The Friday “Ask the Readers” column generally follows a set format: I introduce the topic, share a reader e-mail, give my best advice, and then ask for your feedback. Today’s column is a little different. Sarah sent me a 1000-word question, and rather than write any sort of response, I’m just going to let her have the entire space. Everything that follows is from Sarah.
I have a question for other GRS readers. It’s a simple question: Should I sell my car? It actually seems to have a very simple answer: Yes.
I keep writing lists and outlining the reasons why I should sell my car (and why I shouldn’t), and the balance lies very clearly in favor of selling my car. And yet I’m having the hardest time selling my car.
Why? I’m a practical, logical, pragmatic person. Why is this so hard to do? Why is selling my car so difficult? Even with the facts laid out, staring me in the face, I’m having the hardest time selling my car.
Why I Bought a Car in the First Place
I used to live completely car-free. I lived in different cities and only walked, bused, or biked to get around — occasionally living the high life and taking a taxi when I felt like being luxurious. And then I moved to California.
I bought a car last year. I purchased a 2010 Toyota Matrix from a dealer, priced at $17,490, with a $1000 rebate for being a recent college grad. The Kelly Blue Book value of the car, at new, was $20,049. My purchase price was $16,490. With taxes, registration, and fees, I forked over $19,009. As a somewhat-savvy consumer, I secured a three-year financing plan with 0% interest.
I bought the car because I lived 40 miles from my job, commuting an hour each way (through San Francisco, across the Golden Gate Bridge), and there wasn’t sufficient public transportation to get me to and from my job.
I’ve now owned (and paid for) the car for 12 months, spending $6800 on car payments. I have $12,200 left to pay on the car over a two-year period.
The cost of the car has been unbelievable. In one year, these are the costs:
- Car payments — $529 per month
- 20,000 miles total
- 25 mpg average
- gas price is $3.15 in California
- $2520 for gas, or
- $210 per month in gasoline
- Maintenance for one year (four tune-ups at $109 each) — $436 ($36 per month for maintenance)
- Insurance — $109 per month for insurance (AAA)
- Bridge Tolls (crossing the Golden Gate Bridge every day costs $5) — $80 per month
- Parking. I’m lucky to have free parking, mostly, unless I drive downtown — $50 per month is my average for parking
Every month, I spend about $1014 on driving and owning the car. $1014! This is roughly one third of my take-home income. What would I do with $1014 per month?!?
In addition, I have a substantial amount of debt from undergraduate and graduate student loans (in the realm of $80,000) that I’m currently working hard to pay off. The student loan payments are $679 per month. I struggle to make the car payment and the student loan payment each month.
Today: The Current Situation
In November, I moved back to San Francisco, because I couldn’t stand the long commute. Commuting through city traffic is tiring and psychologically draining; I quickly remembered why I dislike driving so much. In contrast, San Francisco is a hub of public transportation options — sometimes better or worse, depending on the neighborhood that you live in.
I now live eight miles from my job in Sausalito. The drive takes about 15-20 minutes, depending on traffic. Parking at my job is easy, but parking in San Francisco is a nightmare — it can take up to 40 minutes to find a parking spot. I have the option of purchasing a parking spot, but those cost upwards of $300 in a city like San Francisco, and I can’t stomach how much I’m already spending on the car alone.
I now have alterative means for getting to work. For example, I can bike to work a few days per week, depending on the day and the weather. There’s also a bus line that goes to and from my work on the hour, and takes about 30-40 minutes to get to work (it doubles my commute time, but I don’t have to worry about parking, driving, or concentrating on the road).
The (Easy) Conclusions
I worry that it’s a mistake to sell my car after owning it for one year. My parents tell me that I should wait it out for the next two years, buckle down, and just finish making the payments — because I need a car and can’t possibly live without one. People suggest that it’s foolish to buy a brand new car and sell a car within the first year of ownership.
However, I also think that sunk costs are sunk costs. What I’ve already spent on the car is gone; it’s what I spend in the future that’s still up for determination. I think it makes sense for me to sell my car.
Here are some reasons I think I should sell my car:
- Living in a city — with ample public transportation, alternative car-sharing options, bicycle riding, and walking — makes having a car a luxury, not a necessity.
