Less car, More savings

Transportation is the second largest expense after housing for the average person, costing $8,344 a year or $695 a month according to the 2005 Consumer Expenditure Survey.

Three years ago I sold my car. I calculated that I was spending roughly $550 (roughly $400 in cash expenses such as parking, gas etc and an estimated $150 in depreciation) a month when I owned a car. The problem was, that living in the middle of a city, I hardly ever drove. On average I only used my car three or four times a month. Yes, I was spending nearly $150 a trip, and to make things even worse my car was in a garage 8 blocks from my apartment!

I eventually came to my senses when I kept seeing the signs for car sharing services. At first I resisted the idea - what it I needed a car and there wasn't one available? Are there cars close to me? What if I hate the selection? What if there is a major natural disaster and I need a car? Yes, I actually thought of that.

After looking into the services, I signed up for a trial run with Zipcar. They had cars close to me, seemed to have a good selection of cars and the web interface was pretty easy to navigate. I parked my car at a friends house and gave her the keys to hold for a month to see if car sharing would work for me.

At first it took a little getting used to, the idea of consciously planning a trip and everything I was going to do was foreign to me - and I think most Americans. We're so used to hopping in a car and going shopping or whatever for as long as we want. Now, I had to plan my shopping trips. Weird. How long does it take to go grocery shopping, or to Target or to the mall? What do I do for day trips or extended road trips?

It turns out planning was pretty easy. Grocery shopping is a hour and half, add another hour and an half if I want to also go to Target. For trips it depends on how far away it is. Within a range of roughly $225 miles and it's cheaper to use Zipcar, beyond that and I usually rent a car from a traditional car rental company.

Financially it has been a great move. I no longer have to worry about the daily price of gas, insurance, or maintenance issues - all of that is included in the price. my current average car cost is roughly $100 a month which includes an average of one longish day trip a month. I was able to sell my car and use the money to fully fund my cash reserve and the extra monthly cash flow is being used to fund other saving goals and also invest for the future.

Using a car sharing service isn't for everyone. If you don't live in an urban environment or even if you do but you happen to drive a lot then it probably wouldn't be cost effective. But for a myself and a lot of other people in a similar situation using a car sharing service is a way to simplify your life and save a lot of money.