30% and Counting

Did you know that on average, working families are spending nearly 30% of their incomes on transportation? In some cases, transportation costs are exceeding those of even housing. To see the breakdown in 29 regions, take a look at the above graphic from Penny Wise, Pound Fuelish, a report published by the Center for Neighborhood Technology.

If that isn’t outrageous enough, according to the American Automobile Association’s 2010 Your Driving Costs report, the average cost to own and operate a mid-sized sedan has risen 4.8 percent from last year, to 56.6 cents per mile, or $8,487 per year (based on 15,000 miles of annual driving).

I’d bet that many people have no idea they’re spending such a high percentage of their hard-earned cash on transportation (and automobiles specifically). If a person is able to do it, eliminating a car and using alternative transportation is the most obvious way to dramatically cut costs and operate more efficiently in these times of shrinking household budgets.

38 Responses to “30% and Counting”

  • Eric (Denver) says:

    I’m not sure who is spending $8500/year on their cars, but I’m guessing these are people buying $50,000 cars (I calculate my cost per mile to be about 25 cents). I’m all for trading cars for alternative forms of transport but in terms of saving money, I suspect that buying more efficient, less expensive (and less expensive to insure) cars would have a bigger immediate impact.

    If poor and lower-middle class people stopped valuing fancy cars more than savings accounts, the class structure in the US would shift dramatically.

  • Alan says:

    @Eric (Denver)

    Hi Eric,

    I don’t immediately see how downsizing to a less expensive car would make a bigger impact than eliminating a car altogether. Can you explain your rationale?


  • Eric (Denver) says:


    Good point. I guess I was thinking that realistically, most people in the US are either unwilling or unable to eliminate their cars altogether. But I suppose that to some people, there’s not that much difference between trading in the Escalade for a Civic or for a bike.

  • Alan says:


    I see what you’re saying now. I just wanted to make sure I wasn’t missing something.

    Thanks again,

  • Nate Briggs says:

    My day to day work is at a call center, where we commonly have employees pulling down only about $18K. In our advocacy efforts, we have been working the angle that commuting by car is an expense that can be minimized by using a bicycle on a regular basis.

    Two things that have struck me during these conversations:

    – The astonishing commutes that people committed themselves to when gasoline was cheap. 25, 35, 40, 45 miles each way. And the Wasatch Front is not a place where multi-modal commuting is easy or simple. Major time commitments, in addition to money.

    – The idea of car use – even for those who don’t drive long distances – as completely mandatory. They tell me: “You have to have a car”. Once you honor the mandate for a car, then all the other expenses – gas, insurance, repair – follow naturally. The money has to be spent, if you cannot imagine any other option.


    Nate (SLC)

  • Ed L. says:

    An astonishing amount of a person’s sense of self-worth is often tied up in the type of car that they drive, at least in the United States. This was true for me when I was younger as well, and I was willing to spend an inordinate amount of my income to feed that part of my image. Somewhere along the line my attitude shifted to a more utilitarian stance. This was probably brought on by an extended period living car-free for purely economical reasons, which morphed into actually enjoying the freedom and convenience that living car-free provided. Living in a city where alternative transportation was cheap, plentiful and widely used by all classes of people certainly helped.

    Even though I do own a car now, the factors that went into its purchase – can I buy it outright so there are no car payments? does it have a low cost-per-mile to own and operate? is it reliable? is it easy to park on-street in the city? is it utilitarian (will it haul my dog, bike, inlaws, and etc.) comfortably from A to B? – were much different from those that would have driven a car purchase in years earlier (is it cool? will I look cool driving it? is it fast? will it make my friends jealous?)

    I am extremely jealous of the rise of the “bike culture” in the younger set (despite its silliness and indulgences). When I was in high school I still loved to ride my bike, but never would have thought to ride it to and from school – that would have been social suicide, worse than not owning a car at all. Today the bike can not only be the smart choice, but the hip choice as well. Hopefully that will continue and expand.

