Want to Reduce Driving Costs? Sell Your Car!
by Rob Viglione
People talk about “hypermilling,” fuel additives, and keeping tires full of air as ways to reduce driving costs. The simplest method, which is rarely discussed, is selling your car!
Getting rid of your car sounds extreme, and might be for some. However, if you’re one of the millions of American families with more than one vehicle, consider sharing and downgrading. If you live near public transporation routes, consider using them.
The total cost of vehicle ownership is higher than most think. Besides pumping fuel for every inch of distance you drive, cars require continuous insurance payments and maintenence. Most importantly, cars come with a high opportunity cost on their value.
Opportunity cost is something we don’t often consider when holding assets or buying things we don’t really need. For instance, say that you have $15K in credit card debt with a 15% APR and just so happen to own a car that costs that much. Opportunity cost is the concept that if you hold the car you are stuck paying interest on that other debt, whereas if you sold it you could pay off the balance. In this case, it means you’re paying roughly $185 per month on pure interest expense!
Adding insurance, gas, amortized maintenance costs, and opportunity cost of capital, the monthly cost of driving can easily reach $500 per vehicle. Selling a car could easily mean the difference between being under the water on your bills or financially solvent.
About the Author:
Robert Viglione is a author, hedge fund manager, and real estate broker. If you like this article check out
The Freedom Factory where Robert and his team discuss everything from personal finance, economics, investing, to current events.
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