One of the hottest topics of the summer has been the rising costs of oil, gas,and driving, in general. There’s an entire movement growing around fuel efficiency and cutting back on driving costs. People talk of new concepts like “hypermilling” and old ones such as keeping your car’s tires filled with air. The easiest, and least discussed, method to lower driving costs is to sell your car and stop driving!
Getting rid of your car sounds extreme, and might be for some. However, if you’re one of the millions of American families with more than one vehicle, consider sharing and downgrading. If you live near public transporation routes, consider using them.
The real cost of driving goes beyond the gas pump. Insurance is mandatory, recurring, and expensive. Depending on where you live insurance premiums can exceed $100 per month (mine do!), and let’s not forget maintenance costs that have a way of creeping up at the worst times! Going a step further, we have to consider the opportunity cost of capital involved with owning the depreciating asset.
For instance, if your car is worth $10,000 and you have that much in 16% APR credit card debt, the cost of driving must include the interest payments you could otherwise erase. In this case, it amounts to roughly 1.32% per month, or $132. That’s pure interest expense, for which you derive no worldly benefit!
Adding insurance, gas, amortized maintenance costs, and opportunity cost of capital, the monthly cost of driving can easily reach $500 per vehicle. Selling a car could easily mean the difference between being under the water on your bills or financially solvent.