More Savings For Commuters

I blame the economy for just about everything these days. Can’t sleep at night? It’s the economy’s fault. Weight gain? It’s the economy’s fault. Healthy food costs more; so, I don’t eat as well as I should. Wardrobe suffering? It’s the economy’s fault. Not that I was ever a fashion plate before – but, I’m certainly not one now. In short, the economy affects pretty much everything. What we purchase. How we purchase. How much we purchase.

Many of you are like me – living one day at a time; trying to make the wisest choices and decisions for our pocketbooks and lifestyles. I don’t know about you, but every time I have a small victory against the economy, I love to share it. Take this morning for instance.

I had the privilege of sitting next to a woman from Leander. She was a first-time rider who had opted to take MetroRail downtown for a seminar. I asked her how she felt about spending six dollars for her fare. She replied that the fare was less expensive than she would have paid for gas and parking downtown. She commented on the comfort and atmosphere of the train. Being that it was a later-morning train, she was surprised by the number of passengers that were aboard. Knowing that she was probably a one-time rider, I left my questions at that. Then, Ms. Leander started questioning me… 

She asked me if I was a regular commuter. Of course, I had to share that I had been a MetroRail rider since March when the service began. I am sure she could tell I was proud of my almost five-month anniversary as a commuter. We talked about the experience of the ride. We talked about the wonderful people I have met [one of my train friends had chimed in on the conversation.] And, as always, the conversation turned to how much money we were saving each month by commuting. I explained that when I was driving to work, I usually had to fill my tank every four to five days. Now, I can go anywhere from ten to fourteen days before filling up – depending on our weekend activities. Not to mention the wear and tear on my vehicle. Then, Ms. Leander surprised me…

“You probably received a discount on your auto insurance too,” she added. Huh? What discount? ”The reduced rate for only using your vehicle for pleasure…,” Duh… “Yes,” she said. “Most insurance carriers will offer a reduced rate to drivers who commute because it significantly reduces their chances of being involved in an accident.” I have to admit, I did not know that. I couldn’t wait to get off the train and call State Farm. Guess what? It’s true…

Most insurance carriers offer a discounted policy for those automobiles that are rated as pleasure. According to my State Farm agent, the criteria are based upon the number of drivers and automobiles within in a household. For instance, if a household of two cohabitants has two vehicles and one of the drivers commutes or carpools to work, then one of the vehicles can be rated as a “pleasure vehicle.” The savings can be anywhere from ten to twenty dollars per month depending on the carrier and the policy. Add that to the money saved in gas and vehicle wear and tear… it adds up.

Turns out that I don’t qualify for the discount because I have a youthful operator [my daughter] who shares my vehicle. But, when we buy her a car this year, be assured that I will be looking for my discount. In the meantime, some of you other MetroRail riders may want to look into this too – if you haven’t already.

19 thoughts on “More Savings For Commuters

  1. Kudos for only talking about gas/parking. Most people, when they make this comparison, use the bogus calculators from agencies like Cap Metro that include items like insurance or depreciation (yes, you get a very small pleasure discount – but it’s negligible; yes, mile-based insurance exists but is not widespread – yet; no, most depreciation is NOT a function of miles driven).

    Would be curious to learn what you think your savings really are, though. How much were you paying to park before? Were you getting parking on the daily market or did you have a contract? Gas from Leander shouldn’t be more than acouple of bucks a day in a reasonable vehicle.

    1. jman

      I’ve found that gas is roughly 10 cents per mile, and then maintenance is also roughly another 10 cents per mile. Of course the gas cost goes up if you drive a more thirsty SUV or Truck, though I’m not sure about the maintenance costs. I guess you’ve gotta have larger, more expensive tires, and have more spark plugs to be replaced so that probably costs more as well.

      Insurance has gotta be paid each month regardless of how much you drive the car, and the car still depreciates a lot even if you don’t drive, though it does depreciate slightly less. I don’t remember your blog post about depreciation, but I’ve looked up the bluebook values for my 7 year old car, and having 70k miles on it vs having 200k miles on it did not result in more than a $1,000 price difference for how much it was worth.

      Leander to Austin and back again is roughly 50 miles. So at 20 cents per mile that’s about $10 for a round trip. Maybe in an SUV you might be looking at 25-30 cents per mile, and that puts you at $12.50-$15 per round trip. If you add in money to park it can get pretty pricey. People just have to decide for themselves if saving some money each day is worth the time.

      1. chrysrobyn

        If you put less than 12k miles on your car per year, maintenance is a fixed cost. You’ll hit your 3 or 6 months per oil change and other associated maintenance before you hit the miles. At 1k miles per month, divided by 20 (4 weeks per month which I acknowledge is a slight underestimate, 5 work days per week), you’re looking at 50 miles per day round trip. Depending on which way we’re rounding, the drive from Leander isn’t a leading cost for car maintenance. Heck, let’s go pessimistic and drive 50 weeks per year (2 weeks vacation or sick), 5 days per week and divide 12k/250 = 48 miles per day for fixed maintenance cost.

        If you drive 52 miles per day, you’ll hit the mileage less than a week prior to the fixed time. I can’t remember to change my oil within a week of the fixed time anyway.

        As you point out, this doesn’t account for depreciation, but let’s not get too excited about maintenance.

    1. Erik, like most calculators, they’re performing the cardinal sin of assuming that all vehicle costs are variable (or assuming that everybody will just get rid of a car if they have good access to transit, looking at it another way).

      A neighborhood with good transit but not quite good enough to let you get by with one less car will show up very good in their rankings – because they assume depreciation, insurance, and other such costs are 90% less if you take 90% of your trips by transit – of course they’re not; they’re only slightly less than if you didn’t use transit at all.

