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Driving costs you $8,776 a year

By Claes Bell · Bankrate.com
Saturday, April 9, 2011
Posted: 7 am ET

With gas prices headed higher and discounts on new cars in short supply, it's no surprise a new AAA survey shows the cost of owning and operating cars is going up:

AAA released the results of its annual 'Your Driving Costs' study today revealing a 3.4 percent rise in the yearly costs to own and operate a sedan in the U.S. The average costs rose 1.9 cents per mile to 58.5 cents per mile, or $8,776 per year, based upon 15,000 miles of annual driving.

Could riding the bus fund your retirement?

Could riding the bus fund your retirement?

"Despite seeing reduced costs for maintenance and insurance this year, there is an overall increase in the costs to own and operate a vehicle in the U.S. this year," said John Nielsen, AAA National Director of Auto Repair, Buying and Consumer Programs. "The 2011 rise in costs is due to relatively large increases in fuel, tire and depreciation costs as well as more moderate increases in other areas."

The 3.4 percent increase in overall costs the AAA study found would have likely been even higher if it had been able to take into account the stratospheric rise in gas prices we've seen in the first half of 2011. As it was, the study found an 8.6 percent rise in fuel costs for the average driver, and that was at $2.88 per gallon.

The cost category that saw the biggest percentage increase was tires, which rose 15.7 percent year-over-year. The biggest increase in absolute terms was in the category of vehicle depreciation, or the amount of value a car loses over time. The AAA study found the average sedan losing $3,728 per year worth of value, up 4.9 percent over last year.

This isn't the first time I've seen this annual study, but the price people, myself included, pay to drive never ceases to amaze me. Of course, they're getting a lot of significant things in return for their $8,776: convenient shopping, the ability to get to work on time, an easy way to go on vacation, among other things. I'm not immune to the charms of a beautiful new car, and new cars today are without a doubt the most luxurious and technologically advanced in history. But people should at least know the cost of buying into America's love of the automobile.

I mean, think of what you could buy for $8,776 per year. If you walked everywhere for one year, you could have a lavish vacation in Paris. If you rode a bike for 10 years, you could pay cash for a house in a lot of places. If you rode the bus for 30 years, our simple savings calculator says you'd be close to a fully funded retirement, with over a million bucks sitting in the bank! Maybe Harvey Pekar was on to something.

What do you think? Would you stop driving to fund your retirement? Or is the loss of convenience and freedom too high of a price to pay?

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25 Comments
CW
April 17, 2011 at 12:30 pm

Not having a vehicle makes it way more difficult to go grocery shopping, etc. I work and do not own a vehicle but have to rely on others to run my weekly errands. Mass transit is not all this article states.

Mary
April 17, 2011 at 12:21 pm

As sonmeone else noted, this article pre-supposes you live in a metro area with public transportation as an option. The majority of this country does not fit that model. And funding to develop public transportation is non-existant in most areas.

maddoc1249
April 17, 2011 at 12:17 pm

Unfortuantely, many of us must commute to work by auto because there is no rail or bus tranportation.

RICH
April 17, 2011 at 11:56 am

YOU'RE NUTTS! Buses are notoriously behind schedule. TIME is a factor you didn't consider. TIME to get to the stop, Time to make transfers, Time to walk. Yes, you will get more exercise, which may save you more money by giving up a gym membership. What about STRESS, WEATHER, FAMILY EVENTS, COOKING DINNER, FREE TIME! You ever ride a bus, sometimes it is more dangerous than driving. I have use trains, cabs, friends, carpools, biking, and walking. I won't ever live without a car again. LIFE is too short. Sometimes a few extra minutes a day is all I get to spend with family and friends, read a book, or watch a movie. The way to retire is to buy a reasonable quality car with good MPG. That is the key to retire early. Don't spend extra on a BMW or LEXUS. That is the true key to retire early. Horrible article, but I guess you got to write about something.

L.Long
April 17, 2011 at 11:20 am

I actually saved a lot more.
It not only cost nothing to get to work but I got great exercise doing it by bicycling to work.
But when I lost that job the next one was 24mi away and NO BUSES!! at all. So used motorcycle.
But the 3rd job was 48mi and NO BUSES!!! and no motorcycle!
Yes the bus, bike, & cycle are economical but not really available for most working people. I would use a bus even if it was a 2hr trip (did this in England) and you tailor the bus time to be useful time. But even if the bus was available, how many Americans do you know that would do a 2hr bus drive and not do a 30min car drive???

Jeremy
April 17, 2011 at 8:51 am

Yeah, Adam, we are serious. Outside of maybe Chicago and NYC and SF (but only if you live in multi-million dollar homes near downtown), it is nearly impossible to have a decent job in most metro-areas without a car.

Certainly not any job where you are required to be on time--buses can take hours to go where a car can make it in 25 minutes.

It also fails to take into account the housing price differences between no-commute and commuting areas. I could cut my commute to zero and walk to work if I was willing to spend an extra 300k for my house. At 5% interest, that's $15,000 per year additional expense (plus all the other expenses that come from living in a higher income area with richer Joneses to keep up with). Furthermore, I'd still want to own a car just in case I needed to drive anywhere else--like visiting family, going to the grocery store, etc.

This article is pretty shallow in its analysis.

Adam
April 16, 2011 at 2:54 pm

Are you guys actually serious about it not being realistic to have a job while not owning a vehicle?

You both must live in a small town or in a city with horrible transit systems....any city with a transit system allows this to be easily possible.

Taking a bus to work is an obvious possibility (exactly what I do...)
The net savings is easy to calculate given you can calcuate the annual bus pass amount net of the tax savings i.e., bus passes are tax deductable when you file your tax returns...

Joseph Estep
April 16, 2011 at 2:06 pm

I retired 8 years ago. I have lived in Central America 4 years. I have used Bus/Taxi during these 8 years. When working driving is a requirement in all but a few cases. Owning and operating private transportation is stress I can live without. Panama is a great place to retire.

Claes Bell
April 15, 2011 at 1:05 pm

Good point, Greg, although I think it is theoretically possible to hold a job without having an automobile. I've never seen it happen first-hand of course, but I've heard rumors from people in major metropolitan areas that there are individuals who have successfully done it.

Greg Barron
April 15, 2011 at 12:40 pm

Problem with your idea is this: if I forgo an automobile, I might save alot on the cost of ownership....but I would also have to forgo the annual income I receive from having a job that I must drive to. It is alot more than the 8k savings you enthusiasically promote.