The Cascade Effect of Cycling

I have talked to a lot of people about my lifestyle change and whenever I get to the topic of cycling the first response is usually something like: "Yeah, I don't want to bike" or "I can't bike to work where I live!" or even worse: "I'm too out of shape to bike."

After my first ride to work.

I don't think I can stress enough how hopping on a bike was the single best thing I did to become financially independent. I even had an inkling about the momentous occasion while I was doing it. In my RunKeeper log on the very first ride to work I put "First ride in two years and the trial ride to commuting to work! Life changing day. But damn I'm tired." - and I was.

7 months of cycling

The ride took over an hour for 8 miles and I stopped multiple times and went through all my water. Sitting with my back against my office building, I thought about calling for a ride home. But no, that would be giving up. If I couldn't get there and back again, then I couldn't do the trip. I sat and cooled down, drinking water from a water fountain and refilling my bottle. After 30 minutes I hopped back on my bike and I headed back. It was a little easier that time, but it was still slow going. Rides to work incremented slowly. One day a week, two days, three... After two months of riding, I was cycling to work every day, rain or shine and I had taken my time from ~1 hour down to 30-40 minutes. A 40 minute ride was me lollygagging around and an easy pace now. I was not in shape and I had thought 8 miles one way was 'too far'. Those were excuses. After the first ride, seeing that I could do it, there was no going back. Miss Frugal Beard (MFB) is now cycling as well and loving it.

I've been riding to work for 9 months now and I will never go back. But how does this habit actually help me towards financial independence and frugality?

Cars are Money Pits
Here's an exercise to really illustrate that a car is the most wasteful and worst purchase anyone could make. Take all of your expenses that fall anywhere into the "auto" category (you are tracking your money right?!) for a 12 month period and divide it by 12. I'm talking everything from the car payment, insurance, taxes, tags, gas, maintenance, car washes, wiper blades, tires, etc... Everything! I'm not even going to ask you to calculate depreciating asset value of your car, that'll just make you cry.

So I did this for myself shortly after I started cycling and my total monthly cost of the car was ~$580/mo! My car payment was only $281. There was an additional $300 a month being thrown at owning and operating my car. And my household had two of them! Both of our cars were costing us ~$1160/mo. That's more than our rent payment.  Beyond any reasonable doubt, cars are what you buy when you want to throw a bunch of money away and end up with an asset (if you pay it off or buy it in cash) that is worth significantly less than you bought it for. Even if you don't use it and keep it in prime condition, the value decreases.

So back to cycling: My primary mode of transport became cycling to and from work and our second car started sitting in the drive way. After talking with MFB, we decided that I had to keep cycling through the winter before we sold the second car and became a one-car household. That was a huge decision for us to make - we always had a car for each of us. So I concocted a plan. I wanted to pay off, in full, the car we were going to keep - a 2011 Ford Fiesta that averaged 34mpg combined, and then sell the other car, a 2006 Honda Element, come January.

Paying off the first car had several benefits. I saved $2,500 in interest, no longer had a $281 car payment and reduced my insurance by $100 and I no longer paid to park at work, an additional $50/mo savings. Not bad. I've now increased my monthly savings by $431 (as I still have tax, tags, gas, etc... to worry about it on that car).

Selling the second car was so so sweet, especially after the months of worrying about getting a good deal for it. We still had a loan out on this car, so I didn't want to Craigslist it, so we took it to CarMax in January and actually got a fantastic deal. There's 580 additional dollars in savings. Boom, just like that.

Remember, this was all because I started cycling to work. I have reduced my monthly expenses by $1,011. I could by a nice bicycle every month for that.

Exercise, Food, Dining
Cycling is an excellent form of exercise, but it also changes your outlook - I don't know the science behind how or why, but it does. Because we have both started cycling, neither of us need gym memberships. $30/month in savings.

We stopped going out to eat - we packed our lunches and we stopped by the grocers on the way home to pick up ingredients for a healthy meal for dinner instead of just going out ("since we're already in traffic..."). We actually crave healthier foods - we want to cook so we can get the nutrients we are now craving. My body now demands fruit and vegetables. I mentally taste them when I get hungry instead of a Bacinator from Wendys. We reduced our restaurant budget from $600 to $100! $500 in savings.

Our grocery bill spiked a little bit when we first started, but has settled on $350, an increase in $50. But that additional 50 dollars in my grocery bill saves me over $500 from going out to eat. That's a helluva trade off.

Finally, because we don't go out to eat as often, we are saving money on gas. I don't have exact numbers on this, but I'm going to estimate $25/mo - it's probably more.

In total, that is an additional $505/mo in savings. And I could reduce my grocery bill further if I shopped at Costco, Publix or Walmart, but I'm a lazy bum and shop at the Trader Joes and Harris Teeter that are close by - because I can easily cycle to them. :)

So by cycling to work that one faithful weekend on July 1st 2013 and sticking with it, I have increased my savings by an additional $1,516 A MONTH.

There are plenty of non-monetary benefits as well, from happiness, healthiness, I look better (I've lost 30 pounds!), reduced stress levels, larger temperature comfort zones because my body acclimates gradually to changing weather, and the list goes on.

But lets take the monetary piece alone and further the math. Everyone should know about the 4% rule that states you can withdrawal 4% of your total investments safely and forever. That means if I have an investment of 1,000,000 (one million) dollars, I could safely withdrawal $40,000/year indefinitely - no really, it's that simple.

The inverse of that rule is the 25x rule, which states you take your yearly living expense times 25 and that is how much you need in investments to be financially independent. Using this rule you can see how much a reduction in your expenses has actually reduced what you need to retire. By cycling to work and making the changes above because of it, I have reduced how much I need to save by $454,800!

That is, I need 454,800 dollars less in investments now in order to be financially independent because I bike to work.

It gets even better, though. Stay with me. Assuming a 7% return on investment in index funds, that $1,516/mo will grow to $251,349 over 10 years! The Double-whammy. Reduce the needed money and increase how quickly you save. Cycling.

This is why myself, and many others who are on the journey or completed the journey of financial independence cannot stress enough how important it is to get out of your cars and hop in a bike. Too far away from work? Move closer. Out of shape? HOP ON A BIKE. Don't like cycling? Try walking, public transport, rollerblading, long-boards or any other means of transport that isn't a car. Actually - how do you know how don't like cycling? Give it a try.

So stop making excuses and get cycling, you may find it's the best decision you ever made.