      1. Erica

        I agree that most of those transit savings calculators you see online are rather inflated and not realistic. I like the one on Capital Metro’s site because it allows you to manually change or disregard any or all of the various factors… so if you want to calculate just the costs of gas, parking and vehicle depreciation for your daily commute, you can do just that.

        The new CNT tool that Erik mentioned is a little different. Its purpose is not to calculate transportation savings by taking transit, but to calculate all transportation costs of a given place, based on household size, average commuting time, a transit connectivity index, gross and job density, and some other factors. There’s a neat/clear graphic that shows how they determine the monthly figure here: http://htaindex.cnt.org/method.php.

        The purpose is to help people factor in the total costs of getting around (regardless of mode) when they’re evaluating where they want to live. The farther out in the suburbs you go, while your house might be cheaper, your transportation costs would be greater. There’s an interesting article in Grist about the new tool–I may put the story on the blog later. http://www.grist.org/article/2010-08-11-housing-transportation-affordability-index-location-efficiency/

    2. Yes, Erica, but if you don’t correctly handle fixed vs. variable costs, you can end up deciding to live in a neighborhood where 90% of your trips can be taken by transit; expect to save 90% on transportation; and end up only saving 5% – while paying 50% more for housing. Not a great deal.

      (Obviously I value access to transit as the primary reason we’re in the house we are now is its superb transit access to downtown and other central locations; but we do nobody any favors by forgetting that if you need to have the car at all, most of its costs are fixed, not variable).

      1. Erica

        you can end up deciding to live in a neighborhood where 90% of your trips can be taken by transit; expect to save 90% on transportation; and end up only saving 5% – while paying 50% more for housing.

        That is not a fallacy of the online tool, though. That’s called “user error.”

      2. Disagree. The original tool discussed at the top presents all transportation costs as if they are variable — even Capital Metro’s tool does; although at least yours allows you to tweak it if you know what you’re doing, as you noted. The typical user is going to trust the tool developer on this stuff.

      3. Elizabeth

        If I lived in a neighborhood where I could do 90% of my trips by transit I think I’d forgo the automobile and look into carsharing and rental cars for the 10% of the trips when I “needed” one….

      4. Brad

        I don’t think Cap Metro can do anything right according to M1EK.

        I haven’t checked out the calculator, so I’m sort of talking out of my ***. I’m financial analyst for a living, so I usually do this stuff in Excel on my own. It seems the calculation would be one thing if you’re deciding between car 100% of the time versus transit/no car and car 100% of the time and transit/car sometimes. Obviously, if it’s between car or no car, then that’s easy you just factor in the cost of the car.

        However if its car sometimes there are several different ways you can look at it. I’m the kind of guy who keeps a car until it dies, so I’m not concerned about trade in value. What I would like is for that car to last as long as possible. If you assume that a car’s life expectancy is based on miles driven, then taking transit to work can extend the life of that car and effectively allow you to depreciate the value of that car over a longer period of time. Basically, you would go longer with no car payment. Also, I’m not sure I buy chrysrobyn’s argument about maintenance. I know the manufacturer says you’re supposed have you maintenance done ever 3-4 months regardless of miles, but I just don’t buy this. We going strictly by the mileage, which ends up being about every 6 months for my wife’s Civic, and never really had a problem.

      5. Brad, with all due respect, perhaps you should start your own vehicle appraisal service and put Kelly Blue Book out of business if you’re so smart on this stuff.

        The fact is that most people wouldn’t pay 90% of the original cost of a ten year old car if it was only driven 10% of the average miles (for a ten year old car) – yet this is, basically, the math that’s being pushed here.

        Cars depreciate mostly as a function of time – mileage is a secondary factor which only comes into play if you drive an extraordinarily large or small number of miles, and even then it’s still a small factor compared to age.

      6. Brad

        M1EK,

        Why do you have to be so confrontational? It is possible for a well intentioned, intelligent person to have a different opinion than you.

        I’m not claiming to have the answers. I was just sharing how I look it. I must not have done a good job. I personally don’t care if I’m able to sell the car. My point was taking transit could extend the usefull life of the car to myself, which would allow me to go longer without a car payment. I’m well aware that most people don’t want to keep a car for 12-15 years like I do, so this method wouldn’t necessarily work out for them, but as I said before, I was just stating how I look at it.

        And not to try to seem like I have all the answers, but I have a spreadsheet I worked up (I do that, basically cause I’m a nerd) that I would happy to send to you.

      7. Brad, even in your anectdotal case, the facts don’t add up – driving your car a moderate amount of miles doesn’t appreciably subtract from its lifespan compared to the age factor (i.e. the likelihood a 15 year old Civic will be driveable doesn’t go up all THAT much if you only drove it 1,000 miles per year – most cars that wouldn’t last 150,000 miles also wouldn’t last 15 years at 15,000 miles). You seem to be trying a little too hard to give transit credit here, and one thing I’ve learned very early on (when arguing the pro-transit side, by the way) is that you should make sure your claims are conservative before you send them out to be attacked by the other side.

      8. Brad

        You’re totally correct when you say that the Kelly Blue Book value isn’t greatly affected by the mileage driven, but i totally disagree that a car will not last significantly longer when driven less. There is little doubt in my mind that a good car well taken care of can last at least 15 years if driven significantly less than average.

        This methodology is obviously open to criticism. The biggest one that I can see is that most people don’t want to keep a car for 15 years regardless of how well it’s working, and that’s probably true. But for those of us who don’t mind driving around an older car, I’m convinced this would save people a decent amount of money.

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