Cars are a way of life in Australia (and around the world). While most of us enjoy the freedom they offer, their costs can be a burden on your budget. Not everyone can live without that red mark in the ledger, but we'll help you find out if you might be a candidate.
The necessity of owning a car is highly subjective. In some areas, it's not possible to get by without a car, as everything is a long way away and alternatives are lacking. In other places, everything you need is right down the street and there are realistic alternatives to owning a car. Here are some reasons to consider that.
The High Costs Of Owning A Car
Cars are a convenient form of transport -- but that convenience comes at a price. Here are some of the areas where owning a car costs you:
- Down payment/up front cost: Even if you don't buy your car outright, you're probably dropping at least a few thousand dollars immediately. If you're financing a car, that few thousand dollars is just the beginning.
- Loan interest: The longer the term of your loan, the more you'll pay in interest. It may not seem like much, but depending on how much your loan is for, as well as the length of the loan, you could end up paying thousands more on top of the cost of your car.
- Maintenance and repairs: Basic maintenance like oil changes, tyre rotations and replacements will cost you a couple hundred dollars a year at minimum. If you have an older car that requires any major repairs, that number skyrockets, especially when it comes to making your vehicle roadworthy for registration.
- Petrol: Not only is petrol one of the most regular expenses that you pay when you own a car, it's also one of the hardest to predict. While the ACCC is investigating whether service stations have illegally colluded in setting prices, there's no change likely in the short term.
- Insurance: You can't escape paying compulsory third-party insurance (to protect against you injuring others). Realistically, it doesn't make sense to own a car and not insure it comprehensively, given the size of the investment. This is expensive, especially if you're under 25.
It's easy to see why not owning a car would be an attractive proposition. Necessary or not, owning a vehicle is perhaps the second-biggest money pit in most people's lives, behind the home you own or rent. Reducing those costs sure would be nice.
Alternatives To Owning A Car
So, let's walk through a hypothetical scenario where you don't own a car. What are your options? Keeping in mind, you don't have to limit yourself to just one of these -- you just need to know which ones work in any given situation.
In Australian capital cities, you'll generally have a choice of public transport methods: rail, bus, ferries and trams. Outside the capitals, there are bus options in larger cities, but these are often limited. Even in major locations, public transport is rarely distributed equally -- inner-city areas are often spoiled for choice, while newer outer suburbs have fewer choices. Living in an area with good public transport options may well mean you pay more in rent (or on your mortgage).
If you can access public transport, the savings can be significant. In Sydney, for instance, the most you'll pay for public transport is $61 a week. There's no way you can own and operate a car for that amount of money.
When It's Useful
- Daily Commutes: If you have to make more than a half dozen trips to and from work every day (as most do), public transport should probably be the first option you look for.
- Travelling Light: If it's not something you can carry on your back or roll behind you, you'll have a hard time bringing any cargo with you on public transport. There's not typically much in the way of storage space here.
Car Sharing Services
While car sharing is still a relatively new concept, it is growing in popularity in Australia. If a share car is available in your area, you pay a fee to use the car (based on time and distance), then return it to a dedicated car space. The biggest local operator is GoGet, which operates in Sydney, Melbourne, Brisbane and Adelaide. Other options include GreenShareCar, Hertz 24/7 and Flexicar.
There are some downsides. For starters, you have to reserve a specific timeframe, beginning and end. If you need more time in your car, you'll need to extend a reservation, assuming someone else hasn't booked the time.
Another downside is coverage area. If there's no service near you, you're generally out of luck. You can drive it anywhere (within your reservation period, of course), but the starting point is your biggest leash.
When It's Useful
- Scheduled appointments: You work from home, but you have semi-regular medical appointments. Since you know these ahead of time (and, presumably, how long you'll be gone), care sharing is a solid choice.
- Transporting large amounts of stuff: You may be able to send the kids to school on the bus and take public transport to work, but when it comes time to take the kids to soccer, you'll need boot space. If car sharing is accessible around you, using it to move your gear can be helpful.
Taxis And Uber
Taxis are an option in all but the smallest towns, but they're a relatively expensive way to get around. The arrival of alternatives such as Uber hasn't yet dramatically changed the pricing (and their legal status continues to be challenged by the taxi industry), but has improved service -- if they're active in your city.
When It's Useful
- Social nights out: When you and your four best friends go out for a night on the town, you probably have no idea when you're coming home. Taking a taxi means you don't need to worry (and you can drink if you choose to).
- Residential or suburban travel: If you're a stay at home dad and just need to get to the grocery store once or twice a week, taking a taxi can still come out cheaper than owning a car.
Bicycles And Walking
Everyone knows that walking is an option -- but very few people seem to use it regularly. Unless you live in New York City, however, chances are most people don't walk everywhere. Bicycles extend the range a little bit, but you're still often limited by what's around you.
One alternative that starts to get pricier is an electric bicycle. Some models can give you longer range by providing their own motion (as opposed to pedalling) using a small battery. Others will simply take the edge off tasks like riding uphill. It may not sound like much, but it goes a long way towards extending the range you can reach on a bicycle. You can check out sites like Electric Bike for reviews on specific models that meet your needs.
When They're Useful
- Travelling nearby: Some cities are more spread out than others, but you can get a long way with an hour or two's walking, and even further if you ride a bicycle. Weather conditions, as well as physical ability affect how well this works (you probably can't bike to work in the summer if you have to wear a suit), but for some journeys, it's a viable option.
- Low- or no-cost travel: Aside from the initial bicycle investment, travelling is more or less free. And your legs cost nothing. They're not the most flexible options, and you can't go massive distances, but if you're seriously considering giving up your car, it helps to know where you can get to with just the legs (and...wheels?) nature gave you.
Three Steps To Decide
Deciding whether or not you can live without a car is a pretty subjective thing and it often seems that it comes down to "Do you live in the city?" Here's a process you can use to assess the costs:
- Identify your top three car costs per year, add $500, then divide by 12: Usually, the top three car costs you'll have are loan payments, insurance and registration, and petrol. If your car's paid off but requires a lot of repairs, substitute that figure for your loan payment. In either case, add $500 for incidentals or accidents.
- "Spend" money on each service for one month: Before you give up your car, monitor where you travel every day for a month. Find out what option listed above that you might have used instead and add that cost to a monthly "budget."
- Compare both budgets when you're done: So, you found out that you would use public transport for your workday commute and you would have had to call a taxi six times. If you could pay for those services with the total you got from step 1, it might be worth reconsidering the vehicle.
Ultimately, not everyone can give up their vehicle. That's OK. However, owning a car is also a very expensive prospect that we're conditioned to believe is an essential part of life. Bear in mind that humans have survived for millennia without having cars. Take a look at the options available to you and give yourself some time to compare. If you can manage it, the savings can potentially be enormous.
Lifehacker's Loaded column looks at better ways to manage (and stop worrying about) your money.