- Getting rid of $12,200 of unpaid debt is a good thing.
- There are additional costs to car ownership — insurance, gas, parking, maintenance — that will continue to add up over time. (To the tune of about $450 per month.)
- The current value of my car ($14,000) is more than I owe on my payments ($12,200)
But wait! There’s more!
- A car is a depreciating asset, and will not add any value over time. Struggling to make these payments does not help me reduce or eliminate debt in other areas of my life.
- Public transportation to work costs $4 each way, or approximately $160 per month.
- If I also choose to use a car-sharing program on the weekends, I would spend between $50 and $75 for a weekend use — but the cost would be elective, and not fixed.
- If I don’t spend the money on the car, I can spend the money on other things that are more important.
It seems painfully clear, on paper, that I should sell my car. And yet I get in and drive it every single day — to teach swim lesson after work, to dinner parties, to events, on trips to Tahoe, on excursions. I am afraid of selling my car. Psychologically and emotionally, I’m attached to it. I also stubbornly don’t want to admit I made a mistake in buying the car in the first place.
So tell me, fellow GRS readers, what should I do? Can I afford to sell my car? Can I afford not to?
J.D.’s note: Though I don’t have room for my traditional long reply, I’ll just chime in to say I’m glad that Sarah mentioned sunk costs. That’s a very important thing to remember in making these sorts of decisions. (What you’ve spent already is irrelevant; it’s what you spend going forward that matters.) And I think her situation highlights why it’s often best to buy a cheap used car than a brand-new one. I think a $2,000 beater would be perfect for her.
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Why would a NEW car require 4 tuneups?
Sounds like she might be “be taken for a ride” by her mechanic.
Most stuff that would break would be covered on new cars and cost nothing.
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You should sell the car. (But you know that already…) Listen what family and friends say, but be brave and make your own conclusions.
Side note: To me (as a European), 25 mpg seems like awful bad fuel economy. Even my 18 year old car gets something like 35-40 mpg.
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GRS is such a great site because it realizes financial decisions are about more than money. Your question, Sarah, highlights the ambivalence we feel about making decisions just because they make sense financially.
So take the finances out of the equation. You’ve already done an excellent analysis of that. Ask yourself a few questions:
What kind of person am I? How do I see myself acting in the world? And does this person need this car? Or any car?
If you see yourself as environmentally aware, for instance, the car share program might be a better fit for you. And, although it’s not the cheapest option, spring for the frequent user plan and think of the shared car the way you see your current car.
If you see yourself as spontaneous, perhaps swapping the new car for a modest used one would be a good fit.
It doesn’t sound like you see yourself as a spend-thrifty gal–which is what financing a new car and keeping it on the road for lots of money probably sounds like to a lot of GRS readers. So what kind of person are you and what transportation will express that the best?
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Much like J.D., I would suggest that you sell the car. It’s going to be such a freeing feeling for you! See how well you can do without it, and if you feel like you need some wheels, visit a used car dealership and purchase that beater.
If you get your costs down to around $200 like you suggest rather than $1,000, you’ll feel much better about your situation and can handle any emergency that may happen!
Good luck!
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I love public transport and have never had my own car so perhaps I’m biased but for me, it’s pretty clear you should sell it.
You know from a financial point of view that it makes sense – even if you car-share every single weekend, costing $75 a time, your car-sharing and bus fares will still be half the cost of owning your car – that’s an extra $6000 a year in your pocket. You’re not even losing money if selling it now – and you could put that money in a savings account and buy a cheaper car in the future like JD mentions.
Before you moved, it wasn’t practical but now with the bus route, it is: sure, it doubles you commute time but that’s time you can spend reading or whatever (I listen to lectures and crochet when I’m feeling productive, and play Scrabble on my DS when I’m not
) instead of staring at the road. And as you say, you can cycle too.
You’ve explained the reasons why you think you should sell – but what are the reasons for keeping it?
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Hi, I’d also advocate for selling the car but leaving the psychological opt-out: permission to buy a cheap old car (like $2000 one JD suggested) if you feel after selling the current one that not owning a car is a mistake.
