We are now saving (on a monthly basis):
$35 on car insurance
$30 on gas
$25 on car maintenance
$30 on gym a membership
-----------------------------
$120 per month savings
That is close to $1,500 on an annual basis.
Biking is not free. There are some start-up and on-going costs associated with the car-free life, but they are much less than feeding and maintaining a vehicle. I used the money from selling our 2nd car to cover all of the start-up costs. The start-up costs for me included:
a bike (or two)
I would recommend NOT purchasing a commuting bike from a big-box discount store. These are definitely cheap (in more than one way) and can serve a purpose as an occasional use bike. The reason these bikes are cheap is because they are made cheaply with poor quality parts. A good used bike from craigslist or a new bike from a local bike shop will last much longer and give you a more reliable mode of transport.
riding clothes
depending on your level of effort and commitment, this could be a lot or a little money. I chose the "a lot" category since I ride every day in any condition. I have already described my winter gear; I also have rain gear and some specialized bags that attach to my bike rack (called panniers) to carry extra clothes for hot and/or wet days. These are not necessary for part-time riding, but I feel they are required for all-weather riding.
a new wardrobe
I am down 3" on my waist and two shirt sizes after losing close to 40 pounds. I have put away (hopefully forever) my fat clothes.
There are some minor recurring costs associated with biking. I take my bike in for maintenance as needed. I am learning to do my own bike maintenance slowly, but for now I consider money spent at the bike shop for maintenance to be well worth it.
My wife claims that I am consuming all of our monthly savings in the form of food since our grocery budget is much higher now. I believe most of the excess cost for food is due to the better quality, and not necessarily the extra quantity.
So, if you are trying to pinch pennies, biking might be a good way to do it. Granted, exchanging a car for a bike is a bit extreme, but you could keep the car and add a bike. Replacing a couple car trips with bike trips a week could save you hundreds over the course of a year.
Here is a random picture to reward those who suffered through my ramblings. Our winter wonderland in Iowa.