Jerry's Frugal Living Tips

Whether on our way to soccer practice, or work, we are spending more money than we need to. In today's article, I want to review ways that we can save money on our cars and on costs related to owning a car.

The most obvious expense for automobiles in the past year has become fuel. But I don't really see fuel as a determining factor on a vehicle. I know... you think I've lost my mind. But the truth of the matter is it is a cost, but not one that we need to consider until we've nailed down the other factors. And definitely not one that needs to rule the other factors.

There are two general topics that I would like to address first. By the time you get these two in order, most other topics will have taken care of themselves.

Own your own car
Never lease your personal car. Sure, there may be some financial incentives for corporations that have large fleets to lease their cars (although, I still disagree with them... save that for a different post.) But there is absolutely no reason that an average individual should ever lease a vehicle. If you cannot afford to purchase a vehicle with a payment schedule of three years, then you cannot afford that vehicle. Period.

The vehicle itself will depreciate too fast and you will QUICKLY find yourself upside-down in your payments and in financial gloom and doom. You will be living far outside of your means.

Instead, buy the vehicle you can afford. It may have rusty spots, but if it is mechanically sound, it will do the job for a fraction of the cost. I don't care if you have to drive a squeaking rattle-trap. If you own it outright, it is your rattle-trap, and no matter how little it is worth, that "little worth" is equity. Repeat after me: Equity, in any form, is good.

Reduce the number of vehicles you own
Some families think that if they do not own one car per person, then they are "poor". That is the most outlandish lie that anyone can tell themselves, because -- short of your home -- a car is the most expensive item you will ever purchase. Yet we want to own several and leave them parked in the driveway or garage.

Instead, you should own one car per route that you must drive each day to fit your needs. Now, take out of that, any portion of the route that can be managed by bicycle, walking, or alternate forms of travel such as public transportation. What's left is how many routes you have, thus how many vehicles you should own to cover those routes. Work out a travel schedule to best accommodate everyone in your family and share rides when ever possible. Sell cars that are not necessary! Not only do you save on gasoline, and car payments, you also reduce your insurance.

If you can buy a car within your means, and sell the "extra" vehicles, you will find several thousand dollars a year in your budget. I know, because I've done this recently. My wife and I recently sold our second car (which was paid for) and our Prius. Now, we loved our Prius. We named her SweetPea.

But SweetPea was costing us $438/month just to own. Instead, we purchased a "lesser" car that still got reasonable mileage. That car costs us $220/month. I then used some extra to purchase a scooter to get the four miles to work, so our insurance dropped $25/month. With the scooter still trekking me around, my wife still has a car at home to run errands. And on rainy days she is glad to drive me to and from work.

Sure, we spend an extra $5 in gas that way, but I'm saving over $20 in gas per month with the scooter, and we saved over $240/month. All without any significant impact to our daily routines.

Now for the "little" things you can do.

Negotiate better insurance
Call around and check insurance rates for your current vehicles. If you've already reduced your lifestyle to the minimum in the two steps above, this should be a very simple step. Be aware of the plan differences, such as a possibility of a higher deductible or lesser coverage.

Which leads to my next point...

Re-evaluate your coverage.
Please do not read this as "live on bare-bones insurance, that rides barely above the letter of the law." I know that having some extra trim in your insurance coverage can really save you financially should something terrible happen. Insurance is -- in itself -- a very good thing.

But make sure that anything you are paying above the "bare minimum" should be a very tiny cost. Most insurance companies make the brunt of their profits on the bare minimum coverages. All of the add-ons are sheer profit for them, so make sure that any add-ons that you do put onto your coverage above state minimums are the absolute least they can be.

Downgrade your car to upgrade your gas-mileage.
Just because you own a SUV, doesn't mean that you should try to balance the world by trading it for a Prius. Unless you can afford the payments of a $24,000 (or more) vehicle, the monthly payments will sink you long before your SUV sinks the environment.

Instead, you can trade your SUV (12mpg) for a car of approximate equal value like a used Chevy Malibu (26mpg) . If you can trade for right around the same amount, you may be able to pay for the remainder of the car purchase in cash. Or at worst, pay $100 per month in a payment. But compare that to the $100 you would spend in the difference in gas mileage, and you're already money ahead.

On the topic of gas mileage, many people think they'll reduce their gas spending if they buy a high gas-mileage vehicle. For the record, let's take a quick peek at cost of ownership of a Prius and a Malibu.

Assuming $3/gallon, how many miles would it take in that Prius to save $338 -- the cost of the monthly payment difference? We'd have to save 112 gallons in fuel. Yet the Prius only saves us 32 gallons per month over the used car on a 2,000-mile driving budget.

Now if you drive 150+ miles per day to and from work, it will probably start to pay for itself, especially if gas prices spike again. Don't laugh. I used to drive that far to work, so it was worth it. But once I got a job closer to home, I couldn't justify the expense. Sorry SweetPea, but it's time to move on.

Maintain your car
A well-maintained car has fewer breakdowns. Its not the maintenance on a car that breaks most budgets. It is the unexpected costs of having emergency work done, calling a tow-truck or repairing bigger damage that could have been prevented with just a little love and care.

Changing the oil, filters, plugs, tires and belts are all something that you can do at home. If you maintain those simple items on a regular basis, you will avoid most issues that bring a car to it's proverbial knees.

There is more than enough information online these days to maintain your own car. If you consider that most car maintenance can be done with a little elbow grease and some good information, you should be able to extend the life of your car several years, thus putting into investments the monthly payments that you would have spent on a new vehicle.

There are many ways to be frugal about owning a car, but if you can be honest with yourself and take care of a few reliable, inexpensive cars, then the rest will take care of itself.