Living without a car

Car free living is possible - here's how

You wouldn't expect that a loan officer would suggest you consider living without a car, when you go to him for your new car loan. But that's exactly what the car loan officer at my local credit union does. The first part of any car loan interview, he told me, is to try to talk people out of buying their car. When he asks them why they need a car, the number one reason they give is: to bring home the groceries.

Living without a car might seem impossible. Or prohibitively expensive if you factor in taxis, car rentals, transit costs, and so on. One of the things the loan officer does is helps his clients understand the true costs of car ownership, and ways of living without a car that they might not have thought of.

When you buy a car, you often put down cash for a good chunk of the car's value. And five, or ten, or fifteen years later, you probably get some cash for the car when you part with it, with the difference between the starting and ending figures being your capital cost, or the amount by which the car depreciated. Because those transactions occur only at the start or end of the car ownership period, people tend to forget those amounts and think only about the monthly or annual costs of fuel, car loan payments, insurance, maintenance, parking, license fees and so on.

So why don't we start by looking at the true yearly cost of the Toyota Corolla my wife and I owned for 10 years? I'm a numbers guy, and kept careful track of everything. Here's what our annual average cost for the car was, in Canadian dollars, including the depreciation, which reflects the difference between purchase price ($16,500) and sale price ($4,500), divided by years of ownership:

Item	Annual cost
Fuel	604
Interest	135
Insurance	1174
Maintenance	562
Parking	164
License fees	75
Depreciation	1440
Total cost/year	4153

The interest expense assumes a $13,200 starting loan, $400 monthly payments, and a 4% interest rate. At this rate the loan is paid off in the first four years.

Now, $4000 a year might not seem that expensive for owning a car. But our car was particularly cheap because (A) we bought a budget, entry level Corolla, and (B) we almost never drove it. Our mileage averaged around 12,000 km or 7,500 miles per year. We didn't drive to work - so our insurance premiums were substantially lower than if we did. We only drove to the supermarket about 20 times a year - the rest of the time, we biked or walked. On average, we probably only used our car 2 days a week. And because we drove so little, the depreciation was fairly small - after ten years, we managed to sell the car, which we bought for $16,500, for $4,500.

If one of us had used the car to commute to work, our fuel, insurance, maintenance, and depreciation costs would all have been substantially higher - perhaps 50% more. That would put the price up to around $6,000 a year. If we had been more fashion conscious, or eager to keep up with neighbors and friends and their fancier SUV's or European imports or upscale sedans, that could have topped $8,000 a year. That works out to $16 to $24 every single day over ten years for the privilege of owning a contraption that's very good at killing you. Imagine if you could save part of that!

Back to our loan officer. He asked loan applicants to make a list of what they planned to use the car for, and for each use indicate both whether the use was essential or not, and also whether a reasonable cost alternative existed. Since the credit union is on the subway line in Toronto, most of his applicants have some way of getting to work on fast public transit. And a $100/month transit pass not only gets you to work and back, but anywhere else you want to go on public transit through the month. A typical car buyer's list might look like this:

Use	Frequency	Essential	Alternatives
Get to work	5 days/week	Yes	Transit pass
Trip out of town	20 weekends/year	No	Car rental, auto share
Groceries	1 day/wek	Yes	Taxi, bicycle, auto share
Night out at friends	2 days/month	No	Transit pass, taxi, auto share

He then used the information they provided (including distances traveled, not shown above) to calculate for them how much all these things would cost them if they owned a car, and how much if they tried living without a car and stuck with public transit, walking, biking, and occasional taxi fares or car rental fees.

The costs didn't always show that car ownership was more expensive than not owning a car, but it almost always showed prospective borrowers that living without a car wasn't as bad as they thought, when the expenses of car ownership were well understood. Next, the loan officer mentioned unexpected costs. What if, for example, your car is totaled in an accident? The insurance company gives you the book value of the car (if you covered it for collision). Book value is often far less than replacement cost. What about major breakdowns or repairs you didn't plan for? What about gas prices going through the roof? Speeding tickets? Parking fines? Rust protection? Highway tolls?

