The Cost of Commuting...Should You Drive or Ride?

In today's economy everyone wants to save money. One of the the biggest budget entries for some is the cost of commuting. The good jobs are in the city, but the affordable living remains in the suburbs. That leaves many of us in a position with three choices, none of which seem like a good idea. We can drive an hour or more in highway traffic, drive to the commuter parking lot and take public transportation, or share a ride with someone. When it comes right down to actual dollars and cents there is a best choice, but many of us find the mst affordable option so unpleasant, we'd rather spend the extra money.

Opportunity Costs

There are many things to consider in using public transportation to get to work. You can't just look at cost of ownership, gas or tickets. "Opportunity costs" also come into play. These are the things that you give up when you decide one option over another. Although not measured in dollars and cents, they still must be considered when making financial decisions. On investments, it's the money you would have made if you had done something else with your money. In your time, it's what you could have done with that lost time.

Some opportunity costs include comfort, extra travel time, and planning time. It definitely takes much more time to take ride the bus or subway to work then it does to drive your car, even with heavy traffic. There is walking to the stop or driving to the parking lot, waiting for your ride (whether it be bus, train or coworker), then the walk to your final destination.Commuters have to get up at least an hour earlier than those who drive themselves to work and they get home much later.

If you have kids or pets, this is a serious obstacle to saving money on your commute. It can only work if you have a partner who can be there for the family while you spend long hours getting to and from work. So, if you have considered these opportunity costs, are dedicated to saving money on your commute and willing to put in the extra effort, you can then take a look at comparing costs.

True Cost of Car Ownership

Car ownership is no small cost. Even an economical purchase will run about $5,000 for dependable transportation. There are yearly property taxes, road use taxes in some states, insurance premiums and maintenance. Ideally, we're searching for a car with less than 50,000 miles costing around $5,000, that gets reasonable gas mileage. You might be on the look for a while before you find it, but this is the kind of deal that is worth your car investment. Based on research done at Edmunds.com, you can expect about $2,500 a year in maintenance and fuel costs on the average car. But for a one-hour commute, I'm estimating $3,500 a year based on my past commuting experience.

Budget in $300 a year for repairs and expect to increase that about by 20% every year. If you omit collision and comprehensive coverage, you can expect insurance rates to stay constant at around $500 a year, depending on your driving record and location. Taxes vary wildly by location, so check your rates and included them in the budget. All in all, you're looking at about $4,500 per year just to own and operate the car. Ouch! Say that car lasts you five years, a reasonable expectation with so much wear and tear, and the average yearly costs is about $5,500 per year. That's expensive convenience!

Ride Sharing

So what does it cost to ride share? A ride share doesn't save you much unless your coworker is willing to do all the driving in exchange for your fair share of fuel alone. Expect to chip in about $25 per week. All you really save is wear and tear on your car, amounting to about $500 per year in extended vehicle life. If you are expected to do half the driving, then you'll be saving about $500 per year in gasoline costs, and maybe get another $250 per year life out of your car, which brings your cost of ownership down to about $4,750 per year. You'll probably have to spend another 15 minutes or so a day dealing with coordinating rides. And if your sharing a ride with someone you don't like much, the stress might cost you a few years off the end of your life too!

Bus or Train

Taking the bus or train is an incredible bargain, but only if you give up your car. If you use it to supplement your transportation, then you pay about $4,000 a year to own the car (it should last you 10 years instead of 5 and you'll spend less on gas), plus commuting expenses and the extra time you spend getting to the station, waiting around for arrivals, etc. In Boston, one of the more expensive cities to live, traveling from my home in Plymouth to the city would cost me $250 per year, not including parking expenses at the parking lot of about $2 a day. Five days a week, 50 weeks a year (gotta take a vacation or two!) that's another $100 per year in cost to take the train or bus.

I'd save about $1,000 in gasoline, and $500 a year in the cost of the car itself, but spend an extra 50 hours per year getting to and from work if I took the train. Assuming pay of $25 per hour, those hours add up to $1,250. So when you consider the opportunity costs, you actually spend about $100 more. But if I can find a way to get around without the car and still manage to keep a home in the suburbs, I can save a ton. I take my $5,500 car ownership plus commute cost, subtract the cost of the $2,100 train commute and realize a savings of about $3,400 a year or about $300 a month. But honestly, finding a home within walking or biking distance of the commuter train can cost me that much extra in rent or mortgage, so it becomes a toss up.

Dollars and Sense

So, if there is no value in my time, the ride share saves about $1,500 per year, accounting for the longer life of the car and reduced gasoline needs. The train saves about $1,150. That works out to about $100 per month. In the end, it will depend on your personality. If the time you gain to read or relax on the train works for you, then you won't mind the extra time spent away from home. But if you just can't wait to hug the kids or sit down on your own couch after work, that $100 per month will be lost on you. I've tried ride shares, the train and driving myself.

The ride share wasn't bad and even made the commute more palatable.But once the kids came along, I had to be able to leave on a moments notice if there was an emergency at daycare. The train wasn't a great bargain because the schedule fit poorly with my hours, costing me another three hours a day to get back and forth to work, but it was less stressful to ride than drive.

The driving was the most infuriating experience of my life, especially when traffic accidents or bad weather clogged the roadways. I spent seven years of my morning and even live on Rte 3, longing for my kids the entire time. In the end, I had to just get out of the game and start working for myself. So now I'm saving about $1,500 in my commute working at home, and accepting about $15,000 less a year with no benefits. But the 10 to 12 hours per week that I'm not commuting is spent taking the extra time to find bargains and spend less. In the end, opting out of a commute altogether made little difference in my finances but a huge difference in my level of happiness.