Why I’ve Gone Carless (And Why You Should Too)
I sold my car today.
For the first time in my adult life I am carless, and I plan to be carless for the foreseeable future.
My love affair with cars started at the age of eighteen, when my father generously purchased me a four year old Ford Fiesta. A few years later I upgraded to a Renault Clio.
It was my next purchase that took me into the big leagues though, when I purchased a brand new Jaguar XF worth about £36,000 (~$60,000). I drove her for about 3 1/2 years – up to the point when I decided, just a few months ago, that I should upgrade again.
That upgrade was a Jaguar XKR.
This was my ‘dream car’ – I even mentioned it in a previous post on LWB back in 2011. It had a 5 litre V8 supercharged engine and went from 0-60mph in 4.6 seconds. It was worth about £85,000 (~$140,000) brand new; I got it for a snip at just £42,000 (~$70,000).
But now it’s gone. Just an hour ago, only a few months after I purchased it, I sold the car for £37,000 (~$62,000), realizing a substantial loss.
You may be wondering why I sold a car that I had bought only a few months before. You might assume that it was due to financial struggles, but it wasn’t that at all. I could certainly afford the car. In this article I intend to explain my reasoning behind not only selling the car, but why I don’t intend to buy another for the foreseeable future.
Cars: An Insidious ‘Necessity’
Cars are one of those things that we assume we ‘must’ own.
For many of us, that might certainly seem to be the case. I am sure that many LWB readers could not continue living the way they do with a car. However, I have come to the conclusion that to simply assume that life would be impossible to live without a car is most unimaginative.
For what it’s worth, if we go back just a few weeks, I was amongst those of us who consider our cars a necessity. Although I live in the centre of Birmingham (a major city), I still ‘needed’ my car to socialize, drive outside of the city and so on. At least, that’s what I thought.
However, after a lot of thinking, I’ve come to the firm conclusion that I absolutely do not need a car. Not by a long shot. In fact, when I take into account all of the alternative methods of transport available, a car falls firmly into the ‘luxury’ category for me.
More on that later – first, I want to talk about what your car really costs you.
The Cost of Your Car
The amount we spend on cars is astounding.
In the UK we can split car expenditure into the following:
- Road Tax
- Cost of capital (i.e. what we could be doing with the money we spend on our cars if we didn’t own them)
- Depreciation (i.e. the reduction of the value of the car over time)
- Breakdown cover
- Service costs
- Parking and tolls
When most people think of the cost of their car, they might forget (or simply be ignorant of) one or more of the above factors. Two of the most costly – depreciation and cost of capital – are commonly overlooked.
Overlooked or not, your wallet or purse is still getting pounded on a daily basis.
According to the AA, a decent diesel car will set you the average UK car driver around £4,000 (~$7,000) per year when all relevant costs are taken into account.
To put that into perspective, £4,000 is about 20% of the average UK post-tax salary.
Those of you in the USA aren’t doing any better either. According to AAA’s 2013 study, it costs over $9,000 per year, on average, to own and operate a sedan. That’s a fair old chunk of money!
As always, and with reference to leaving work behind, this comes down to the hours you spend working and what you get in return. If you work eight hours a day and spend say 25% of your salary on your car, it means that two hours of your working day – every day – is used just to pay for your vehicle.
But What’s the Alternative?
You may be thinking this is all very well and good, but utterly irrelevant to you, as you need a car. Fair enough. All I ask is that you hear me out. There are actually quite a few alternatives to throwing your money away on a car.
The first ‘alternative’ to car ownership is to own a less expensive car. Obviously, this is more a lesser evil than a true alternative, but depreciation is one of the biggest killers when it comes to car ownership, and you can reduce that liability by purchasing an older vehicle.
Consider for example that a brand new car drops double digit percentage points in value as soon as you drive it off the forecourt. One cannot possibly justify the logic of purchasing a brand new car other than to say, “Screw it, it’s worth the $x,000 I’ve literally just thrown down the drain to have a brand new car.”
At the very least, purchase a nearly-new car. You’ll get 90% of the benefits of a brand new car and save yourself a whole load money.
However, you can do even better though and go older. If you take a little time and do your research, you’ll find that you can get the vast majority of what you want for far less than you might otherwise pay.
For example, here in the UK you can get your hands on a brand new mk7 Volkswagen Golf for around £20,000 (~$33,000). She’s certainly a pretty car:
Alternatively, you can shoot for the older mk6 model, which was released in 2008. You can pick one up from Volkswagen, with an approved used one year warranty, from around £7,000 (~$11,700). Here’s what she looks like:
No, they’re not the same car. Look closely and you’ll see some differences.
I went into a Volkswagen dealership recently and challenged the salesman to ‘sell’ the mk7 to me over the mk6. His response was simple: if you’re not that fussed about having the latest number plate or model, there’s no compelling reason to choose the mk7 over the mk6. Your repair bills will almost certainly be higher with the older model, but nowhere near enough to make up the mammoth difference in price.
After all, we’re talking about spending well over £10,000 less on car here. Can you really justify the material benefits you will experience from choosing a newer vehicle when it comes down to such an enormous amount of money? That’s the question you need to ask yourself.
Reevaluate Your Driving Decisions
The second ‘alternative,’ again, is not actually an alternative but a means of reducing your financial liability.
It comes down to thinking carefully about what your car actually costs you, per mile. Consider for example that the average American sedan costs $9,000 for 15,000 miles driven in a year.
Let’s quantify that.
Each mile is costing you $0.60. If you take a trip to the shops just down the road, it might cost you a couple of bucks just to get there and back. And what of all the other numerous trivial trips you take, possibly on a daily basis?
