Why I'm Thinking Of Selling My Car

Featured above: My 2013 Honda Civic EX

I am thinking about selling my car. It’s one of those things that I never thought I would consider after experiencing the freedom of being able to drive where ever I want. I took public transit until I was 27 and so getting my first car was something special. I can’t remember how many hours I spent on the LRT/C-Train going to school and to and from work, and needless to say it had its effects on my dating life.

Something changed that made me realize I don’t need a car. I moved downtown. Whereas before I had an hour commute each way to downtown Calgary, I now have a 10-minute walk to work. I love the change but it has its pros and cons.

Pros of living downtown

  • Saving almost an hour and a half per day. This is equal to 7.5 hours a workweek, or 30 hours a month or 390 hours a year. Think about what I can do with all that time! Even assuming my free time is worth $20 an hour, that’s $600 in time I am theoretically saving per month. However, I would like to think my spare time is worth as much or more as my time at work so I would assign a rate higher than that.
  • The joy of walking everywhere. Studies have shown that those that walk to work are happier than those who take transportation and I can attest to that.
  • Not needing to worry about going out with friends and drinking too much. After work when I got home I rarely went out again unless I was seeing my friends immediately after work. Now I can walk to the venue and stumble my way home.
  • Lower maintenance and gas costs on my vehicle. My Civic is great on gas but I was filling up once a week. Gas savings = $160 a month + $100 oil changes every 3 months + $100 monthly train pass = about $290 a month.
  • Avoiding rush hour traffic. I’ve never been in an accident where I was the driver but I swear if I did it would be on the Deerfoot (one of the most dreaded highways in Calgary especially during rush hour or the winter). Thank god I no longer have to drive on that thing and be ready to flip someone off or be flipped off at a moment’s notice (both have happened). Stress level is zero.

Cons of living downtown

  • Living downtown is more expensive. I am paying $1,726 a month for a one-bedroom versus the $900 a month I was paying living in a basement suite. However, I own my condo so $702 of that is principal payments. Essentially then I’m paying $326 more a month compared to my previous place but once you factor in the time savings, gas, and transit I’m waaaay ahead.
  • Less ‘time’ to listen to audiobooks and podcasts. Even though I have more time now, I like to listen to audiobooks and podcasts when I’m busy doing something else like driving. I’ve found that I’ve been listening to less since my commute is much shorter, but I’ve been experimenting with listening while I run and cooking which makes it not so bad.

Overall I’m happier living downtown, get to go out more, walk more, and generally have more time in my day.

Now going back to my car situation, it helps if I break down the costs. I’m going to show you what I spend monthly on my car and then show what those savings could mean if I invested that money instead, and then what would happen if I sold my car now and invested that money too. 

Costs of owning my car downtown

Car payments = $452.96 a month (16 months remaining/36 months)

Insurance= $106.06 a month

Gas = $40 a month

Opportunity cost of not renting out my parking stall = $250 a month

Total monthly expenses= $849.02

Total yearly expenses= $849.02 * 12 = $10,188.24

$10,000 a year is a lot of money! However, that’s just a drop in the bucket of what car payments can do over time. Over 25 years invested in the stock market that is about $1,050,782.

Of course, my goal was to pay off my car and drive the thing into the ground, so does it still make sense to sell it if I only have 16 more months of payments remaining and can save money after my car is paid off? Let’s do the math.

What my car is really costing me

Amount owing on my car = $7,394.42

Average black book value = $13,100

Amount of proceeds assuming I sell my car at $12,000 = $4,605.58

$4,605.58 + $10,188.24 of yearly savings + 4 months savings more of $3,396.08 (to equal 16 months) = $18,189.90

Now let’s take that $18,189.90 and invest it over 25 years = $184,075.51

Is my car worth $184,075.51 to keep making the payments over 16 more months??

