Should I sell my car?

[younginvestor2013]

Having just paid my license plate annual renewal fee ($100), 6 month car insurance policy ($350), and facing my city sticker renewal in Oct ($100) plus anther 6 month policy ($350), I am highly considering selling my car.

I live in Chicago and take the train to work everyday. I really only use my car to drive to the grocery store, the gym, and the occasional random place (target, a sports game, random store, to dinner with a friend if more convenient etc).

My car is paid for and is about 4% of my net worth excluding my home. Given that I rarely drive, and pay ~$1,000 a year just for insurance and registration, I am highly considering selling it.

If I sold it, I could rent a zip car when needed, or take an uber and not feel bad about it, given that I am saving ~$1,000 a year.

The easy and obvious answer is "yes" why wouldn't I sell it? I've only had it about a year, and I must say, it is very convenient to have when I do use it. But the amount of money I am paying for it is crazy.

I am reluctant to sell it because I think I will miss it, and I did some back of the envelope calculations, and if I were to add the approx $12k I could get back if I sold it to my portfolio, in 15-20 years, I would only be about $27-$28k wealthier in today's dollars (this only takes into account the $12k lump sum - not the additional $1,000+ I'd be saving year over year). Plus, given that I drive so little, it will likely last me many many many years, but over those years, my annual licensure and insurance costs will surpass the cost of the car.

Thoughts?

 

[Ginny]

Keep the car and earn another $13,000 a year. You'll probably want to buy another car within a few years and that will cost you more than $12k. Good luck

 

[Bestwifeever]

DH and I were carfree in Chicago for the first three years we were married. Like you, we took the train/el/bus everywhere. I highly recommend selling your car and squirrelling the $ away until you really need a car more often than not.

 

[Sarah in SC]

Wow, I can't believe it costs $1k annually to keep a car there! That's a lot for something you don't use all that often.
I'm a total car junkie, and live in a place where I'd quickly starve to death without one, but even I see your point about selling it.
Tough call, but maybe you could share the car and expenses with a relative or close friend? Just thinking of alternatives to ditching it completely.

 

[younginvestor2013]

My plan would be to sign up for zip car, which is a car sharing service.

There are 3 cars in a lot next to my condo. You can reserve them on the mobile app or online and you pay $7-10 an hour for them.

Or, I would just take a taxi.

I'd have to use quite a few zip cars or taxis for $1k!


Sent from my iPhone using Early Retirement Forum

 

[Texas Proud]

Can you get a cab easily where you live When I was in NYC, it was so easy to get a cab... but I rarely used a cab there or in London... the subway is just too convenient to use and gets you to almost every location you want...

I lived 4 years where I did not have a car where I was... still had a car at my house.... (note: I was only supposed to be away for 6 to 9 months... )

 

[Bamaman]

For your situation, keeping the car or selling the car would be okay. The question is whether you can sell the car for the payoff--or for what it's really worth since you've not had it very long.

I'm car poor with 3 cars and a truck sitting in my driveway--for 2 drivers. Auto and home insurance are our biggest expenses with no car debt and 3 houses paid for.

 

[Hermit]

I think you are quite a bit low on your annual savings. Maintenance and fuel will bump you up another $1000 a year. That was my experience. I always had a second car and maintenance and tires, etc. seemed to always cost a lot no matter how little I drove it.

 

[dvalley]

How often do you use it? $1k/12 = $83 a month. To me it's worth having a used but dependable car for less than $100 a month.

 

[Rick_Head]

$1K/year is about $20/week. Can you get cabs/uber/zip cars for that? When you want them? I wouldn't even consider it.

 

[KingB]

I agree with Hermit - I think you need to add gas and maintenance in your calculation. You live in the city where there are public transportation. If you need to go outside the city once in a while - rent a car. I would get rid of the car.

 

[Bestwifeever]

Does your condo have a parking space? Could you rent that out if you got rid of the car?

 

[wrigley]

$1000 a year isn't squat knowing that you have a car any time you need it. If you sell the car and then realize you really need one/want one, you're going to fork out a large chunk of change to get one. Keep what you have.

Mike

 

[jollystomper]

Figure out what you really will be saving. Your are looking at the gross, not the net. A zip car for say $10 an hour. used an hour or less, means that if you use one twice a week you are spending over $1000 for the year. So you would not be saving anything.

