In my last post, I mentioned that I’ve only driven my car 10,000 miles in the last three years. A reader asked whether I’d considered getting rid of the car all together, and I thought that our conversation deserved its own post, in case some people had missed it in the comments section. This was my response to Henry:
“You bring up a good point, and getting rid of my car is something I’ve considered. However, I can’t see a way that it would make sense, financially or practically. Pretty much the only time I need to use it is when I go to the city about ten miles from here. We’ve tried riding our bikes in there, but the only roads into town are fast, with small shoulders, and we just don’t feel comfortable on them. There is no public transportation between here and there. And there are no places to rent a car in our town. I wouldn’t feel comfortable borrowing a neighbor’s car – we know our neighbors well enough to say hi and chat for a while, but borrowing someone’s car (for me anyway) would require a lot closer relationship than that.
I did the math a while back about how much my car is costing us. I always average at least 32 mpg, city and highway combined. If we were to borrow or rent a car for the 3000 miles I drive each year, we’d still have to pay for that gas (and there’s no public transportation here, so that’s not an option). I pay $250/year for insurance, and $65/year for registration. And in the seven plus years that we’ve owned my car, we’ve spent less than $1500 total in maintenance (including a new windshield, as the original one was cracked when we bought the car). So my car is costing us just over $500/year plus gasoline costs. (We paid $2300 cash for the car in 2003, so there has never been any monthly cost associated with buying the car).
It’s hard to see how we could get rid of the car and come up with an alternative way of getting around when we need to leave our town, that would cost less than $500/year. I’ve read that the average American spends something like $8000/year on a car, and in that case, I’m sure there are much more financially practical options. But I’d say I’m on the low end of the scale in terms of transportation costs, and there just aren’t that many other alternatives in a town with no car sharing program, no rental places, and no public transportation.”
Henry replied with a perspective about how much his own car used to cost, living in Europe, and how much better his life is now that he no longer has the car (a common theme that I hear quite a bit from other car-free folks):
“I keep forgetting just how cheap cars are to run in the US. I don’t know whether this makes you all very lucky or very unlucky. The maths you gave would be quickly dismissed as hopelessly naïve and the worst kind of wishful thinking in Europe. $500 a year!! I live in Austria – let me share my equivalent calculations for the car I used to have (2005 VW Sharan). The car was €23,000 when I bought it back in 2007. Since then it depreciated to €15,000 when I sold it a few months ago. I averaged 7 litres per 100km (Google says that’s 33.6 mpg in your language) and drove about 15,000 mostly unnecessary kilometres annually. At €1.20/litre (very approx. $6.50/gallon) that’s quite expensive. Because we had a small knock a couple of years back, our insurance was €1,712 (not a typo!) last year. I have averaged about €1,200 in annual servicing costs and for things like new winter tyres and a new air conditioning system. We also have motorway vignettes, annual parking fees in our town, etc.
The thing is, although I’m not exactly rich, I could afford it easily, so never questioned whether it represented value for money. When I started taking my finances by the scruff of the neck earlier this year, I was shocked at how much it cost to run – the best part of €8,000 a year! I knew cars were expensive, but I didn’t realise that it was such a drain on me. To top it all off, most of the driving I was doing was to out of town clients so that I could earn enough money to pay for the car. The money I was making by going out to them almost exactly balanced the cost of the car. I got rid of the car and the clients and am in the same shape financially, even when the cost of the occasional taxi or car hire is included. This means I now have time to play football (soccer) in the park with my kids and I also have one less thing in my life to worry about. I love how liberating it is to get rid of stuff.
Sounds like there might be a business opportunity for a start-up car sharing business in your community. ?”
Henry’s experience with owning a car sounds a lot more like the average costs here in the US than my own experience (except for the gasoline cost – I’ve always thought that if the US were to catch up with the rest of the world in terms of the price of gasoline, there would be a lot less driving here). The main reason my insurance and registration are so low is because my car is 19 years old. Registration fees are based on the value of the vehicle, so if I had a $25,000 car, I would be paying a lot more to register it each year. And because my car is worth so little, I only carry liability insurance. I have lots of liability insurance, as that’s not something I feel is worth scrimping on – if I ever need it, I want to be sure that there’s plenty of it there. But there’s no need to pay to insure against damage to my own car, as the cost of the insurance would quickly exceed the value of the car. One thing that I’ve done to keep my insurance costs as low as possible is to be a very careful driver. I’ve never had a ticket in my life, which helps quite a bit. We also have our liability umbrella policy and our homeowners policy with the same company that insures our cars, and that gives us a 15% discount.
