Save Money: Ditch the Car
What percentage of the time do you use your car? How much of the time does it sit, empty and alone? Cars cost money to own and spend most of their time idle. You probably don’t need one.
Once you have a car, it’s difficult to imagine life without one. It becomes a part of a great many rituals and we build a life around the availability of the car for weekends, holidays, grocery runs and everything else in-between.
The car is, however, a huge money drain. It costs a fortune to own, to run and to insure. In this article I’m going to cover
- How much your car costs you
- The alternative modes of transport you could use
- What it’s like to live without a car
- How to switch to carless without losing your mind
How Much Does Your Car Cost?
The total cost of a car is so much more than the fuel it costs to run it. Here are the different costs you need to add up to figure out how much your car is costing you.
The Car Itself
We want to think in monthly or annual terms so that everything is comparable. The purchase cost of a car therefore needs a little analysis. To properly understand this cost, we need to look at a couple of scenarios:
You bought your car for cash
The cost of the car will be the annual depreciation plus the loss of earnings on the cash (the interest you would have earned).
If you buy a car for £20,000 and drive 10,000 miles a year, then the car is worth less each year because it’s older and it has higher mileage. That gradual loss of value adds up to quite a lot over time. You can ignore it because you don’t see cash leaving an account, but if you think of the car as a bank account with money in it, every time you drive it, every day that passes, that number goes down.
When you sell the car, you “close” the account, but you can only take out what’s left after all the loss of value.
In addition to this cost, you’ve lost the use of your money for the time you own the car. Money is worth between 2% and 7% annually depending on where it’s invested (don’t leave it in your current account). If you spent £20,000 in cash on a car, that’s between £400 and £1,400 per year of lost income.
You leased the car
This is easier. Your annual cost is the cost of the lease contract over the year. That’s likely to be a big number. The first year is likely to be higher because there’s often a large initial payment.
You borrowed money to buy the car
The worst of all worlds. Not only are you going to be paying interest on the loan, but the car also loses value over time, so you’re getting the annual depreciation as well.
How much is your insurance each year? The nicer and more powerful the car, the more you’ll pay.
You’ll also end up treating your no-claims bonus like some sort of validation of you as a human being, because we’re all so scared of losing it and having to pay the full sum.
The price of gas is such a touchy subject that when the President of France tried to tax it to reduce carbon emissions, half the country put on yellow jackets and started setting fire to (ironically) each other’s cars.
It adds up over time, and is obviously dependent on your mileage.
A cost we don’t always think about when we imagine driving a car – most countries tax vehicle ownership. They do this because it’s not fair to charge people who don’t use the roads for their construction and maintenance.
You need to service your car regularly. You can cut corners here, but if you have a branded and valuable vehicle, then having a well-kept and up-to-date logbook of on-time maintenance will have a positive effect on the resale value.
Maintenance increases with the age of a car, and is much more expensive for complex and modern cars than it is for older and simpler models. Invest in that BMW X1, and although you’ll enjoy the ride, your wallet will be a few dollars lighter every time you drive past one of their garages.
Cars need cleaning, they cost money to put on ferries, require permits to park and result in fines of various types, for infractions of every kind. This is not something you can plan on, but it’s a cost that often hits you when you can least afford it.
Think also of the time it takes to manage owning a car. You have to remember to renew the insurance and the tax each year, get it to a garage for a service on time and check the tyres on a regular basis, make sure your parking permit is up-to-date and find a place to park it every time you move it.
Alternative Modes of Transport
When you’re going fairly far away, a train or a coach is often the most obvious alternative to a car (ignoring aircraft since that’s for very long distances).
For Going Places
Coaches are usually extremely affordable, and trains are often more affordable when you invest in various discount schemes like the UK’s National Railcard. Personally I’m not a huge fan, but I do use the Eurostar and the Thalys on a regular basis to get between Paris, Brussels and London?
It’s always worth checking out the train ticket prices as an alternative to driving anyway – you get to spend the time with your family, a book or a project rather than staring at the tarmac. You can check prices on The TrainLine.
