Stephen Nellis rides to work.


Stephen Nellis rides to work.

How to Make a Million

Ride Your Bike to Work!

Monday, August 18, 2014
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Most people know that a bicycle can improve your sex life and help save the planet. But aside from the health and environmental benefits, a bike can also make you rich.

Forgoing four wheels for two on your daily commute can easily rack up $1 million over the course of a career. And even if you can’t give up the car-based life completely, replacing car miles with bike miles can save you hundreds of thousands of dollars. That can go directly to easing college tuition bills for your children or boosting your retirement plan. Whether your post-career ideal involves rewarding but less remunerative work for a good cause or retreating to a warm beach with umbrellas in your drink, a bike will get you there faster than a car.

Before we start going through the numbers on how to unlock your inner millionaire by pedaling, a few notes on who this column is geared toward: I’m assuming you make enough money to have a choice about whether to drive or bike to work and some choice in how close to work you live. I’m assuming you’re in good enough health to operate a bicycle on a regular basis. And I’m assuming you live in Santa Barbara, where the weather and geography are amenable to year-round biking.

If you meet all three criteria, you are truly lucky and enjoy an enormous degree of privilege compared with 99.9 percent of the world. My job here is to help you count not only your blessings but also your Benjamins.

To understand the financial power of the bicycle, you must first understand the staggering true financial cost of car ownership. Economists and financial news outlets fixate on car sales because, aside from a house, a car is the biggest purchase that most Americans will make. And it’s hard to find any kind of a purchase where the consumer gets screwed harder.

Before the recession hit, the average consumer bought 13 new cars over the course of a lifetime, a figure that dipped with the downturn but is likely on the rise again. So let’s look at what that might cost for a modest, plain-vanilla vehicle, the good old Honda Accord.

The base price for a 2014 Honda Accord is $21,955. Sales taxes and registration add $1,968. If you get a five-year loan at 3 percent interest, that leaves a monthly payment of $423.47.

That’s just the start. Because that car is financed, you’ll need full-coverage car insurance. At one prominent online-only insurer that begins with a “P,” I got a quote for $92 a month for a male, 30-year-old driver. The monthly cost of owning a car just went up: $515.47.

Now, gas. The U.S. EPA estimates that the average car is driven 11,318 miles per year. (That number dipped during the recession, but again, historical data suggest that it will rise once wages and employment recover.) The Honda Accord LX with an automatic transmission gets a combined city-highway fuel economy of 30 miles per gallon. Over a year, that’s 377.3 gallons of gasoline. At the average gas price of $4.09 (at the time of writing), that’s $1,543.02 per year, an average monthly cost of $128.59. The monthly cost of owning a car just went up again: $644.06.

So over the course of five years, that “modest” Honda Accord actually cost $38,643.60 in total. (I’m excluding DMV registration fees here because some people write off a portion of them during tax season.)

The average consumer who goes through this ridiculous rigmarole 13 times will end up shelling out $502,366.80 in 2014 dollars. That’s half-a-million dollars of your money that are working against your wallet, working against the planet, and working against your derriere by coddling it all the way to work every day. That’s half-a-million dollars you’re sending to an environmentally destructive manufacturing industry and the Wall Street banks. Let’s see what happens if you bike to work instead and put that money to work for you.

If you took the $644 a month you pay for a car and put into an investment vehicle that earns a modest 5.5 percent interest compounded yearly, after 40 years you’d have $1 million. And 5.5 percent interest is relatively modest. You might hear people yelling about 11 and 12 percent returns on CNBC, and it’s true that you should be skeptical — the talking heads are leaving out a lot of asterisks. But even with all the necessary handicaps, the inflation-adjusted, annualized compound annual growth rate of the S&P 500 over the past 40 years has been about 6.7 percent.

Now let’s be more realistic. If you go car free, you’re still going to have some costs. Let’s factor in $200 a year for bicycle tune-ups at one of our great local bike shops. And let’s factor in $300 a year of cab rides or rental cars for those times you just can’t escape the need for four wheels. Over a 40-year period, you’ll still earn $986,847. Perhaps your workplace has no showers and you need to rent a locker and shower at a gym nearby for $50 a month? You’re still $904,884 in the black.

Now let’s say that you can’t give up your car and can’t get around financing a car. If you can use your bike to keep each car twice as long over a 40-year period, then you can still make a cool $493,428 by retirement age.

Now let’s get really realistic. Say you can’t avoid buying a car, and say you’ve got kids. Well, if you can save a modest $200 a month in your family by riding bikes, that adds up to $70,757 over the course of 18 years. That’s a free college education. And saving $200 a month – which is practically just gas savings alone – over just 10 years will net you $30,902. For many people, that equals retiring a year early.

