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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
Brooke Lorren
April 18, 2011 at 1:34 pm

I know that we spend a lot less on our cars. We fill up our tank about once a week for about $40... that's $2080 a year. Car insurance is about $1000 a year. Maybe we'll spend $1000 on maintenance (not likely). That's $3080. I'm not sure where the other $5700 is coming from. We own our car outright, so there are no payments, but they were about $300 a month. That's still $2000 short of their estimates.

I suppose that you could spend that much on cars if you wanted to, but there are ways to save money on that amount. Buy your cars used, pay them off and drive them for as long as you can, etc.

Jason
April 18, 2011 at 11:43 am

I lived in NYC and they have probably the best public transportation. This also extends into upstate new York, New Jersey and CT.

Many people living 1-2 hours outside of the city can commute to work via trains..but this is an exception to the rule.

I know live in S.Florida where the transportation system is a JOKE..

you have to remember local government has their own priorities-like keeping their fund raisers going- and who's funding them? Why local businesses of course? Down here on of the largest car salesmen/companies was against us getting a train that would-presumably-help out traffic..

why? because more trains and busses=less car sales..

this never passes and hasn't passed since it was proposed back in 1992.

Why NOT have a train system that runs parallel to major highways (like in Detroit, New York) to give commuters the option?

$$$$ the states get more $$ out of roads via toles and government funding than a train system.

you have to pay to lay the rails, pay for trains, pay for monitoring systems, pay employees and union too?

its EASY to see why public transportation is a farce and will never get off the ground unless someone actually backs it

David
April 17, 2011 at 2:40 pm

I have lived in DC for past 13 years have never owned a car. I use metro and walk. I have been able to save sooo much money, plus by walking more I've stayed skinny.

maureen wilson
April 17, 2011 at 1:58 pm

I WOULD LOVE TO SEE PUBLIC TRANSPORTATION. I LIVE IN MARTIN COUNTY.I'D LOVE TO HOP ON PUBLIC TRANS TO GET TO FRIENDS LIVING IN ANOTHER COUNTY. THE MALL IS 40 MINS. AWAY FROM WHERE I LIVE.I'D LOVE TO TAKE A BUS INSTEAD OF PAYING FOR GAS TO DRIVE THERE. WHEN WILL WE HAVE LOCAL TRANSPORTATION LOCALLY? SHOUD I
WRITE TO MY GOVERNOR TO SEE IF THIS WILL EVER HAPPEN ?
LET'S SOLVE THE PROBLEM OF BUYING GAS................
JUPITER, FL.

Cheryl
April 17, 2011 at 1:53 pm

I live in the suburbs North of Chicago and work not far from home. There isn't any public transportation from where I live to where I work. I wish there was, because I drive a 1999 Chevy S10 Blazer that sucks up gas. Today I filled my gas tank for $50.00!! Nothing would make me happier than to be able to save money by taking public transportation.

Dominique
April 17, 2011 at 1:28 pm

The bus as transport to work has some merit, but i've recently experienced some issues that would create problems if this is your sole source of transportation. Safety is an issue as you are exposed to the elements as well as a sitting duck if crime is a problem in the area you have to wait for the bus. Also, I am in Detroit, and just this past week, I was stranded as city bus drivers decided to participate in a sick out that prevented many riders from being on time, if they made it at all. Also, it is terrible going to the market on the bus since you'd take up too much space from the other riders and you could only carry a little bit of groceries. With the cost of a ride, not many could afford to do this daily. Also if you have to take a child to daycare, it had better be right next door to where you work!

Machiavelli
April 17, 2011 at 1:14 pm

This is a ridiculous article.

First of all, the AAA estimates for car ownership are greatly inflated. Let's say, for the sake of argument that gas cost 4$ a gallon and you got 25mpg. For 15,000 miles, the total cost would be a total gas cost of $2,400. Now, let's take the high assumption maintenance costs of the vehicle on average are $1,500. Think about it, do you really spend more than that per year on maintenance of your vehicle? Personally, I know some stuff about cars, so my yearly maintenance is around $500. Auto-insurance at most is going to be $1,500 per year. Total yearly cost using high estimates: $5,400

Next is the cost of the actual car. The problem with this calculation is that a car is an asset that can be resold. If you buy a $20,000 car, 10 years later, you can still sell it for $2-4,000. But let's use generous estimates. Let's assume, you have to spend $20,000 on a car (wasted) every 10 years). That's a cost of $2,000 a year.

Total car ownership cost when using wide estimates is around $7,400. Personally, my cost is around $5,200.

But that's not the real problem I have with this article. The problem I have is that it assumes that if you don't buy a car, you'll have that $8,776 in your pocket. Taking the bus costs money. A lot of money in fact. Maybe the writer of this lives where buses go everywhere for free, but i don't have that luxury. In my area (San Jose) buses cost $2 each ride. Most places are between 1-2$ in the US. Assuming you have to commute to work, that is $500-1000 per year (depending on the ticket cost). This does include the time cost of having to walk to and from the bus station. That's just to get to work. You need groceries? Want to go see a show? Want to do anything not in walking distance?
A. Good luck finding a bus that goes there
B. Add that to the cost.

Depending on the cost of the bus ride, it is going to cost you in between $800-1500 at least.

In other words, taking the bus will only save you around $4,500 per year. Personally.....I'll take my car, please.

Colleen
April 17, 2011 at 1:09 pm

I have taken the "T", which is the transit system in suburban Pittsburgh to work for the past 4 years and my commuter stress went from unbearable to non-existent. I do have to drive 4 minutes to the Park and Ride, so I definitely need my car, but the "T" is almost always right on time. I get on with my book each morning and read for the 25 minute ride into downtown Pittsburgh. Not only do I not have to pay for parking and gas, but the relaxation during the transition to and from work to home has been incredible. My 4 year old car has 15,000 miles. I wish more cities would invest in light rail systems like this.

Siobhan
April 17, 2011 at 12:56 pm

I have lived in two major metropolitan areas and two small towns. In the small towns, there was NO public transportation system. In the major cities, the only bus system is so unreliable that many companies will not hire people who rely upon it to get to work. My daughter lives right off the bus line, so she decided to give it a try to get to her job downtown. It turned what should have been a 20 min. drive into a 3 hr commute each way that required changing buses at least twice. Add that to working irregular hours that do not coincide with a bus schedule, picking up children from school or daycare and going to the grocery. Additionally, the metro transit authority here does not allow passengers to have packages, bags of groceries and such. That effectively prevents shoppers from using the bus. She tried biking as well. Although bicycles are a pretty good answer to the parking situation downtown, she determined that it was entirely too hazardous. The only bike lanes in this city are those near greenways designed strictly for recreational use.

Renard
April 17, 2011 at 12:36 pm

How do I want to live? How long will I be able to continue my wasteful ways? We humans are an invasive species kind of like locusts. In the end we will consume all that can be consumed.
Any one that thinks we are too smart for that is just kidding them selves. This planet has a way of starting from scratch every so often. Dinosaurs didn't work out, People did even worse, maybe Cockroaches will get it right.