American and Canadian families spend a large portion of their paycheck on transportation. Usually, we spend most on housing, transportation, and food in that order. One of the best ways to reduce that big slice of the expenditure pie is to share one car. We each used to drive our own car and it was a big expense. Over the last 5 years, we made a few lifestyle changes such as moving from the suburbs to downtown Portland, and were able to reduce our transportation needs down to one vehicle by partially utilizing public transportation.
By sharing one car we save on:
– Fuel cost. Gas prices went up this year and I read many articles on how to improve your gas mileage. That’s great, but if you can go down to one car, you’ll save even more.
– Insurance. Auto insurance is expensive and I hate paying that bill. I haven’t been in an accident for 14 years! We all need insurance though so it’s an unavoidable expense.
– Car payment. How many of us are stuck with car payments? With one vehicle, you double your chance of paying your car off early. 😉
– Maintenance and repair. This is another thing I hate about owning a car. Whenever I take the car in for service, it always costs more than I thought.
– Vehicle registration and other fee. Oregon’s vehicle registration is pretty reasonable at $19 per year, but I know Californians have to pay quite a bit more. We also have a $5 county registration fee to help pay for a replacement bridge. Yeap, another hidden tax.
– Depreciation. This is another big one. As we all heard, a new vehicle loses 30% of its value as soon you drive it off the lot. Every year, that car you paid $30,000 for depreciates.
– Opportunity cost. The big unknown is what else could you have done with all these savings above? If you invest what you had saved, you can give your retirement fund a big boost! Why not invest all that saving in your Roth IRA account for instance.
What do you think? We probably saved at least $300 each month by reducing to one vehicle. I know many families need two or more vehicles, but take a good look and you might be able to do it. We did it by moving into the city. Our current location has great public transportation options which includes a “fareless” zone, and we can walk to many places including the art museum, theaters, restaurants, and the library. My employer pays for part of my public transportation monthly pass. Mrs. RB40’s employer picks up the cost of an annual pass, so that helps keep our transportation costs down.
We even went carless for 3 months before we purchased the Mazda 5 to replace our old BMW Z3. We joined Zipcar and it’s a great option for city living. I like having a car way too much to stay carless though. 😉
What about you? Can your family function with one vehicle? If you are already sharing one vehicle, how did you do it?