After ditching your car, your biggest problem will be how to invest all the money you’re saving. Perhaps becoming a millionaire through the stock market isn’t your style. No problem: There are a range of alternative investments, from peer-to-peer lending to microloans to the developing world. Or you could donate to your favorite cause. The idea is to divert your monthly dollars away from the big automakers and the Wall Street banks and put it to work however you choose. All it takes is a bike.


Independent Discussion Guidelines

This is soo great... Don't forget all the damage that the pursuit of oil does to the environment, and the geopolitical mayhem it begets... And, how much to we spend on these freeways? The bicycle an old invention, may provide at least one of the many smart ways forward. The automobile(or at least the internal combustion engine) is not it.

BondJamesBond (anonymous profile)
August 18, 2014 at 8:06 a.m. (Suggest removal)

Excellent. That makes a lot of dollars and sense.

The potential for a lifelong reduction in health care costs and increase in quality of life is there also (the sex part was covered). From a financial viewpoint that's partly offset by a need to save more for retirement due to longer lifespan, but still a win.

EastBeach (anonymous profile)
August 18, 2014 at 9:01 a.m. (Suggest removal)

Go car-free forever? What if you need to take a trip? Buy groceries? Move a piece of furniture? Not owning a car in Santa Barbara can be a major inconvenience. One could probably get away with it in Manhattan, IF you can afford to live there.

Botany (anonymous profile)
August 18, 2014 at 9:11 a.m. (Suggest removal)

How do you evacuate in case of a fire? How do city housing projects that limit resident parking evacuate in case of a fire? Is there a Plan B for bikers in case of a fire.

JarvisJarvis (anonymous profile)
August 18, 2014 at 9:56 a.m. (Suggest removal)

Unfortunately this just isn't practical for most Californians until there's a major transportation infrastructure change. In addition not everyone can ride a bike.

Ken_Volok (anonymous profile)
August 18, 2014 at 10:06 a.m. (Suggest removal)

Your going to need a million dollars to pay all those medical bills after a car plows into you.

The density and over-development of our area has taken away the choices of whether to walk or ride a bike to school and work.

There's a reason parents don't let there kids walk or ride their bikes to school anymore.

Georgy (anonymous profile)
August 18, 2014 at 10:57 a.m. (Suggest removal)

Mr. Nellis needs a "Wide Load" sign on his bike when riding down the street.

remcprmarketing (anonymous profile)
August 18, 2014 at 11:37 a.m. (Suggest removal)

Groceries are easy with baskets and trailers. Most people people aren't able to move furniture with there cars; I rent a truck when I move.

It is straightforward to ride a bike away from a fire, don't see the problem there.

Trips… well, there is a train, bus, and plane system. I often rent a car when on a trip anyway.

Darn few cyclists are car free. Being car free is a limiting case. But the 20% of car drivers who both cycle and drive are far more careful in their driving around cyclists on the road, that is for sure.

The only problem with cycling are the careless drivers, like Ernesto Botello, who killed 12-year old Jake Boysel. We need much more reliable penalties for drivers who kill cyclists when the cyclists were doing everything legally. Like a $50,000 fine (or seizure of assets) and a mandatory 10 year sentence in the penitentiary. Killing people is way more serious than selling cocaine, or 3-strikes offenses, which have mandatory sentences. Botello got off scot-free; there is no deterrent for killing cyclists right now.

sevendolphins (anonymous profile)
August 18, 2014 at 2:04 p.m. (Suggest removal)

BIke riding drives down your sperm count, well if you are male, so we can have more unprotected sex without fertilization...
Agree however that folks that both drive and bike tend to be more cautious. I find bike only fanatics to be obnoxious and sanctimonious beyond belief.

nomoresanity (anonymous profile)
August 18, 2014 at 2:19 p.m. (Suggest removal)

The paradox is that while we are being hammered with the idea that cars are bad, bikes are good, the local economy has forced many of us who work in Santa Barbara to leave Santa Barbara and it will only get worse.

Only when the powers-that-be create an economy where the working-class can actually *live* in Santa Barbara and not live in third-world conditions (if at all) despite working their fingers to the bone while the "Green" crowd toasts each other with their bike/wine/Yuppie culture will the anti-car movement be able to be taken seriously.

billclausen (anonymous profile)
August 18, 2014 at 3:30 p.m. (Suggest removal)

The reason Mr. Nellis rides his bike to work is that he can't afford gas. I've seen him pushing his car around town. He's been looking for another job for years and won't be able to find one ...

remcprmarketing (anonymous profile)
August 18, 2014 at 5:32 p.m. (Suggest removal)

Why the animosity towards this guy remcprmarketing? Is he a better marketer than you? Most critical commentators raise valid issues, you only offer cheap personal attacks that aren't even funny.
How's that "fuelbox" coming along for you?