You might ask, but won’t you need a car sometimes? You are correct. The above assumptions are overly simplistic for illustration purposes. In real life, I’ve calculated I will need a car about once a week to either get groceries or go to the mountains or to Edmonton to visit family and friends. However, there are alternatives to owning a car that end up being cheaper.

Alternatives to Driving

These little smart cars that could are ubiquitous in Calgary. You pay per minute of use so if you don’t need a car for too long you can save a lot of money over the long run. Car2go offers two different cars to rent depending on if you need to get to point A to point B, or if need more storage. As an example, if I’m going to get groceries andI’m gone for 30 minutes, it’ll cost me between $9.60 and $13.50. I can also rent per hour and car2go also offers day rentals if I need the car longer.

Features

  • $0.32 a minute for their smart car.
  • $0.45 a minute for their Mercedez-Benz.
  • Gas, insurance, and parking are all included.

Things to Consider

  • $5 one-time sign-up cost.
  • $1 activation fee for your first 200 trips in a calendar year.
  • Parking has its limitations. You cannot park outside the car2go Home Area, parking spaces that are owned by a private party such as a school, business or residence, and can’t park in garages, lots, or other facilities. You can park on the street though where applicable.

Cost Breakdown

Vehicle Minute Rate
1 Hour
3 Hours 6 Hours 1 Day 2 Days 3 Days
Smart $0.32 $15.00 $35.00 $49.00 $69.00 $99.00 $149.00
Mercedes-Benz $0.45 $19.00 $45.00 $69.00 $99.00 $179.00 $249.00

*All prices in CAD and based on Calgary rates. Prices may vary for other locations and change anytime.

The king of ridesharing, and frankly the only ridesharing option in Calgary until Lyft launches, Uber is a cheap and affordable way to get around the city. Not to mention not having to worry about parking, makes Uber a faster and more convenient way to getting around. But how much does it cost? I typically only use UberX, their low-cost option which costs $2.30 for the base fare plus $0.17 per minute and $0.90 per km in Calgary. To go to the grocery store and back, for example, would cost me about $7.50 each way or $15 round trip without surge pricing. A little more expensive than car2go.

Features

  • 3 different levels of service:
    • Uber Select: Their black car service and the most like a traditional taxi at more affordable rates. Fits up to 4 people.
    • UberXL: This is if you need an SUV. Fits up to 6 people.
    • UberX: Their most affordable option. Fits up to 4 people.

Things to Consider

  • During times of peak demand prices will increase. This is called ‘surge pricing’ and is meant to encourage more Uber drivers to hit the road to meet the demand. Expect bad weather conditions, sporting events, and the holidays to increase pricing.
  • More expensive than car2go but you do not have to worry about finding parking.
  • Not ideal for day trips. For longer use, either look to car2go’s day rentals or rent a car.

Cost Breakdown

Service Base Fare Per Minute Per Km Cancellation Fee Service Fee Minimum Fare
Select $5.30 $0.32 $2.10 $5.00 $3.00 $9.00
UberXL $4.00 $0.26 $1.70 $5.00 $3.00 $8.50
UberX $2.30 $0.17 $0.90 $5.00 $3.00 $6.30

*All prices in CAD and based on Calgary rates. Prices may vary for other locations and change anytime. Check uberestimate.com to see individual city prices.

Lime is a new addition to the Calgary scene, and the first city to launch with them in Canada, with their electric bikes in over 100 cities across the globe using GPS and 3G connectivity. The best part of these bikes is their dock less feature unlike other bikes in other cities where you need to return the bike to a dock. This means you can park a Lime bike anywhere you like that is city property.

Features

  • 4 different levels of service (depending on the city):
    • Lime-S: Electric scooters that are powered by its rechargeable battery and 250-watt motor.
    • Lime-E: Electric assisted bikes that assist in pedaling.
    • Limebike: Their classic bike with up to 8 speeds.
    • Limepod: Their car option. Similar to car2go.
  • Lime also offers discounted rates for those eligible with low-income called Lime Access (only offered in the U.S. currently).