Or, become a scooter gal. No idea how much they cost though
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If you still lived 40 miles away from work then a car would be a necessity, Now that you live close enough to take the bus to work, then you should sell it off. Hopefully you can get enough for the car that it completely covers what you still owe on it.
It will save you the stress of having to find a place to park and the stress of having to deal with the traffic.
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I think you cannot afford to keep it. Sell it, take any $$ left over from the sale and buy a used car if you like the freedom and convenience of being able to just get in a car and go when you want or need to.
And I do not think you made a mistake when you bought the car. You obviously thought about the pros and cons of purchasing and owning a car and made the decision that was best for your circumstances at that point in time. Don’t let anybody tell you otherwise (including yourself)
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Well, the point is: the car mustn’t be bought.
Unfortunately you cannot go back, so looking forward, I do think you should put your hands on a pen and write down to a paper the following:
Calculate how much you are going to loose if you sell your car now, instead of waiting some time.
Calculate how much you are spending now with it, instead of selling it.
Than just make a comparison. Is it worth selling?
Yeah? No?
If it is cheaper to keep it, keep it, if not, do not ever think something else.
Forget about the-completely-wrong-saying: “can’t possibly live without one“, referring to live without a car.
It is aways possible. Billions of people do, why wouldn’t you?
I do, working almost 10 miles far from home. I get a bus and wait 40 minutes to get to work.
“Oh, but I can’t wait so long”, me neither.
So I actually learnt to use this time to grow my knowledge. Reading books, read thousands of blog posts during commute (including this one), study etc.
“Oh, I can’t read inside vehicles”.
So download audio podcasts, listen to books.
“Oh, but I am making a course far from home and office”.
Arrange a course near one of both places.
“Oh, I can’t do it, my work is too much far from home”.
Then move.
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2 more things to consider -
1. How often do you shift cities for jobs and is it in your hands to move to a public transport friendly city?
2. Can you keep the car if you only use it for car pooling or simply reserve it for the non-work related transport (to teach swim lesson after work, to dinner parties, to events, on trips to Tahoe, on excursions)?
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Sell the car and save up to buy a good used car with cash. You can live without a car for a few months and save that $1,014/month to buy a reliable used car. Who knows, maybe you’ll get used to not having a car again. You can join zipcar.
I’m sure your housing cost went way up when you moved into the city. You’ll need to reduce other expenditures.
Yeah, sunk cost. Money is gone so don’t throw good money after bad.
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I have a 95 Escort wagon named Betty the Ford. I paid very little for her and since she only has 68,000 miles, she’s got an engine that will last for years. I’ve had to put about $2000 into her for some under body during the last two years, but my mechanic assures me that she’s in very good shape. Insurance on her is ridiculously low. If I had bought a new (or newer) car I would have been paying that yearly $1000 in 2 months instead of annually. A real bonus is that even though she’s a really attractive car considering her age, I don’t check her for scratches every time I go to the grocery store. After my long winded story, my advice is to lose the expensive vehicle and buy a cheap one or use the vehicles that you pay for as needed. You have better things to do with your money.
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She should probably get rid of it, sounds like she’s already made up her mind. But I’d like to comment that there’s no way a 1-yr old car needs 4 tune-ups a year. Oil changes? yes. $100 tune-ups? No. Unless there’s something exorbitantly expensive about car maintenance in California, she should find a new mechanic for her next car.
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‘
Sarah
Immediately sell the car and go for public transportation. You are paying way too much for having the car.
The sunk costs are sunk costs. Dont worry about them. Sell it off.
Leo Babauta from zenhabits.com also lives in San Fransisco and he never had a car while in SF. He and his wife have 6 children. So if they all can get by without a car, so can you.
