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

Posted by Home Morgage | Personal Finance | Tuesday 16 June 2009 11:18 pm

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.

$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.