Lose a Car, $80,000 in Real Estate!

We live in a society where everyday decisions have become increasingly difficult with experts pulling us in many different directions. Do I eat more meat or become a vegetarian? Should I be using eco friendly products or consume less of the regular stuff? So it’s only natural, that at some point some of us ask ourselves: Do I buy a car or use public transport? We factor in costs, logistics, costs, and practicality and of course, costs. Who doesn’t want to live closer to work in order to avoid the morning commute and the afternoon rush? The only downfall to this question, is that most of us are looking at the numbers wrong. So let’s do a breakdown:

Car expenses Annually
Monthly payment $450

 5,400  $ 

Gasoline avergae per Month $220

 2,640  $ 

Insurance monthly $65

 780  $ 

Tickets (paking, speeding etc)

 300  $ 

Registration and liscence

 275  $ 

General maintenance, tires, etc

 605  $ 

Total annual expenses

 10,000  $ 

These calculations are based on findings conducted by the Canadian Automobile Association (CAA). Costs are calculated on a driver of a mid-sized car, doing approximately 18,000 kilometers a year.

Now, let’s look at what the costs of using public transportation means would be, for 2 people:

Expenses for 2 people, without a car Annually
Public transit  passes (82$/month)

 1,968  $ 

Occassional taxi rides

 1,200  $ 

Occasional car rental

 832  $ 

Total annual cost

 4,000  $ 

The difference here is staggering – $6000 a year! This can actually be seen as an extra $80,000 more to invest in a property. A saving of $6000 a year is the equivalent of an extra $80,000 on your mortgage. Over 25 years, at a rate of %5.35, the monthly payment is only an extra $495 a month, which totals $5940, per year. There is a clear advantage to reducing the number of automobiles in a household and one must remember, that when the CMHC is calculating costs related to a new purchase, they are not factoring in the addition of a new car

So maybe it is time to considering getting rid of your car and swapping it for a chic home on the island, close to public transportation of course.

Car Bus Bicycle

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