small change toward a rich life

Gasoline spending: the problem

When I set up our budget in July 2011, Jak and I both had contract jobs. That meant two things with regard to transportation: a long commute several days per week, and free transit passes.

Mostly, we bussed to work — free is good. But that took over an hour each way, for busses that only ran for a short period each morning and evening. Since the double income also meant we were flush, I set our gas budget at a moderate $80 per month. That allowed for our normal driving activities, plus the very occasional ‘oh crap I’m late’ drive over the bridge to work.

520 floating bridge across Lake WashingtonBy the time January rolled around, both of us were jobless again. I reorganized our budget to make the numbers work with our unemployment income alone, which meant cracking down on the gas expense, among other things. With no commute, I thought we could manage on just $30 a month. And we did, for a couple of months, but as we got into the summer gas prices crept up and I was forced to pull money from other categories to bump that to $40.

That turned out not to be enough of a patch. Over the four months from July to October, our gas averaged $56.63 per month — and if Jak’s dad hadn’t paid for a partial tank during his visit in October, the total would have been higher still. Our running budgetary deficit was $66.52. Again, I scrounged from other categories and added $10 for September and October, but I couldn’t sustain that without putting something else in the red.

By this time, we were down to just one unemployment check and some very small occasional freelance income: a long way from flush. We were already being squeezed by higher health insurance prices and a big bump in child support payments; I had no budgetary magic remaining. Succumbing to cost creep was not a viable option.

More importantly, I didn’t believe we needed to. Our living circumstances hadn’t changed in any way that required more driving. Our gasoline expense had risen by more than 50%, but gas prices had risen by less than 10%. We were simply choosing to drive more.

Why? Because our incentives were all wrong.

•   •   •

Jak and I agree that in ideal circumstances, we’d burn no gasoline at all. We are both environmentally-minded sorts, concerned about climate change, not big fans of fossil fuels. In theory, we prefer public transit, electric cars, and feet. In practice, electric cars are still far too expensive for us to afford, and our current neighborhood is thin on both transit options and useful destinations within walking distance.

Seattle bus stuck in snowPlus, the weather makes driving attractive. For seven or eight months out of the year it’s cold, wet, and dark, which means both walking and waiting for buses is pretty miserable. Driving is considerably faster than bussing, in nearly every case. Then there’s the matter of cost. Our corporate-sponsored transit passes expired earlier this year, so now every time we step on a bus we instantly have to fork over $2.50. Getting in the car, by contrast, is free.

Of course, it’s not really free. We’re paying $2 a day just for insurance. There’s the ‘opportunity cost’ of the $3K or so that’s tied up in the vehicle — the interest or dividends we could be earning with that money if we didn’t have the car. There’s regular maintenance like oil changes and the ongoing possibility of a costly accident or repair (like the $180 we spent a couple of weeks ago to have the windshield replaced). And of course, the aforementioned gas.

The problem is that psychologically the cost of driving is decoupled from the benefits. When we step on the bus and slide a couple dollars into the farebox, the cost of that transportation is immediate and ‘salient’ — we feel it, and so it gets incorporated into our decision-making.

But we don’t have to hand $2 to an insurance agent every time we get in the car. Each decision to drive somewhere is separated by days or weeks from the incurred cost of gas, and combined with all other such decisions into a single fill-up expense. (Which is itself rolled up with other credit card expenses and paid once a month, obfuscating it still further.) Besides which, Jak and I are each making independent choices about where and when to drive, but only one of us is even present for most gas purchases.

The cost of driving, because it’s dissociated from any given decision to use the car, is naturally non-salient: it feels almost free. The resulting disconnect is severe: in theory, we believe we should drive as little as possible. In practice, the whole system pushes us toward driving all the time.

My solution? Change the system.

•   •   •

I recognized that the incentives around driving were counterproductive from the start. When I was working out the details of the Conflict-Free Family Budget, one of my key rules was that every category that involved frequent decisions (more than once a month) should have a single owner. So in our case I have full control over the grocery allowance, while Jak controls the kids’ budgets.

I deliberately made an exception for gasoline. “To be strictly accurate, we should keep mileage logs and distinguish between required and discretionary trips,” I wrote. But I was reluctant to add that much record-keeping to the system just then, because a) I was already asking Jak for a lot of changes and b) I thought it would be a pain in the ass.

Eventually, two things happened. One, what seemed like a “minimum” of driving when we briefly had two incomes became unsustainably extravagant when we dropped to half of one. And two, we became increasingly complacent about driving, despite our best intentions.

OdometerWithout detailed logs, there was no way of knowing exactly where we were slacking. I had the general impression that Jak was using the car a lot more than I was, but even that was a guess — I had no numbers except the monthly gasoline totals. For a couple of months I tried simply pointing out that we were significantly overspending on gas and we needed to cut back, but that had no discernible effect.

So I bit the bullet, set up a mileage log, and rearranged our budget system to make the cost of driving more salient — first, to force awareness of the expense of each individual trip, and second, to give us direct incentives to become as efficient with our driving as possible.

We started this new system November first. In a couple of weeks, once we’ve got two full months under our belts, I’ll explain in detail what I did and how it’s worked.

(Photos by psvensk, Jeff Maurone, and NewsRover.)

One response

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  1. Ross says

    This is an issue I think we all struggle with. Obviously driving costs quite a bit, but if feels free.
    Once I did the math(including purchase price, fuel, oil changes, and maintenance, and not insurance since it’d be there either way), I realized that driving costs me $.31/mile. It’s probably more for most people. So whenever I think about driving, I divide the miles traveled by 3 and figure out how many dollars this trip is costing me.
    A 20 mile trip is costing me about $6. It’s not a ton of money, but it makes me think before I drive.

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