Frugal Fridays: Planes, Trains and Automobiles
Fri Mar 09, 2007 at 01:03:40 PM PDT
Welcome to "Frugal Fridays" where we share money saving tips, discuss living frugally and generally talk about personal finance issues. From the overwhelming response of Kossacks a few weeks ago, one major concern around here is saving money on transportation costs. This topic is particularly appropriate this week, since I am heading off for a weekend trip as soon as this is posted and won't be around to discuss any of this. Sorry for the post and run, but sometimes life calls! Since transportation can be one of the biggest ways we use energy in our personal lives, and since burning energy has more than merely financial costs associated with it, I want to extend this discussion to not merely saving money, but saving energy as well, and perhaps, dare I say it, saving the planet while we're at it. The term "cost" used below can mean money, energy or some combination thereof.
CAR COSTS
If you're like most people, the biggest contributer to your transportation costs is the cost of your daily commute, with the cost of occasional trips only contributing a small percentage to your overall costs. For most people in America, their transportation costs are almost completely encompassed by the costs associated with their car, so let's start there. I've separated out the car costs into different categories, but keep in mind that savings you make in one category may be eaten up by costs in another.
- Purchase
A car is a very rapidly depreciating asset. A new car loses a significant portion of its worth the minute you drive it off the lot. You can avoid paying for a lot of that depreciation by buying a relatively new (2 year old, for example) used car. But keep in mind that the first two years of a cars life are the most trouble and maintenance free years, so you will lose those years if you buy used. Also, you never really know what has happened to a used car before you owned it.
When you are in the process of looking to buy a car, new or used, here are a few really good tips to keep in mind:
- Do your homework: research what kind of car you want and how much you are willing to pay before you even walk on to a car lot for the first time. There are lots of car web sites out there which will walk you through a decision tree and come up with makes and models that fit your requirements. Consumer Reports comes out with an extensive car issue every April that covers buying both new and used cars. Look them up in the library. There are also lots of online web sites that will give you the estimated value for used cars. Keep in mind that the dealer pays for a trade in is much less than what you will pay to a private owner, which is in turn less than what you will pay to a dealer for the same car.
- Keep the finance decision separate from the purchase decision: one of the best ways car dealers make money is not from selling cars, but from lending money. A dealer will often disguise the true price you are paying for a car by only talking about down payments and monthly payments. This makes it somewhat difficult to evaluate the true deal you are getting. It's best if you can arrange your own financing prior to going shopping and then refuse to even discuss financing through the dealer until after the final price has been settled. At that point, you can explore dealer financing options and you can compare that with your bank financing.
- Look at alternative sources of financing: other than banks and dealer financing, there are other institutions that may want to lend you money at a favorable rate. Check out credit unions, on-line banks, other lending services, Costco, and perhaps even friends or family members. If you are going to pay interest to a bank, you may have a family member whom you would rather pay that interest to. Draw up a loan agreement like you would sign with a bank so that everyone is protected and be aware that sometimes money from friends and family comes with strings attached.
- Be on the lookout for fraud: have any used car checked out by your own independent mechanic before you buy. If you don't have a mechanic you trust, ask your friends and coworkers, someone should be able to give you a good recommendation. You will have to pay a nominal fee for this service, so only do it once you've found the car you are reasonably sure you want to buy. You may also want to pay for a background check on the car to find out if it had previously been totaled for insurance purposes.
- Maintenance
Finding a reliable mechanic can be an iterative process. The dealer will be the most expensive option, but it is likely (however not always assured) that the work is being done properly. Independent mechanics are usually cheaper, but ask for friends recommendations before you pick one. If you can learn to do your own minor maintenace (oil change, etc) you may gain a sense of independence, but you probably won't save that much money, at least initially, when you consider that you will need to buy some specialized tools and disposing of used motor oil safely can be messy and complicated.
- Gas & Tolls
I have never heard any convincing evidence that the regular grade gas at one station is guaranteed to be any better than the regular grade at any other, so buy at the cheapest station you can find. There are tons of web sites that list the cheapest gas prices in a local area in the last few days. Check out the one for your locale.
If you pass over a toll road or bridge daily or even monthly, it may be worthwhile to get an electronic toll pass. They go by different names in different parts of the country: FastPass or EZPass are two I've heard. They may save you money (sometimes you pay a discounted toll rate) and they will most assuredly save you time waiting at the toll booth, but you do have to pay for them up front.
