With the global pandemic still hanging around and the threat of an uncertain economic future, it’s easy to want to tighten your belt and save for the future. You could cut costs by clipping coupons, eating at home as opposed to getting takeout, and if you work from home, you can even sell your car. But how much money can you really save by not owning a car?
Apparently, you can save a lot
In a story posted by Out of your Rut, the calculations for not owning a car shows that you can technically save a lot. Of course, this depends on what kind of car you are looking to get rid of and whether or not you’re currently financing it. For example, if you’re currently driving an old car that’s worth $5,000 and you barely ever drive it, then the math is simple. However, if you are financing a newer car, then the savings that you can have by getting rid of it go up exponentially.
According to the example used in the story, if you purchased a car for $25,000 and put 20 percent down ($5,000) with a five-year loan at an 8-percent interest rate, then you would pay roughly $406/month.
That would mean that you would be spending $4,872 per year just on the monthly payments, plus another $750 per year on maintenance (rough estimate), and maybe another $750 per year on insurance. As far as fuel costs, the article goes on to calculate the average costs using a 25 mpg rating with the average driving range of 15,000 miles per year and the national gas price average of $2.50.
If that’s the case, then you would be spending $1,500 a year on gas. In total, you would theoretically be spending $7,972 every year for the first five years. (Their math, not ours).
If it’s any consolation, a writer at Kiplinger can back up the math as they reportedly saved $5,000 per year by not owning a car. So the savings are real!
What would I do without a car?
Now that you know that you can save a small fortune by being car-less, you might want to think about the logistics of not having a car before you sell it off. If you work from home, then your life will be easy since you likely spend around 90 percent of your time at home. However, if you have other obligations to attend to during the week, then you can always take a Lyft or Uber to get to your destination, or perhaps, call a friend for a ride.
With the pandemic, you might not be too keen on taking public transportation, however, you can always get a bike or an electric scooter if that works for you too. In any case, you can always walk. It’s a great time to get fresh air and socially distance from other people anyway. And while any of those means of transportation are nowhere near as convenient as having your own car, just remember all of that money you can save.