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Hi Sarah:
I think it’s great the way you have carefully laid out all the reasons why keeping this car does not make sense for you right now. It seems clear that you would definitely be better off without the high overhead costs of owning this car. I say sell. I understand completely that hindsight is 20/20, but I’m sort of puzzled by your decision to purchase such an expensive car in the first place? If your take home pay really is in the $3000K per month range, a better idea might have been to finance a cheaper used car or a new car with a lower price tag, but over 5 years, so that your monthly payments would be much more manageable. Of course all of your other car costs would still be there, but you’d probably find them somewhat less of a pinch with a lower monthly payment. For example, my husband and I recently purchased a new hyundai elantra for $18,600 and a $6500 down payment including my $1500 trade. We received an interest rate in the 3% range and financed over 5 years, so we pay only $239 per month on the car loan. The reason I mention this is not to say that you made a mistake, but just as a reminder that whenever you make any purchase on credit, you should always consider how it will affect your discretionary income once you have to start paying the money back. Good luck with your decision!
Alexandra
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It seems like you should sell your car, but it seems like you are overpaying for insurance and especially maintenance. A new car does not need a tune-up only oil changes…
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I would sell the car and use the extra money you get (car value minus outstanding car debt) to make an extra down payment to your college debt. The money you don’t spend a month on car ($1000) you can partition in three sections: $300 on alternative transport (bike, bus, rental car, car sharing), $300 on extra pay off college debt, $300 for the emergency fund.
Just my two cents. I was able to pay off my college debt very quickly after I left university and that has given me much (financial) freedom.
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You didn’t make a mistake in purchasing the car. You had to have it due to commuting.
Circumstances changed and now you are throwing good money after bad.
Take the leap and sell the car! Make a promise to yourself that you will try it for a set period of time (one month, three months, whatever). Make a note of all the times you REALLY wish you had a car… and not in an “Oh, it would be nice” kind of way. At the end of your time frame, go over your notes. If you need a car, go get another used one – it doesn’t even have to be a beater. Just one that will keep your financial boat from sinking any further than it’s doing right now.
Good luck!
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Why not refinance and get a lower monthly payment until you find a buyer? My credit union offers 2.99% on 4 or 5 year pre-owned vehicle loan. Refinancing would reduce your monthly car payment in half.
I would suggest listing it for sale ASAP at a price that is more or equal to what you owe. Just be patient, it may take two or three months of driving it around with a For Sale sign or listing it on Craigslist or Ebay.
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Think a couple of years down the road. You’ll be making that new-car payment every month for a pretty well-used car. Car payments become less and less worthwhile as your car ages.
Try this experiment. Find a place to park your car for a week (outside the city) and do without it. Then reevaluate.
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Yes, sell sell
Please, ignore this advice if you are in a very busy area or don’t feel confident about the safety!:
I like the idea of a scooter for those dinners out and swim lessons, and a zip car for your Tahoe trips. The scooter won’t be perfect – i.e. if it is raining you may still ask for a ride or go with public transportation – but that will help bring you closer to a public-transit only mode.
A used car is a good idea too, but I have a feeling every time you have a repair >$200 you’re going to thing “damn, I should have kept that lovely new car”
One more option: Anyone nearby or in your building that you could create a car-sharing agreement with? (i.e. you share their car) I feel like SF is one of those towns where people would be open to such an arrangement.
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It really sounds like you enjoy owning a car. There’s nothing wrong with that. You just don’t enjoy the high cost of this particular car. Sell the car, take any proceeds you make from it and perhaps set it aside for a while to see how things work out by not having a car. If after a few months you believe you would like to still have a car, just use the money that you made from the sale and buy one outright.
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Why don’t you try going carless for a couple weeks? This will help you see how not having the car will affect you.
I think you should keep it if you decide you want it after that.
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Only you can make this decision. Don’t disregard your emotions because they can give you information on your wants and values.
Why not try a week or two leaving your car parked somewhere and see how difficult life is without it?
And don’t forget zipcar– the best thing about zipcar is the dedicated parking spots.
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I, too, bought a car specifically for a commuting job – then found a better job that didn’t require a commute. (At least while I lived in my old apartment.) It’s not a mistake if there was a clear rationale for the purchase, and you couldn’t foresee moving so soon after buying the car. Don’t feel guilty about using the money you earned for a valid reason.
Anyhow, if the emotional/psychological part of selling back your car is getting to you, I’d suggest that you take a week or two to “test-drive” your new transportation: feet, bike, public transit, etc. Keep track of all the expenses related to it, and keep track of the adjustments you’ll have to make in terms of time/scheduling. Also keep track of where your new transit takes you, in terms of closest groceries, shopping, major transit (Greyhound, e.g.). During this period, you’ll have access to your car – but don’t use it.
