The Big Three – Part Two: Transportation


Welcome back for Part Two!

Last post, we discussed how Food, Transportation and Shelter make up 47% of median income in Canada. This week, the focus will be on Transportation which is a whopping 14.7% or $11,909.


In the FN household, we have one car for the two of us. And it’s a real doozy…

It’s simple, efficient, and has plenty of room for the two of us. The hatchback design of this monstrosity allows for extra carrying capacity. It’s a…2012 Yaris.

We live pretty close to downtown, which is where I work. So for me, I bike to and from work everyday through 3 seasons; total distance is only about 10km per day. In the winter, I walk to and from work using a more direct route; total distance is about 5km per day.

My wife is the one who generally uses the car for work. She is a supply teacher here in Ottawa, meaning she could get a call to cover for a sick teacher that’s a short walk away, or one that’s a 30 minute drive. If she needs it, the car is there.

The Yaris is gas efficient getting about 6L per 100km with a small 106hp engine. It’s a lacklustre 4L engine but it totally gets the job done in the city with respect to engine efficiency and for parking if required. We only need to gas up twice a month on average; avoiding lineups at the pump feels fantastic, keeps the needless expenses down and is more environmentally friendly than some alternative gas guzzlers.

The hatchback design provides substantial carrying capacity. I was never a hatchback fan UNTIL we got this car. And quite honestly, I don’t know if I can go back to a non-hatchback. We’ve been able to fit full sized dressers in this thing with no problem! It is deceivingly big and has more than enough room for the two of us, a couple guests, and more.

We got ours lightly used as a previously leased car with only 18,000km on it. Overall, we pay about $475 per month on the car (including $260 on a 0% interest loan), and maybe $5 on my bike for a new tube here and there. Including general maintenance every 5,000km or so on the car, we have transportation expenses of about $6,250 a year which is about 52.5% of the average, $11,909.

My “Not so” Pro Tips on Transportation!

1. Bike or Walk whenever possible

This one speaks for itself.

  • If you’re within walking distance of work, groceries, etc. You have no excuses not to WALK.
  • If you’re within biking distance of work, groceries, etc. You have no excuses not to BIKE.

But in Canada, it’s cold in late Fall & early Spring! And with the snow in the Winter, I need to drive to work!


I know people who bike year-round. I currently bike 3 seasons at the moment and it’s extremely easy. The key? Having the right gear.

Spend money upfront on good quality proper clothing that you can layer and that are expertly designed to cut wind and insulate.

  • I’d suggest getting brands that are of decent quality (that doesn’t mean you have to search ‘bike clothing’ on Amazon and sort ‘High to Low’ by price and stick to the top 5%). Some gear you may already have, like windbreaker jackets, thin fleece, etc.
  • This gear will ideally last many years and cost you significantly less than your ongoing financial expenses for a car (gas, insurance, maintenance).
  • For biking in the late Spring, Summer and even early Fall…just use your gym clothes. Bike in shorts and a shirt that are breathable – you don’t need anything fancy here. Don’t overthink it. (I’m super lucky and my work sports a full gym with locker rooms, so I can just quickly change in there before work. If you’re not so lucky, I’m sure there are some options such as a bathroom stall, spare office, etc. Try to be creative!).

Biking or walking is also, to state the obvious, good for your health. It’s an easy way to get your cardio in as you feel the breeze and the sunshine wash over your face! Keep your heart healthy and that gut in check! It can also allow you to work out some stress from work and bring down those cortisol levels.

I’m also an advocate of living close to where you work so that you can commute through self-powered means like biking. As MMM says, if you don’t live close to where you work, you can always move closer or find closer work.

2. Reduce the number of cars you have and avoid expensive depreciating luxury transportation;

By point (1) above, if you’re now biking – you should be able to eliminate a car or two! Congratulations!

I would say for most households if you’re strategic in where you live, you can go down to one car. This is a big money move and will help you increase that savings rate tremendously.

I suspect the average Canadian household has two cars which is why the average transportation cost is outrageously high. So getting rid of one will reduce your cost by half and get you in and around $6,000 a year. You can bank the remaining $6,000 per year and have nearly an extra $129,500 by retirement (15 years at 5% real return per year).

3. Try to pay cash. If you can finance at 0% for the entirety of your contract, go for it!

Borrowing money to finance a car is obviously a terrible idea.

Think about this: Companies generally borrow money through debt or stock equity to invest in profitable projects that create value for shareholders. But YOU are borrowing money to pay for an asset (car), that does not go up in value. In fact, it goes down in value. It’s stupid, don’t do it if you can avoid it.

Pay in cash if you really need a car. Some vendors offer 0% interest for the first year of the 5 year term. If you do not have enough cash, try to negotiate 0% interest for longer, say 18 or 24 months. Also make sure you can pay more than the minimum payment every month. If you do it correctly, you could pay the car loan off within the 24-month 0% interest period and get away without taking on debt for a depreciating asset.

And it goes without saying that brand new cars is a huge no. We bought our car 3 years old with only 18,000km on it; essentially brand new. This cost us about 60% of the MSRP at the time. I’m sure you have all heard the age old “you lose 20% of the value driving it off the lot”. So let’s not even go down this rabbit hole of buying brand new and financing at any interest rate other than 0%. That may require a whole blog post on its own.


Well that’s it for Transportation. The FN household is doing pretty well in this category at about 52.5% of the average Canadian household. I’ll tie in the third part of this series next week which will cover Housing!

Stay frugal my friends and have a great week ahead!

One thought on “The Big Three – Part Two: Transportation

  1. Pingback: Study Up On: Canadian Savings & Investment Vehicles – Where To Start? | The Frugal North

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