Whether leasing a new car, taking on a loan, or paying cash, a vehicle is a major financial decision. While you can budget for upfront costs and recurring loan payments, have you considered how much it will cost to maintain your car?
Car costs such as gas, car repairs, tire, and insurance, are steadily rising. In May, Allstate insurance company implemented rate increases of 9.3% across 13 locations. They have also admitted to implementing 78 rate increases averaging approximately 8.1% across 49 places since the beginning of the fourth quarter of 2021. So yes, car insurance is increasing significantly because of the cost of replacing car parts and other materials.
I know. You'll hate this idea.
But, if you need to save money, batten down the hatches, or have some outrageous bad credit card debt that needs to get paid down... Could it be time to lose the car?"
Believe it or not, I did not have a car for the first half of my life. In fact, I did not get my driver's license until after my first child. I had grown up a city girl and just got around on public transportation. During my Boston days, I would commute to work by the "T," and sorted locations around train and bus lines when planning vacations. Forget flying; I was paying off student loans!
Interestingly, you can also potentially do the same to cut costs. With technology and numerous transportation option like ridesharing apps, trains, public transit, carpools, and car rentals, you could successfully live auto-free.
Here is how much you can save beyond your loan payments if you give up the car...
👉Tires and maintenance: AAA found that, on average, new vehicles cost $0.09 per mile to maintain and repair. If you drive 15,000 miles annually, the total cost would be $1,350.
👉 Fuel: Consumers in 2020 spent an average of $0.1 per mile on gas, other fuels, and new motor oil. This adds to an average of $1,500 for a 15,000 miles drive every year.
👉Insurance: According to a "The true cost of auto insurance in 2022" report by Bankrate, American drivers spend an average of $1,771 annually on car insurance premiums.
👉License Registration & Taxes: It costs $712 to register a license and pay taxes as a car owner.
Car maintenance, fuel, and insurance are the top three driving costs per year. Even without car loans, parking fees, depreciation, and other subscriptions you have within the car, believe it or not, you can save $5,333 every year just by ditching the car.
Do you think this is something you can consider to help get your personal finances in order?
👇Share your thoughts in the comment section below 👇
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Disclaimer: Jessica Perrone is not a registered investment professional nor a financial advisor. This content is for educational purposes only and is not investment, tax, or financial advice. Always do your own research. You are solely responsible for all investment, tax, and financial decisions that you make. Please read the full disclaimer here.