Give this phase a good run. Given others’ comments, I think you’ll find yourself able to manage the transition. Realizing you can make something work can be hard after you’ve established a habit (like driving). You just need to allow yourself the time to establish new habits.
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I’m with JD on this – start looking around for an older car to replace your Matrix. You are spending too much every month just to keep it.
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I’ve lived in four different states, traveled all over the country, go out fairly regularly, and have never owned a car. I take the bus or train everywhere that I can’t walk to. I carpool with friends who have cars are are going the same direction, offering them a bit of gas money if needed.
In some areas, you need a car to get around. But if you are living in SF (which has some of the greatest public transit I’ve ever used), there is no need for one. Its a commodity, a convenience. Whether it be for financial reasons, environmental reasons, or just simplifying your life – you’re likely to be happier without the car.
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Ah, Liz beat me to it! I was going to suggest a two week trial period or a month.
I used to commute 40 minutes each way, and you’d be surprised what a big difference that is at the end of the day. When I changed jobs and the commute was gone, I had more time and energy for exercise, more time to plan and prepare healthy and frugal meals and more time to just unwind. However, a lot of people I know who take public transit love the opportunity to read or play on their smart phones as a way to unwind. It’s really up to you how you take to the lifestyle, but it can be hard to predict until you actually try it.
Also, if you do keep this car or get another one, I’d look into another place to get maintenance done. I can’t understand why a new Matrix would need four tune ups in a year. I don’t think my old corolla has had that many in total!
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It seems like you think you should sell your car more than anybody else, so go for it. No reason to make yourself feel guilty every time you get in it or see a bill, right?
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Sell the car or keep it, depending on your lifestyle. But two points:
1. Your car should not have needed four “tune-ups” in its first year. Nowadays, a “tune-up” (new spark plugs) might be after 100k miles. You got taken for a ride there. Live and learn. Read the service schedule that came with the manual, and follow it. An oil change every 8-10k miles or so is likely all that’s prescribed, and this will run about $30.
2. Your accounting is a bit off. Specifically, the $529 monthly car payment is based on a three-year amortization schedule. But the car will last much longer than three years. That figure is relevant in terms of analyzing monthly cash flow for the present time, but your car isn’t “costing you” quite that much. Otherwise, once it’s fully paid-for, based on this accounting process (and after you’ve become a bit more maintenance-savvy) the car would become the clear winner over public transportation.
Additionally, now that you’re living much closer to your job (that is what you said, right?), it’s not accurate to compare your monthly fuel costs from your previous 40-mile trek.
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@SG from Germany: Laws in the US have made the high mpg that many people enjoy in europe unavailable to us here in the US.
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I like Nicole’s suggestion of parking the car for a couple of weeks to “test drive” the no-car scenario.
Financial decisions on elective choices really have to be considered in the context of your overall finances and financial goals – none of which you have provided.
Are you short of money because of the car? What would you do with the saved money if you sold your car? Are there goals you can’t achieve because of the car?
Two more points:
1) Buying a beater is a good way to get rid of debt, but it won’t lower your monthly costs outside of the car payment.
2) Your car payment is quite high – This is partly due to your financing choice. Paying off $19k in three years is admirable, but it results in higher monthly payments. You have to consider that there are only two more years of these payments. If you keep the car, another 6 years – you will have 4 years of no payments.
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I’m with Liz#13
Wasn’t a mistake at the time but now your situation has changed and so you shouldn’t beat yourself up if you want to make a change in your transportation.
I also like the trial run. You may discover you’d rather have a car (but maybe not yours in particular.) Or you may discover you are just fine without one.
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Well, I don’t think you made a mistake in buying it in the first place. The question is now how much value do you place in it. Life is full of “sunk” costs, like food, shelter, kids, education, clothing, etc. It’s the value you are personnally receiving for the money that’s important.
So as others have mentioned I’d recommend taking a few weeks or even a month getting around without the car. Park it somewhere safe and away from you if possible and see how you manage. Like most things of convienance we get used to them and they become a need. To see if it’s really a need do without for a while. That will also help you determine it’s value to you and if it’s worth spending the money there or elsewhere.
