Author Chris Balish says the way to put the brakes on high gas prices is to do the unthinkable: leave your car behind! In his new book, "How to Live Well Without Owning a Car," Balish argues that getting rid of the ride can actually increase your quality of life. An excerpt.
Despite what $20 billion of automobile advertising every year would have us all believe, buying or leasing a car, truck, or SUV is the worst financial move most people make in their lifetime. And they make this mistake again and again, at a cost of literally hundreds of thousands of dollars. As you will see in the coming chapters, cars devour cash, increase debt, reduce savings, and make financial freedom difficult to achieve.
This book suggests taking a different path — a car-free path. The program in these pages will show you how to live a full, active life without owning a car. And without a car to pay for, practically anyone can get out of debt, save money, and achieve financial freedom. The truth is that tens of millions of working Americans do not need to own a car. One basic premise of this book is that if you can get to work reliably without a car, you don’t need to own one.
Are there exceptions? Sure, plenty. Families with children may find it difficult, though not impossible, to live car-free (see chapter 28). Outside sales representatives who use their cars to make sales calls would have a hard time not owning one. Construction workers who haul heavy tools need their pickup trucks. People who live in rural areas not served by public transit might find car-free living difficult. And anyone with special medical needs or demanding family responsibilities probably needs to own a car.
There’s no doubt that cars, trucks, and SUVs are useful tools. They provide instant, on-demand transportation at a moment’s notice. They can haul heavy loads and help you run errands. And they can whisk you out of town for a weekend away. That’s why this book does not suggest that you never use a car or never ride in one. This book simply argues that millions of Americans can get along just fine and save a fortune by not owning a car. The few times a year when you do need one you can rent or use car sharing.
Living car-free in America is not difficult, but it does require some mild lifestyle changes. This book will walk you through the process step-by-step. The strategies in this book will put you on the car-free path to financial freedom; or, if you do not wish to get rid of your car entirely, this book will help you save money by using your car less. So even if living “car-free” isn’t your style, this book can show you how to live happily “car-lite.”
Chapter One: The car-free way to financial freedom
If you currently own or lease a car, truck, or SUV, this book has the power to give you the equivalent of a $5,000 to $10,000 raise. Following the program in these pages can help you slash your monthly expenses, pay off your credit cards, build an investment portfolio, save for a house, and possibly pay off your mortgage early. You could even become a millionaire, or retire at age forty. Regardless of your income level, this book can help you keep more of your money and lead a richer life.
And financial benefits are just the beginning. You’ll also learn how not owning a car is liberating, rewarding, and fun. Without a car to constantly take care of, you’ll have fewer hassles, lower stress, less aggravation, and less to worry about. You may even find you have more free time. With no car in your life you may also improve your health, get more exercise, lose weight, and sleep better. In other words, you’ll be happier, healthier, and much wealthier.
Best of all, practically anyone can live happily without owning a car — or as many people call it, living “car-free.” This program is not abstract theory. It’s not a fringe concept applicable to a select few. It is a broad-based, step-by-step process that almost anyone in mainstream America can follow to start saving money right away. Even if you’re convinced you “need” a car, this program may change your mind.
What this book isHow to Live Well without Owning a Car is a personal finance and lifestyle book. It is a simple program that can dramatically improve your finances, your quality of life, and your peace of mind. According to Kiplinger’s Personal Finance magazine, the best way to cut costs and save money is to go after one big expense, rather than a bunch of little ones. This book will show you how. And it’s a lot easier than you think.
This book isn’t written for people who live in New York City, where it’s common not to own a car. The program is designed for people who live in the rest of America: in cities like Omaha, Phoenix, Los Angeles, San Francisco, Boston, St. Louis, Cincinnati, Chicago, Philadelphia, Salt Lake, Seattle, Miami, Sacramento, Washington, D.C., and so on. You can also live well without a car in smaller towns like Oxford, Ohio; Columbia, Missouri; and Eugene, Oregon.
Furthermore, this book is about living well without owning a car. It doesn’t mean you won’t ride in one or drive one occasionally. You will. You may even decide to keep your car, but use it less. This book will show you how.
Who should read this book
Anyone who owns or leases a car or truck should read this book. If you have two or more cars, read it tonight! You should also read this book if:
- You’re fed up with high gas prices
- You think owning a car is a hassle
- You have financial problems
- You worry about money
- You have credit card debt, student loans, or personal loans
- You long for the freedom and serenity of a debt-free lifestyle
With no exaggeration, this book can change your financial life, even if you go car-free for only a short time. But it’s not just for people with troubled finances. This book is for you if:
- You’re a renter and you want to save for a down payment on a house
- You want to pay off your mortgage in ten years, instead of thirty
- Your goal is to retire from full-time work in your forties
- You just want to work less and have more free time
Or maybe you feel your life is too complicated. Going car-free can simplify your life in one bold step. You’ll have fewer bills to pay, less paperwork to do, and fewer complications in your life.
