A month or so ago, I asked my Facebook friends the following question.
Someone just gave you a tax-free raise of $7,000 a year. What do you do with it?
The responses I got were inspiring. We have so many dreams! Things like college funds, retirement, savings to support aged parents, paying off debt, investing, emergency funds, charitable giving, new bikes, and of course tropical vacations. In essence, all those things that we really want to do but haven’t quite figured out how to properly fund. We know that wages have stagnated – or even fallen – in recent decades. But what can we do about it? Well…
$7,000 is about how much it costs to own one car for one year.
The numbers on car ownership costs vary depending on how you calculate them. They usually include the cost of gas, maintenance, and insurance; the cost of the car itself and/or wear and tear may or may not be included. The AAA estimates that we spend over $9,000 per year, I found ranges from $2,800 for the lowest-income families to $15,000 for the owners of luxury vehicles (here). I went with kind of a low-ball figure for my informal survey, but it’s possible to spend less than that – most of us don’t, though.
Does that make you feel empowered, because here is something you can do? Discouraged, because the very idea is overwhelming?
I felt a little bit of both. It’s possible to be a one-car family in the suburbs, but it’s not easy. I’ve found it to be socially isolating, and if you run out of milk (or, heaven forbid, coffee), you’re stuck. Our family has gone back and forth between one car and two, plus or minus a motorcycle. It was doable for us before the kids were in school, but tricky.
(On a side note, I met another person on a bike outside the coffee shop this morning – a beautiful bright yellow one. “Ran out of coffee at home,” he said.)
But if you get paid biweekly, dropping a car will almost immediately put an extra $270 in your pocket every single pay period. Sometimes I like to ask myself – if I were starting from scratch, would I still choose a second car knowing that the convenience cost is $540 per month? Is that REALLY worth it? Or could we use our bikes more, ride the bus, or drop each other off places?
In fact, I’m asking the question again as I write this article.
Right now, we have two paid-for cars (that still require a lot of maintenance, gas, and insurance). We’d like to try dropping back down to one after our hopeful move into town in the next several months. When I think of how much we could use that $540 a month for, it’s almost a no-brainer (almost – because we are Americans, after all!).
So there’s the personal side of both the social and financial costs of car ownership. From the standpoint of our local economy the impact of all this extra money becomes staggering, and we’ll return to this topic in the next few weeks.