I believe that most of us don’t thoroughly consider the cost of our travel. I know I haven’t in the past. But that changed when I bought my XKR and realized that a round trip to my home town and back (~70 miles) would cost me about £20 (~$33) in fuel alone.
My point is this: it pays (or saves, more appropriately) to have a rough estimate of the total cost of your car (per mile) in your head so that you can make informed decisions about the times you choose to use it. Perhaps it might be better to walk, ride your bike, or skip the trip altogether (perhaps combine it with another upcoming trip?).
Ditch the Car – Use Public Transport and Your Own Power
I appreciate that there are many people who feel that they simply can’t live without a car.
Perhaps you live in a remote area, or simply are not well-served by quality public transportation links. Either way, you feel that you need a car to get them from A to B.
I’m not going to argue with you. The necessity of car ownership is something you need to figure out for yourself.
However, there are a lot of stories out there about people who are living normal lives without a car.
How about John and Beth? They’re a couple who are living in Oklahoma City without a car. Pretty impressive.
But they’re not the only ones. Turns out Phil is doing it in Strasbourg. This CEO is carless too. Francesca is rocking the carless lifestyle in San Francisco. And the list goes on.
It turns out that more and more Americans are going without the ‘necessity’ of a car. In fact, the percentage of American households without a car has doubled to nearly 10% over the past two decades. Top US Cities with carless citizens include New York City (duh), Washington D.C., Seattle and Chicago.
How are people living without cars, you may ask? Primarily, public transportation and good old fashioned self-propulsion are doing the job.
One thing I realized when I was considering selling my car was that I could possibly get by with public transportation alone. It wouldn’t be easy – I’d probably need to buy a bike, and even then there would be certain situations where I would struggle – but it was possible, and worth investigating.
Perhaps the same can be said for you. Or perhaps you will find that you can replace some of your journeys with public transport, at a lower cost than the equivalent journey would be in your car. You’ll never know unless you investigate further.
Car Hire and Car Clubs
It was when I considered car hire and car clubs that I really saw the light.
Because like I said, public transport wasn’t always going to suffice. It would still be convenient for me to have access to a vehicle without me having to cope with all of the associated ownership and running costs.
I tried asking my girlfriend if we could share her car, but she was having none of it. So instead I thought of car hire, and that’s when I came across the concept of car clubs.
For those of you who don’t know, car clubs are like super-flexible car hire companies. In locations across America and Europe, cars owned by the likes of Car2Go are parked up in designated bays, ready for you to drive. Make a simple booking and you can unlock the car via your smartphone and be on your merry way.
You’ll typically be charged by the hour or per day, and the cost is relatively comparable to car hire (in my experience).
With my new discovery in hand, I did some research and found that:
- There is a car club vehicle just down the road from me
- There is a car rental location just down the road from me
At this point the argument for no longer owning a car was getting pretty damn strong. I live in a city, I have access to a decent public transportation network, and I can rent a car when I need one.
I figured the last thing to do was to figure out how much money I could save.
The Cost of Vehicle Ownership vs. Going Carless
This is where my mind was blown.
A rough comparison was easy enough to do – I simply compared the annual costs of:
- Owning a car worth up to £16,000 (~$27,000) driven around 5,000 miles per mile
- Using public transport, car hire and car clubs to complete similar journeys
Using the AA’s Motoring Cost survey results, I figured out that a car would cost me around £3,300 (~$5,500) per year.
Meanwhile, the equivalent alternative cost was just £1,900 (~$3,200).
In short, I could save nearly £1,500 ($2,500) a year by going carless – and that was with a relatively modest car. Compared to my Jaguar XKR, I’ll be saving well over £10,000 per year.
If that’s not enough and you want a particularly compelling car ownership vs. going carless argument, check out John’s here.
So Why Go Carless?
My new experiment starts today. Rather innocuously in fact, as I won’t even need to use anything but my feet for transportation until Saturday. On that day I plan to hire a car for 24 hours, which will set me back around £35 (~$60).
I’d like to think that I’ve made a pretty compelling argument for considering going carless above, but I’d like to take this opportunity to recap my thoughts, along with mentioning some benefits that I haven’t even touched upon:
- Save money
- Benefit the environment
- Exercise more
- Reduce stress (fewer traffic jams and parking space finding journeys!)
- Use your time more productively (if you’re not driving you can read, write, etc.)
The big one for me is money. The amount one can spend on transportation is insane, and when it comes to leaving work behind, going carless can make a huge difference.
For example, consider this: how much does your commute to work cost you? If you didn’t have to commute and could work from home, how much less would you need to make? Would working from home mean that you wouldn’t need a car?
Although I earn enough to afford the car I sold, ultimately I realized that it was an extreme luxury. Owning it simply didn’t align with the outlook I wrote about in my recent brief guide to money. So my original plan was to purchase something less ostentatious, but I could never figure out what exactly.
The decision-making process (or more accurately, the lack of an effective decision making process) was beginning to seriously stress me out. It took me a long time to realize that the best decision to make was to eliminate the issue altogether. No car at all would mean spending far less money and not having to make the decision as to exactly which car was the most economical/practical/good-looking for a ‘reasonable’ price (whatever ‘reasonable’ is – it all comes down to a small fortune regardless).
Maybe I haven’t convinced you to go carless, but perhaps I have given you a different perspective from which you can view the necessity of your existing car and the regularity with which you need to use it. Because believe me: that car could be the difference between leaving work behind and going nowhere.
Photo Credit: johnrobertshepherd