Money & Career

Should you sell your car to save money?

Author: Canadian Living

Money & Career

Should you sell your car to save money?

If you live in the city, sometimes it just feels like owning a car is more of a liability than it's worth. The price of gas is ridiculous, insurance rates are nuts -- heaven forbid you should ever use it. Downtown parking lots gouge and a parking space in a condo building can run you a cool $30K in some towns. Then there's depreciation, car payments, leasing costs and buyouts, maintenance and repairs. It can all add up to a small fortune.

For many folks a car truly is a necessity -- for work or family. But for many more of us, it's really just a matter of convenience, preference, habit or even status. This is where we might want to delve into our psyches a bit -- take a look at what car ownership means, really means, for us. Is our need really just a want?

How much money does your car cost you?

New mom Peri Deacon-Burgoyne ditched her wheels and she’s saving big. "My husband travels weekly and had a car and I had just had a baby and was at home, so we got rid of my car," she says. "I'm saving about $800 a month -- not counting the gas I’m not buying -- which buys a lot of diapers and wine!"

When calculating how much your car costs you, don't just look at monthly payments -- all the costs have to be accounted for. Joe Conde, a mechanic in York, Ont., says the average car owner should spend about $1,200 a year on maintenance and small repairs -- and that’s if the car is no older than five years. As for insurance, rates are all over the map, depending on who you are and where you live, but expect anything between $1,600 and $2,000 per year. Add gas and parking and you should have a good idea of what your car is costing you. (For more details on calculating driving costs, download this PDF guide from the CAA.)

What are the costs of being car free?
Of course, you're probably not going to walk everywhere or become a hermit, so for a fair comparison, you have to look at costs for public transit, cycling, car sharing (a convenient service now available in most Canadian cities), taxis and car rental and calculate how much you'll use them. Subtract those costs from what you'll bring in by selling your car plus the annual carrying costs, and you have an accurate estimate of your savings (perhaps of how much you can spend on your next winter vacation).


Not quite ready to take the plunge? Try taking a driving hiatus first. Consider it an experiment. Park the car and simply buy insurance to cover vandalism: that can be as little as $25 a month. Then see how it feels, how viable it would be for you to go carless and how much you save. You might be surprised at how easy it is to live car free.
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Should you sell your car to save money?

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