May 16, 2010
A One-Car Family (Carole)
I'm not saying this course is for everyone. We currently own three cars (hubby's, mine and one with our daughter at college). But in our former life, with very young children, we were one of those one-car families - for 12 years. It wasn't that bad. Really. My husband and I were both flexible, and I tried to consolidate my errands and only take the car when I really needed it. I think a good attitude helps too. My girls will remember many, many nights going to pick up Dad at his office while they read in the back seats already dressed in their PJs. We'd often crank up That Thing You Do on the CD player and cruise down to his office on Flamingo Road and occasionally stop for ice cream cones at McDonalds before picking him up. If he was running late, we'd dash to the local book store that was open until 11:00 PM and wander around until he was ready to go. It was actually kind of a cozy time.
Besides special, fun times in the car, however, there is one very compelling reason to own just one car: Money. Of course. Your car, as you know, is the single largest guaranteed negative investment of cash you will ever make -- unless something really bad happens to you. Almost no car appreciates -- you spend tens of thousands of your hard earned dollars on a beautiful, shiny car and within 5 years any car is nearly worthless. You can hardly give it away. Ouch.
1. Think of the tax you paid when you signed those papers. 7.35% is a lot on $20,000 - $60,000.
2. Interest too, if you have a monthly payment.
3. Then there's auto insurance every month.
5. Maintenance (oil, tires, tune ups, repairs. . .)
6. State licensing (several hundred dollars in most states).
7. And remember you actually had to earn at least 25% more than the cost of the car just to pay the federal taxes on your income that paid for that car. Happily Nevada has no state tax, but if your state does, then add in another 7% or so.
Even a $20,000 car, if kept for 5 years, will cost you approximately $50 per day to own and operate. That's nearly $20,000 per year. And that's if you paid cash. It goes up if you have monthly payments. Or bought a more expensive car. Or both. My goodness, you could have vacationed quite nicely for a couple of months in europe on that! Or fully funded you 401k for the year. And an IRA. And then retire a multi-millionaire at age 50 -- if you started early enough.
Just like when buying a house, cars are big ticket items, so there is a lot of money to be saved by making wise choices. I don't know about you, but I OFTEN wish I lived in a big city (preferably London :), right downtown so I could easily walk most places. I'd happily give up my car. I could rent a pretty nifty auto for the occasional trip out of town for a whole lot less than $20,000 per year. Also, think how trim my calves would be from all that walking or biking!! I'd also buy a lot fewer items knowing I had to carry them back to my home. The benefits and savings just keep on comin'!! Mostly, I'm writing this post because now that I only have one child at home, and my husband stays in one location all day while at work -- I'm thinking about it again. What I could do with all that extra cash! I'm really very tempted. How about you??