I’ve never owned a vehicle. It’s awfully inconvenient to not be able to drive around. My commute takes twice as long via bus than if I were to drive. Going to grocery store is a pain, and I have to align buying toilet paper with the generosity of friends. Going out for dinner with my fiancée can take an extra 2 hours just to factor in the time it takes to walk to the bus stop, wait, take the bus, go to the restaurant, figure out when the next bus comes, bus home, etc. But how much am I willing to pay for the convenience of having a car? Would I pay $8,535/year?
Photo by mzacha from stock.xchng
How Much Would a Car Cost Me?
First, I would have to buy a car. If I were to finance a car (most likely), I would be paying a large monthly fee. According to Money Central at MSN.com, the average car payment is $479. WikiAnswers puts it between $380 and 460. Finally quoting NADA.com, No Car Credit puts it at $400. That averages out to about $430. Let’s say that I’m a little more frugal than the average consumer, my monthly car payment could be about $350.
Of course, that’s only the beginning of the expenses I would incur with a car. What about gas? I did a little research, and according to Daily Fuel Economy Tip the average new car fuel economy in 2004 was 24 MPG. The current average gas price in the states is $2.624/gallon, per ABC News. My daily commute would be 8.9 miles, so a monthly commuting distance of 356 miles. I could easily round that up to 500 miles/month for trips to the grocery store, visiting friends, etc. That’s a monthly cost of about $55, at best.
How much would insurance cost? $817-937 according to RMIIA.org, though it depends widly on which state you live in. I live in BC, Canada, where the average is around $1079 CAN, so similar to the states average. I’m less than 25 and male, so I would be paying an expensive premium, around $150/month.
What else would I be paying for? What about potential repairs? Even if the car was brand new, I ought to be putting away at least $50 a month for eventual repairs, or car replacement. I can’t forget about car maintenance either. Oil changes, tire rotation, winter tires, anti-freeze, windshield wiper fluid, etc. That’s another $40 a month. If I do choose to drive to work, I have to park downtown. At $9-15+/day, that’s at least another $180 a month — just to park.
All told, that’s $8,535/year, or $710/month for a vehicle. This can also be expressed as 79% of my housing costs, or 1/3 of my net income!
Perhaps this is just the pessimist in me. I could get a cheaper, older car, so I’d be paying less for car payments and insurance. It could be in perfect condition, and never require anything but minor maintenance. I could continue to bus to work, so I would save on parking. But even if I was saving $500 a month, I could continue to save money commuting by not having a car.
Can You Go Without a Car?
Do you think you can get to work without a car? For a lot of us, the commute to work is the largest use of our vehicle. If we can find a way to get to work without driving, we could save ourselves a lot of money. Your gas use will go down, and your insurance would as well. You’d save wear and tear on your vehicle, and you wouldn’t have to pay for parking. The only thing you give up without a vehicle is a little bit of time, and convenience.
I challenge you to check out your transit options to work. Can you take the bus? Bike? Carpool? Try it for a month. I found that when I borrowed a vehicle, going back to taking the bus was hard, because it was inconvenient. However, after a few weeks, I got used to it — and so can you. Tough it out for a month, and if it is still unbearable, I give you permission to switch back. See how much you can save for that month, and if it isn’t as bad as you thought it would be, consider keeping it up!
Not having a car isn’t for everybody. It is especially hard if you already own a vehicle, as it may seem a waste to have a perfectly good car sitting in your driveway. However, for me, saving $8.5k per year is worth it — at this stage in my life.
Some More Tips to Save Money Driving
Learn to Drive Smarter
Trent from The Simple Dollar shares his lessons in fuel efficient driving. Are you the kind of driver who’s foot is always either on the gas or the brake? Did you know that coasting is a valuable tool in fuel efficient driving? This, and other tips, are shared from Trent’s experiences with his new Prius.
Don’t try to save money by ignoring oil changes, tire rotations, and regularly schedule maintenance. Skimping on this will cost you more in the long run. In addition, prepare in advance for roadside emergencies.
Don’t make one trip to the grocery store, one trip to the bank, and one trip to pick up the kids. Combine as many errands as possible into one trip. For the most efficient course, plot it out ahead of time using Google Maps. You can add as many stops as you need to, and Google will sort out the details for you.