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Before you decide, you need to test yourself. Spend at least one week getting to work without using the car. Make notes every day what you did, note the time spent on alternative transport, etc. Then spend a week using the car again making the same notes of time spent & other costs. If after the one week test you still feel you should sell the car but you have doubts, commit. Commit and execute a full month without using the car at all, for anything.
After one month without it check again how you feel about the car. Sit down with your bills and detail where you would be financially after selling the car. Then list any doubts you have about whether to sell the car. What will alternatives cost? How many trips do you make during the week that are difficult with public transportation? Test out how much a taxi would cost for non-work travel and whether it would be convenient (sometimes they take too long to arrive when summoned by phone). Consider the cost of a rental vehicle for trips out of town.
By comparing the alternatives your decision will be clearer. Also consider how you would be set financially after two more years of paying, and how long you feel the vehicle would last. I bought a 10 year old used vehicle for $10k, and have had it for nearly 10 years now. So reasonably your vehicle should last a minimum of 10 years without major work. With that perspective in mind will it be worth it to pay it off? In just two years you would start paying more on the student loans.
Is there anything you can do to bring in extra money? You might feel differently if you had a few thousand in emergency cash. Or if you were paying an extra $100 a month on your student loans.
What is you car worth now if you sold it vs how much you owe on it? If you can’t pay off the loan with what you would make from selling the car you are surely better off keeping it for another year.
From my perspective you are being influenced by some internal buyer’s remorse and that is what is making the decision such a problem. If you are feeling you made a bad deal and you want out of it (subconsciously) you will feel bad every time you make a car payment. You can reduce some of your costs by using public transportation to work on days when you don’t really need the car, reducing your monthly gas costs. You are certainly in a good position right now to test out alternatives before you make a decision.
Keep good records during your test runs but don’t agonize over them. When you are ready to summarize the results write down your gut feelings about it BEFORE running the numbers, then compare. Sometimes our emotions influence our thoughts more than we realize. Just try to clarify everything and the decision will make itself.
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I am always frustrated by arguments that you “need” a car. If you didn’t have a car, would you be unable to function in society? The answer is certainly a resounding “no”, especially in the Bay Area (where I used to live). So the only reason to keep the car would be if you *want* it, and it sounds like you don’t.
There are many alternatives, and I think you will enjoy the freedom from payments, worry, and the hassle of parking.
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@Stephen:
Why would she refinance at 2.99% when she clearly said her current financing is at 0%? Why would you advise her to pay interest when she’s currently not paying any?
@Sarah: Sell the car and take the bus. Lots of people get around SF just fine on the transit system, you’ll become comfortable with it in no time. You’ve got way too much student loan debt to be spending 1/3 of your income on a car.
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Great, thoughtful post. I agree with others that when you lived further away and didn’t have public trasportation as an option, car ownership was vital. Now having moved with public transportation, it’s obvious that the new car is a burdon. I’d throw an experiment into the mix of options: before selling the current car, go carless for one week-is it do-able for you? reflect on the carless experiment? does public transportation meet your needs? Next, sell the car, pay off the loan and breathe. Either put in the $2000 over the car loan into a better fuel efficient beater car OR deposit the cash for emergencies.
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Sarah, I disagree on buying a beater. That only saves you the car payment each month and maybe some on insurance. You would certainly have higher repair costs. The “$2000 beater” advice I hear all the time is tough to take unless you are a weekend mechanic or know a good one. You can often end up with more costs with $2000 cars and you still don’t have reliable transportation. Nothing like surprise $1000 repairs plus being nervous about taking the car to Tahoe because you are afraid it will break down.
Good luck.
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Park your car at your parent’s for a month. Call the insurance co and tell them it is parked and will not be driven. See how you do. Your list of pros and cons can be on your fridge. It will also give you time to look for the zip car spaces and get used to public transportation.
IF you sell (which I am betting you will) DO NOT buy a beater. A huge part of your problem is parking. I know- BTDT in a big city. Live without a car. You can do it if I could for two years with two little children.
