Daily Archives: November 17, 2010

Car Costs

(Photograph Source)

I have been debating for the last little while the cost of owning a car, and whether I want to be a car owner or not.  I’ve thought about the reasons why I want the car, and also the costs of owning and driving a car.

Reason why I want a car:

It would be convenient to get to places.  I can use it to get to work, I play volleyball once a week, and I also use it drive home to visit my folks.  I would also be able to carry groceries home easier and not be cold waiting for the bus, or having to follow bus schedules (which don’t run very often on weekends).  I also use my car for work, and drive to meet clients.

Reasons why I don’t need a car:

I live within 5 minutes of walking to two different bus routes – one of them takes me very close to work.  It’s about a 25 -30 minute bus ride and about 15 minutes of walking, so it’s certainly do-able.  Volleyball games are also usually close to the subway.  It would take planning but is not impossible.  There is public transportation that I can take to visit my parents.  It takes almost 2 hours one way, but I don’t really mind being on the bus that much.  I can listen to music and sleep.  For work, I can try to use car sharing programs such as ZipCar or AutoShare since they do have locations close to my office.  Will have to get my manager’s approval for this one.

Background:

I plan to buy my car second hand.  I’m not completely sure which car I want.  I debating between a used Corolla (early to mid 2000’s) or a used minivan (also early to mid 2000’s).   I like the Corolla because I’m used to driving one and it’s super awesome on mileage and easy to drive.  I like the minivan because I can find it for a better price and can likely get cheaper insurance for it.  At the end of the day, I really don’t care what type of car I drive as long as it’s safe, reliable and easy to drive – I really don’t care about the cool factor in the car I drive.  The cost to purchase the vehicle will range between $5,000 to $10,000.  I will buy it with cash.

I am a young driver (I’m 26) and it will be my first time being the primary driver.  I also have not been insured for that long (under 2 years) and I been quoted for $3,800 (annually) for the Corolla and $3,200 for the Minivan.  Outrageous, I know.  That’s what you get for driving in Ontario. That was the first quote I received and I am sure that I can get a better price, but the sticker shock opened up my eyes to the REAL cost of driving.  Let’s say I can find a price for $2,500 to $3,000 – it’s still a lot of money.

The Math:

Since the main cost is the cost of the car itself, I also did the math assuming that I would be able to use the car for at least 5 years.  From this total cost, I calculated for the average annual cost in today’s dollars (note: inflation was not taken into consideration for this example).

If I didn’t have a car, I would use public transportation to get around the City.  I live on the outskirts of the City, though I do have access to public transportation – just not as frequent as the Downtown core.  I would also buy a monthly pass so that I won’t have to worry about constantly buying tickets – it works out to be almost the same, anyway.

With those calculations, I have an average annual savings of $4,308 or $21,540 over the next 5 years!  That’s a lot of money that can be put in my Retirement Savings, my Emergency Fund, a Trip or put into some Dividend Paying Stocks! I like looking at numbers and this number is a huge incentive for me to NOT buy a car.

I also read a really neat post from Hi That’s My Bike (HTMB) about how they were literally paying themselves by not owning a car.  Basically, HTMB takes the money that they’ve saved and divide that by the time they spend on the bus.  I think it’s a very innovative way of thinking, and will apply that here.

I roughly spend 30minutes on the bus each way.  Each month I would spend approximately 20 hours on the bus, and I would save $218 by taking the bus.  (I am not counting the time that I will be making long commutes to see my parents, this is just day-to-day getting to work time.)  That works out to about $10.90/hour.  The more I take the bus, obviously the smaller the hourly rate, but it’s a good ball park number.   Unfortunately (or fortunately), it’s nowhere near as high as HTMB’s $26/hour, but it’s something!  And that money saved could easily cover my groceries bills for at least a month, maybe even two :).

How much are your car costs?  What are you paying yourself an hour if you don’t own a car?  Is it feasible for you not to own a car?

Cheers,

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Filed under Car, Finance, Public Transit