When Only A Car Will Do
If a car turns out to be the most efficient mode of transport for any given outing, there are ways to get a car for an hour, a day or a weekend with little or no effort, provided you’re willing to plan ahead slightly.
For traditional car rentals, it’s worth using a comparison engine, and RentalCars.com is one of the biggest, and the one I’ve used most often. I’ve never had a problem with them, although it’s worth writing down all the contact and contract numbers before you leave on your trip.
For more infrequent and short-term use of a car, I’ve been a member of Zipcar for the past 3 years. I use cars very rarely in London, but every so often a car is by far the most convenient solution. It costs me an annual membership fee and a rental fee every time, but these numbers pale in comparison to the cost of owning a car. They also have vans, which has saved me a ton of money as I’m able to move furniture or large boxes from one place to another without having to buy in the services of a van owner!
There’s also taxis, but when I use an Uber or a Taxi, it’s typically not for a journey I would have used my car for, if I had one. I wouldn’t drive to the airport because of parking costs. I wouldn’t drive to dinner because I like to drink wine. I don’t think my taxi bill would diminish all that much if I had a car.
It’s true that the cost of London Transport is quite high. A return trip to work in rush hour without even leaving Zone 1 (the center of London) will cost you £4.80, and if you work 220 days a year, that adds up to £1,056 in a year.
I rarely use public transport to go to work, and so I save about 90% of that by either walking to work, or by using the Santander Bike system that gives me access to bicycles across London.
Admittedly, the Santander bikes are basically bricks with wheels, have the aerodynamics of a mammoth and weigh more than the Hulk on a bagel day, but I can get to work in under half the time it takes me to walk there.
The Santander Bike membership is another £90 per year, but the first half hour on a bike is free every time you take one, and I have yet to spend more than half an hour getting anywhere in London on a bicycle.
Living Without A Car
- I no longer worry about whether I can park somewhere
- I no longer worry about people denting my car
- I don’t spend money on insurance
- I’m fitter, spend more time outdoors, and haven’t had an incident of internalized road rage since that lunatic in the South of France … long story
- I don’t care about the price of petrol (gas)
- I’ve lost a certain flexibility where I could spontaneously decide to do certain things without the need to plan them
- I have 2 or 3 other memberships I manage to compensate for the lack of a car, and while they’re cheap in comparison, I still had to go and get them
When you have a car, you plan things that you can do with a car. When you don’t have a car, those things don’t occur to you, so you don’t think about them the same way. It’s limiting, but not in a way you notice.
Alternatively, having a car means you’re often thinking of ways to use it. What holidays can we go on that we can drive to? Shall I drive to the supermarket or walk? Drive, obviously, because I have a car!
It’s a different lifestyle, with a massive cost taken out of the mix.
How To Go Carless and Not Lose Your Mind
If you want to ditch the car, I’d suggest you not go cold turkey. It’s a big shift if you’re used to using it regularly.
I’d give myself two months during which I’d try to not use it at all. Then I’d take a long hard look at my costs over those two months and decide whether saving the money on the car would make a difference.
Once you’re in the habit of walking, taking public transport, cycling or renting cars when you need them, you’ll wonder why you bothered with the hassle of owning a car in the first place.
Full Disclosure :
I don’t own a car, but I might soon. I’ve been thinking about it for some time now. The reason I’m considering it is something I don’t cover above.
I have kids, and there are things you start to think about when you have kids that have an effect on decisions like these.
A car that I own is:
- Regularly serviced
- Driven carefully
- Always available
- Set up for my family
Taking 4 people somewhere costs four tickets, which increases the cost of journeys by a lot. Sometimes to the point where the cost of the car isn’t so much more than the cost of the tickets. It’s still more, but a car has a boot (US:trunk), kids safety seats and a total absence of drunk partygoers on their way home after an all-night bender.
In short: do the math, think about it and then do what’s right for you.