I have been very fortunate in terms of how few problems my car has had over the years. It’s a Honda, and I’m convinced that they build very good cars. But a huge part of it has to do with how little I drive. If you only drive 3000 – 4000 miles per year, it makes sense that your car will last three times as long as one that is driven 12,000 miles per year.
I did seriously think about selling my car earlier this summer. We would still have my husband’s car (a 20 year old Audi that has similar maintenance, insurance, and registration costs as my car), but his has far less room in it for things like the dog and groceries. His car has about 100,000 fewer miles on it than mine though, so it wouldn’t have made sense at all to get rid of his and keep mine (even though my car has been going strong for years, it does have 221,000 miles on it, and I realize it’s not going to last forever). I checked the Blue Book value on my car, and it was about $1000. But we decided that the convenience of having the car is worth more to us than the thousand dollars would be. There’s plenty of space in our garage for my car, and there’s no issue with parking in our town (if we lived in a city where we had to pay for parking, that would sway things more in favor of getting rid of the car).
If and when we get to a point where my car needs extensive and very costly repairs, we’ll reconsider. But for now, we figure that we might as well keep it as long as it’s running well and costing us so little to insure, register, and maintain. And of course, I am always focused on how I can reduce my mileage as much as possible, and use the car only when I really need it, as opposed to every time I need to go somewhere.
What do you think? I know it’s very feasible to live without a car in a big city that has public transportation and car sharing programs, but have any of you done it while living in a small town without any of those resources? What does your car cost you each year? How high would that number have to be to convince you that the car’s not worth it?
We did also consider renting a car for long journeys and when we go on vacation. That way we would only have to pay for the use of a car once or twice a year. We aren’t sure if this is feasible or not, but it’s a possibility. Take cheap car hire in France for example: we could drive from coast to coast, through Paris, up to Nice if we wanted to – all at our own convenience – without owning a car of our own and having to pay car expenses year-round.
Thanks for taking the time to look at this issue in detail! There are two things that I think you have not factored into your calculations: Environmental impact and (financial) risk. I’m not sure what your beliefs are in terms of drowning polar bears, and as I have three children I’m in no position to preach. Let’s stick to the risks – have you factored in the potential costs of your car? Sure, car and health insurance would cover most things. How about speeding/parking tickets? How about if you were responsible for severely injuring someone in a crash? Would you still be covered if you were hit by someone who was uninsured?
I like how you have calculated the cost of your car in detail – a step everyone should take – however I think the true cost of a car is much higher when you start adding risk to the picture. I understand the counter argument – to avoid all risk stay indoors and don’t meet people (and then be killed when an asteroid lands on your roof). I’m not saying that you shouldn’t have a car because of these risks, all I’m saying is that these risks should at least be considered to understand the cost of your car.
Thanks for the post. I live in a city, love public transit and rarely use my car, but came to a similar conclusion a few years ago. My car is old and so inexpensive to maintain, but I use it for out of town weekend trips (to see family over an hour away) at least once a month. Both car rentals and car sharing would be more than twice my monthly average car cost, and even factoring in the original price, I broke even by the 3 year mark. I take transit on a daily basis and limit car use to trips that really need it for both financial and environmental reasons, but the process you describe is one I’d recommend everyone follow. I ran the numbers to see just how much I was paying for the luxury of keeping the car, and was surprised to see that (other the cutting way down on family visits), it was my least expensive option!
We spend a ridiculous amount of our budget on our vehicles, about 25%, including payment, fuel, maintenance, insurance, inspection and registrations. This is partially our choice as one of our goals is to pay off my husband’s truck within 1 year (and 2 years earlier than the loan). We live in a rural state, where affordable housing is quite far from employment (~1 hour drive, unless you want to live in a condo). Additionally, both of us have jobs that require personal transportation. My husband is a carpenter, so his truck is rather necessary. I’m an engineer, and transportation is necessary during the construction season and for client meetings, but I ride my bike to work when I can, but I am not brave enough to ride to work in the snow. Last year I think we spent $13,000 between the two vehicles.