Ken_Volok (anonymous profile)
August 18, 2014 at 5:41 p.m. (Suggest removal)

Did anyone mention the Motorcycle or the Electric/Hybrid? There are other modes of transportation that gives you a break, also the constant care and maintenance to keep your four wheels running or a different brand other than Honda, Hyundai/Kia or Suzuki makes very low gas high mileage vehicles or the Electric cars coming out provide incentives. A Bike is great, don't get me wrong and I support a Bike in Santa Barbara but I live in a Death Zone, called DC where riding a bike can and will get you killed, walking will get you shot and taking the Bus or Train is like owning a car anyway so NO great Transport Infrastructure makes it any better not too mention living in the biggest Target zone for Terrorist Attack. Now if I lived in Santa Barbara, I would ride to work if I could find work in my field and still survive the high cost of living there but I can't so I have to work with what I have (or Not!). In the next few days I will be boarding a plane for the Great Sand Box to earn my Government Contractor pay in blood-money at the expense of human lives, the environment is the least of my thoughts (surviving Allah's Fighters come first).
This Story is a great feel good writing but there so many items left out variables left out that it was just entertaining...

dou4now (anonymous profile)
August 18, 2014 at 6:33 p.m. (Suggest removal)

Hey Ken: This guy this guy is a fraud. Until a short while ago, he never rode a bike or walked. Now that he can't find another job,he has to ride one. He gives new meaning to the word "hippodrome," since he's about 25 pounds overweight. Beware of bike riders claiming know more than they really do. I like bikes, but walking is better. You see more. After driving too many cars for too many years, walking in SB makes sense.
And, BTW Ken, get a life ...

remcprmarketing (anonymous profile)
August 18, 2014 at 9:37 p.m. (Suggest removal)

@Remcp(F*&k it, too many letters)
We prefer swimming. Ken is on probabation for the mass murder of some previous bloggers who insulted him like U R doing. (He avoided the death penalty with an insanity plea, coupled with running around naked in the courtroom spitting coins out his mouth at the jury--thus convincing them he really was insane) clausen has been widely rumoured to weigh over 400 pounds and the last time they put him on a bike, the tires burst under his immense weight. Sevendolphins is ok, but only half as effective as us, and botany is a practicing Amish who travels everywhere by horse and buggy--complete with a top hat and coattails.

dolphinpod14 (anonymous profile)
August 19, 2014 at 4:18 a.m. (Suggest removal)

So many riders at the fiesta ride we weren't even noticed, even though we wore our sparkly saltwater containment suits.

eleventysevendolphins (anonymous profile)
August 19, 2014 at 7:38 a.m. (Suggest removal)

Obviously many commenters didn't read this article completely. The author also covers the scenario where you *do* own a car but keep it for more than 5 years by mixing in some biking. You still come out ahead financially.

Anti-car? Obviously not considering the author says he recognizes not everyone can be car-free - he clearly reinforces that in the preface to his piece. And it's not like he's making any demands of you. He's merely crunching some numbers and thinking outside the box.

It's funny how many people are so thin-skinned as to be intimidated by a commuter on a bicycle with an interesting financial analysis.

EastBeach (anonymous profile)
August 20, 2014 at 12:38 a.m. (Suggest removal)

Brilliant! The bicycle is timeless -- it will always be an amazing, cheap, healthy, fun and efficient way to get around. The ultimate equalizer. I think that for many people, biking still remains some weird eco-groovy alternative, but it can truly save you a ton of money as this column smartly points out. Bravo for a fresh take on the many benefits of bicycling. I'm biking my way to a million bucks daily.

(Sidenote to the Indie editors: There are some pretty nasty ad hominem comments on here by somebody who clearly has personal issues. How about moderating?)

sunflower99 (anonymous profile)
August 21, 2014 at 4:08 p.m. (Suggest removal)

Sunflower: It's better to have an open forum because when one makes a comment that offends, others can counter that comment with truth--assuming the they have truth on their side.

I find Rc's comments amusing.

billclausen (anonymous profile)
August 21, 2014 at 5:09 p.m. (Suggest removal)

Personal insults have absolutely no place in intelligent discussion. It's the online version of graffiti ... Actually more like scrawling on the bathroom wall.

(Per the Indie's discussion policy:

"The following types of comments are not welcome here, and may be pulled or blocked without warning or explanation:
- comments that include personal attacks on writers or other participants in these forums;")

sunflower99 (anonymous profile)
August 21, 2014 at 8:14 p.m. (Suggest removal)

I can see your point re online graffiti, sunflower, and remcprmarketing violates, BUT there's plenty worse on these threads, e.g. next door on the Casa de la Raza article see posts by TheTruthShallSetYouFree [August 21, 2014 at 5:51 p.m.] -- YES to the Indie's more out there and OPEN zones for free discussion, even with the omnipresent trolls, the racists, anti-Semites, noe-luddites, falseflag freaks... and thank god for dolphinpod14, who skewers all mercilessly and with irony and humor. Sigh, sunflower, I've complained too, but in the end the looser policy here is better.

DavyBrown (anonymous profile)
August 22, 2014 at 6:43 a.m. (Suggest removal)

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