If you’ve already adopted a car-free or car-lite lifestyle, this book will help you maximize enjoyment, minimize hassle, and boost personal fulfillment. And if you follow the steps in chapter 22, your social life will soar.
Americans spend one-fifth of their income on cars
According to the U.S. Bureau of Labor Statistics 2003 Consumer Expenditure Survey, the average American spends eighteen cents of every dollar earned on transportation. And 98 percent of that transportation spending is for “the purchase, operation, and maintenance of automobiles.” That makes our cars the second largest expense behind housing. And by the way, that 18 percent figure may be low; it was calculated using the average price of gasoline in the year 2003, which was $1.55 per gallon.
Other research has also shown that Americans spend a big chunk of their income on cars. According to a 2004 American Automobile Association study, the average American spends $8,410 per year to own a vehicle. That’s equal to $700 per month! The figure includes car payments, insurance, gas, oil, car washes, registration fees and taxes, parking, tolls, and repairs. You’ll see those average AAA numbers used to calculate some of the financial examples later in this book. But, of course, “average” does not necessarily mean typical, and the amount Americans spend on their cars varies widely. The only way to know for sure how going car-free will affect your bottom line is to run the numbers for yourself. A worksheet in the next chapter will walk you through the calculations. But for now, just think about how your life would change if you had hundreds more dollars to spend (or save) every month.
Show me the money
Let’s consider what would happen if you invested your money, instead of spending it on a car. Are you ready for some shocking numbers? That AAA average annual cost to own a car of $8,410 invested at an 8 percent annual return over thirty years would be worth $1,043,251.
So if you adopt a car-free lifestyle over the long term, quite possibly you could become a millionaire. Imagine, a million-dollar net worth just by not owning a car! And that doesn’t include any other savings or 401(k) money you might be investing.
On the other hand, thirty years is a long time. So what if you live car-free for a shorter period? Based on AAA’s numbers ($700 a month) and an 8 percent annual return, going car-free would still have a dramatic impact on your finances.
As you can see, the longer you go without owning a car, the greater the financial benefit. So the key to successfully using this book to reach your financial goals is simple: you must not merely survive without a
car, you must learn to live well without a car. If you apply the advice in this book in the way that works best for you, living car-free will be a joy, not a struggle, and you may never want to own a car again.
Why 8 percent?I chose to use an 8 percent investment return in the examples above because the long-term average annual returns of investing in the stock market exceed 8 percent. For example, the average annual total return for the S&P 500 stock market index (as of January 31, 2006) is as follows: one year, 10.38 percent; three years, 16.42 percent; and ten years, 8.99 percent.
However, investing in the stock market involves considerable risk, and is best suited for long-term investment (five years or longer). Also, past performance is no guarantee of future returns. So investing in the stock market is certainly not suitable for everyone. Therefore, I have included additional examples in this book based on a 5 percent average annual return. Five percent is a more likely return for conservative investors, or for short-term investors who are not investing in the stock market. It is always a good idea to seek professional financial advice before investing in the stock market or any other volatile investment vehicle.
The car-free way to financial freedom
Have you ever dreamed of taking six months off work to travel the world? Or maybe taking a year off to write a book? Or quitting your job to go back to graduate school? Sadly, for most people these things are simply not possible because their monthly expenses are too high, and they don’t have enough savings.
When you live car-free, your monthly expenses drop dramatically and your savings can skyrocket. This powerful combination can give you the freedom to live life on your terms. Hate your job? Then quit, and take your time finding a new one. Does your wife want to stay home and be a full-time mom? She can. Would you rather work for a nonprofit, even though it would require a pay cut? Do it. This is financial freedom: the ability to make life decisions not based on financial concerns. When you live car-free, you can have this type of financial freedom.
You can live well without a car
As you are beginning to see, there are enormous financial benefits to living car-free. You’ll read about more of these benefits in chapter 2. But can you really live in America without owning a car? And can you maintain your normal activities and your normal social life? The answer to both questions is yes.
Despite the fact that we live in a car-centered culture, not only can you live without a car, you can live well without a car. And if you follow the hundreds of tips and strategies in this book, living car-free can become downright easy. You’ll learn how to get to work, how to get your shopping and errands done, how to maintain a vibrant social life, and how to overcome car-free challenges with creativity. By following the step-by-step program in this book, you will soon be smiling on your way to the bank, instead of frowning on your way to the gas pump.
The way I see it, my job is to teach you everything you need to know to live in America without owning a car. Deciding what to do with all the money you’re about to save is up to you.
Excerpted from "How to Live Well Without Owning a Car: Save Money, Breathe Easier and Get More Mileage out of Life." Copyright (c) 2008 by Chris Balish. Reprinted with permission from Ten Speed Press.