  • James says:

    I actually see where Eric was going with this (I think), meaning that if you just have to have a car, going with a used Honda Civic that you pay cash for vs. a brand new car that you finance/lease is going to be a cheaper option. Even going that route is going to save you some money, perhaps enough to get a good commuter bike and then slowly transition right out of the car altogether. I think that I would call this “baby steps”, but it is a whole lot better than the alternative.

    I have been commuting to work (and everywhere else) since 2008 and I cannot tell you how much that has saved me in not only hard dollars, but in my own health and overall knowledge of our great city of Chicago. We moved here in 2006 and I feel like I lost a lot of money on the two years that I didn’t bike for transportation. That said, we still own a car – a paid for 1999 Honda CR-V – because we go back to Michigan to see our family from time to time, but I can see a day when we train to Ann Arbor, grab a car sharing vehicle when we need a car and then train back to Chicago.

    I suppose my situation “kinda sorta” illustrates the idea that this is a transition that even the most hardened city dwellers need to undertake in increments to fully appreciate and understand what they are missing by driving everywhere. The Midwestern US is a hard nut to crack as it seems that a car is seen as a birthright around these parts! My wife and I are still in that transition, but I am far more amenable to ditching the car sooner than later!

    Here is what’s wild, I spent $1400 on a Civia Loring (I love it) a few weeks ago, which is far more that I would have been able to “justify” for a bike a few years ago. Today, that seems like a bargain!

    Great discussion and thanks for bringing it to our attention.

  • Brian C says:

    I suspect if we had some of our Canadian cities on this graph, you would see we spend more on housing but less on transportation. While our transit systems do not match what we have seen in Europe, they are certainly usable, and used. And our bike share in general tends to be higher.

    On a personal level, I can relate to James above, after just spending $2000 on a bike for my wife. Small cost compared to keeping one or two cars on the road. And the 45,000 km on three of our bikes was certainly significantly cheaper than an equivalent amount of mileage in a car.

  • Geoff Jennings says:

    I think a lot of the problem with reports like this is that they don’t differentiate between fixed costs and variable costs. This article suggest you save that much by eliminating your car completely, something many of us aren’t willing to do. I bike commute most days, about 13 miles roundtrip. But I’m also an avid whitewater kayaker, something I can’t get to on my bike. So I own a small, four cylinder pickup truck.

    Once you decide that you want to own a car, many of the costs are closer to fixed costs than variable. That is, the price I paid for my truck doesn’t change when I ride my bike to work, so calculating that into my savings would be misleading, though I’m sure it will last longer (saving) and be worth more when I do trade it in (savings). Maintenance is less, fuel is less, but I pay pretty much the same for insurance.

    I’m a huge advocate for biking, and commuting via bike, but I think the whole suggestion of getting rid of a car is not realistic, and probably doesn’t win us many converts. The more reasonable suggestion should be – ” Bike some. Bike alot – Bike more”

    Not, “Don’t ever drive”.

  • Alan says:


    I don’t think anyone said “Don’t ever drive.”

    Not everyone is going to go car-free, but certainly there are many families that might reduce the number of cars they collectively own from 3 down to 2, or 2 down to 1. For those people, knowing the potential cost savings could be a big motivator. And there’s no question that having fewer cars available significantly reduces the number of miles driven.


  • J.. says:

    My transport costs are negative. That is, I *make* money by commuting. It’s only a couple of thousand a year, but still…
    Ofcourse, that’s not really possible if you own a car.

  • Runjikol says:

    Are you a bike messenger – is that you make money “commuting”?

  • Carolyn I says:

    I have no car, I bike everywhere and have for 20 yrs. I can drive, but cheaper to not have a car. I agree, sometimes I wish I had car to go camping, driving to nearby towns.

    But I am lucky. I like hiking and belong to a local hiking club. We carpool to the hikes, and so I don’t need a car to go hiking and camping. I just pay a ‘carpool’ fee for each hike. It doesn’t work for all the things that I want to do, but it helps. If I had a vehicle, it would have to be a truck or something that would have enough clearance for the gravel backroads, so definitely wouldn’t be cheapest vehicle to drive.