You should add in your maintenance/fuel costs, then subtract an estimate of what zip car/taxi/subway would cost per trip that you use to go to grocery/gym/occasional shopping (number of trips made today versus perhaps some fudge factor for a conservative estimate). Then you would be closer to what you would actually be saving.

 

[photoguy]

Why don't you try not using your car for a month or two and see if you can survive without it.

Given that your renewal fees are a sunk cost, it will only cost you about $60 a month to test out (insurance costs).

Of course you might feel differently about waiting for the bus in winter.

 

[brett]

YES. Get rid of it. It is a money pit.

We lived downtown in a large city. We had a tight budget..I was in university.

We looked at the cost of the car, gas, parking...everything you mentioned. Everything was nearby and we walked. Plus we both had bicycles.

It was far less expensive for us to rent a car on those weekends when we needed one. Plus we found that there were many great car rental deals on the weekend so we would occasionally take advantage of them when going to visit relatives in another city.

We just moved from the suburbs to the city edge..walking distance to rapid transit. The first thing to go was our second car.

 

[FANOFJESUS]

What are your yearly property taxes on the car?

 

[TrvlBug]

My plan would be to sign up for zip car, which is a car sharing service.

There are 3 cars in a lot next to my condo. You can reserve them on the mobile app or online and you pay $7-10 an hour for them.

Or, I would just take a taxi.

I'd have to use quite a few zip cars or taxis for $1k!


Sent from my iPhone using Early Retirement Forum

Who carries the insurance? Wouldn't you still need some type of auto policy to cover you in the event you cause an accident? Same if you use rental cars.

 

[bubba]

$1000 a year isn't squat knowing that you have a car any time you need it. If you sell the car and then realize you really need one/want one, you're going to fork out a large chunk of change to get one. Keep what you have.

Mike

+1

 

[unno2002]

To maintain potential freedom to drive when necessary, how about selling the $12k car and get a "beater" to use in an emergency?

While the wife and daughter drive "newer" vehicles, my run errand, haul stuff vehicle is a 27+ year old Samurai, with 240k+ miles on it. It looks as worn and tired as I feel, but whenever I turn the key, it starts.

I see the minimal registration and insurance cost as "insurance" that I can get around where and when I need to.

 

[FIREd]

We recently sold our second car and only kept the fun but very impractical Mazda Miata. So I signed up for Zipcar for when we need a larger car. We have three Zipcars parked in our building's parking lot. In our case, the math was even more compelling. Between parking, insurance, registration, depreciation, and maintenance, selling the car is going to save us nearly $7K per year. We live in downtown San Francisco. We don't drive much at all, except on the weekends when we go out of town. We should have sold the second car 3 years ago, when we moved here. But we have always had 2 cars and we were reluctant to give up that second vehicle (burb mentality). People's reaction to our decision to sell the car has been one of disbelief. And when we add that we also cut Cable TV, then they really think we are off our rockers. So we must be on the right track. If we did not go out of town so often (nearly every weekend), I would sell the Miata as well. With the subway, Zipcars, taxi cabs, Uber, Lyft, etc... there is no shortage of in-town transportation choices to get around.

By the way, gas and insurance is included when renting a Zipcar.

 

[Hermit]

To maintain potential freedom to drive when necessary, how about selling the $12k car and get a "beater" to use in an emergency?

While the wife and daughter drive "newer" vehicles, my run errand, haul stuff vehicle is a 27+ year old Samurai, with 240k+ miles on it. It looks as worn and tired as I feel, but whenever I turn the key, it starts.

I see the minimal registration and insurance cost as "insurance" that I can get around where and when I need to.

There is a big difference in having a beater that you know the condition and buying one. A guy out here just bought one and he has had nothing but trouble with it.

 

[Sarah in SC]

Hey now, I specialize in buying beaters...knock on wood...

FWIW, I have a couple of hard and fast rules: under $3k price, around 100k-120k odometer, and has to be sold by an individual (not a dealer, nor an auction). There is something about looking a guy in the face in his own yard and asking him if there's anything wrong with the car we need to know about. Only a sociopath will lie to you at that point, in my opinion.

But we fix our own, and DH is really very mechanically inclined with such things, so he goes over them pretty thoroughly before making an offer.

 

[younginvestor2013]

My costs per year are pretty close to $1k. They are the costs mentioned above. Believe it or not, I only fill up 5-7 times a year, excluding any road trips which have been far and few.

 

[Golden sunsets]

Does Zip car cover liability and collision insurance along with the hourly rental cost?