According to AAA, the average annual cost of owning a car is $8,558, or $713 per month including fuel, maintenance, tires, insurance, license and registration fees, taxes, depreciation and finance charges.
This figure doesn’t include parking and valet, which can add up to an additional $1,200 to $2,000 (~$100 to $200 per month) if you pay for monthly parking downtown or valet your car regularly.
But Now You Have Options: With the advent of rideshare services, if you own/lease one or two vehicles you should strongly consider selling one and turning that capital into an appreciating investment.
Try to determine what your monthly transportation costs would be if you had to ditch one or more of your cars.
If it’s less than $713 per month, then not only can you invest money currently tied up in your vehicle, but you can decrease your monthly costs as well!
Since ditching my car my transportation spend has not exceeded $400/month, so I’ve been saving over $3,756 per year by ditching my vehicle, plus incremental parking expense savings.
If I invested all of those savings, this is what my retirement calculator looks like at an average annual stock market return of 7%:
Here’s what it looks like if I sold my car for $5,000 in cash, and earned 10% per year by investing.
I can basically fund a nice retirement with my vehicle cost savings every year.
Now THAT is some food for thought.
BOTTOM LINE: Jump start your retirement savings while ditching the stresses of driving and searching for parking. You can rent a vehicle when you need to use it, use rideshare, public transportation, or walk or bike more to save mountain loads of cents.
You can learn more about the holding cash (or worse, a depreciating asset) by reading this blog post.
Are you considering letting go of one or more of your vehicles?