  • voyage says:

    The three big fixed costs of automobile ownership:

    1) Finance charges (the interest on the loan taken out to buy the thing)

    2) Insurance (comprehensive and liability)

    3) Vehicle taxes and fees

    One work-around is to buy an old car full price with cash, don’t insure it or you, and don’t register it with the state. Only drive it in the late wee hours, ideally on weekends and on side streets for short distances.

  • doug in seattle. says:

    I wish I owned a car.

    I could sell it and buy my dream bike! Alas, I make do with elderly frankenbikes assembled for a few hundred dollars each.

    The bright side is that I use the extra money to buy good beer rather than nasty cheap beer. Among other more important things, of course.

  • SB Tim says:

    I live in Santa Barbara so our rent is close to half of our family budget, then comes food, then household, and then our college loan payments. Gas is a small part of the budget, but we made the choice long ago to live close to work and play.

    I own a 94′ Toyota truck that I bought ten years ago for $5000 and I’ve invested about$3000 in repairs. I only have liability insurance coverage (which is cheap), and I fill up the tank only once a month. Our other car was also bought used with cash, so no car payments but we have it fully insured. So our transportation costs are way less than the AAA average.

    My truck happens to be in the shop right now with a cracked cylinder head, and I’m leaning toward not fixing it. If I junk it, I’m not getting another vehicle, I ride my bike to work anyway. But I sure will miss that old 4×4, it used to take us places where not many people go.

  • J.. says:

    No, I’m not a messenger. That would be “working”, not commuting. I get a (pretty standard) 19 cents per kilometer (30 ct/mile) reimbursed by my employer. This amount is based on the assumption of car ownership ofcourse, but it’s not a requirement. Some of my co-workers make a little on the side by using very cheap, small cars. Nothing beats a bike for efficiency though. I commute to a lot of different places at different times right now, so it’s a little irratic, but in a good month I’ll bag enough to pay for a years worth of bicycle expenses.

  • J.. says:

    Errrr… no insurance? Isn’t that illegal?
    And why include finance in the costs? Those aren’t costs, they’re options. That’s like saying the bulk of the fixed costs is the $20,000 stereo system you had installed. Financing a car (or anything else for that matter) is a luxury that you choose to afford yourself. Doesn’t anybody just “buy a car” anymore?
    It’s like those people who say they need that extra credit card because they can’t afford to buy shoes for their kids. Excuse me. If you can’t even afford shoes for your kids, how the hell can you afford a credit card?

  • thomas says:


    here’s the cost of owning a 2010 Honda Fit. The pie chart is interesting and take a look at the 1st year depreciation. Cars are expensive. Isn’t that part of the allure?

  • Rob says:

    Interesting to see the difference in commuting habits and dependability of the car. I live in Sweden and I love biking. But since I live 30 km (18,6 miles) from my work it’s not easy to commute with a bike only, especially not in the winter with a meter of snow and -10 deg C (there are people doing that with studded tyres but usually not long distances). Since we have a good bus system (unfortunately not subway or train since I live in the archipelago), I hop on a bus and bring my Brompton, jump off at suitable stop and bike on to work, not to save money but to save time and get some exercise. When it comes to calculation of car costs I went in to the consumer boards homepage and did a calculation. If you buy a new car (nothing fancy), keep it for 10 years, include service, petrol, tax, parking, decrease of value, insurance and so on you end up with a cost of approx. ½ USD per km. Since I drive approx. 15000 km (9320 miles) per year the cost for the car is 7500 USD per year! I spent about 1000 USD per year on commuter traffic (card that’s valid for all public transportation for a radius of about 50 km from city centre). Car pooling is interesting but not available where I live, but you can rent a lot of car for 7500 USD! You can lower your variable costs and fixed costs with a smart choice of car. What do you need the car for, what purpose should it fulfil, fuel consumption (I know your petrol is very cheap in the US, here in Sweden it cost about 1,6 USD per litre (1 litre = 0,26 gallons), do you need a new car etc.

