Monetary Impact

The astute reader of my blog may note that my impetus to start biking to work was financial, yet we are now a little over a month into this blog adventure and I have not directly addressed the issue of money and biking.

This is a purposeful move on my part, because I do not wish to insinuate that my continued use of a bicycle as my primary transportation is in any way financially motivated.  I did start out my career with very little money to the point that it necessitated my daily bike commute.  However, at this point there is definitely room in Mr. and Mrs. BCBiker monthly cash flow to afford a commuter car for me.  I, nonetheless, continue to pedal my way to and from work every day without fail. My motivation is now completely existential. (To see what motivates me to bicycle commute, please see the rest of this blog.) Please note that these existential factors are so overwhelming that even if we lived in some alternate universe where bicycle commuting was more expensive that car commuting, I would  continue my pedaling ways.

So despite the non-monetary benefits of Business Casual Biking being incalculably high, it is important to let those of us who have not experienced these benefits to  see the monetary gains to be enjoyed by simply changing one part of your day.  Perhaps this money-based calculation will motivate you to start your own bicycle commute so that you can then rake in all of the existential benefits!

Be prepared to be amazed!

Most people pay more attention to their favorite team’s box scores or to celebrity gossip than they do to their monthly budget, so it is the rare bird that actually realizes that their car (whether spectacular or not) is a tremendous source of cash hemorrhage!

Table 1  – 2014 Bicycle Commuting Expense Sheet

Date Amount Purpose
6/12/2014 $155.47 Tubes and Tires
6/12/2014 $2.50 Bus Fare
8/9/2014 $26.00 Spoke replacement and wheel repair
Yearly Total $183.97
Monthly Total $15.33

To summarize, I spent a grand total of $183.97 in 2014 on getting to work. This total includes a catastrophic event in which I had worn all the way through the tread of my rear wheel such that the tube blebbed out and punctured.  I purchased front and rear tires even though my front tire was still good so I have yet to put that on.   The tires I purchased were also very fancy Hardshell Continentals.  I was in a little bit of a hurry so I splurged on a 4 mile bus ride when my tube punctured.  The spoke replacement was done because I could not find the tool needed for the repair, and the shop I took it to was new and relatively expensive.  I thought about taking it somewhere less expensive but wanted to support the place because it is located near our house.

Now let us compare this amount to a standard car commute in Denver.  I will make some assumptions.  I am assuming the only purpose of this car is for commuting.  I will assume I purchased a 2011 Toyota 4Runner (SUVs are the predominant commuter car in Denver) priced at $28,000 with an average fuel economy of 19 miles per gallon.   If I did car commute I would need to purchase this car from scratch so I will say I borrowed money for this car with a small down payment ($2000).  Let’s make the terms of the loan a 4 year payoff with a 3% interest rate. I also will assume that I take the fastest way to work which is a 17 mile each way freeway commute (which is slightly further than my bicycle commute – 14 miles each way) 260 days – the approximate number of day I worked last year. Fuel was about $3.50 on average in Denver last year. Because this truck will make me broke, I will assume a standard comprehensive insurance package with a $500 deductible.  Taxes and registration are based on estimates from the state web site.

Drum-roll Please…

Table 2 – 2011 4Runner Year One Expenses


Expense Category Monthly Yearly
Car payment $575.49 $6,905.88
Retained Value -$489.17 -$5,870.00
Fuel $135.00 $1,620.00
Insurance $115.50 $1,386.00
Depreciation $350.00 $4,200.00
Sales tax $221.00 $2,652.00
Registration $42.00 $504.00
Maintenance $40.00 $480.00
Total $989.82 $11,877.88

Now some may state that this is a ridiculous amount of money to spend on a car… To those people, just look at your checkbook and credit card statements and do the math.

Please note that some might consider this to be an obnoxious vehicle where as others might say what about the BMW?!

Let’s now see the difference between car and bicycle commuting (Listed as Savings)

Table 3 – Savings table

Yearly Savings $11,693.91
Monthly Savings $974.49
Per Daily Commute Savings $44.98

That is right, every day I ride to work I am saving $44.98 compared to what I would pay to drive a 3-year-old SUV!  The scenario may seem hyperbolic but I guarantee that you can find any number of co-workers who are shelling out at least this much money for their comfort wagon.  I promise to repeat this calculation with a more reasonable (and less reasonable) situation in a future post.

Comments are welcome!


*Depreciation is a hidden cost to motor vehicle ownership.  Cars are the prototypical depreciating asset.  A simple example is you buy a car for $30,000 new and then sell the car 1 year later for $23,000.  That is a $7000 depreciation.  That $7000 is money you will never get back so is an real expense to you.  Please note that in this example, the car is 3 years old so the depreciation is less than if it was a new car.  I calculated the depreciation based on the car costing $42,000 when new in 2011.  I could have depreciated my bicycle in the analysis but the bike and my spare bike were free. Stay tuned for my future post on getting started in biking for low and no money!

Post script:  Some commenters have noted, the first year costs are much higher than in future years so year-two will be much less savings from the bicycle commute but still significant.  My intentions in this post was to show just how much a somewhat average vehicle can cost and that a bicycle is a reasonable replacement.   Stay tuned for more good stuff on this topic in future posts!


8 thoughts on “Monetary Impact”

  1. Great idea to analyze the difference between car and bike commuting. I love my bike commute and will continue to check out your blog (followed you here from the MMM forums).

    For this analysis, I think you should only include the interest of the monthly car payment, not the whole amount of the loan payment. Some of the principal portion of the payment will be returned to you when you decide to sell the car. The part of the principal that will not be returned when you sell the car is depreciation, which you’ve already accounted for. So in a sense, you’re double counting that bit of the cost.

