These days, most households have at least two cars. This has largely been driven by the increase of dual-income families over the past several decades. But, for some people, the recent rise of work from home arrangements and greater flexibility with how one earns an income brings to question – should I become a one-car family?
My family recently started experimenting with becoming a one-car household. Ironically, I write this post from the “Motor City.” I am fortunate to be employed by a company that allows me to work remotely from the comfort of home. A couple of years ago when I began working from home full time, I discovered that although my wife and I each had a car, there was always one car sitting idle in the driveway. At one point, my car sat long enough that the battery actually went dead. And on the weekends, my wife and I are typically together with the kids, using one car to do our weekend activities like going up north, weekly grocery shopping, going for a hike at a local park and so forth.
This got me thinking, “what would it be like to have only one car? Could we really do it?”
When I was a kid, my family did not own a car. My mom didn’t drive. I spent a lot of time with my grandparents. They shared a car and went everywhere together. They were both retired in the mid-1980s, in their late 50s, early 60s. On the weekends, my sister and I were often cruising around town with them. Back in those days, it was not uncommon for me to be sitting in between the two of them on the big front bench seat (remember those?). What I remember most is that by sharing a car, they somehow felt closer…to me and to each other. They enjoyed spending time together. I imagine when each of them had something to do separately from each other, they just planned for it versus carrying the extra costs of two cars year round. They had the means. They were just frugal.
Cars are expensive!
I challenge you to break down the cost of your car to a daily, monthly and yearly rate. All in, between a car payment (if you have one), car insurance, maintenance and repair costs, parking fees (if you have them) and other expenses, that daily rate of owning a car can be extreme. Let’s say you have a $400 monthly payment, a $100/month insurance expense, $300/year in oil changes and other maintenance and $120/year in registration fees. That is about $18 per day or over $6,500 per year not including the cost of fuel or large repairs that might not be covered by warranty. And the big thing here is that the cost to have a car is largely a fixed cost, meaning you pay whether you use the car or not. Do you use your car every day? Becoming a one-car family certainly has financial benefits.
Five financial benefits of becoming a one-car family
1. Lower auto insurance costs
No matter where you live, auto insurance is a large cost. Some states have “no fault” laws, driving costs even higher for drivers. The average annual cost for full coverage in Michigan, for instance, is $2,309 per year. That is nearly $100 per month just to have coverage for the car in the event of an accident or damage. Oh, and by the way, if it is in an accident, you might have to pay another $500-$1000 or more to cover the deductible. Then, at your next policy renewal, deal with the aftermath of increased rates due to the claim. By reducing the number of cars you have in your driveway, you reduce insurance costs significantly and avoid all of this to a great extent.
2. Cash or savings back in your pocket to invest
Cars are assets that typically depreciate (I say typically, because today’s used car market is in an inflated state due to supply issues). By selling a car you own or turning in your lease, you can free that cash or monthly expense up to invest in things that will actually appreciate over time, such as the stock market or real estate. I am blown away when I see some car payments that are as high as a monthly mortgage. While some people view cars as a symbol (status, representation of self, etc.), let’s not forget that cars are meant for transportation. Get me reliably from point A to point B when I need it. [I outline transportation alternatives further below. Read on!]
3. Lower maintenance costs
Cars are unpredictable. At the very minimum, you should be changing the oil and rotating the tires. Most cars today use synthetic oil. This is good in the sense that there are less frequent oil changes needed, but when you do get the oil changed, it is significantly more expensive than conventional oil. And if your car is out of warranty, you now have the added costs and worry of large repairs. An engine or transmission issue could be financially detrimental for many people. By becoming a one-car family and seeking out transportation alternatives when you don’t have access to your car, these costs can be avoided.
4. Removing a car will get you out of debt more quickly
If you have debt, taking a car and all of its expenses out of the equation will get you out of debt more quickly. If you are spending $6-8k per year in car expenses, think of the impact that could have on loans and credit card debt you might be servicing. Applying those savings will help you wipe out bills more quickly.
5. Having one car is better for the environment
If you don’t really need something, the most efficient thing to do is not acquire it in the first place or get rid of it. Cars are a drain on the environment. The manufacturing of cars, the use of cars and even the ultimate disposal of cars. It is all taxing on the planet. When you use alternatives, such as riding a bike, riding a bus, carpooling, renting on-demand or telecommuting, you are helping the environment in a large way by efficiently using transportation solutions. You still get what you need, but in a different way – all while supporting the environment.
There are some downsides of being a one-car family
Becoming a one-car family might not work for everybody. If your family is constantly on the go, managing activities for kids, constantly in a place of conflicting schedules and plans, it might be difficult to manage only have one car. However, with planning, even some of the busier households could make this work. Additionally, reducing the number of cars you own isn’t an all or nothing deal. There are many alternatives available to get you where you need to go.
Transportation alternatives to consider if you ditch a car
1. Get active in a carpool or rideshare
The carpool concept has been around for quite some time. Historically, it has been a challenge to get connected to a carpool. But, technology has changed all of that. Waze, for instance, the helpful navigation app that gets you to where you need to go (and avoid tickets along the way) also offers the Waze Carpool app which connects drivers to riders in a much more casual way than Uber or Lyft. Waze knows your regular route to work, for instance, and can connect you to other “Wazers” who are driving in that same direction.
