Posted by: John Vandivier | January 12, 2013

5 Ways to Save Money Through Logistical Cost Reduction

This article will be about 5 ways to save money. Is the lease on your apartment up soon? Are you considering buying a vehicle?

These and other topics will be dealt with here because good decisions in these areas will all help to reduce something called your logistical expenditure, which is a fancy way of saying how much it costs you to go places such as commuting from home to work.

#1 Buy Used Vehicles
According to Dave Ramsey, the average car loses 70% of its value in 4 years. Looking at this a different way, this statistic indicates that if you wait until a car is 4 years old you can purchase it for 70% off! Additionally, many of the manufacturer problems in a car will have already surfaced by the 4 year mark. Make sure you do your homework though! Here is a video to help you dodge some of the tricky parts of buying used:

#2 Get a Vehicle With Higher Gas Mileage
I’m not about going green, but I am about saving green. If a car gets 20 mpg, like mine, finding another car with 40 mpg is like cutting your gas bill in half! I spend about $10 per day on gas due to my work commute. If I only spent $5 per day I would be saving about $70 per pay period (every two weeks for me), about $150 per month, or about $1800 per year! Make sure that the maintenance costs on your car do not outweigh the savings in mpg cost though! I hate to say it, but alot of Asian (Nissan, Mazda) are a win-win in this trade, saving both in maintenance cost, mpg cost, and also often cheaper to begin with!

#3 Move Closer to Your Destination
If you commute to work or school, consider living closer to that destination. I commute 30 miles to and from work each day. That is over an hour of wasted time and also about $10 in gas each and every day. If I lived 10 miles from work I would only waste about 20 minutes per day and about $3-$4 per trip. The same is true for those of us how commute to school regularly!

#4 Like, Really Close to the Destination…Walking/Biking Distance
If you live within 1-3 miles of your destination you can simply walk, bike, or skate there! This not only saves time and gas money but also upkeep costs on your vehicle! Vehicle repair can be very expensive as we all know. According to one source, the average American family spent about $400 per year per car on maintenance and about $600 per year on car insurance. Not to mention the bonus to your health of exercise!

#5 Move Work Closer to You
This is pretty much the same as #3 and #4 but at the same time opposite. Instead of moving toward work, get a new job closer to you! Considering that I waste an hour of time each day (time is money) and $10 of gas per round trip going to my job which has an average shift length of 8 hours and pay per hour of $10 I could actually take a job (if such a job existed) where I walked across the block and only earned $8.10 per hour and actually earn more per hour! How? In the first case I am spending 10 “hour equivalents” per day:

8 hours work + 1 hour drive time (I could be working and earning) + $10 gas =
10 Hour equivalent yielding $80 income b/c 8 hours actual work * $10/hr wage =
daily adjusted wage of $8 per hour.

In the second case, assuming the same shift lengths:
8 hours work + 0 hours drive + 0 hours equivalent due to gas = 8 Hour equivalent yielding $64.8 income b/c (same reason as first case). Daily adjusted wage of $8.1 per hour.

So as you can see I would be earning less but spending so much less that I would actually come out ahead! Considering factors like these will help you be a better steward of your money! These factors include logistical costs and opportunity costs!

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