    If you want, you could also include the opportunity cost of putting that $2,000 down payment toward the car instead of into an investment.

    1. Thank you for checking out my blog! If you want to receive my posts to your email once they are posted you can enter your email on the left hand column.

      I may be wrong and need to think about this more but my initial thought is that depreciation is still a cost on top of the principle payment. Depreciation still happens whether you are making payments or you own the car outright, because it is simple a decrease in the re-sell value over time.

      I thought about including the $2000 down payment as additional expense but I will just give that money to my broke hypothetical self.

      Regardless of these minor quibbles, it is clear that bicycle and car commuting are barely comparable in terms of cost.

      1. PowerMustache is correct. The calculation only represents the expense side of the equation. The payment is going toward the purchase of an asset. An easy alternative way to recognize depreciation is to offset for the expected post-depreciation value of the vehicle and based on the numbers, that is around $11,200 after the 4 years. Also, the down payment, which is embedded in the final valuation of the vehicle should also be recognized as a cost.

        Expense Category Monthly Yearly
        Car payment $575.49 $6,905.88
        less residual value -$233.33 -$2800.00
        plus down payment $41.66 $500.00
        Fuel $135.00 $1,620.00
        Insurance $115.50 $1,386.00
        Maintenance $40.00 $480.00
        Total $674.32 $8091.88

        It still yields a pretty impressive $31.13 per day. Also, there will likely be a parking cost for many commuters, so that can increase the number dramatically. Also, the opportunity cost on $2,000 (addressed in the prior comments) will make a small difference.

        Anyway, thanks for the eye-opener.

        1. Thank you Visitor. You make a good point that what retained value you have paid off is not a true expense! I apologize for not incorporating that into my analysis. Your calculation is good for cost per day averaged over 4 years, but the first year of ownership will be the most expensive because of higher depreciation and higher financing cost early on in ownership.

          In general though we are talking about big numbers! If everyone had to hand over $30-50 every day they drive to work, very few people would do it! But these calculations say that this is precisely what car commuters are doing!

          Thank you for reading! I hope to see you back and continuing to contribute to this project!

  2. I find your choice of car to be odd. $28,000?! Anyone even mildly considering biking to work is hopefully already a little wiser than to buy a 4 year old car that still costs $28,000 (let alone on a car loan.) How about comparing this to the actual car they might be using now? Try a 6-8 year old hatchback that gets at least 30 mpg, and it’s paid off. That would instantly cut your numbers to at least one third.

    Expense Category Monthly
    Car purchase (divided by 5 years of use) $133.33 ($1600/yr)
    Car payment $0
    Fuel $86 ($1,032/yr)
    Insurance $60.00 ($720.00/yr)
    Depreciation* $67.00 ($800.00/yr)
    Maintenance $40.00 ($480.00/yr)
    Total $386.33 ($4635.96/yr)

    $17.83 each day or $8.9 per one-way commute.

    (See? Still a stark contrast to a bike, but much more believable numbers. Also if you were truly using a car for nothing but commuting, you could probably go much cheaper than $8k, drop all but liability on your insurance and get a higher mileage car. And as I wrap this up, I finally see your disclaimer about the more reasonable comparison ;)!)

    1. I agree that a Toyota 4Runner (new or old) is a pretty non-savvy financial decision. Nonetheless, my daily commute gives me broad exposure to the current car choices of the everyday car commuter and my non-scientific gestalt tells me that a 4 Runner represents about the average car on the road at 7:30 am and 5:30 pm in my city. Here is my observed breakdown of cars: <5% hatchback commuter cars, 20% small to midsize sedans, 40% small to midsized SUVs, 15% large SUVs, 20% trucks. You can put minivans anywhere you want in the continuum, but I think it is reasonable to say a mid-size SUV is about average. While you may see a SUV as a totally ridiculous car choice, unfortunately you are in the minority.

      I agree. I would never use an SUV as a commuter car unless my job required pulling large trailers or some kind of off-road activity. I appreciate your breakdown of a more reasonable car! I have achieved similar numbers.

      Stay tuned and Thank You for reading my blog! There will be more great stuff to come!

  3. Instead of comparing our biking expenses to a scenario we would never do (I agree that any person who would bike to work is pretty darned unlikely to finance a $28K SUV), we compared them to what our transportation expenses were before I started biking.
    The results were pretty impressive, at over $200/month in decreased expenditures during our rather pricey “startup period” with the bike, with an estimate of about $275/month going forward.

    1. That is a great summary and I think it is awesome you have a reimbursement for bicycle commuting. Wouldn’t it be great is such a reimbursement were available to everyone (I have some ideas related to this in terms of legislation advocacy)!

      Your savings is likely even more than what you calculated because you are not accounting for depreciation of your Jeep or for the fact that you now have the cash windfall from selling your Jeep. Also, you had significant startup costs for biking that will not continue to a accrue which I didn’t have in my calculation. I plan to advocate on this blog for low startup cost so that one can start right away!

      I created my scenario from a combination of my current situation to what I would have spent to acquire a car (I completely left out sales taxes and registration I now realize). Now I personally would not buy the vehicle in this example, my point is that MOST people would consider this a reasonable purchase (people have this perception in Colorado that you need to have this rugged truck that will pull a camper and off-road up 20% grades while carrying 200 lbs of camping equipment while in reality they just use it to drive to work…)

      The goal of this post is to motivate one who is driving an average vehicle to bike. Perhaps realizing this saving will get them to ride enough that they will enjoy all of the other amazing benefits of biking and ditch the truck and live the BCB high-life!

      I also don’t like the stereotype that people bike only for the financial savings (despite the overwhelming support of this argument!). I think that biking to work should be something you do because you love it and people will only learn to love it if they try it and money has a powerful influence!

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