April 26, 2015 - 9:49 am
The human mind — or at least the mind of a modern-day American — seems to be having an increasingly difficult time differentiating between “wants” and “needs.” Long gone are the days when “needs” simply consisted of The Big Three: food, clothing and shelter. Today, the list of life’s necessary expenses includes things like health care, education, insurance and transportation costs.
Fair enough. But the minute something becomes a “necessity,” we often abandon any sense of what’s reasonable and truly necessary to spend on that item. So, “shelter” morphs into a 10,000-square-foot mini-mansion with five bathrooms and granite countertops. “Education” is a four-year degree earned over a period of five or six years at the most expensive out-of-state school we can find. And in the case of transportation, we simply can’t survive without at least 2.28 cars per household — or can we?
Isaac Asimov wrote, “Your assumptions are your windows on the world. Scrub them off every once in awhile, or the light won’t come in.” Believing you can’t survive without a car or there’s no way you can simply drive less are assumptions worth questioning. Chances are, these assumptions are costing you a small fortune.
How Much Are You Really Spending on Cars?
During the course of a lifetime, the average American is estimated to spend between $240,704 and $349,968 on automobiles, according to MotorTrend. Keep in mind that cost includes gas, repairs, registration fees and more. Rather than spending all of that money on your wheels, what if you saved at least some of it and invested it instead?
By my calculations, if you lived close enough to where you work so that you could walk, take public transportation or carpool, rather than drive 32 miles or so, you’d save about $4,000 per year. If you took that yearly savings and invested it at a 5 percent annual rate of return, you could probably achieve a healthy retirement nest egg of more than half a million dollars (and you’d undoubtedly have a great-looking pair of legs, too).
5 Ways to Save Money on Your Car Costs
I know, I know, I know: You need a car!
And maybe you do. But maybe if you’re young, you don’t need a car as soon as you think you do. And maybe when you’re old, you can give up owning a car, access ride-share programs for the elderly and just rent a car when you really need your own set of wheels.
Or maybe, like my wife and I discovered 10 years ago when we were middle-aged, the two cars we’d always had parked in our garage were really unnecessary. By coordinating our schedules, joining a car-share program, and getting me back on my bicycle after a 20-year hiatus, we now live very comfortably with a single car. We also enjoy annual net savings of more than $7,000 as a result.
Even if you do truly need a car, consider these money-saving ideas:
1. Reduce Your “Child Miles”
Data in the past suggested 20 to 25 percent of morning traffic was caused by parents driving their children to school, according to Safe Routes to School. This practice was almost unheard of just a couple generations ago. Put the kids back on the school bus, have them walk or bike to school with friends, and arrange carpools with other parents when they really need a chauffeur.
2. Drive a Manual Transmission
Manual transmission vehicles typically, but not always, cost less than automatics. And since so few Americans even know how to drive a stick anymore, you can probably find a used one at an affordable price. By my calculation, the average driver would save about $30,000 over the course of his driving lifetime just by driving vehicles with manual transmissions.
3. Live by the “Two-Mile Rule”
Instead of driving your car to run multiple errands, combine those trips, and vow to never use a car to run just a single errand within a two-mile radius of your home. Or better yet, bicycle or walk whenever possible for trips within your TMZ (“Two-Mile Zone”).
4. Car Shares
Whether it’s an informal arrangement to carpool with friends or a membership with Zipcar, you can save more money on transportation by car sharing. Zipcar says that its members save an average of $600 a month compared to owning a car. A Zipcar membership also costs only $70 a year, which is a lot less than the nearly $9,000 it costs to own and operate the average sedan in the U.S., according to AAA.
5. Know the True Cost to Own
Before you buy a car — either new or used (the cheapskate’s choice) — go to an automotive website like Edmunds.com, and enter the make, model, year of the vehicle and style you’re considering into its “True Cost to Own” calculator. These online tools tell you what costs you can expect in terms of maintenance, repairs, insurance, fuel economy, etc. for the vehicle you’re thinking about buying.
And before you assume that you can’t live car-free — or at least car-lite — “scrub off” your assumptions as Asimov suggests, and pick up a copy of Chris Balish’s excellent book, “How to Live Well Without Owning a Car.” It’s crammed full of creative and thought-provoking ideas for reducing your automobile dependency, helping you achieve SUV-size savings.
From GoBankingRates.com: How you can lower your car costs