How I Save $8,535 Per Year By Not Having a Car

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?

blue car

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.

Be Proactive

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.

Combine Trips

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.

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22 thoughts on “How I Save $8,535 Per Year By Not Having a Car”

  1. 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.

  2. 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 think that’s a pun).

    My advice– continue to hold out as long as you can!

  3. @ 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, but so far, my fiancee and I have never owned a car. We are trying to hold out, but I think its only a matter of time before we succumb to the ease. Though right now, we just can’t afford it!

  4. 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

  5. @ 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?

  6. 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. 🙂

  7. 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.

  8. 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 your insurance will be lower.

    You could look for a used car that gets better gas mileage than 24 mpg (and that is a statistic that is 5 years old). If you got a car that averaged around 30 mpg, you would save an extra $10-15/month.

    If you are driving 500 miles per month, I think the $40/mo in routine car repairs is overstated. I assume it only refers to routine because you mentioned you are putting another $50/month away for car repairs and a new car fund, which I agree with. You would need 2 oil changes throughout the year and 1 tire rotation if you only drive 6,000 miles per year. The fluids have little cost associated with them (<$10).

    Look forward to hearing about your thought process.


  9. @ 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 supposed premium to not have to deal with that hassle. And I would drive it until it did need those repairs, so that premium probably wouldn’t be that much of a premium in the long run.

    I also acknowledge that I could get a cheaper car, one that doesn’t need a lot of work, and that I could potentially be paying a whole lot less per month than the estimated $710.

    Some of your logic is a little faulty as well. I don’t know how easy it would be to find an older vehicle for less than 5k that gets significantly better gas mileage than 24MPG.

    But yes, the $40 a month for car repairs could very well be overstated. I have no idea, I’ve never owned a car. I would think that it would go towards purchasing winter tires (I live in Canada), oil changes, and anything less over would go towards car replacement.

    Thanks for challenging me on it. It’s too easy to just throw out numbers. Good to see someone is actually paying attention!

  10. 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/.....r-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 to buy a car, trying to find one owned by an elderly person! I bought mine from my grandmother – it’s in great condition, still has only 62,000 miles on it (was about 40,000 when I bought it from her) and despite being 13 years old and having lived its entire car life in Upstate New York, has very little rust on it at all! It lived most of its life before I got it in a garage, which is excellent. 🙂

  11. 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 you to not be screwed, essentially. A lot of these older cars will have more than 100,000 miles, but with only driving 6,000 miles per year they will surely last. In fact, with that limited driving, I would find a hard time justifying buying a new car.

    If you buy an expensive car, winter tires COULD run you up a bit. But, if you buy a car like a civic, the tires are a lot cheaper. Probably closer to $60-70/tire on the rim and out the door (which includes lifetime rotation in some places). I didn’t look it up, but that’s what it costs for my car which is equal in size. With the limited driving (say 4,000 of the 6,000 miles annually are done in the winter, I suspect you have longer winters?), a set of winter tires would last you for longer than the car will last. The summer tires will do the same. So one set of tires over the life of the car.

    I don’t mean to be over critical of your numbers, but it seems this article is more “How I justify not owning a car” or “How much the average over-extended consumer could save by not owning a car”

    You might actually find that owning a car would be beneficial. If it takes you an extra 2 hours each time you want to go do something like eat at a restaurant… how much do you value your time?

    Take a $5,000 car. Over 3 years, $140 month. $83 month if I stretch it over 5 years, but I will go with the higher number. Insurance is cheaper, $90 month. You get 30 mpg+, $40 month. Maintenance, misc costs, and car savings, $50 month. TOTAL: $320/month. Even if I bump that up a lot for unexpected costs, say… $400 month… that comes in at 56% of your estimation.

    Cars are expensive. But they don’t have to be.

  12. @ 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 to my numbers. I definitely agree. There are alternatives. But the alternatives come with a greater risk, a risk that at this point in time, I personally am not willing to take. I’d rather buy newer, pay more, and get a warranty and peace of mind.

  13. 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.

  14. 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.

  15. 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:


    That calculation includes financing, insurance, repairs, fuel, taxes and even the opportunity cost of your money.

    But no matter how you figure the costs and how accurate the estimate is, the point is still valid. Spending $8,500 or $5,600 or just $2000 a year on a car is a lot of money.

