of days you drive into work.
The best thing to come out of the Covid-19 pandemic is that most employers switched to a work from home model. This has allowed millions of workers to save time and money on their commutes. We calculated that the average American spends $18.56 every day they drive to work so every day they don’t have to drive into work they can save almost $20. That’s not including the time spent commuting. If you make $25/hours and it takes you an hour to drive to work that’s $25 worth of time saved as well.
During full-time work from home last year the average worker cut their commuting costs by almost $100/week, but now that the pandemic is pretty much over workers are going back into the office. But one of the lingering effects of the pandemic is that a lot of employers are much more flexible if you want to work from home part time. If you can make a deal with your boss to work from home two days a week, you could end up saving over $35/week. $35 is nothing to sneeze at. That’s enough to go out to a (semi)nice restaurant with your spouse once a week.
Conclusion
As always this is just an example of ways to save money. My intent is for you to apply these principles to your own situations and determine what’s best for you. You may be a good mechanic who enjoys working on your own cars, or maybe the peace of mind that full car insurance brings is worth the extra money to you. Remember what’s best for you may not always be the best choice money-wise.
What do you you think? How do you cut your commuting costs? Is your cost above or below the IRS Estimate? Let us know in the comments below!
