How to go car-free and save hundreds of dollars a month

After rent or mortgage, one of the largest expenses in most households is transportation. For most people in North America, this means owning or leasing one or more cars. Because of this, the choice to stop using your car can have a very positive impact on your financial life.

Consider these USA-based figures cited here:

• Americans spend an average of 20% of their income on cars.
• As of 2004, the average American spends $8,410 per year (over $700 per month) to own and operate a vehicle (this figure includes loan and principal payments, insurance, gas, oil, car washes, registration fees and taxes, parking, tools, repairs and maintenance)

Given these (possibly surprising) numbers, why don’t more of us sell our cars and use the growing number of alternatives? Primarily, it is due to the lifestyle expectations that we have developed and grown into as car owners.

Many of us have built our lifestyles to depend on the convenience that a car provides. We “know” that it takes 15 minutes to travel from A to B. As a result, adjusting our schedule to take into account walking time or bus schedules feels unfamiliar, uncomfortable, and potentially constraining. Also, the ability to decide at a moment’s notice to jump into the car and go somewhere (anywhere!) confers a powerful feeling of freedom.

Fortunately, adjustment to car-free living is possible, and many alternatives exist to car ownership. Some have been around for a long time (public transit, car rental), and other, more recent ones have been enabled by new information technologies (short-term car sharing).

I owned and garaged my car in downtown Boston for over a year before facing up to two uncomfortable realities. Specifically, I was (1) spending a lot on car payments, insurance, and parking, and (2) using the car once every weekend or two. It made no sense to continue spending so much money to give myself the option to use the car on any given weekend. When I was living and working in suburban areas – and commuting 15-50 miles each way – owning a car had made perfect sense for me. However, the time had now come to let it go.

Looking back after a few months, it’s easy to see that for me, going car-free was ultimately a no-brainer. I live in a large urban area served by excellent public transportation and taxicabs on a major street steps from my door. Ten Zipcars can be found in the same lot where I was paying to park my own car, and a nearby hotel has a rental car office available to the public. However, even with all of this, it took me a few months and careful consideration of the alternatives before I was ready to make the leap to a car-free lifestyle. The following are some of the most important factors that I looked at.

Factors to consider before selling the car(s)

Availability of public transportation

Are there buses, trolleys, trams or subways available near you? If you have easy access to public transportation, this makes the car-free decision a lot easier. These services tend to be in and around major urban areas since they depend on high population density for economies of scale. The same is true of taxicabs – in major urban areas you will have near-instant access to taxi service, whereas in more remote areas calling a taxi may mean a long wait.

Availability of car sharing and / or rental services

The emergence of car sharing services in some urban areas has made the decision to go car-free much easier for residents of those areas. Essentially, car sharing companies operate like a highly automated short-term rental service. Through a web page, a customer identifies and reserves a specific car for a set period of hours or days. At the start of the rental period, the customer unlocks the car with their personal key card, uses the car for the rental period, and then returns it to the same location.

For people who use a car less than a few days a month, this is an excellent alternative to ownership. Generally speaking, renting a car for more than a day is less expensive via a traditional rental company, while renting for less than eight hours is less expensive via a car sharing service. I use Zipcar, which is probably the best known car sharing service, but other companies such as Autoshare in Canada provide similar services.

Responsibilities to others (e.g. children or other dependents)

If you use your car for dropping children off at soccer practice, or transporting aging parents to the hospital for medical appointments, it may be harder to transition to a car-free lifestyle. Depending on the details of logistics and the frequency of these responsibilities, taxis, public transportation, or car sharing may still wind up being cheaper. As with all of these factors, balancing financial savings with the comfort and convenience of a private car is the key to a decision that you and your loved ones can all live with happily. A recent blog post by Corbyn Hightower describes some of the factors involved in her family going completely car-free.

Personal safety

If you live in or near a marginal neighborhood, and bus or train service is sporadic or unreliable, owning a car may be a real factor in personal safety. This was the case for a close friend of mine who had unusual working hours and commuted through several potentially dangerous neighborhoods at 3AM. Obviously, I am not encouraging you to make any decisions that you feel may put you or anyone close to you in danger.

All or nothing? Not necessarily…

If you or your family own more than one car, then it might make sense to do this gradually. Adjusting to using one car, then none, will be easier than going from two cars to none overnight. The financial and environmental impact of a family changing from two cars to one will still be significant.

Peace of mind

This is an intangible factor. The reality is that this is an emotional decision, and only you can decide which factors matter more than others. If the ability to get in the car at any time and go wherever you want is the most important thing in the world to you, then none of the other factors will mean very much. If environmental considerations matter more than anything else to you, then you probably already live car-free and laugh at the fact that I found it challenging to decide to sell my car. 🙂 In my case, I found the minimal and infrequent convenience that I gained from owning the car to be significantly outweighed by the inconvenience, expense, and responsibility of parking and maintaining it in a dense urban area.

Running the numbers

Car ownership delivers several “guaranteed” expenses, including insurance, fuel, maintenance and licensing / registration. Depending on how the purchase was financed and where the owner lives, loan and principal payments and parking fees may also be part of the cost of ownership. All combined, these make up the average price of $8400 per year / $700 per month mentioned above.

Of course, car-free living creates new expenses of its own, including car sharing or rental fees, taxi fares, bus and subway fares (or monthly passes). Purchasing and maintaining a bicycle creates another set of potential expenses.

However, in most cases – and especially in urban areas – living car-free will be much cheaper than owning a car. This is even more likely to be true when we select less expensive options more of the time – for example, walking, bicycling, or riding public transportation instead of taking taxicabs everywhere.

The key to getting your personal analysis right is to run the numbers as realistically and honestly as possible. If you can’t stand walking, then don’t pretend that you won’t ever take a taxicab for a one-mile trip. If you go away to the lake every weekend of the summer, be sure to include rental car fees for those weekends. The more accurately you are able to estimate your future car-free expenses, the better you will know how much money you might save by taking this step.

I can’t promise that going car-free will work for everyone. However, if your financial analysis suggests that it will work for you, and your intuition agrees, I highly recommend it.