- Insurance
Insurance costs can vary widely by company, but then so can service when you have to make a claim. Before you chose an insurance company or agent, check out the stories of people who have made claims and see how their experiences worked out. Even within a single company, you may be able to lower your insurance costs by taking advantage of discounts that may be offered for safe drivers, multiple car households, combining auto and home insurance, etc.
OTHER COMMUTE OPTIONS
If you can possibly reduce or eliminate your dependence on your own private car, you could stand to save a lot. What you will give up, however, is some measure of convenience, which you will pay for in time. As I stressed last week, time is money, you can never escape that relationship.
- Company Subsidized Efforts
Your employer may offer subsidies to help reduce your commute costs. These could be in form of advantages offered to carpoolers (like favored parking places), subsidizing the cost of a van lease for vanpoolers, providing privately operated shuttles to transport employees from the local train station or even from nearby cities, providing subsidies for public transportation commuter passes or tolls, or some other benefit. If your employer doesn't offer such a thing, ask if they would consider doing so.
- Independent Carpool
If you can find a friend or family member who lives and works near where you do and who has a similar work schedule, this is a great way to save money and impact on the environment. Plus it's a great way to cut down on those last minute over-time sessions your boss tries to rope you in to: "Sorry I have to go, my carpool is leaving," is a position even the hardest boss can't really argue with.
- Public Transportation
Most municipalities have some sort of umbrella organization for all public transport. Their web site can be a one-stop shop where you can find route maps and schedules for all manor of transport. It may take a bit longer to commute by bus than by car, but you can can use your time on the bus to read or do work, which can make that extra time not "wasted".
- Walking or Bicycling
If you can manage this, commuting by human power is the best solution all around. It has virtually no negative effect on the environment, it provides you exercise, and it's about as cheap as you can get, money-wise. Your employer may even provide shower and locker facilities so you don't have to inflict your sweaty self on your coworkers after your hard ride in to work. However, it may not be practical to commute this way during inclement weather or for long distances. Even if you can't bike all the way to work, you may be able to combine biking with public transportation by bringing your bike on the bus or train. Many communities have bike associations, like this, where you can get maps and other info to help you plan your commute.
- Pie in the Sky
Woe be to us all if they ever develop Star Trek-type beaming technology. Sure, we will instantly be able to get where we are going with complete safety and no real costs, but, it will eliminate one of the best excuses for being late to work. I don't think "there was a backup on the transporter pad, honest" will cut it with most bosses.
COST SAVING TIPS FOR NON-COMMUTE TRAVELING
When you are planning a vacation or a business trip out of your regular commute, you still have options for saving money and energy.
- Planes, Cruises, Car Rental
The internet has made vacation planning so much easier and cheaper than it was 20 or even 10 years ago. You can compare prices from different providers with the touch of a button. If you are planning a trip, you may want to check the price offered directly from the airline or other provider as well as through a consolidated web site like Expediaor Orbitz. However, if you use a certain web site to explore all cost options and then don't use them to actually book the ticket, you may save a few bucks, but that may not be the most honest business practice on your part. If you are using a service provided by the web site, maybe you should pay for it.
Most airlines, car rental agencies and hotel chains have some sort of frequent user club that is free to join and can offer you some immediate benefits (like faster check in) which they offer in the hopes of inspiring customer loyalty. Ask when you make your reservation about any such deals.
- Trains and Buses
In America, long distance travel by train is expensive and inconvenient for most trips. However, there are some cities that are well serviced by trains (mostly on the eastern seaboard) and you may want to check out Amtrak's schedule for your next trip. They have some unusual options like the Auto Train that will take you and your car from Washington, D.C. to Florida. It's a nice way to see the countryside without the trouble and expense of driving.
Another way to see lots of America, can be the intercity bus. Greyhound and Trailwaysare the only two companies I know of that still provide this service. If you are on a really tight budget, this may be the only way to get where you are going.
Speaking of trains and buses, something that came out of a discussion in last week's diary reminded me that this can be a very economical way to transport freight long distances. You lose the door-to-door delivery convenience of UPS or other package services, but you can save a lot of money this way if you need to transport a lot of stuff and can arrange a pick up and drop off at the station at each end.
- Carbon Offset
If you are concerned about the effect on the environment produced by the fossil fuels you are burning you may consider buying a "carbon offset" from a private company. I've been doing a bit of research into these and it's not totally clear what you are getting for your carbon offset pass, other than a salve to your conscience, so check out the company carefully before you buy. One of the ones I've found that I can at least say is not a total fraud (which is about as far as I'm willing to go about any of these) is TerraPass. If anyone knows any more about these companies, I'd love to hear it.
So what's your favorite idea for saving money or energy when getting from point A to point B?
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