Through some amazing set of coincidence or just plain unluck, I have an inherited knack for buying cars that are lemons. The thing is, my father knows quite a bit about cars and is close friends with the local (trustworthy) mechanic. But I can walk into a lot of brand new cars and pick the one that will turn out to be a lemon. I purchased a little toyota in high school for $5K, and paid it off within a year. This car was supposed to last me through college and for the first few years of work. The engine blew 8 months after I started college. I made do with a series of $1K-$2K value cars that averaged repair costs of $600 every 3 months while I was in college. I worked 20 hours per week for my entire college career to keep my cars on the road to be able to get to classes. (On campus housing wasn’t available to me because of dorm renovations.) So I thought, one of the first things I am going to do when I graduate is buy a newer car that I won’t go broke repairing it. So I bought a car within a few months of working at my current job. The car was checked out, good history, reliable manufacturer, affordable. And needed a new engine (fortunately covered under warranty) within the first year of purchasing the car.
My husband has purchased a toyota tacoma while I was in school, that he planned to drive into the ground, but it died too. It was part of the toyota recall a few years ago for frame rust. Ironically, it was sitting in the driveway with a broken frame (3rd time) waiting for the repair appointment, when we found out about the recall. We used the money from the recall to pay off my car, and purchased an (almost new) tacoma for him. We took stretch to buy the new truck, but he has been meticulously babying the new truck and plans to drive it into the ground. If we are able to meet our goals, we will both be driving paid off vehicles within 12 months. This will reduce our transportation costs considerably.
I was quite annoyed to notice that our insurance increased after the toyota gas pedal fiasco, for no other reason than one of our cars is a toyota.
Theresa in Mérida says
It seems to me that you need to have a car. When we lived in California it was pretty much a necessity for us too. Public transit was a joke, taxis cost $20 usd minimum! There were no grocery stores within walking distance!
Now that we live in Mérida, we go back and forth about selling our 13 year old Volvo. It’s paid for, we don’t use it that much because we live in a big city so we can walk to most things we need. We also live in a country where almost everything is delivered. It’s convenient to have a car but not necessary. Especially since we have a dog, we like to be able to take him places with us. Though the vet will do house calls here and the groomer comes to the house, so we don’t need to drive him.
Two years ago we spent about $900 usd to have it repainted and reupholstered, and our insurance runs maybe $300 usd a year. Gas here is about $9.51 mxp a liter for premium about $2.85 a gallon, magna is less but we don’t use it. We also put a liter of gas additive every 3rd tank or so.
In order to sell it we would have to drive it out of the country to either Belize or the USA, which is a long trip. We can’t nationalize it and sell it in country due to it being a non-NAFTA vehicle. Parts for our car are unavailable where we live but we haven’t needed much except a new head lamp because a bus broke one.
The big thing is that we know it’s a luxury and would be the first thing to go if we needed to trim the budget. We only drove it down because we couldn’t bear the idea of putting the dog into a crate in the cargo compartment of a plane.
To be honest we can’t really afford our car and when i consider just how much milage we do as opposed to the amount of money it costs us it really is a stupid thing to have.
There are alternatives, here i the Uk there is a scheme whereby you can join a car club where you simply pay for a car when you need one. We thought long and hard about this one but the thing which really let it down was the availability of a car when you needed one. we have got so used to jumping in the car when we have something to do, often on the spur of the moment.
The problem will really hit home if we ever have to buy another car as that just wont be an option for us again. perhaps then we will have to conmsider other more frugal options. Until then we our car only when we need to.
Charlotte K says
I admire the European way of life and wish that gas was a lot more expensive here. However, I don’t think most Europeans truly understand the distances involved in getting around much of the country. Not for me, I live in a Northeast city and have never owned a car, have easy access to rental/day cars if necessary. But I grew up in rural America, so I know what it’s like. I sometimes fantasize about moving to one of those towns in the Dakotas where they give away houses to re-build population (if only I could come up with a location independent career) just to see whether I could manage without a car in a place like that (being dependent on gardening, chicken raising & UPS!) But I think it will remain a fantasy. You are doing the right thing, driving an old car that still gets great mileage, and using it as seldom as possible.
I live in a little town, and we either combine trips (get groceries when we’re on our way back into town from the big cities) or bike/walk to the store. We can do a lot without cars. But both our cars are paid off and have fairly low insurance costs. Our main expense is routine maintenance (new brakes soon for me — yipes). And gas, of course. But having the car has been invaluable. When I worked in town, I mostly biked to work. But I just got a 6 month contract job in the big cities an hour north, and I had to have that car to get to work.
