Hacking Transportation Series-How Much Is Your Car Costing You?

Transportation is more expensive than most Americans realize. A typical American will spend thousands of dollars a year on transportation without even considering alternatives to owning and driving a car. This ends up being one of the biggest expenses and yet we spend no time considering alternatives. Time spent optimizing this decision will pay off much more than most other financial decisions—getting housing and transportation right makes other financial decisions much easier. Unfortunately, it is a cultural norm to buy an expensive car and have perennial loan payments. This is an immense drag on most people’s happiness and they don’t even realize it. We need to question the assumptions that lead to the massive amount of time spent earning money to pay for your expensive car.

Do I Really Need A Car?

Do I even need a car? Until recently, I never questioned this despite being frugal my entire life. Then I started reading the Mr. Money Mustache blog. Mr. Money Mustache is a big proponent of riding bikes and also makes a persuasive argument for not owning a car or at least driving them less. The AAA estimates annual transportation expenses driving 15,000 miles a year are $10,054 for pickup trucks and $6,354 for a small sedan; which is $0.67 per mile for pickup trucks and $0.42 per mile for a small sedan. Investing only the savings from not owning a car is enough to make you a millionaire in under 30 years with 8% returns investing.

In addition to the substantial financial benefits of going carless, there are both mental and physical health benefits. Biking to work starts your day with some exercise which will wake you up and get your blood flowing throughout your body which in turn will allow you to think better at work. The ride home will reinvigorate you after a day of work and the exercise will help remove any stress you built up during the day. Taking public transportation will allow you to read or do other things while you commute instead of having to focus on driving.

Despite all of these benefits, my first thoughts were, “I understand that is a lot of money and there are many additional benefits, but I really need a car”. Then I thought of many excuses for why my situation is different than people that do go carless. I live in Phoenix, a sprawling city, I work irregular hours so carpooling wouldn’t work, I go to work too early for public transit, my commute is too long, I have a child, I need a car to pick up groceries,  etc…

No matter what excuse you use, there is someone that goes carless that could use that same excuse but chooses not to. We can all come up with reasons why something won’t work, but this is unproductive so let’s our efforts toward finding ways that we can get rid of our cars—even if decide to keep them.

I could move closer to work. I can get a job closer to my house. I can ride a bike. I can take public transportation. I carpool to work with someone else. I could move to a more bike/walk friendly city. I could talk to my employer to be more carpool friendly or change jobs for a company that does. I could get a job that is conducive to public transit. I could use the vanpool or carpool finder feature on my public transportation website. I can get a stroller and bike trailer. I can get a wagon.

Of course, many/all of these solutions may not work for your specific situation, but the point is that we start thinking in a solution-oriented way. How can I make this work? We don’t have to implement any of these solutions but it at least gives us a choice so we don’t feel like we HAVE to drive a car. Life is better when we feel in control of our lives and don’t HAVE to do anything—we choose to do things.

This post may make it seem like I don’t have a car, but my wife and I both have a car. I just question the assumption that I need it, and I am working on solutions to use my car less and eventually get rid of my car. I also question the purpose of my car and the best way to serve that purpose. What do I need from my car so that it can serve the functions I use it for most? Does it need to have a high top speed or a fast 0 to 60? Does it need to look really cool to impress my friends? Does it need to have high ground clearance and 4WD? Does it need to have lots of power and cargo space so I can haul large objects? Does it need to be unowned by anyone before me? What purpose am I using it for 90% of the time?

I use my car 100% of the time for getting me and sometimes my family places—A to B. I drive a compact car but it can still fit me, my wife, a baby seat, another person comfortably. I can fit a 5th person in if necessary but it would be uncomfortable for the person squeezed in next to the baby seat. The reason I chose my car is that it was the lowest price option that I found that met my desired functions of having room to put in a car seat and other passengers, being reliable, and having excellent gas mileage.

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Adding additional purposes makes the car purchase vastly more expensive and those features are rarely used or not valuable to me when I really think about it. What does it say about you if you need to impress your friends with your vehicle? What percentage of your mileage is spent racing or going off-roading? How often are you moving furniture? I suspect that the vast majority of people would be better off financially by buying a car for the purposes they use 90% of the time and renting or borrowing the right vehicle when those rare alternative functions occur.

In my next post, I will break down several transportation options to make it easier to see the total cost of each option is and give you a framework to determine the best way for you to take care of your transportation needs. What excuses do you have for needing a car? What would you spend your money on if you had an extra $8,000/year on?

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