Hacking Transportation Series-Analyzing Options

I am currently thinking about how I can further optimize my transportation and I know many people don’t enjoy analyzing these kinds of things as much as I do, so I am posting all of my hard work for you to see here. My first step was to brainstorm all of the possible ways I could accomplish my current transportation desires. This was a little difficult because needing a car has been ingrained in my mind by our culture. I decided to think about it as helping out my friend named Zack that has the exact same commute as I do—what a coincidence. I also wrote down each option no matter how unfeasible I felt it was for the sake of completeness. I also asked around on social media what alternatives other people have come up with for their commute.

The options we came up with are: walking, getting a bike, getting an electric bike, using public transit, using a carpool or vanpool, getting a motorcycle, keeping my current small sedan, and buying a pickup truck. I didn’t find a good option for carpooling or the vanpool so I didn’t include those options in the analysis, but I think if I put more effort into I could find a way to make those options work. In Phoenix, where I live, the public transportation site has a great tool that allows you to meet up with other commuters in order to facilitate carpooling and vanpooling.

Background Information

AAA estimates that driving expenses are $0.608 per mile or $9,122 per year (15,000 miles). This estimate takes into account depreciation, gas expense, maintenance, repair,  and insurance. Driving a smaller car will land you under this number while driving an SUV or pickup truck will put you above the average in spending. Like me, Zack is a naturally frugal person and already falls well below the average for driving expenses. To calculate Zack’s driving expenses I had to do some research to track down the numbers but luckily Zack’s insurance uses a driving monitor that tracks all of his miles (11,000 in the last 12 months), which was particularly useful. Zack’s current car is a small sedan averaging 38 MPG. KBB estimates that he could sell his car for $3,800. I divided all of Zack’s expenses by the 11,000 miles he drove to get all of the numbers except for repairs and maintenance because that expense is not evenly distributed. For that, I found an article that has the maintenance expense broken down by the mileage on a car and just used the numbers that matched up with Zack’s mileage. Here are the per mile and (yearly) costs.

Gas $0.058 ($636.84)
Depreciation $0.016 ($173)
Repair/Maintenance $0.164 ($1,804)
Licensing and Registration $0.006 ($66.95)
Insurance $0.023 ($251.28)
Total Expense $0.27 ($2,865.13)

So Zack is already saving over $6,000 per year relative to the average. The majority of this savings comes from buying a used cheap model car which significantly reduces depreciation costs. Repair and maintenance increases but not nearly as much as depreciation decreases. Zack’s actual expenses are actually far lower than this as he didn’t need any major repairs during the previous year. I went with the average because it is possible that he could have multiple major repairs the next year and he should be amortizing the expense over the life of the car.

Options

Now that we have the background information, I will adjust all of the numbers to the 15,000 miles number that is used by AAA to make the comparisons easier. The majority of Zack’s miles are his commute so I also wanted to consider what that 30 miles 60-minute round trip commute would look like under the different options.

Walking

If Zack walked to work it would increase his commute time to 7 hours 30 minutes round trip. He could sell his car for $3,800 and invest that plus the annual the car expense savings, $3,998. If the stock market returns 8% over the next 10 years Zack would have an additional $70,800. With Zack’s current housing and work situation, this would almost double his work hours for the same pay. The only way I see this option working is if Zack moves within a mile or two from his work, or he gets a job a mile or two from his house.

Biking

Zack could also buy a used bike for $200 and probably spend about $50 on maintenance each year. This would make his commute to and from work about 2 hours 40 minutes—much faster than walking. Assuming 8% market returns, the 10-year costs would be $1,200 and the savings over Zack’s current car would be $69,500—slightly more expensive than walking, but a much shorter commute. This is a far superior option to walking because it is nearly as cheap still provides exercise to get your blood flowing before and after work and drastically costs down commuting time. With a bike trailer, Zack can still take his son places and pick up most groceries. However, the commute time is considerably longer than with his current car and longer distance travel which is not uncommon in Phoenix becomes much more difficult. I would recommend renting a car or taking Ubers occasionally to alleviate some of these concerns if Zack decides to sell his current car. Zipcar allows you to rent cars by the hour for people that infrequently need a car. One benefit is that even if Zack keeps his car, he can significantly decrease the mileage and associated expenses by using his bike on his shorter trips. The small trips create more wear and tear than longer trips per mile because starting the engine and warming up the car does more damage than when the car is already warmed up.

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Electric Bike

Zack could also buy an electric bike that assists in pedaling or can do all of the pedaling for him. This has many of the advantages of a normal bike in that no license, registration, or insurance is necessary to use the bike, but has the added benefit of greatly extending the range and speed Zack has. I estimated that the commute would drop to 2 hours even. These bikes are more expensive than a normal bike but Zack could get a lower end model for around $600. Zack would also need to replace the battery every 40,000 miles in addition to the normal bike repair and maintenance expense which would also be higher due to more components to break. I estimated the yearly expense to be $250 per year. With an 8% investment return, the e-bike would cost $5,207 over 10 years for a savings of $65,600 compared to his current vehicle.

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Public Transit

If Zack uses public transit. He could still sell his car for $3,800 but he would also need to spend $754 annually for bus passes. His commute time would be 2 hours and 26 minutes instead of 1 hour, but now Zack can read while he goes to work which is what he likes to do on his free time anyway so he might think of that as a commute time of close to 0. Assuming the same 8% returns on investments, the 10-year costs of public transit would be $11,800 and Zack would have $59,000 of extra money to use. Some additional considerations are that when he goes places with other people they would also need to get bus passes which would increase the costs. Another consideration is that there would be a loss of flexibility because he would need to schedule commutes around the bus schedule and routes. This inconvenience can be overcome by strategically renting cars using Zipcar, or by getting Ubers.

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Motorcycle

Zack could easily buy a used motorcycle that gets 70 MPG for $1,500 and his driving expenses would be reduced to $2,100 per year. Zack’s commute time would remain 1 hour. It may be reduced slightly and could be reduced significantly if his commute involved freeways and rush-hour traffic. Assuming 8% returns, the motorcycle would cost $36,800 for a savings of $33,900. Zack would need to develop his motorcycle riding skills, get motorcycle riding accessories, and get a motorcycle driving license. There would also be increased risk of serious injury in the event of an accident. He may be concerned about taking his son on trips with him using the motorcycle which he would then have to rent a car or take an Uber somewhat frequently. Keeping the car and using the motorcycle to reduce miles on the car is also an option. You would need to pay the same insurance and registration expenses for the car, and then an additional insurance and registration cost is added for the motorcycle as well. I estimate a net savings of about $600 per year with Zack’s current driving so the motorcycle would take about 3-4 years to pay for itself.

Pickup Truck

If Zack sold his car and bought a new pickup truck his yearly driving expenses would increase to $7370. Note: I am not including the purchase price because the depreciation already factors in this loss of value each year. His commute time would remain 1 hour. Assuming an 8% return on investments, buying a pickup truck would cost Zack $157,700, an additional $86,900 over a 10 year period. This is one of the most expensive ways for Zack to deal with his transportation problems. 

Current Walking Biking e-bike Public Transit Motorcycle Pickup Truck
Yearly Expenses $3,998 $0 $50 $250 $754 $2,148 $7,370
Initial Costs $3,800 $0 $200 $600 $0 $1,500 $0
Commute Time 60 405 160 120 146 60 60
10 Year Cost $70,759 $0 $1,214 $5,207 $11,797 $36,849 $157,673
10 Year Savings $0 $70,759 $69,545 $65,552 $58,962 $33,910 -$86,914

Which option sounds best to you? Why? How do you currently handle your transportation needs?

 

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