2. Request an Uber or Lyft
If you have an infrequent need for transportation, you should crunch the numbers and see if a weekly Uber or Lyft ride is a better deal than owning a car. For instance, my office is in downtown Detroit. If I need to go downtown, each Lyft ride is $20. If I only work downtown once a week, that is a $40 expense each week or $160 per month. Compare that with the cost to own and maintain a car every month. Additionally, there is a benefit to riding to work vs. driving, as you can read a book, catch up on emails or simply sit back and relax in the backseat before you get to work to conquer the day.
3. Ride a bike
When my wife is at work with the car, and I need to run an errand that is not too far (even in the winter), I ride my bike. Otherwise, I wait until she gets home. If you live in a place that has great bike paths, that is an added bonus. Biking also has obvious health benefits. In our society today, where life has become more sedentary for a lot of people, riding a bike can certainly change things up.
4. Rent from Zipcar or Turo on demand
A few years back, Zipcar was pretty much the only operation in town if you wanted an easy, short-term car rental without all of the rigmarole of a traditional car rental agency. The premise is that you sign up for an account, then go grab your car from a predetermined location, for one hour, three, a day, the weekend and so forth. The hourly rate is currently roughly $11. Their daily rates get much more expensive. This is a good choice if you need just a couple hours for some errands. You can also rent a van by the hour if you need to move or purchase larger items.
Newer on the scene is Turo. Turo is like the AirBnB of cars. Car owners (like you and me) list their cars available for rent, and someone who needs transportation for the day or longer can rent directly from that person. I can find a car in my area for $30-40 per day using Turo and not have the headache of a rental car agency, especially if I only need the car for the day. [On the flip side, you can also turn this into an income opportunity…keep reading!]
The critical key to becoming a one-car family…planning.
When there are two adults in the house, and you take one of the cars out of the equation, it can be a challenge. It is even more challenging when you are a one adult household and perhaps plan to go completely without a car. Planning is the key to making it all work. Owning a car is very convenient, but as mentioned earlier, very costly at the same time. By planning ahead, you can get into the groove more quickly and see success.
Having one car in the house will force you to plan ahead for your transportation needs. Planning ahead for grocery and/or shopping days, short trips, business meetings and other needs will be a regular occurance. It may seem like a hassle at first, more trouble than what it is worth, but you may find it to be well worth it.
What to do if you are ready to unload one of your cars
There could never be a better time to sell a used car. Dealerships are hungry for inventory. In today’s market, you might even be able to make a quick profit selling your car. Even if you lease, you may be able to turn a profit.
Case in point- The lease for my car recently came due (Note, I only lease because I get reimbursed for it. Normally, leasing cars is not the best financial decision for most people). Instead of simply turning the car back in to the dealership, I decided to crunch the numbers. In doing so, I found out that the price to purchase my lease was significantly lower than the current value of the car. It was about $6,000 lower to be exact. In a nutshell, in a matter of a week, I was able to “flip” my car for a profit. I bought and sold my lease for a profit of $6,000! [Keep reading to learn the steps.]
If you are nearing the end of a lease, see if you can profit by buying, then selling it
- Call your leasing company to find out what the price is to purchase your lease. When you originally signed your lease, an end of term purchase price (usually the residual value determined at the time of lease) was already determined. When you call the leasing company, you’re finding out how much it would cost you to buy the car that you’re currently leasing.
- Do a quick check of Kelly Blue Book to find out what the market value of your car is based on the current mileage and condition. While Kelly Blue Book isn’t a perfect science, it does give you rough ranges which are very helpful in determining values. Compare the lease purchase price with the market value. How does it look?
- Check online car sellers like Carvana or Vroom to run your VIN or license plate number to get an instant offer for your car. But, don’t take the offer right away until you’ve done step 3. Checking with Carvana and Vroom helps you get a sense for how much you can actually make on the sale.
- If there is a decent margin between the cost to buy the car vs. the price you can get by selling it, consider buying it. You’ll likely have to go to the dealership to sign papers, but they can do most of the prep work by phone and through email. My time at the dealer was about 15 minutes. Note, you’ll have to wait for the title before you can sell the car.
- Take some photos and post your car for sale on Facebook Marketplace. Both dealerships and individuals are scouring Marketplace right now for cars. I posted my car, and that same day, I had multiple offers. One of them was a local dealership who ultimately sent a driver to my house to deliver a cashier’s check and drive my car away.
- If there are no bites on Marketplace, sell it to Carvana, Vroom or another online buyer/seller of cars.
Not ready to unload your car? Consider monetizing it!
Enterprise, Dollar, Budget and other car rental companies are no longer the only option for consumers when it comes to renting cars. New platforms have created opportunities for car owners (like you and me) to monetize the cars they own. People are turning cars into an income stream.
Turo, as mentioned earlier, is the AirBnB of cars. If you own a car, and your car has downtime, you can become a “host” and offer it for rent to others using Turo.
According to Turo’s website, the average yearly income:
- For 1 car – $10,516
- 3 cars – $31,547
- 5 cars – $52,579
- 9 cars – nearly 6 figures!
So, are you ready to take a spin?
This article has outlined the benefits of becoming a one-car household as well as provided alternatives to transportation so that you’re covered when you need it. Whether you’re ready to make the leap today, this has hopefully given you some things to think about. If you’re between cars anytime soon, perhaps consider going without a car, if possible, for a few weeks or a month and see how you feel. Reducing your car footprint would certainly be good for your wealth.
Drive/walk/ride safe!