You might wonder why a loan officer would try to convince people applying for a car loan to instead try living without a car. The reason is simple - people who haven't realized how much car ownership will cost them, and what cheaper alternatives exist, often buy the car, and sign the loan agreement, without having fully appreciated the costs they are signing up for. In many cases, first time car buyers have little financial experience, and low earning ability. So the chances of default on such loans are high. This exercise helped the prospective borrower reach a decision they could afford, and helped the credit union avoid making car loans that led to defaults.

Is that commute as cheap as you think it is?

I act as if I'm living without a car. I don't drive to work - I bike, or take public transit, even though it takes an hour each way. My view is that I save money compared to driving, reduce health risks to myself (better health from cycling and walking to the bus stop; less risk of car accidents), and, on the bus anyway, gain valuable time for reading.

Most of my colleagues drive to work. When I ask them why, they offer two main reasons - cost and time:

• "Transit costs more. I spend $30 and only have to fill up my tank every couple of weeks. That's $60 a month. A transit pass costs $100 or more."
• "Transit and biking are both slower. I can drive to work in 40 minutes in rush hour, 25 minutes outside of rush hour. Transit takes me an hour. Biking takes an hour and I have to shower when I get to work." (Thankfully our workplace has showers for cyclists.)

My responses?

• Transit is cheaper when you factor in:
  • Extra insurance premiums you pay for driving to work every day
  • Depreciation on the car from the extra mileage of commuting
  • Additional maintenance costs from that extra mileage
• Transit takes more time but wastes less time:
• You can read on the bus. You can't read in your car.
• Unless listening to the radio, or cursing at the drivers around you, is your idea of quality time, you'll get more value out of an hour bus ride than a half hour commute
• Time your commute by car for a week. In Toronto, anyway, chances are what you think takes 40 minutes often takes 50 or 60.
• Biking takes time but you spend half an hour at the gym three times a week. Spend that time biking instead. And you don't have to shower at home if you shower at work - your employer can cover the hot water cost!

Tips for living without a car

I won't deny that there are situations where living without a car is next to impossible. (But it's never impossible - remember, people have been living without a car for most of the last 30,000 years!) If you live in a city with good transit, as I do in Toronto, living without a car is easy - hundreds of thousands of households do.

If you live in the country without access to public transit, and you have to get to work at some distance from home, living without a car can be a real challenge. But remember that you do have choices - about where you live, where you work, whether you work!

Here are some ways in which you can manage living without a car, and still enjoy the convenience of being able to get around when you need to:

Use your bike more. The more you use your bicycle to get around, the better shape you'll be in, so the more you'll feel like using your bicycle to get around. If you don't have the stamina to use your bicycle to run errands, get an electric hub motor for it and use that to help you along.

Use public transit. In Canada, you can actually claim a federal tax credit for the cost of weekly or monthly transit passes. This means you save about 15% of the cost of the transit pass, as long as you keep the expired passes as proof of purchase.

Make friends closer to home. If you move to a new neighborhood, try hard to make new friends there. The more friends you have in your own area, the less you'll feel the need to drive far away to visit old friends. And the more people you'll have to call on if you do need help with transportation - bringing home a new piece of furniture, taking a load of renovation waste to the dump. Just don't abuse your friendships by trying to borrow your buddy's car every time you need to buy groceries!

Know and help your neighbors. I have a friend who decided it was crazy for every house on his street to own a lawn mower, a circular saw, a weed whacker, and so on. He went to his neighbors and suggested a sharing arrangement: he would happily let them borrow any of his tools, if they would do likewise. Why not do the same with errands? When you head to the building center or grocery store (on your bicycle or in your rental car or taxi), ask the neighbors if they need anything. They may well reciprocate the next time they head out in their car. Being neighborly doesn't mean taking advantage of the fact that the guy across the street owns a car and you don't. It means finding ways to (A) build stronger friendships while (B) finding ways to help one another.

