Transportation related expenses account for 17% of what the average household spends in a year. If you are serious about creating a budget and staying on that budget in 2014 this is a great area to create an impact. With a little effort and thought and my favorite budget cutting tips you can make this work without a major lifestyle change.
My Favorite Budget Cutting Tips: Gas Mileage
- When you dive consistently at 65 mph you use 15 % more fuel than if you drive 55 mph …that can add $0.40 plus cents per gallon to the price of gas.
- Unless your user manual suggests premium gas, stick with regular.
- Avoid excessive idling when warming up your car. It takes more gas to idle your car for a minute than to turn it off and start it again.
- Under-inflated tires can reduce your gas mileage by approximately 3 % or so in gas mileage. The tire’s maximum inflation pressure is indicated in relatively small-sized print branded near the tire’s bead (adjacent to the wheel).
- Remove the junk or items you don’t need from the trunk: An extra 100 pounds in your vehicle reduces mpg by about 2%.
- You’ll save money at the gas station if you shop wisely. You can find the gas stations with the best deals at Gasbuddy.com.
Cut Down on Car Maintenance
- Have your tires rotated every six months (or 6,000 miles) to distribute wear evenly. This occasional maintenance could double your tires’ life. The garage where I buy my tires includes this service with the cost of the tires.
- Some quick lube places recommend an oil change every 3,000 miles, but most cars only need one every 5,000 to 7,500 miles; this is a savings of up to $360 over five years. Refer to your manual for the manufacturer’s recommended oil-change interval so you don’t violate the terms of your warranty.
- At your next inspection, ask if the oxygen sensor is working properly. If not, a new one can improve mileage up to 14%.
Tips on Buying a Car
- Use Edmunds.com to get the manufacturer’s invoice price (the amount the dealer pays); offer the dealer that price. He may sell you the car for as little as $100 more in order to get a profit called a “pullback” from the manufacturer.
- You should be purchasing and not leasing if you expect to drive your car for at least five years; you think you might drive it for more than 18,000 to 20,000 miles a year; or you’re in the market for a used car. Consider a lease if you want a more expensive car than you could otherwise afford, or you want to drive a new car every two to three years
Leasing a Car
- Do your research; visit Auto Lease Wizard to find out going lease rates.
- Be wary of an open-ended lease, this is where the amount you’ll owe for depreciation is the difference between the residual value and the market value of the car when the lease is up. A closed-end lease is better because you and the dealer agree beforehand on what you’ll owe.
- If you choose a lease don’t underestimate your mileage allowance. Most leases are based on your driving 12,000 miles, and charge 8 to 20 cents per extra mile. If you think you’ll be driving more, buy extra mileage up front; you might pay as little as 5 cents a mile.
- Don’t lease for longer than the warranty. Stretching the lease can lower payments and that may appear attractive, but if you need big repairs after the warranty runs out, you’ll be stuck paying for them.
- Don’t buy gap insurance through the dealer; this insurance will be cheaper from your car insurer. This coverage protects you from a full loss if the car is stolen or destroyed and pays out the difference between the present value of your car and the residual value, plus what you still owe on the lease.
- Don’t keep the car longer than you want it. If you need to get out of your lease, advertise on leasetrader.com, the costs are certainly outweighed by the lease payments.
- Shop wisely, minimize leasing costs, look at several leasing packages from at least two dealers, check your credit union for cheap leases to members, and drive carefully; there’s usually a charge at the end of the lease for unusual wear and tear on the car.
Transportation is approximately 17% of your household budget, with a little thought you can make a dent in these dollars that are going out the door without impacting getting to your destination.