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I don’t know whether you should sell your car either (although, I loved NOT having a car when I lived in D.C.!), but I will say that you might be surprised what you can find to do on a 40 minute commute. I live in a little town with a university that has a bus system and I could drive to campus in 5 minutes. My bus route takes 30. However, I *like* the bus because I get reading/knitting done that I cannot justify the time for otherwise.
I also like the idea of getting a good used car. When I was a sophomore I bought a used Kia Sportage (terrible mileage, but that’s beside the point) under original factory warranty for $7000 cash. It’s still going strong. It stays parked unless I need to go out of the college town, or somewhere not within bussing or biking or walk distance, and it works well for me. It would have been the same thing if I had taken the car to D.C.
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Because you have other debt around $80K, it makes sense to sell it. I am of course puzzled how your car lost 43% of its value in 1 year. That seems a bit high to me, ut any case get as much as you can for it.
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I don’t have that luxury since live in MA. I’m too far away from the nearest public trans. and I’m too far away from my job. It is a necessity during the winter months.
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Before taking any actions, I have to ask: What are the chances that you’ll be moving again, or changing jobs?
If there is more than a small chance that either of these events will happen, I’d hang onto the car a while longer. You have already expended the sunk costs, so you don’t want to find out in a year that you need to purchase another car and invest in the sunk costs again.
If there is a chance of either, you might seek out a place outside the city where you could safely garage your car for a while. With family, or a close friend maybe?
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JD – this is totally off topic, but can i put in a vote for a commenting feature where we can “like” each-other’s comments, I think it would be great esp. for “ask the readers” posts. – for example, I’d like to agree with Nicole’s comment without having to make a second comment. Sorry for the tangent, pls go back to enjoying your vacation!
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You should sell it. Do it quick before you can change your mind.
I was also in a similar situation 2 years ago. I missed my car badly at first but after seeing my savings pile up, I didn’t miss it as much anymore. Now it would be harder to try to get me to BUY a car.
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Who the hell convinced you that you need 4 tune-ups a year? Modern cars are designed to go 100,000 miles without a tune-up. All you need is an oil change, and that only about every 7500 miles – anyone who says less is trying to sell you oil changes, unless you’re driving in extreme conditions like through sandstorms.
I have a 14 year old car with 136K on it and I haven’t paid $1000 in maintenance total on it since day one, excluding new tires.
$20 for an oil change every 7500 miles. Anything else goes wrong, it’s a new car, get the dealer to fix it for free.
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I would recommend against selling the car. If you can tough it out for 2 more years you will own the car outright and you can probably get at least another 7 years out of that car. Think about now nice 7 years without a car payment would be.
If you really want to make a fact based decision though you should consider the costs of both alternatives. Public transportation is nice but it isn’t free (at least not in the greater Philadelphia area). So you should compare the cost (time and money) of both situations. Additionally, I agree with the other suggestion to “try out” the lifestyle of living without a car. But I would suggest at least 1 month (and no cheating).
The worst option I heard was buying a “beater” car. I’ve been there. They are unreliable and frequently need work. If you are a mechanic it can make more sense but otherwise I would advise against it. Especially a $2,000 beater. Remember, on your current path, you are 2 years away from owning a car outright that will last you for 7 years.
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You need to work on the quality and timing of your analysis skills!
First, you neglect sunk costs: so far so good. Next, you take old costs, which clearly are no longer applicable, and apply them to your new situation. Then, you neglect to address other uses – how do you get to the swim lessons and the dinner parties? You haven’t included bus, taxi, or car expenses for that travel. The Zip car needs fuel to get to and from Tahoe – not included.
And, worst of all, you are conducting this analysis AFTER having moved to SF. You traded a 40 minute commute for a 20 minute commute plus 40 minute parking search and higher living costs.
Your bad decisions so far include buying a new car and moving without a full analysis. The $1000 rebate was designed to fool grads into thinking they can afford a new car – which you can’t. Then you bought into the idea that living in “insert your favorite Urban center here” is cheaper than the suburbs and commuting without doing the analysis.
In the future, you need to analyze ALL of the effects of major life decisions BEFORE you commit to the changes.
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