Your Cost to Drive Is Higher Than You Think
Everyone knows that cars are expensive. In addition to the cost of acquisition, there’s maintenance, insurance and the ever-increasing cost of gasoline. We all know that those costs add up, but few of us know exactly how much it really costs to own a car. Let’s take a look.
According to Consumer Expenditures in 2006, released in February of 2008 by the U.S. Department of Labor’s U.S. Bureau of Labor Statistics, the average vehicle costs $8,003 per year to own and operate. The breakdown of the figure comes to $3,421 for purchasing the vehicle, $2,227 in gasoline and motor oil expenses, and $2,355 in other vehicle-related costs. As one might expect, the least affluent spend less than the most affluent. In fact, the nation’s most affluent quintile spends a whole lot more, with their $15,198 in annual vehicle expenses coming in at nearly six times the $2,856 spent by the least affluent. An overview of vehicle expenses based on household income is provided in figure 1 below.
According to the AAA, the average person spends $9,641 per year for the privilege of driving. Keep in mind that these estimated costs are based on an average gasoline cost of $2.256 per gallon. The numbers also don’t include the cost of parking.
Using, the AAA method, let’s calculate the real cost of this trip, supposing you drive your vehicle (since we’re speculating, let’s speculate that you drive a really nice car such as an Toyota Avalon, which get roughly 25 mpg) 15,000 miles a year.
Total gas for the year: $2,400
Maintenance, using AAA averages: $739.50
Full coverage insurance: $1,006
License, registration, taxes: $769
Finance charges: $1,089
Total cost for the year: $11,258
Of course, the numbers for every driver and every car will be different, but the point to note here is that the true cost to operate a vehicle is much higher than just the gas you put in it.
Minimize Your Costs
Regardless of how much you spend on your car each year, less is always better. Although eliminating all spending on transportation isn’t practical or possible for most people, there are steps that can be taken to keep your costs low.
1) If you don’t drive much, “zipcar” may be right for you.
The beauty of ZIPcar clubs is that it’s there when you need it and not when you don’t. Just imagine never having to make a car payment, pay a car insurance bill, or worry about the cost of fuel again.
Zipcar is a car club – the world’s largest car club network currently operating in London, Bristol, Oxford, Cambridge and Maidstone (and another 50+ cities across Europe and North America).
Zipcar is far simpler and more convenient than conventional car hire. Once a member, when you need a car, just choose your make and model from the great selection parked around your local area; get in and drive off.
2) If public transportation goes to the places that you need to be, you should seriously consider it’s merits. Not only does somebody else do the driving, but taking public transportation can often reduce your monthly transportation expenditures by a significant amount. Buses, trains, subways and van pools all provide relatively inexpensive alternatives to driving yourself to work.
3) If you’re headed to anything important, like work, biking is a completely green form of transportation that’s free (so long as you have a bike) and provides some great exercise to boot. With Commute Solutions estimating the cost of a 10-mile round-trip to work at $10 (including gas, insurance, maintenance, initial costs and indirect fees), it’s definitely a good idea to consider taking your bike instead.
Whatever you are driving, make a conscious effort to drive it less frequently. Walking or biking to local destinations is good for your health and good for your budget. When you do drive, consolidate your trips. Go to the shopping center, the bank and the dry cleaner all in the same trip instead of making three separate trips.