Saving Pennies or Dollars? A One Car Family

saving pennies or dollarsSaving Pennies or Dollars is a new semi-regular series on The Simple Dollar, inspired by a great discussion on The Simple Dollar’s Facebook page concerning frugal tactics that might not really save that much money. I’m going to take some of the scenarios described by the readers there and try to break down the numbers to see if the savings is really worth the time invested.

Darrin said, Being a one car family. I could really use some number crunching on this one. The bus ride is an hour long each way, at $4 a day. The car ride is 22 minutes on streets, not the highway. We were car-free before the kids came along and a scooter + a van until the scooter died. I’m not loving the idea of a second vehicle but I’m not sure if we’re just putting too many miles on the car or the kids when we drive to my husband to work or wasting time if he uses the bus.

There are really two questions here: one about money and one about time. Let’s look at the money first.

Let’s say you buy a fuel-efficient car for commuting. Some assumption:
1. It’s a late model used – let’s say you pay $10,000 for it. You expect that you’re going to get 100,000 miles out of this car.
2. You’re going to have to pay some amount for car insurance – let’s say $75 per month.
3. Your car can get about 35 miles per gallon, so let’s say you’re getting a day’s commute off of a gallon of gas (at $3.50 per gallon).
4. You’re also going to have to pay an average of $100 for maintenance every 5,000 miles, so let’s total that to $2,000.
5. You’re commuting 20 times a month with 40 miles per commute – 800 miles per month.
6. You’ll also have some number of major repairs along the way. Let’s total them at $3,000.

This are back-of-the-envelope assumptions based on the situation you describe. This means that you’re going to get about 10 years of commuting out of this car.

So, your total cost for all of those commutes over ten years is:
1. $10,000 for the cost of the car.
2. $9,000 for the insurance.
3. $8,400 for gas.
4. $2,000 for maintenance.
5. $3,000 for major repairs.

Thus, your total cost over those ten years for the car is $32,400.

Now, what about the bus? You’re commuting 20 times a month for $4 per commute. That’s only $9,600 for 10 years worth of commuting.

Using these assumptions, you save $22,800 over those ten years by using the bus.

Obviously, you can quibble with the individual assumptions quite a bit here, but the math is pretty clear: unless something very strange is going on, riding public transportation will be far cheaper than owning a vehicle.

Now, what about the time issue? On a given day, you’re riding the bus for two hours versus driving for 44 minutes. This means that each day you commute, you’re losing one hour and sixteen minutes to the commute if you take the bus. Let’s round this to 1.25 hours.

At twenty commutes a month over ten years, that’s 3,000 hours. That’s a savings of $7.60 per hour spent on the bus beyond the driving commute.

So, what’s your time worth? That’s really a question you need to ask for yourself. What value can you get out of your time on the bus? What value can you get out of your time at home for another 40 minutes in the morning and 40 minutes in the evening? Is the difference there worth about $10 per day?

If I were in your shoes, I’d be riding the bus. I could absolutely find things of worth to do on the bus commute each day, whether it’s reading something of worth or doing some extra work on my laptop.

This is definitely all about the dollars, not about the cents.

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