This post is part of a 30 days series called the 30 steps program to financial independence. You can check the list of other posts here.
As you (and me) walk your way towards financial independence, you start realizing that there are some things you don’t really need. A car may be one of them. You may have a car since your college years, you probably bought it because back then everyone bought a car, and you never thought much about consequences.
Best case scenario, you bought it cash, and went for an old but reliable car. You spent some $5,000, then $500 on insurance every year, and that is without maintenance, gas and other parking related costs. That really adds up fast! Even faster if you bought your car on credit or are leasing it.
While a car is a bare necessity in some rural areas, in big cities like NY or SF, owning one or more cars becomes questionable.
I was raised in Paris, then moved abroad and at 32, I have owned a car for 7 months in my life. I have owned many, many bicycles. I used to roller skate too, but my roller skating days are over… I enjoy a good walk, and taking the train and the bus, because I don’t have to focus on driving. And if the need arises to have a car (to move stuff or go on a short trip), I just rent one. At the end of the year, my expenses are way lower than if I had a car.
How much exactly am I saving?
To be honest, I don’t really know. Because I don’t have a car, I just know that I am using one when I really NEED one, and the expense is justified.
But roughly, say parking costs $100 a month in my area, insurance was $100 per month when I had a car, I would fuel $80 a month, and spend $200 every 3 months on oil changes and other minor repairs. Oh and the odd cost of traveling with a car, taking a ferry or a paid highway, add another $20 per month. And another $100 for depreciation. Total, $600. Ouch. And I’m not adding credit costs since I paid my car cash, if not it could be upward of $1,000 per month.
My bicycle cost $500 to buy (good one!) and almost nothing to upkeep, maybe $50 a year. Another $30 per month in different subway/bus/train tickets. And two big holidays would be $100 each for a train ticket, and rent a car three times a year at $100. Over the course of the year, I spent $910. Not even a month worth of having a car.
So would you like to save that additional $6,000+ per year? Lear how to live without a car. Walk, run, cycle, skate, ski, carpool whatever else gets you from point A to point B. If you have two cars, start by getting rid of one. Organize yourself to limit distances, by running errands AND going grocery shopping AND dropping the kids at karate practice AND not forgetting the dry cleaning. Yes, all in one trip.
You can also work out an agreement with friends or family to borrow their car once in a while in exchange for gas money or another type of service. I always make sure I give back a car with a full tank, it makes people happy and costs my much less than renting a car.
In the end, you will learn how to live without a car. And your days of financial independence will be much closer since your expenses will lower drastically.