We’ve toyed with cutting down to one car, but my boyfriend and I aren’t married yet and are still nervous about merging finances and things. I suspect we will become a one-car family once we’re married. I hate my current commute (just 6-8 more days!) and am adamant about working harder in the future to keep work and home close.
I’m actually giving thought to selling my car and joining a car share program. I live in a major metropolitan city with public transportation available, and my commute from home to work is about 5 blocks. There are three “pods” for the car-share program I would join within 7 blocks of my house. I owe just over $2000 on my car and it blue books at around $5000. I’m torn though – I like the convenience of having my car right there to jump in if I need to go somewhere, as opposed to signing on the computer and hoping a car in one of the pods near me is available. And I visit friends in the suburbs a half hour or so away, generally spending at least half the day, and I’d have to pay by the hour for the car. And I’m afraid by the time I got the car in condition to sell, the weather would be starting to turn cold and that’s not really the best time of year to sell.
Though I’m incredibly intrigued by the car share program, I have decided for now to hang on to the car. I currently live with a roommate in an apartment, and I’m hoping to buy a house within the next couple years. If I sold my car now, and then the house I buy isn’t near public transit or a car share pod, then I would just have to buy another car, when I could hang on to what I own now and own it outright in 1.5 years. For me, hanging on to my car but walking most places I can makes the most sense right now.
Thanks for all the great comments everyone! Henry, you raised some good points. Yes, I do very strongly believe that humans are contributing to climate change. Most of my decisions are made with this in mind, which is why we don’t own a dryer, use cloth diapers that I made from old sheets and clothing, avoid disposable products almost entirely, etc. It’s also a big part of why I only put 3000 miles on my car each year – I would feel incredibly guilty if I were driving my car to the library, a mile and a half from my house. Now that I’m only going to town every two weeks, hopefully my mileage will drop even lower. But I have not yet figured out a way to get supplies from the city without driving. If they ever put in a public transportation system between our town and the city, I’ll be thrilled, and will use that instead.
In terms of financial risk, you asked about things like uninsured motorists, parking tickets, speeding tickets, and liability expenses. I’ve had two parking tickets in my life (a total of $70), and have learned to be very cautious about obeying signs where I park. I haven’t had one in years now. I have never had a speeding ticket. I realize that there’s a first time for everything, but I tend to drive about ten mph slower than the speed limit on the highway, and I’m very vigilant about keeping my speed at or below the posted limits in towns. I know that someday I might slip up, but I doubt this will ever be a big area of financial drain. Our car insurance does have uninsured motorist coverage included in it, so we would be covered by our own policy if I were hit by a person without insurance. And we have liability coverage that is several times higher than the amount required by law. In addition, we have a liability umbrella policy that extends to our cars. I am all about avoiding risk, but as you said, we can’t just stay home and wrap ourselves in bubble wrap. I know that driving entails risk, and that’s another reason why I choose to leave the car parked as much as possible.
I live in Nebraska – the only bus lines are in Omaha & Lincoln and I’ve heard they are terrible time-wise (it takes twice as long to take the bus then drive).
My car costs me on average:
Insurance – 700
Annual Maintenance – 164
6 at home oil changes – 138.36
Repairs (I do my own) – 80
So figure that car costs me about 1682.
I have to have it for work as I drive a lot for work. My mileage checks for work average 1200 a year so figure I’m paying 400 out of pocket for the car annually. I got the car at auction when it was 6 or 8 months old back in spring 2003 and own it down to the lug nuts. I know everything thats ever happened to it and know how it’s been maintained. That knowledge brings me peace of mind when I’m in the middle of nowhere (which is 80-90% of my beautiful state).
Also, I have to drive my kid to school since our school consolidated with other communities – he’d have to be out the door @ 6am to get there on time if I didn’t drive him.
Most of the US just isn’t pedestrian friendly. Everything out here gets spread out like butter on bread instead of keeping it close enough to walk everywhere once you get in town. When I was a kid my home town had everything downtown so you could park the car & run all your errands on foot – now everything gets built on the edges of town instead of reusing existing buildings in the downtown area. Such a waste of space & real GOOD farm ground.
