Friday, October 15, 2010

Guest Post- "How To Pedal Toward Financial Freedom"

How to Pedal Toward Financial Freedom
by Tammy Strobel    

Pedaling toward financial freedom seemed like an outlandish idea to me a few years ago. I always considered car ownership to be a necessity; that I "needed" a car to get to and from work. I never imagined that I'd be commuting by bike, going bike camping, and having so much fun with out a car. Making the decision to structure our lives around biking and alternative forms of transportation has changed our lives.

Five years ago, my husband and I lived what most would consider a normal middle class lifestyle. We were young professionals renting a large two bedroom apartment in a suburb, had two cars, and $30,000 in debt (a majority of which came from student and car loans).

At the time, I worked in the investment management and talked to clients about the importance of long-term investments, creating an emergency savings fund, paying off credit card balances, and being aware of expenses. Yet, I wasn't doing these basic things in my own life. Something had to change. Our excess debt was creating too much anxiety and stress in our lives. And rather than spending so much time on the work-spend treadmill, we wanted to restructure our lives around solid relationships and community.

So, we decided to take a step back and reflect on our behavior and budget. One of our biggest expenses, other than rent, was our cars. We didn't seriously consider selling our cars until we analyzed the cost. The numbers were shocking! Car payments, interest, insurance, gas, and maintenance added up to a total cost of$10,000 per year.

I'd love to say that we sold our cars to benefit the environment, but the decision was based on our financial well-being. For our situation it was the best way to pay off our debt quickly.

To make our car-free transition easier we decided to move closer to my place of employment. We ended up renting a small one-bedroom apartment about a mile away from my office. And that decision allowed me to bike or walk to work.

If you're able-bodied and live in a city, it is possible to go car-free. With that being said, going car-free in a rural area can be very difficult. However, it is possible to sell one of your cars and save money.

If you're on the verge of going car-free or car-lite consider these tips:

1. Do a cost/benefit analysis.

Even if you’ve paid off your car, do you really know the true cost?

The American Automobile Association (AAA) puts out an awesome publication every year to help you assess the true cost of your car. The cost analysis will help you calculate the true cost of car ownership. These costs are direct costs to you as a car owner, but don’t include the societal and health costs of owning a vehicle.

According to the AAA study, the average American spends over $9,000 a year to own a vehicle - that's about $750 per month. The figure includes car payments, insurance, gas, oil, car washes, registration fees and taxes, parking, tools and repairs.

Bikes at Work, Inc. points out, “car ownership costs are the second largest household expense in the U.S. In fact, the average household spends almost as much on their cars as they do on food and health care combined for their entire family.”

2. Talk to your partner.

If you have a partner and want to go car-free, you need to talk with them about your idea and how going car-free will benefit your lives. Create a pro/con list and a budget before discussing the idea so you can propose the idea more effectively.

3. Take a test ride.

If you don’t want to do something as drastic as selling your car, try going car-free for a week or a month. Park your car in the garage and don't use it. And at the end of the test period, evaluate how you felt and whether or not living without a car is best for your life circumstance.

4. Decrease health care costs.

Going car-free is one way to get your move on and keep your mind and body healthy. These economic benefits go beyond just vehicle costs. You can reduce your short-terms costs by ditching your gym membership and decrease long-term health care costs by reducing your risk for heart disease.

By selling our cars we gained a significant amount of financial freedom, improved our health and decreased our stress levels.

Resources for further reading.

There are a lot of resources online that will help you go car-free. Consider reading:

Tammy Strobel blogs at RowdyKittens about simple living and is the author of Simply Car-free and Smalltopia.

Wanna learn more about Tammy?  Tammy's Car-free American Profile


  1. "You can reduce your short-terms costs by ditching your gym membership and decrease long-term health care costs by reducing your risk for heart disease."

    If you don't do it for your wallet, do it for your health- great benefits in cycling!

  2. Fantastic article! I started bike commuting just two days a week and in a single month saw my gas bill cut in half (from $100 to $50--and I drive a small car!)

    I'm putting the savings back for a new bicycle! :)

  3. I commute to down town about 5 miles one way. I am 150 miles into it and will not go back. At the end of the year I will have saved $1300 in parking fees alone. Sounds like a great new bike in my future.

  4. Tammy,
    If you put just $6,000/year (2/3 of the saved money from not owning a car) into a ROTH IRA each year for 30 years, would it help your retirement?
    Seems like it would grow to quite a tidy tax free sum.

  5. Don't forget about the happiness and satisfaction one gains each time one learns how to accomplish another task via bicycle or walking. Riding a bicycle to manage one's life is challenging. It's a liberating feeling when one doesn't pose the need to cite comfort or convenience issues for why they would have rather ridden a bicycle or walked; instead, those riders won't be deterred by weather, distance, or convenience.

    I love pedaling out of the driveway on a crisp December night to pick up something from the store. It's just so much more pleasant to go by bike. It takes some practice and planning to find out what works for each individual rider.

    I agree the savings and health benefits are a wise investment too.

  6. I commute to down town about 5 miles one way. I am 150 miles into it and will not go back.
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