More Driving Tips
Still not enough? Here are 34 Ways to Save Money on Car Expenses.
Andy is a 30-something New Yorker who turned his financial life around. He took charge of his finances, got out of debt, and is now working his way toward financial success. He is the owner and publisher of WorkSaveLive.com.
My wife and I don’t own a car either. 🙂
(Granted, we live in Chicago where that’s fairly common.) We used to own one, but found that our all-in cost was around $500/month, and we were only using it 3-4 times each month. Yikes!
Now we use a car sharing program. Love it.
I applaud you! I didn’t buy my first car until I turned 30. I had borrowed one of my parents’ cars for a year and one half after I graduated college, but before I got married. When I got married, my wife had a car, which we shared for 2-3 years until we sold it after moving into NY city for six years. Then I bought the first one, leased another, bought my current, and helped my new wife buy hers. Cars are an expense, but I now live in the country and can’t get away without a car (I… Read more »
@ Mike P That’s great! There are a couple of car sharing programs here in Vancouver that I’ve tried looking into, but I don’t know if they’re quite worth it yet. For the most part, we just want a car to get to/from one evening activity, so it doesn’t seem like it’d be worth the cost. How have you found the pricing in Chicago? @DDFD Thank you! When I left for college I was told that the longer I can go without a car, the better off I will be. I’ve borrowed a vehicle for a summer here and there,… Read more »
I currently own a car….but after the wedding we be without a car…although we could afford it we rather save the funds and pay off some student debts left
@ Ray Ah, student loans. That’s why we would struggle to afford a car too. Our priority is to eliminate a significant amount of our student loan debt first, and then we might have the option of considering a car.
Good luck making the transition to car-less! It’s a difficult one, for sure. Do you have good transit where you live? Are you going to bike?
Regarding pricing of car sharing: The program we use (iGoCars.org) is only available in Chicago. The pricing is $50/yr for a membership. Then $8/hour to rent a car. They have 4 cars within 3 blocks of us, so there’s almost always one available when we need it.
We still take the train almost everywhere. But for those times when you do need a car, $8/hour is a lot less than $500/month. 🙂
I haven’t had a car in about 4 years. I commute to work on the bus and subway, and when I need a car (about twice a week now that my son has mandatory weekly doctor appointments with providers who are not close enough to each other to get to on time via bus), I use Zipcar (car sharing). I pay about $150 a month, and the car is $6.30 per hour. Once the doctor’s appointments get less frequent, I can step down my usage again.
I think a lot of the premises this article goes off of are faulty. Your title leads me to believe we are talking about YOUR circumstances (how YOU save $8,535/year not owning a car). But then you start talking about averages. Would YOU buy a brand new car? Just because the average person does and has a huge car payment doesn’t mean YOU would, right? In reality, you could find a car that runs OK for $5,000 (even less if you tried). Over 3 years that amounts to $1,667/year or $138/month. By getting a less expensive car without a loan… Read more »
@ MLR I don’t own a vehicle, I never have. So I can’t say how much I would save by getting rid of a vehicle, I have to take averages and make estimates from there. If you will notice, I often referred the averages, but then made an estimate based on what I would save. For example, the average car monthly payment would be about $430, but I said mine could be around $350. And yes, I would probably buy a new car (or very late model used) because I hate maintenance and car repairs, and would rather pay a… Read more »
I started wondering about this last summer, when I was commuting every day for my summer job. I ran a cost analysis on it, and even though it was during the time of high prices, taking the bus would have only saved me about $40/month, and would have added 3 hours per day to my commute. I wrote about that on my site: http://poorerthanyou.com/2008/07/16/saving-money-on-driving-one-way-or-another/ Of course, one thing to keep in mind is that I bought my car for $2000 back in November of 2006, and it’s completely paid off and paid for. I definitely recommend, if you ever decide… Read more »
You can buy a new car and have just as many car repairs as if you buy a used car. And my logic isn’t faulty… a early 2000’s Honda Civic averages 31 city and 38 highway (worst model) to 35 city and 42 highway (best model). Do a search on Autotrader in a zip code near you and you will probably find at least a few models under $5,000 (I did it for two zip codes I have lived in and was successful). Versus a $350 month car payment, you only need the $5,000 car to last 14 months for… Read more »
@ MLR. I think what it comes down to is the difference between buying new vs used. In my experience, what I grew up with, what I’ve seen over the last couple of years, buying used can get you into trouble. I’ve seen too many people get a “good deal” and then end up having to dump another couple of thousand dollars into repairs. So yes, buying, owning, using a car does not have to be expensive. But it most definitely can be. From what I can see, you’re not arguing my numbers. You’re arguing that there is an alternative… Read more »
I have had cars and I currently don’t have a car and I know I’m saving money on gas and insurance. I use the public transport and I walk everywhere. It’s good for me because I’m exercising and leads to savings because I’m not dumping money into a vehicle. It is definitely inconvenient sometimes, though.
