Wife and i had two cars living in a small city, realized we barely used the second one. was costing us $285 car payment plus $75 insurance plus $50ish in gas and maintenance per month. decided to try one car household.
sold the car in july for $8,200, paid off remaining $4,100 loan, pocketed $4,100. bought a ride1up ebike for $1,595, left us with $2,505 extra cash. put that straight into emergency fund.
now we save $410 per month that was going to car expenses. been putting $400 into vtsax and keeping $10 for bike maintenance fund. in 5 months that's $2,000 invested plus market gains.
logistics took some adjusting. wife uses car for work, i bike to my job 4 miles away. grocery trips we do together on weekends. occasional uber if we need to be two places at once, maybe $40 per month total.
bike costs are minimal, electricity to charge is under $3 monthly, haven't needed any repairs yet except one flat tire for $15. comparing to $410 monthly car costs it's absurd how much we were wasting.
biggest surprise was how little we actually needed two cars. thought it would be huge hassle but turns out we just got used to convenience and never questioned if it made financial sense.
over 10 years at 10% return that $400 monthly investment becomes roughly $82,000. that's a substantial chunk of retirement just from selling a car we barely used.
obviously this won't work for everyone, depends on your city layout and jobs. but if you're in walkable area or have decent bike infrastructure it's worth calculating actual costs vs convenience factor.
sold our second car 5 months ago and redirected $410/month to index funds, actual breakdown.
byu/OperationNo1017 inpersonalfinance
Posted by OperationNo1017
9 Comments
$410 monthly is $4920 annually, that’s almost a roth ira maxed out just from one car.
how do you handle bad weather or winter?
This only works in certain cities, where i live you absolutely need a car for everything.
In the mornings as I’m getting ready I’m looking forward to getting on my bike. While at work same-same, getting on my bike is a form of freedom for the soul. With your short commute you should try a regular bike, they are awesome.
We’ve never had a car payment in our lives. Its helped us save a lot more money.
Intelligent financial decisions. I need 2 cars where I live but they’re 12 and 21 years old. Like you, I tuck the cash savings into an index fund. It’s astounding how quickly that money compounds.
Glad it has worked for you!
We did the same a few years ago as well. It was certainly an adjustment for me, but we’ve made it work so I can’t complain. It seemed silly to have two cars, when one of them was always at home.
I had a lease car and had rolled two cars worth of negative equity in to the last one, so when COVID hit and the second hand car market went crazy, I somehow walked away with cash on top.
My work allows me to use that money and put it towards rent or mortgage instead (tax advantage) so I did just that and it helped build our house deposit up much quicker than I would have been able to do, if I kept that second car.
Were you inspired by Mr Money Mustache? Seems like you are right on your way.
Fantastic move. Between the bike and uber you’re still saving money.