Back in the days when I had a real job my commute was 50 miles one way. Can you imagine what that would be like today with the gasoline prices where they are? I was wondering that myself the other day so with calculator in hand I went to work. I came up with an annual commuting distance of about 25,000 miles.
If I remember correctly I got around 25 miles-per-gallon on the highway back then. So those 25,000 miles would use 1000 gallons of gasoline. As gas went from $2 to $4 it would have cost me $2000 more each year to go to work.
If you live far away from your workplace, like many do in many areas, you could drive about 50 miles one way just like my old commute. So how is that extra $2000 per year fitting into your budget?
If youâ€™re earning $100,000, then itâ€™s a minor inconvenience. But if you are earning $10-15 per hour then it is lopping off a noticeable chunk of your take-home pay. That calls for action, but action that needs to be thought out.
You can move closer to your work. Getting to within five miles will bring your extra gas cost from $2000 to $100. It sounds tempting, but you must consider the cost to sell your house, buy another, and move. If you are renting what will the new house or apartment cost compared to what you are paying now? And if you leave family and friends behind, driving back on weekends to visit will take away some of what you were hoping to save.
You can move your work closer to you. My guess is that if this was as easy as it sounds you would have done it already. After all, youâ€™ve been driving 100 miles a day for a reason. Can you find a job with equal pay and benefits, with as good a work environment and possibility of advancement closer to home? Giving any of these benefits up means that there is a cost to changing your job. Is it really worth the gas money saved?
You can get a car with better gas mileage. Much of the car decision depends on exactly what you are driving now and why. If you are in a pickup that gets 18 miles to the gallon on a good day, then switching to a Honda Fit (like I drive) can save you $2600 per year of fuel costs on those 25,000 miles. But, what if you drive your truck not because it makes you look good, but because you need it for the work you do?
Even if you donâ€™t have a true use for a truck you must consider that the trade-in value has all but disappeared lately, and the new car is going to cost you. Even something as inexpensive as a Fit can take you six years to pay off with gas savings alone.
Iâ€™ve made these examples fairly simple. Life is more complicated. Thatâ€™s the point. If the price of gas is giving you indigestion, then youâ€™ll want to look at what you can do about it. Just donâ€™t do anything without sitting down and examining what your costs will be on both sides of the equation.
Gary Silverman holds the Certified Financial Planner (CFPÂ®) license and is a member of the Financial Planning Association (FPAÂ®). Gary is the founder of Personal Money Planning, a retirement planning and investment advisory firm, and is a Qualified Kingdom Advisor.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.