Your money and your life: ditching your car gives you more of both.
We all know that cars cost a lot of money, but John Heinzl, writing in the Investor Clinic of the Globe and Mail, explains how much he has saved over the years by not having one. He starts off with the obligatory “I know, I know. Some people need to own a car.” But he then describes how he has lived without one for ten years, using transit, car sharing, bikes and walking.
He first notes that in Canada, the average midsize car costs a user $10,789 per year including depreciation, maintenance, insurance, fuel, and other costs. The alternatives are not free, but are a lot cheaper. (Zach came up with different numbers in his post How transit & bikes paid for my home.
Most of those costs disappear when you don’t own a vehicle. Over the past 12 months, I spent just $2,643 on car rentals and car-sharing. Even after adding in the cost of public transit and fuel for car rentals (gas is included in the price of car-sharing) my all-in transportation costs were still comfortably under $4,000. Compared with car ownership, that’s a savings of about $7,000 a year – or more – that I can invest. Over 10 years, assuming a pretax return of, say, 8 per cent, it works out to an additional $156,000.
He does not explain where he gets a return of 8% on his money, but then he does run the Investor Clinic, perhaps that’s another story.
His recommendations for living without a car:
- Get to know your transit system. It helps that he lives close to the subway in Toronto and has options, but this is clearly the single biggest factor in going car-free.
- Get a bike.
- Learn how to save money on car rentals.
He munches on the American data for accidents per mile traveled, the benefits of exercise, and perhaps overstates the case just a little bit: “It is not an exaggeration to say that a bicycle is a money-printing fountain of youth, probably the single most important and highest-yielding investment a human can possibly own.”
Under even the most pessimistic of assumptions:
- Net effect of driving a car at 65mph for one hour: Dying 20 minutes sooner. (18 seconds of life lost per mile)
- Net effect of riding a bike at 12mph for one hour: Living 2 hours and 36 minutes longer (about 13 minutes of life gained per mile)
So really, if you want to live longer and richer, dump the car.