Wanna save $10,000 in 2011? Ditch Your Car

You're not alone if advice to cut out your lattés, buying lunch and clip coupons feels like a death of 1,000 cuts.

To be fair, those methods work. A year's worth of bagged lunches helped me pay back my first loan to make an investment in a Registered Retirement Savings Plan. I'd do it again in a heartbeat. In fact, to this day, I prefer bagging my own lunch because that way I know what's in it. Packaged and processed foods? Don't get me started. But that's another post.

But if you want to save more than $1,000 or $1,000 a year toward a big purchase (such as your first house), it's going to take more than giving up lattés to reach your goal.


So, if you own a car and are looking for a way to make a difference in a big way, you don't have to look farther than your driveway, because that's how much car ownership costs, on average, for a year. Car costs are nothing to sneeze at.

Don't believe it?

Payments Alone Average $4,800 a year

Car ads that claim you can own a car for $199 a month are baloney. Unless you're a pretty good mechanic, any car you can buy for that little money is likely in such sad shape you'll pay that much (or more) per month keeping it alive. And that payment doesn't include the cost of insurance, plates, fuel, repairs, maintenance or parking. Heck, a set of tires average $400 and you need a new set every two to three years, depending on how much you drive.

Realistically, minimum monthly car payments on a $20,000 car (which is about as cheap a car as most of us can buy, even used, if we want something reliable) run $400 to $500 a month. That's $4,800 a year minimum, half-way to that $10,000, before you even look at other car expenses.

CAA Does the Math

According to the Canadian Automobile Association, it costs $7,768 (or 64.7 cents per km) to own and drive a Chevy Cobalt 12,000 km a year, $10,583 (88.2 cents per km) to drive a Dodge Grand Caravan 12,000 km a year, and $8,317 (69.3 cents per km) to drive a Toyota Prius 12,000 km a year.

Very few people drive only 12,000 km a year; 20,000 is more realistic if you drive to work. CAA doesn't give data for 20,000 km, but at 24,000 km the Cobalt will set you back $9,454, the Caravan will cost $12,779, and the gas-sipping Prius will cost $9,655.

If you want to calculate your costs, the CAA has a 2010 Driving Costs brochure you can download to help you figure it out.


No Brainer

If you live in an urban centre where you can buy subway passes that are tax-deductible, it's a no-brainer.

Go carless for three years and you'll have a downpayment on a house.

Believe it.