Q. Like a lot of busy families we play taxi for our kids outside of school and work. Having two vehicles is as much a necessity as a convenience. However, with the rising price of gas, we’re noticing that our credit card bills keep getting higher because we’re paying for some living expenses, like gas, on credit just to get by. How do we manage this when gas prices keep going up?
A. Your experience with rising gas prices is unfortunately a common one. I was at the gas station recently and noticed several unclaimed receipts. As I waited for my tank to fill, I looked at them. I was surprised to see how many people only bought $5 or $10 of fuel at a time. It was clear to me that many people can’t afford to fill their tanks as they used to and only put in what they can to get them through the next few days.
Save $4,000 to $10,000 per Year: Try Using Only One Vehicle
I would encourage you and your wife to test becoming a one vehicle family. Try not using one car for a few weeks to see if you can do it. While you’re noticing the price of fuel, vehicle costs are so much more. Assuming some very simple numbers, $125/month for insurance, $200/month for gas and $75/month for maintenance, a one-car family could save over $4,000/year on vehicle costs. Add in a monthly payment if you don’t own your vehicle outright, parking costs or any significant repairs and the annual savings could be in excess of $10,000.
Optimize Vehicle Use or Consider Vehicle Alternatives
Alternatives to using a vehicle can include creating a schedule of vehicle sharing; carpooling as a family or with colleagues; public transportation; or walking or riding a bike. With only one vehicle, taking a taxi even once a week will still save you money over the annual cost of maintaining a second car.
If downsizing to one vehicle is not possible right now, consider cost-saving measures like telecommuting for even one day a week; arranging carpooling for your children’s activities; using public transportation a few times per week; and maintaining your vehicle properly for optimum performance.
Track Your Expenses
I would also encourage you to track all of your expenses for one month. You’ll not only find out exactly what you’re spending on transportation costs, but you’ll also gain insight into all of your spending. If you do need to spend less to afford having two vehicles, you’ll know what’s realistic. The last thing you want is your hard earned dollars wasting away faster than your gas when you’re idling at a stop light.