Five Ways to Cut Your Commuting Costs
Ever wonder how much money you can save by cutting your commuting costs? How about enough to pay for two trips to Ireland plus several major home improvements?
As chief of marketing for the Maryland Transit Administration, Buddy Alves set out to see how much money he and his wife could save on their commute from the Baltimore suburbs to their downtown offices. The couple started taking the light rail instead of driving separate cars and investing the cost difference in mutual funds. Not only did the Alveses save on gas and parking costs, but they also needed less car maintenance, saved on their auto insurance and got transit pass discounts from their employers.
After 10 years, the results were astounding: The Alveses had enough money to cover two trips to Ireland, pay for a $3,000 fence, spend $2,000 to repave their driveway and splurge about $4,000 to refurnish their living room.
AAA estimates that when you add in all the costs of commuting, including car depreciation, maintenance, tires, insurance and fuel, you're spending 55 cents per mile, so lowering your commuting costs can be a great way to put extra money in your pocket. Try these tips.
Improve Your Gas Mileage
Buying a fuel-efficient car is an obvious way to save, but you can make other driving decisions to stretch your gas mileage even further. Robert Hall, fleet environmental manager for UPS, which has more than 88,000 vehicles, knows firsthand how these strategies can add up. Here are his recommendations:
- Avoid left turns, which waste gas while you idle and wait to turn across traffic. UPS routes are designed to avoid them.
- Maintain your car. Simple measures such as making sure the tires are properly inflated can positively affect gas mileage.
- Reduce weight in the car. Unnecessary items can contribute to lower gas mileage.
- Avoid rush-hour traffic. Leaving a little earlier or later can reduce the amount of money you spend on fuel while you’re idling in a traffic jam.
- If both spouses drive to work in separate cars, use the more fuel-efficient one for the longest commute.
Take Advantage of Discounts from Your Employer
The federal and most state governments offer big tax breaks for commuters. In 2012, employees can spend up to $125 per month in pretax money on transit passes or van-pool expenses and up to $240 per month in parking benefits, as long as their employer offers the benefit. Like money you contribute to a 401k or flexible-spending account, what you spend on transit passes or parking lowers your taxable income and thus your tax bill. If you’re in the 25 percent federal tax bracket, you’ll pay only about $48 for a $64 pass -- and even less when you subtract state and FICA taxes.
Some states offer more benefits. For example, Maryland offers employers an extra 50 percent tax credit for providing transit passes. If the employer gives the employee the pass rather than having the cost deducted from their paycheck, the company can take a federal and state tax deduction as a business expense plus get the 50 percent Maryland tax credit. As a result, an employer ends up paying about $11 for a $64 transit pass if the employee is in the 25 percent tax bracket, Alves says.
If your employer doesn’t provide these perks, lobby for them. They cost the employer little or no money but are valuable employee benefits that can attract workers and help them save. “A typical commute costs about $1,000 a year, and this will save them about $400,” says Jon Kessler, chairman of WageWorks, a company that helps employers administer these plans.
Look for Other Transit Discounts
Those over age 65 ride Maryland’s commuter rail trains half price, while students save 15 percent on most commuter rail passes. Students at participating colleges can get a $64 pass for local bus, light rail or subway for only $39. Most states offer similar discount programs.
Share a Ride
Carpooling and vanpooling helps you split commuting costs over several people, which is particularly helpful in areas lacking good public transportation. You may even be able to use up to $230 per month in pretax money for van-pool costs if your employer offers the benefit. Most states or counties have databases to hook people up with ride-share partners or van pools that have similar schedules and commutes. Check out your state’s department of transportation or CommuterChoice.com for resources.
Cut Your Car Insurance Costs
If you cut your commute, make sure you tell your insurer. You’ll generally get a low-mileage discount if you drive fewer than 7,500 miles per year.
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