If you find yourself struggling to pay your bills each month or not being able to save as much as you want to, one of the biggest ways to improve your cash flow could be to sell your car. For many people, their car is their second largest expense after housing. How much is your car costing you? Consider not just any loan payments, but also insurance, gas, repairs and maintenance, registration, and, if applicable, parking and tolls. It probably adds up to at least a few hundred dollars a month.
You first reaction may be that getting rid of your car is impossible, and certainly, in many cases, it would be very impractical to not have a car (e.g., you live in a rural area, you have small children, you take your sick relative to the doctor every week), but it does not hurt to at least consider the alternatives to having a car and how doable they are:
- Public transportation: Coverage, frequency, and hours of operation can vary dramatically by city. Would you be able to get to work, the supermarket, and the other places that you usually go using public transportation? How long would it take? How much would it cost?
- Walking/biking: The price of a comfortable pair of sneakers and a bike is nothing compared to the costs of owning a car. Of course, how practical these options are depends on how far you live from where you need to go, the climate, and how much stuff you carry with you.
- Car sharing service: Unlike with traditional rental companies, car sharing services allow you to rent a car by the hour. It is not really cost effective if you rent it 40+ hours a week to go to work and run all of your errands, but it can be a terrific back-up for someone who can mostly get by with public transportation and on foot and just needs to use a car once in a while.
If you are not sure if living without a car will actually work, test it out for a month or so. That way, you will know whether it makes you want to tear out your hair or question why you ever needed that hunk of metal before you actually sell your car. If you decide that you cannot get by without a car, there may still be ways you can lower your transportation costs. If you have multiple cars, can you manage with fewer cars than you have now? Are there some places that you drive currently where you could walk or bike? Have you searched around for the best insurance rate, and are you receiving all of the discounts you are entitled to? If you would like to go car-free in the future, are there any changes you can make that would allow you to do so (such as rent an apartment close to work)?
Not having a car can be a major lifestyle adjustment, but those that are able and willing to take the plunge typically find the financial – and health – rewards well worth giving up the convenience of a car.