How many thousands of dollars do you have parked on the street or in the garage losing money every day?
It’s a question I’ve been focused on for our household recently. My wife and I each have a car, plus there is a 12 seater minibus for my wife’s tourism business that we could use for a personal trip in a pinch.
I reckon we’ve got about $70,000 of vehicles sitting on the street, slowly degrading, and all the while costing us money in servicing, petrol, tyres, insurance, and registration.
Surely there’s a financially smarter way of getting around!
I want to share the research I’ve done on a few alternatives to owning a vehicle and a little about my journey with car ownership.
The plastic card of freedom and my silver (not grey!) Subaru I grew up in the outer suburbs of Melbourne where public transport was a bus every half hour and nothing was in easy walking distance.
Like most teenagers, turning 18 and getting my license was a HUGE milestone. Honestly, I was more excited about taking my driving test than my 18th birthday party.
I already had a car, a 1975, 2 door silver (not grey!) Subaru complete with the mandatory Oakley Thermonuclear sticker on the back window. Remember those?
All I needed was that plastic card of freedom. No more buses or bike rides for me!
Almost 30 years on, I still find the mental connection between car ownership and personal freedom a tough one to break.
Aussies spend an average of $17,000 on road transport each year
Remember those 80s beeper gadgets that clipped onto your belt? Back then, those beepers were essential pieces of tech equipment for many jobs.
Now they seem like a million years old.
What is the beeper equivalent today? What will we look back at in 20 or 30 years and think how antiquated and cumbersome it seemed.
A big possibility is privately owned cars.
According to ABC Life “The average Australian metropolitan household spends about 13 percent of its annual income, which is about $17,000, on road transport.”
$17,000 is a big chunk of the average household budget. Considering many Australian cars sit idle for 23 hours per day, is it an expense that makes financial sense?
Just knocking 20 or 30% off these costs could be the equivalent of a pay rise.
We ́ve all heard the basic financial tenets of car ownership – never buy brand new (the depreciation is a killer) and wherever possible don’t borrow to buy a car or lease one, even if your employer tells you about the vague tax benefits of a novated lease.
So, what are the alternatives to car ownership?
Car-sharing is perhaps the best known alternative to car ownership.
2017 Roy Morgan research found around 200,000 Australians were using car-sharing services like Go-Get and Flexi-car, estimating as many as 1.5 million Australians could be using car-sharing schemes within 10 years.
It´s a great option to replace a second family car. Families keep the main vehicle but when they need to head in different directions, kids sporting activities, for instance, they grab a share car.
Maven, a car-sharing company owned by General Motors, is evolving the car-sharing model.
Maven holds pools of vehicles, often in the basement of large apartment buildings and using a mobile app you book the car when you want. The app even works as the key.
Maven is still in its infancy in Australia but this model at hints at a future where car manufacturers start looking more like a rental company or even an airline – you don’t buy the car, you just buy the journey.
Uber´s stratospheric rise increased transport options while shaking the taxi industry from its complacency.
Do you catch public transport to work each day and only use your car on the weekend? It’s highly likely replacing your car with weekend Uber rides would put you ahead financially, with less parking and traffic stress!
Electric and power-assisted bikes are now one of the fastest-growing segments of the bicycle industry becoming increasingly popular for the daily work commute. They ́re not cheap but the long term cost savings are worth it.
A friend of mine recently bought an electric bike. He handed back his company car which resulted in an increase in take-home pay and a healthier lifestyle as a result.
His commute time hasn’t increased and he kept the family car for camping trips and running around on the weekend.
What path have I chosen?
While I love the idea, car-sharing doesn’t seem to be quite mature enough yet in Australia. I haven’t been able to find a fleet close enough to where we live to make it convenient – and convenience is key.
However, if I lived in an apartment with a Maven fleet downstairs, I’d be all over it!
We certainly need one family vehicle and for the time being, I’m holding onto our second car for two reasons –
- My son turns 18 in a few months, and once he gets his licenceI think 2 cars between 3 drivers makes sense.
- If I sold it, I’d only get around $5,000 – most of its depreciation cost has already occurred.
Instead, I’ve focused on reducing running costs.
Most days I walk or ride to work and leave the car in the garage at the office. This cuts fuel and maintenance costs significantly.
I’ve reduced insurance to 3rd party only, saving $900 per year.
And whenever it dies, it won’t be replaced. I’ll use Uber from that point forward.
Beyond the financial benefits, I’ve also discovered less time in the car equals a healthier, happier me. I’ve always been reasonably active, but I ́ve found spending less time in the car, and more time in the fresh air leaves me feeling energised and less stressed.
I definitely think it’s worth reflecting on your current car situation. Could it be adapted, or completely overhauled, to boost your finances and wellbeing?