By Jeffrey James Higgins
Published August 21, 2019
If you live in an urban area, it may make sense to ditch your car for alternative transportation. Selling your car provides significant benefits to your lifestyle, the environment, and most importantly — your wallet.
While giving up car ownership helps the environment and society as a whole, collective rewards are difficult to calculate. Your lowered stress level from avoiding traffic is equally hard to measure. The good news is the financial benefits of giving up your car are easily quantifiable and should be your primary justification for losing your car.
So, what is the real cost to owning your car? Most people consider the purchase price, gas, and oil changes, but fail to take all of the expenses into account. For example, the money you spend on a car could be used to pay off debt or invested. Your car depreciates the instant you drive it out of the dealership, until is eventually becomes worthless. Some cities levy personal property taxes on cars, and don’t forget the incidental expenses—which often come as a surprise but are highly predictable—such as parking tickets and vehicle damage.
If you’re living in the city, it’s likely you have to pay for parking, which can be a big expense, but even with free parking at home, you still have to pay for parking at your destination. If you’re lucky enough to own a parking space, you can generate rental income from it once you sell your car.
The following calculation is based the yearly expense of owning $30,000 car in Washington, DC:
Car payment (x12): $6,420
Depreciation (15%): $4,500
Property tax (6%): $0
Home Parking ($270×12): $3,240
Other Parking ($20×52): $1,040
Gas ($2.88gal, 4,160 miles, 24 mpg) $499
Oil/Fluid change (x4) $400
Not using money to pay off debt (12%): $770
Minor damage (x1): $115
Once you decide to sell your car and embrace a more fiscally responsible more of transportation, how do you get where you’re going? The answer to this question is also highly individualized based on where you live, how you’re employed, and your lifestyle. In general, your options are public transportation, private carriers, remote work, manpowered vehicles, or walking.
Obviously, walking is a free commute with huge physical and psychological benefits. Bicycling entails some expense, but mostly to purchase your gear, and finding room to store your bike may be your biggest concern. Motorized scooters and other alternative transportation have a higher cost, but still far less than car ownership.
Assuming you work five days per week and can’t use your legs to get to work, your options are public transportation of private carriers. The cheapest option is usually the bus, train, or subway, followed by private hourly car rentals, like ZipCar or Car2go then by private driving companies, like Uber, Lyft, and Via. Taxis and limousines are usually the most expensive option.
The cost of these options differs greatly by length of commute, time of day, and sometimes weather. Each mode of transportation also come with non-financial costs and benefits, such as having to wait for a ride or not having to focus on driving. Other subjective intangibles include losing the security of having a car in an emergency and the convenience of ownership.
Below are approximate costs based on a five-mile, round-trip commute across Washington, DC, five days per week. You will need to travel more than just back and forth to work, so let’s add roundtrip costs for a weekly grocery shopping, and two social events. Feel free to adjust up or down based on your own lifestyle.
Bus: ($2×832): $1,664
Subway: $2.65×832): $2,204
ZipCar ($11.25×832): $9,360
Lyft ($16×832): $13,312
Taxi ($18×832): $14,976
Based on the estimated costs above, your yearly cost of owning a car is approximately $16,984, and your estimated yearly cost of alternative transportation falls between $1,664 and $14,976, for an average of $8,320. That’s an average yearly savings of $8,664.
Your individual costs will vary, so modify them as necessary then compare the monthly cost of owning your car to alternative transportation. You may be shocked by your savings.