I read an article on TIME the other day on how much we spend on driving. It was actually a summary of a study from Energy Trap. The study is quite long and I bookmarked it so I can go through it in detail.
Basically, they are saying an American family spends more money on their ride than on health insurance or taxes. By the end of 2011, we will have spent more than $490 Billion dollars on gasoline. That is a huge amount! Many families are having a difficult time paying for the total cost of a car – gas, insurance, parking, repair and maintenance, not to mention monthly payments. At this rate, it might be better to sell your car and bike or walk instead. At least consider sharing a car instead of maintaining multiple cars.
It got me thinking and I figured I should calculate how much we spend on driving this year. The Energy Trap site conveniently has an annual cost of gas and transportation calculator at the top of page 3. Here is our result.
The picture might be a bit small so here is a quick recap.
We spend $1,972 per year on our car where the average American spends $7,900 on a car & fuel. I think we are doing quite well on this front. Our housing on the other hand is quite expensive, but that’s another story.
*update* As Brave New Life pointed out in the comment. I should have taken depreciation into consideration as well. I checked and our Mazda5 depreciated about $3,000 in one year. 🙁 I’ll round it up and say driving cost us $5,000 this past year. The good news is the car should depreciate less and less every year.
How come our car expenses are so low? It seems we made many right choices over the last 5 years to reduce our transportation cost.
- We share one car.
- Mrs. RB40 takes public transportation to work (free) every day. I take public transport to work about 40% of the time.
- I fill up the tank about twice a month for a total of about $100/month. I drove about 7,500 miles over the last 12 months. The low mileage kept gas expense and maintenance cost down.
- We paid for the car in full and we no longer have car payments.
- It is a newer vehicle and requires minimal repair and maintenance.
- Our car insurance price is somewhat reasonable.
- We live in the city and can walk or take free public transport to many locations.
I would hate to spend 15.5% of our income on transportation like the average household. Americans have become so dependent on driving that even when the price of gasoline goes up, we reduce expenses in other areas to keep driving. As the price of gas goes up, I think many of us will have to evaluate how much we spend on transportation and make some difficult choices.
Darren is in a tough position because he can’t sell his home and move due to the housing market, but there are still a few things he can do. He can sell his vehicle and purchase a more fuel efficient vehicle and try to find full time employment instead of 2 part time jobs. Hopefully he can figure something out soon because gas price is going up again. Spending 51% of his income on transportation is not sustainable at all.
How much do you spend on your vehicle per year? Is it more than you think when you put your numbers into the calculator? What is your percentage? If it is too high, what would you be willing to do to reduce that cost?