My wife and I went down to just one car for several years. We were both working out of our home most of the time, but did have to plan for days when we both had meetings. So we finally bought a 1996 BMW 3 series (currently worth about $4-5000) that looks like new and runs great. Insurance is cheap and we never have maintenance problems. The point is, you can definitely find a cheap, quality car without spending a lot.
Doing without a car is a great way to save money if its a practical option. I do think the $8k figure is high. The average American household spends around $8,500 annually and has 1.9 cars. (ref: http://www.bls.gov/cex/csxann07.pdf So you’re figuring spending about double what average Americans do. But then if you’re in Canada maybe the exchange rate and expenses will differ some too. You can buy a new Honda Civic coupe for around $15,000 which would have a total cost of ownership of about $28k for 5 years. That’s $5,600 a year: http://autos.yahoo.com/honda/civic-coupe/2009/dx-5-spd-mt/cost.html That calculation includes financing, insurance, repairs,… Read more »
There seems to be a hole in this. You’re using the car loan payment. That assumes that you will always have a car payment. Or in other words, buy a new car, pay it off, and immediately sell it and buy a new one. It would be more accurate to divide the cost of car by the length of time you’d likely keep it. So a $20k car kept for 10 years only costs $167/month. Of course, since you’re financing, you’d want to include the interest as well. Also, if you add in savings to replace the current car, you’re… Read more »
I know this article is older but I just read it and I strongly disagree with your numbers. IF someone is financially foolish or very secure financially they MIGHT spend $8500 a year on a car but that is not necessary. I’m sorry, but I consider this piece sensational writing – exaggerating to make a point. IF you were to actually buy a car, would you spend 1/3 of your net income on it? I doubt it. How much would you actually spend? Have you ever seriously considered buying a car? What kind of car would you buy? How much… Read more »
I haven’t had a car in about 5 years. It’s definitely an inconvenience in certain situations, but if you work your lifestyle out around the fact that you don’t have a car, it does have its advantages financially and personally. For instance, I used to commute to work by bus everyday (3 buses to be exact), and it took me about 2-3 hours (no kidding!), but now I’ve worked it out with my job and I am able to work from home, so I’ve eliminated that problem. It’s also a much easier situation if you have a friend that can… Read more »
I am so excited to read the article then started reading the views of the people. I am come to a point that those who want to buy a new car are just dumping money into the gutters. But those who are lucky ones got used cars like Honda Toyota (maximum average of miles per gallon). When I was living in New York I was working in Manhattan and used to go from Jackson Heights on the subway trains. Which cost me only 67$ per month and transfers were available to the buses. I enjoyed that time I was only… Read more »
I know the forum is old but I was just looking into selling my car. I didn’t do exact costs. I actually rounded down but I’ll show you what I spend without my car payment. I live in MA Gas per year = 2400.00 Car insurance = 1200.00 Oil changes – 120.00 Tolls – 50.00 Maintenance – 200.00 Car inspection – 30.00 Car tax – 50.00 This is being generous. I actually own a new corvette and I didn’t add those prices into it. These are the prices for my 1994 GEO Prizm. It’s easily 4k a year. I know… Read more »
@Michael – If you are going to live in Manhattan, you don’t really need a car. It’s far cheaper and better to live without one. If you’re going to be in the outer borough, then it might make sense to have a car — but it really depends on what you’ll be doing there.
For me having a car is essential as I have to drive 45 minutes to work, however I love some of the ideas you shared about improving driving habits in order to maximise fuel efficiency. I would also add that it’s worth removing heavy unwanted items from your vehicle, which can increase the weight of your car and thus cost most in fuel, due to drag.