Serious About Savings? Get Rid of your Car

Two weeks ago marked the 5-year anniversary of my wife and going from two vehicles to one.

Up until a month or so prior, the thought of doing so had not received serious consideration. Like many, years upon years of billions of dollars of automobile advertising and 2-3 cars in every driveway led me to believe that every adult has a need for, if not a right, to a vehicle.

As soon as I was old enough to drive, I wanted to throw my life savings towards a car, like just about every other high-schooler. The “cool” kids had cars, the “un-cool” kids did not. Picking up a girl for a date in your parents minivan? Not cool. So I saved up from my jobs as a pancake house busboy and grocery store checkout bagger (do these even exist anymore?) and threw it all towards an ugly, run-down Pontiac Lemans that didn’t have much life left in it. But who cares, I was mobile! It was a right of passage to adulthood. Or so I thought…

5 years after giving up a car, I haven’t looked back at all. We never have to play “musical cars” in the driveway, we’ve saved time on maintenance and cleaning, I’ve rediscovered my love for biking, I’m in much better shape and have found a good stress release in biking, and we’ve been able to easily coordinate transportation needs to the point that an occasional scheduling conflict has never had us seriously re-consider the the move.

But the best part of all has been the cost savings. In fact, I cannot think of another cost cutting measure I’ve made that has saved me more money than getting rid of a second car.

The key, for me to be able to do this, was to strategically find a home that was within 2 miles from work. With a bike, a bus line half a block away, and my feet, I have three ways to get to/from work – making it incredibly easy to make the move.

If you want to cut your transportation costs and total costs, in general, the easiest way to do it is to have less vehicles. Want to cut your housing costs? Downsize your home. Sometimes saving your money is gloriously simple.

Going from two vehicles to one will result in instant savings, even if miles driven (fuel expenses) are all consolidated to the remaining vehicle. Savings you will enjoy will include:

  • get rid of carthe monthly lease or opportunity cost of holding on to a vehicle that is paid for
  • finance charges
  • insurance costs
  • maintenance costs (even vehicles that just sit need regular maintenance)
  • cleaning costs
  • costs for additional parking space (for those in apartments or condos)
  • if you view time as money – time spent on maintenance and cleaning

You’ll have to crunch the numbers to determine how much you personally stand to save. With some back of the napkin math, we can get a rough average calculation:

  • $9,211 in total transportation costs per 2-person household
  • $2,743 of that is fuel (we’ll assume total mileage won’t change – even though it prob. will be lower)
  • $629 is public transportation (we’ll assume that won’t change)
  • If we assume every 2-person household has two cars (back of napkin, I said) and split the difference of what is left (lease/purchase price, maintenance, insurance) – the amount saved by getting rid of second cars would be $2,919 per year, or $243 monthly.

I think that number is actually on the low side. I personally saved about $5,000 annually with the move. That was a pretty big price to pay considering the lifestyle benefit to owning the car was actually negative, not positive.

Speaking of lifestyle, what if you don’t live in a 2-person household and getting rid of a vehicle means you are left without one entirely?

It seems like this is easier than ever to do these days.

More and more professionals want to live closer to urban centers to be closer to their jobs and other downtown amenities. 2010 Census data showed that in 33 of the nations largest 51 cities, urban center population growth is outpacing suburban population growth. Being close to your job makes self-powered commuting much easier.

Public transportation has experienced a resurgence in recent years. 2008 and 2012 marked the first and second highest mass transit ridership year in the last 5 decades (10.5 billion trips in 2012). More ridership leads to increased services.

And when you absolutely need a car? Zipcar is making it easier than ever to get a vehicle nearby, Enterprise will pick you up, and a number of websites focused on peer-to-peer local car sharing are popping up.

It’s not even “cool” to have a car anymore. Just look to the kids on this one. The University of Michigan’s Transportation Research Institute found: “About 87 percent of 19-year-olds in 1983 had their licenses, but 25 years later, that percentage had dropped to about 75 percent. Other teen driving groups have also declined: 18-year-olds fell from 80 percent in 1983 to 65 percent in 2008, 17-year-olds decreased from 69 percent to 50 percent, and 16-year-olds slipped from 46 percent to 31 percent.”

Saving money to fuel your financial independence, on the other hand? That sounds pretty damn cool to me.

Getting Rid of a Car Discussion:

  • Have you gone from 2 cars to 1 or from 1 to zero? Share your story and how much you’ve saved.
  • If you’ve considered downsizing your vehicle fleet but haven’t made the move, what has held you back?

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