    Love the pictures on your site!


  • Herzog says:


    Do you realize how out of touch you sound?

  • AZMike says:

    The study says, basically, that the further out of the city one goes — the housing is cheaper. But one also spends more on transportation. Makes sense.

    However, if one moves into a densely populated area with public transportation/walkability/bikeability — then transportation costs go down but housing prices (and everything else) go up to match or exceed that. The blogger/economist Half Sigma had a post to that effect some time ago — living in say, Omaha or Phoenix with a car is actually cheaper than living in a densely populated city (like New York or San Francisco) with no car. And I’m afraid he’s right.

    In this case, the problem is that ‘working families’ don’t make enough money. Either way they will spend more than half of their income on transportation or housing. It may actually be marginally cheaper for a ‘working family’ to live in a car-friendly city than not — and gentrification isn’t helping (see the neighborhoods of Park Slope, Bushwick, and Williamsburg in Brooklyn.)

    A combination of high taxes on automobiles/gasoline, high land-value tax (see Georgism/single-tax) to encourage density within cities and government subsidizing low-cost housing for all citizens within (like Singapore does — 85% of the country lives in fantastically designed and cheap public apartments) will make housing and transportation affordable for almost everybody.

  • J.. says:


    Out of touch? You mean on the commuting or on the finance thing?
    Out of touch with what? With the delusions people have or with reality?

    Seriously, tell me. I’m interested.

  • Alan says:


    I’m pretty sure he was being sarcastic (in a complimentary way).

    Let’s get it back on topic now – thanks.


  • Steven says:

    One point I’d like to make is that insurance companies often exploit those who choose the least expensive cars to buy and operate, usually the working class. For example my 2002 Hyundai Accent costs almost twice as much to insure as my 2005 Hyundai Elantra and they are only one model apart in Hyundai’s line. Last year when it looked like my wife wasn’t going to be able to find a school to teach in town and might be forced to teach in the county, I was considering getting a Prius or simular high milage auto. A quote from my insurance agent said it would have only gone up $125 a year replacing a $3000 (bluebook) car with a $23000 new car. It partially explains why in AAA’s report that the cost per mile of the SUV was only 170% more than the small sedan when gas milage is probably closer to 3x the difference.

  • Herzog says:

    J., Alan,

    Nope, I wasn’t sarcastic. It’s about the finance thing — it’s easy to criticize (or even mock) people for paying exorbitant interest. The fact is that it is usually quite rational and unavoidable — many can’t afford not to pay interest.

    Most Americans don’t have the liquidity to make large purchases. For example, considering taking out a loan to buy a car. Suppose you need it to begin a new job that pays $20,000 more than your old job. Let’s say the car costs $10,000 + $5,000 a year. Unless you have $15,000 lying around in your bank account (most people don’t) you can’t buy the car. That’s a paradox since, in some sense, it’s worth $20,000 a year to you.

    An even more obvious example is houses. Ever think about why almost everyone pays interest on their home instead of buying it outright?

    Many Americans don’t have the liquidity to make even small purchases.

    If you want to rationalize people’s choices you need to get their objective right. Rich people maximize something like expected and discounted net worth while poor people don’t.

    Economists sometimes puzzle over why people hold high interest credit card debt when they have savings in a checking out.

    “It’s like those people who say they need that extra credit card because they can’t afford to buy shoes for their kids. Excuse me. If you can’t even afford shoes for your kids, how the hell can you afford a credit card?,”

    Now, when you say something like that, I get angry because I think you are being ignorant and irrational. When you’re poor and you don’t have $40 laying around to buy your kindergarten daughter new shoes, you’re not going to mind paying $.50 a month if that will allow you to get them today.