  16. 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 basically calculating the cost of two cars. The $50 would be more appropriate for the repairs then, although it seems a bit high to me when you take into account the early years of minimal repairs and the fact that you designated separate money for routine maintenance. You really have to average the costs over the vehicle’s lifespan.

  17. 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 does that car cost? Did you actually call an insurance agent and get a hypothetical quote? It is a fallacy to say you are “saving” this money. What you actually save is what you would actually spend. (A good personal finance rule to remember when shopping sales, by the way.)

    As I think was pointed out earlier – and might be an interesting exercise for you – have you ever added up how many hours a week you “pay” by not owning a car? What is the value of that time? Did you deduct from your numbers how much you spend on bus passes and other expenses you have as a result of not owning a car? And the lost opportunity costs – not being able to easily buy bulk at the store and such? And the goodwill of friends? Do you reimburse them for their car expenses or trade them somehow? How much does it cost you to not own a car? How much is your life limited by it? All of these things should be a part of your equation. Boldly saying you save this much is a fallacy.

    I have a system that I have followed for years and it works quite well. I buy a beater for $500 to $1000. I then plan on spending another $500 to $1000 on repairs up front. I have a mechanic do a thorough safety inspection before I buy – a compression check to ensure the engine has at least 15,000 miles of life left on it and so on. Once I find a car that is sound, I repair everything it needs right off the bat. And I am neurotic about oil changes every 3 months or 3,000 miles. (Worked in the car business for 15 years.) Right now I drive a 97 Toyota Corolla that gets 40 mpg. I paid $1200 for it 18 months ago. I put on new tires for $200. I have had about $1000 in other work on it as well. I have invested $2200 in a car that had a blue book value of $3500 when I bought it. Even though it has over 180,000 miles on it, I am expecting to drive it for another 3-5 years. I drive less than 10,000 miles a year. My insurance expense is minimal as I only have liability coverage. My total car expense is around $150 a month. For that $150 I have a four minute drive to work instead of a 30 minute walk. That extra 54 minutes a day with my family is a valuable investment to me.

  18. 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 help you with going to the grocery store or running errands when necessary, because everything becomes so much more of a hassle when you have to take public transportation.

    Of course, it also depends where you live. City life is much easier without a car, but try living in a smaller town or rural area, where a car is necessary to travel anywhere and no public transportation is available. You’re literally trapped without a car.

    The worst thing is probably that it takes away your spontaneity, like you can’t just jump in your car and travel someplace easily, or even just shoot across town at the last minute, because you are always depending on a ride, so that’s a little disheartening sometimes.

    You really need to develop patience as well when using the public transportation systems, because you’ll be standing around on a lot of corners waiting for buses that never seem to be on schedule.

    It’s a good lesson for life in that way I suppose, that nothing happens according to your own schedule, and in the end, some things probably weren’t worth the wait, even though we still needed to get there somehow.

  19. 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 spending less than $500/month altogether my grocery, rent sharing and commutes. That was the best time of my life. It remained up to 18 months.

    But then I came to CA Fremont where I lived only 3 months without car but here I had no options to go for work on buses too late sometimes wasting of time. Then I bought 92 model Ford Taurus which ran up to ten thousand miles and then Engine was gone. So I took that to the repair shop who advised me to dump that car and got a new one like Toyota or Honda. So I bought used civic which ran great up to 2007. May be it was costly but I enjoyed that car. Now I have one used Hyundai accent 2002 salvage which I bought for $2,600 + $1,400 transmission + door glasses and repair400= total 4400/- which is running good. I also bought a Honda Accord Coupe Ex-L black with Alloy wheels and auto start functions. Which was my choice for my son. I paid $0 down and no expenses of oil change up to five years. no tyre expenses up to 5 years and paying installments $615 per month + insurance $50 per month.

    I loved to buy new car because whenever I bought old ones I paid lot for repair and maintenance and always scared to take for long drive. I will suggest to buy now a days new cars because government is paying clunkers money.

  20. 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 that might not be 8k like the author posted; but let’s think about it. If I didn’t have a car then that’s 4k a year in savings.

    I looked into this because I’m considering moving to NYC which is uber expensive but not owning a car almost balances out the costs of living in NYC with MA.

  21. @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.

  22. 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.

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