Things to Consider

  • Need a helmet to use.
  • Not ideal in the winter.
  • If you use it a lot, might be cheaper to buy your own bike/scooter over the long term.
  • Hard to haul luggage or multiple people to share the cost.
  • If traveling with multiple people, cheaper to get an Uber or car2go.

Cost Breakdown

Fleet Cost to Unlock* Per Minute*
Lime-S $1.00 $0.15
Lime-E $1.00 $0.30
Limebike $1.00 per 30 min $0.033
Limepod $1.00 $0.40

*Note the above costs are estimates.  Prices may vary for other locations and change anytime. Only Lime-E is available in Calgary at this time.

Keep in mind that public transit is cheaper than any of the above options but often I’m in a hurry and impatient to get to where I need to be. I also have to weigh the costs if I’m riding with someone else. If so, then it’s cheaper to get Uber or car2go than it is to get two Lime bikes.

Car rentals

This option is mostly for when I go up to Edmonton to visit my family or to go on a day trip to the mountains to hike or go skiing. Using a price check website like Kayak.com and I can rent a car for as low as $40 a day plus gas. A weekend trip to Edmonton, therefore, would cost me $120.

Turo is peer-to-peer car rental services that connect renters with car owners. Think of it as the Airbnb of car rentals. If you own a car you can rent it out on Turo and get paid and vice versa, you can rent cars on here instead of going through a traditional car rental service. It’s nice because the owner of the vehicle can meet you somewhere to drop it off and pick it up, so if a car rental place is too far, this service can save you some time. Prices are usually on par with normal rental services but you get to pick from a huge variety of cars, from economy to luxury and you get more personalized service.

Features

  • Usually cheaper than renting a car for an extended period.
  • More personalized service vs. a traditional car rental service.

Things to Consider

  • Check the reviews and see if the delivery of the car is included.
  • The longer you rent the car the bigger the discount you usually get. This is where Turo really shines.
  • Read the fine print for their insurance offerings. I like to recommend their premium insurance plan to know you are covered but this adds to the cost.
  • Gas is extra like a rental car.

Summary

With so many alternatives to owning a car, it has seriously made me question if I need to own one. Not only is my vehicle costing me $184,076 given the future value of my savings potential, but if I continue to have car payments for the next 25 years if say, for example, I trade in my car after I finish paying it off, owning a car will eventually cost me over $1,000,000. That can be enough to retire on!

If you’re in the same position as me, what would you do? Would you give up the convenience of owning a car to hit your financial goals faster? To make things a little easier, I’ve summed up the estimated costs for each alternative that I would likely be using so you can make the calculation for yourself depending on what you need a car for.

Service Base fare Per minute Per Km Example: 30 min ride for 20km Day Trip Week Trip (per day)
Car2go $1.00* $0.32** $10.60 $69
UberX $2.30 $0.17 $0.90 $25.40
Lime-E $1.00 $0.30 $10.00
Car Rental*** $48 $63
Turo*** $40 $34

*For first 200 trips in a calendar year, resets annually
**Using car2go’s smart car
***Using a Toyota RAV4 for comparison.

Assuming the above, if I use a car once a week for 30 minutes it’ll cost me anywhere between $10 to $25 or $40 to $100 a month. Add a car rental, or Turo, also once a month, I’m at approximately $150 a month for the use of a car when I need one. $150 a month versus $849.02 per month owning until my car is paid for, or $150 a month versus $396.06 after it is paid for.

What should I do? What should you do? Comment below.

Legal Disclaimer: The views expressed by Mr. Dumont on Money Sensei are solely his and not intended as investment advice nor a guarantee of any financial return. Mr. Dumont is not an investment or tax professional, so the information contained on the blog is not a substitute for professional advice. The contents of this blog are accurate to the best of his knowledge at the time of posting, but rules and laws are ever-changing. Please do your research to confirm that you have the current information.

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