  • Alan says:

    OK, I stand corrected. Now can we get back on topic, please? :-)


  • Larry says:

    It’s been mentioned already, but other aspects of the big commute add significant additional costs to families. The time it takes for a 30 mile commute twice a day means less parenting time and less time to cook. Families wind up eating fast food or prepared supermarket food – more expensive and often less healthy. Add the health consequences of the added stress of spending 1 – 2 hours in traffic daily. Also the reduced time available for rest, relaxation, and exercise. On the other hand, families also must consider schools. Not every population-dense region has high-quality educational options.

    Those people (including myself, at the moment) who are able to live in a place where all/most of their needs (employment, shopping, social, recreation, education) can be met within a small geographic area and/or by public transportation are quite lucky. In the U.S., I think there are many places where it is hard to find everything you need in one place. And public transit in many places is inadequate. So car-free or car-minimal isn’t always an option.

    But I think that we will naturally move in that direction in the U.S. when fuel prices reach painfully high levels. Over the last ten or twenty years, large parts of some cities (Chicago and Philadelphia are two I’m familiar with) have “gentrified” as the time/monetary cost of the big commute grew to the point that city life became preferable to a 60-minute drive.

  • J.. says:

    Herzog, thanks for your reply.

    First, I must insist I’m not trying to “mock” anyone. In order not to stray off topic too much, I’m going to stick with car costs. I’m well aware that buying something on credit can be very rational, but my point is that in practice, it often isn’t. In the example you give, financing that car is only rational if you can expect to service your debt without running into trouble. And maybe getting a cheaper car is more rational. My point is that a lot of people live far beyond there means without even realizing it, because they got everything on credit. They think products are more affordable because you pay less now, while in fact the opposite is true. It’s tragic.
    Buying those shoes for your kids on credit is just going to make it even harder for you to buy the next pair a year from now.

    I can’t look at a graph saying people spend a third of their income on transportation without thinking that a lot of them are driving too many, too big, too expensive and too inefficient cars. You could rebut that high transportation costs is just something that comes with the suburban lifestyle, but then I’ll simply ask the question: “Doesn’t that mean that the “suburban lifestyle” is something that a lot of suburbanites simply can’t afford anymore?”. I realise it’s a scary question to ask, but I see energy costs trending steadily upwards in the coming decade and that will make the suburban living arrangement more and more problematic. And I’m afraid biking is not going to be a silver bullet solution for that problem.

    Alan, hopes this puts your topic back on track a little…

  • CedarWood says:

    One aspect I haven’t seen mentioned so far is that suburban homeowners often see a pickup truck as a necessity of suburban life, whereas the city dweller might be content with just one vehicle for transportation.

    So now there are at least two “necessary” vehicles required for life in the suburbs, along with the required licensing, fuel , and maintenance costs.

    If one must have a car, I believe buying older vehicles can sometimes result in significant savings. The insurance seems to cost less, and there are fewer computerized parts, which makes it easier and cheaper for the owner to troubleshoot and repair the vehicle themselves. Just my personal experience.

  • Geoff H says:

    What a marvelously civil, reasonable discussion. Thank you.

    To echo some of the thoughts expressed thus far I’d like to note that we tend to have a very short collective memory. It was a relatively short four generations ago (1918) that, according to the Bureau of Labor Statistics, american households spent only about 5% of their income on transportation. In that era, the average american family spent the largest share of its income on food (38.2%), followed by housing (23.3%) and clothing (16.6%). It was mass transportation that drove the development of the first suburbs, often aptly named ‘streetcar suburbs.’ The streetcars may no longer exist, but those original suburbs can still be very livable.

    Public policy helped shape our existing single use, single family, single-occupant-vehicle culture. We can use public policy today to begin to create, or recreate, livable communities. In a modest way, the Obama administration is trying to do just that. And though it’s a modest effort to merely restore a little balance to transportation and land use planning in America . . . well, let’s just say that any change to our accustomed lifestyle is perceived by some as a threat.

    Here’s to change for the better.