Join a car sharing program. Several membership-based car rental companies and co-operatives have sprung up in recent years. They offer, for an up front deposit and annual fee, access to cars on an hourly, half day, daily, or longer basis. These programs are often less expensive, and more convenient, than regular car rentals for the shorter term uses, and I know many Toronto families who are living without a car and take advantage of these programs. For example, for $7 or $8 an hour, you can walk to your local super market parking lot, open the car with your combination code, go run an hour or two of errands, and return the car to the lot (or another designated drop off location). The shorter term rentals often come with gasoline and mileage included in the hourly rate. AutoShare and ZipCars are two of the bigger car sharing programs.

You may even be able to work out a casual car sharing agreement with a neighbor or friend. For example, in exchange for borrowing their car on occasion for a half day of errands, you promise to fill the gas tank for them. Just remember that any actual rental paid for using a friend or neighbor's car will make the use a bona fide rental, which has insurance implications: the owner may need to add you to the car's insurance policy.

Join a car pool or ride sharing program. There are probably lots of other people who live near where you live, and work near where you work. Ask the transportation department at your local city hall, or your own firm's personnel department, for information about carpooling to work.

Move to the right neighborhood. I hear many of my suburban friends claim that living without a car won't work for them, because public transit is no good or the stores are too far away. But they can - they just have to think about relocating. I love the fact that I can walk to the store, the community pool, the pub, the subway, or a dozen different friends' houses. Most of my suburban friends drive to all or most of these and don't even know the names of half their neighbors. If you're serious about living without a car, you really should consider whether relocating to a more bike-friendly, walking- friendly neighborhood makes sense.

Find a more convenient job location. My employer moved to a new office a few years back, and my commute went from 25 minutes of biking through a gorgeous park valley, to 60 minutes of commuting on busy arterial roads. I stayed with them because the work was fun and the pay was good. But if you're unhappy about your job for other reasons, or you can find another equally good job that's easier to get to, jump ship! Living without a car can be truly liberating!

A study of commuters found that the closer people live to their place of work, and the less time they spend commuting, the happier they are overall; distance to work and time commuting was one of the biggest factors in determining their overall satisfaction with life. Work closer to home - you'll not only spend less time commuting, you'll probably live longer too!

Buy a shopping cart. My wife always used to drive to the grocery store when it was her turn to do a weekly shop, because she said she couldn't carry back that many groceries. I bought us a shopping cart, and lined the bottom with an open cardboard box; you can easily fit a week's groceries in it, and since the nearest supermarket is only about a ten minute walk away, we do the trip on foot much more often than before we had the cart. I've also used the cart to haul home 5 bags of 30 liters of topsoil each. While we're not completely living without a car, the shopping cart has cut back on grocery store trips substantially.

Buy a bicycle basket or big bicycle paniers. You'd be surprised how many groceries you can bring home in a couple of big bicycle paniers, a bicycle basket on your handlebars, and a backpack. I can bring home pretty much the entire week's worth of groceries for four of us, from a nearby natural foods store. Invest in good carrying equipment for your bicycle, and you'll need the car a lot less.

Buy online instead of going to the mall. You can often get a better deal by shopping among the thousands of online vendors for a product, than by shopping at a physical mall where only a handful of stores carry what you're after. You save on gas, and save time too. You can even order groceries online - just about every major North American and European city has one or more online grocery stores or organic food outfits that let you order a custom grocery box, or a standard box of fruits and vegetables every week.

Set aside money for taxis. In Canada taxi fares can be quite expensive - but it's still worth your while to fork out the occasional $10 or $20 bill to get somewhere quickly, if it means you can avoid owning a car.

Set aside money for longer term rentals. When you're planning a weekend getaway or a summer vacation, don't be afraid to spend a few hundred dollars renting a car. Remember that you are saving somewhere in the neighborhood of $3,000 to $5,000 dollars a year by not owning a car.

Living without a car isn't as hard as you might think. There are financial savings, health benefits, happiness benefits. Even the satisfaction of knowing that you are cutting out a major source of pollution and greenhouse gases from your lifestyle.

And if you can't live completely car-less, at least try hard to use your car less!

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