Outside of the two “big” cities, I don’t think it’d be economically feasible for there to be public transportation. Also, in the big cities transportation only goes to certain parts of town limiting where those without cars can shop & work.
Glass Bottles says
I have the same debate every year concerning my car. 97 Explorer, but it runs great and costs me very little. I think I’ll end up driving it into the ground!
I’ve thought about this, but like others I just don’t live in a city that has good enough public transportation. I work odd hours so it would be difficult (if not impossibe) to find someone to rideshare. About once a month (sometimes once every 2 or 3 months and somene twice a month), I travel about 2 1/2 hours to visit family.
However, I think if getting rid of my car were enough of a priority I could overcome those obstacles. It comes down to convenience, flexibility and the time value of money for me. I would rather spend 20 min driving myself to work, in control of my a/c or heat, in control of my radio singing at the top of my lungs, stopping for a donut if I feel like it, than spend 1-3 hours on multiple bases with a bunch of strangers and waiting at bus stops for bus changes in the heat and cold. I would rather head home to my folks on my schedule, than wait for the car rental place.
It’s about more than money for me, though I do feel with my car paid off it is also a better financial decision. The cost savings of getting rid of it would not be great enough to mitigate the intangible parts of the decision process.
Simple Homekeeping says
I found your blog day before yesterday so I’m slowly trawling through it as I have time and its great :)
I live right the way down in New Zealand which is different again from the States and Europe, both price-wise and for lifestyle.
We live a teeny tiny rural town that has a garage, a couple of pubs (an NZ smalltown staple ;)), a library and a 4Square which is like a corner store I guess. The closest town is about 20km away so approx 40 miles and while there is public transport to and from there, its at 6am one way and 6pm back – not a viable option with 2 littlies of 3y & 6m! My husband works in the closest city which is about 30km/60miles away, so we have two vehicles. A motorbike for him and a diesel ute for me and the kids (and the dog, various stray calves and lambs we haul around, hay and so on).
Even though going vehicle-less is not an option for us I decided to break it down to see how much it cost us versus how useful it is so this is what I worked out :
All our insurances are in a package but full insurance on the motorbike is $NZ400 p/yr and full insurance on the ute is $NZ200 approx.
Insurance p/yr – $NZ600
Our monthly fuel expenditure is around $200 p/m, sometimes less and thats using the motorbike 5 days a week. My friend and I carpool into town 2 days a week for our bible study and playgroup, mostly in her vehicle, I drive places once or twice a week for playdates or to do odd jobs, and on the weekend my husband and 3yo take the ute hunting or getting firewood, we might do a family trip someplace and we go to church on sunday (which is 60k away).
Fuel p/yr – $NZ2400
We have WOFs here every 6m for the ute and yearly for the bike – $NZ50 for each, and registration yearly @ $NZ450 approx for the ute and $NZ500 approx for the bike.
Misc costs are bike tyres yearly @ $NZ150 each, oil changes for both totalling $NZ60 and about $100 in other small bits and pieces.
All up our vehicles cost us approx $4560 p/yr including fuel :D sounds like alot doesn’t it??!!
Now for my pros and cons list :
Pros to having no vehicle are 1. smaller environmental footprint and 2. less overall expense.
Cons to having no vehicle are 1. no more free firewood/meat (you can’t borrow someone elses vehicle to go in backcountry!) which would then incur considerable additional cost to our food bill, 2. severely limited socialisation inc church attendance, 3. severely affected ability to visit family, and 4. negatively affect our ability to renovate our home. Those were just the things I could think off of the top of my head :)
We could choose to move to the city where my husband is working and go down to just the motorbike or even no bike, however we would be paying more than double that amount in accomodation costs, plus of course we aren’t ready to sell our home yet and we don’t want a city lifestyle.
Your last question was how high would that figure have to be to convince us it isn’t worth it but TBH I can’t see us ever going vehicle-less! When we move again it’ll be to a bigger block of land, further away from ‘civilisation’ so a vehicle will always be a requirement.
I walked the 2 miles to work today. Wasn’t bad. Saved me a trip to the gym too.
Insurance SIX says
I definitely would have a car now if I hadn’t found out the pleasure of hitchhiking a 6 years ago. I prefer to live in (big) cities though – where cars are mostly cumbersome to have. I try to go around on bicycle most of the time – the city I live in has a nice yellow bike system that only costs 30 euro per year and many bike points.