  • Alan says:


    Thanks… :-)

  • Herzog says:


    Well, I think the fundamental problem (abstractly) is that individual rational doesn’t aggregate well. This explains why people buy too much on credit, drive too many expensive cars and have homes and lots that are too big.

    Car ownership itself creates a collective action problem. If few people have cars, having one gives you a tremendous advantage in mobility — so you want one. If most people have cars, you need one to, or you can’t around efficiently.

    Status is another issue. It’s perfectly reasonable for individuals to waste money on status symbols — fancy shoes and shiny cars — but it’s a disaster from a societal standpoint.

    A similar thing happens with space. Many people would love to have a spacious house with a big yard — but next a dense and walkable urban environment.

    All three of these collective action problems contribute to the high cost of the suburban lifestyle.

  • DeltaTrike says:

    Yes, most discussions here are reasonable and sensible. I have enjoyed the days this year I was able to commute – not as many as I had hoped, but I did what I could. I would be interesting to know from the car lite/free folks how they handle the everyday stuff like – you need to be across town in 20 minutes or 30 minutes after the work day for a meeting, or daughter/son is stranded at some 20 mile distant site or the neighbor’s call that the pipes are busted/house is broken into – family member was taken to the hospital…When these have happened to me, it seems that being on the bike that day was just so much of a hassle to deal with, that I ended up having to depend on someone’s car and then have to deal with getting back to the bike. I know some of the readers manage to be car lite/free and have families and have to deal the everyday unforeseen. How do you do it?

  • dave says:

    Thanks for posting the study.
    I think the study is just a part of a larger challenge to the prevailing attitudes towards development in the U.S. This has been going on for a couple of decades, now, I think.

    The prevailing attitude has been to mostly ignore transportation costs and build low density developments further and further out from city centers.

    @ J…”I realise it’s a scary question to ask, but I see energy costs trending steadily upwards in the coming decade and that will make the suburban living arrangement more and more problematic.” …I agree. Some of the hardest hit communities in the housing crisis were in fact the ones farthest out, the ex-urbs. Which means answering DeltaTrike’s “How do you do it?” is a huge deal, in my opinion.

  • J.. says:

    I’ve managed to find some statistics from the Netherlands, just to contrast.
    The average Dutch household uses 14% to 18% of income on “transportation and traffic”, averaging about 16%. (The numbers are from 2005, but should be fairly representative, as the stats from this article are from 2006.)
    So the Dutch spend a little over half of what Americans are spending. Now I don’t know how average income of the two countries compares, but they’re both rich, industrialised western nations. I don’t think the Dutch make that much more than Americans. Now you could say that Americans are more addicted to their car, but I’ve seen a lot of people around here who are practically all car all the time, so I don’t buy that argument.
    I think it’s mostly the layout of the land and the occurence of true mass cycling that explains such a huge difference in expendatures. Here, cities and towns are built more compactly, and although we have sprawl (just google “almere”), it hasn’t gotten out of hand yet. It means you probably won’t get the house with the big yard and the double garage, but you do get to cycle (safely) to a lively, bristling town centre for a beer on one of the sunny terrasses.
    Which brings me to Deltatrikes question: How to live car lite/free?
    I’m one of those people lucky enough to live where I live. Living car free is easy here, if you conciously choose to and plan ahead. I’m a 50 second walk away from a streetcar stop, 10 minutes biking away from a mayor train/bus station and the supermarket/bakery/butchershop is a 4 minute walk. This ofcourse, is no coincidence. I chose this particular house specifically because of its proximity to these things. Not that I use public transport very often. I use my bikes for almost everything, but it’s there when you need it. I can afford a car, but it’s an expense I can’t justify to myself. If I had a family to worry about than I might see things differently, but right now I’d rather spend my money on other things. I’ll need a car maybe once or twice a year, but I can usually borrow one. I could rent one too, but I’ve never had to. It’s a luxury to not need a car, which is why I’m careful not to admonish those in the US who can’t quit theirs. To a great extent, everyone’s hostage to the invironment they live in. In recent years I’ve come to realize just how lucky I am.

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