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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I faced the same conundrum but without the debt load of student loans.
When I first purchased it I soon realized I barely drove my car because I commuted by bus (no parking costs!) and could do most of my errands by bike/foot. I didn’t realize that, when I first moved to my new city, I probably didn’t need a car. (It is now 6-yrs old with about 40K miles now)
It sounds like you do use your car for recreational purposes on a nearly daily basis…so I would think twice about getting rid of it.
If you do not drive your car to work and will be putting less than 15K miles annually on your car, check to see if your insurance will decrease – it should.
I would crunch the numbers based on your new living situation and look at it from a current cashflow perspective. If you use public transportation to get to work, then by your numbers, you save $50/month right there. Plus a discount on insurance that you should get for putting a lot fewer miles on your car per year.
Sunk costs are sunk costs and while the car is a depreciating asset, you have paid into it. If you’re one of those people who will keep a car for 15-years then maybe biting the bullet will be worth it in the end for those days when you just want to leave the city or be able to move.
FWIW, I paid off my car (with much internal grumbling). My life has changed a lot since I started grumbling 1-year into 5-years of car payments. My life has changed a lot in just the past 18-mos. While still I do not drive my car daily, I live in a new town where I really do need a car to go to the grocery store, I’ve taken several cross-country road trips and jump in my car on the weekends to go to the beach or go hiking. So yeah, I’m glad I bit the bullet and paid it off. Because in many parts of the country you do need a car. And you always need a car to get to those hiking spots that are quiet and relatively car-free. The irony abounds.
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People are always going to question you when you go outside the norm. The norm in our country is to have a car….so if you go against it (and make people for at least a second have to question themselves or their way of living) they will quickly try to bring you back to the fray. The same thing occurred after college when I quit smoking (all my buddies were smokers) or when my wife and I got rid of cable for six months. Although I think you may be able to price around and find cheaper insurance, it doesn’t seem the car brings you any value or make you happy and instead is more of a burden. I think we all have enough worries, why spend 1/3 of our takehome pay for an additional one. Last year I was able to walk to work every day but I knew I only had a one year gig. I felt so much healhier, lost weight, etc. Now I communte 30 minutes each way (which isn’t too bad) but I can’t stand it. Best of luck cutting the chord on the car!
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@Chris – The people who think you can buy a cheap, but “good” beater car are the same ones who think that a new car gets depreciated by 40% as soon as you drive it off the lot.
I’m not saying used cars are bad, but the reason a car only costs $1,000 or $2,000 is because it’s a piece of sh*t.
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Keep the car. You can drive it for another 15 years, at least. Or buy a $2,000 used car and think of all the fun times you’ll have haggling with a mechanic to fix it.
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Sell the car. Get a ZipCar membership (or something similar). Put the remaining car debt towards your loans.
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I don’t think those were 4 tune-ups. I believe she means four scheduled maintenance visits (probably at the dealership) as part of the outlined maintenance program. She’s just using the term “tune-up”. $109.00 is a bit excessive, however.
As to “sunk costs,” I don’t believe they should be dismissed so lightly. If she has a change of heart a year after selling the car and decides whe needs one due to life’s changing circumstances, she’ll sink those costs again.
I’m on the fence on this one.
She might keep the car at a relative’s house where she leaves it parked & protected. Because it has a lienholder, she’ll have to keep the insurance intact, but find cheaper insurance. She can use public transport while paying off the car @ 0% interest. She still saves money (fuel, insurance, maintenance, parking, etc) and in the end has a paid for (relatively new) car at her disposal.
It’s the best of both worlds.
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At the time, buying a car was the best thing to do. Right now, you need to sell it. You have better options and later on down the track you can always buy another car.
I didn’t need a car where I was living in a metro city close to everything I ever needed. Then, I moved to my home-town where the bus runs once an hour. I needed a car to get to and from work. It wasn’t fair depending on my mother. Sure my car costs me a pretty penny each year for maintenance but she’s darling and absolutely perfect for my situation.
In sum, sell the car and take advantage of your public transport. Think of all the reading or video gaming you could get in!
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Perhaps in other areas of the country this doesn’t hold true, but in South Dakota $2000 can buy quite a decent used car. Five years ago, we bought a 1986 Ford Taurus. Some people thought we were nuts, but it only had 50,000 miles on it. We paid for it outright with cash ($2000). We pay about $40 a month for insurance (liability only) and that is our only ongoing expense. So far we have not had to pay for ANY repairs. My husband changes the oil himself. So with the cost of the vehicle plus insurance, we have paid about $1000 per year to drive this car. While we may have just been lucky with this one, this is the third time since our marriage that we have done this with a car. After we’ve had it for about five or six years, and things start to go wrong, we sell it an get a new one. (A new old one). If you’re willing to look around a bit for the right vehicle (and not expect to get anything fancy) you can get a reliable car that will last years.
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I was in a similar situation (bought a car when I was living in Phoenix, moved to Washington, D.C. where parking was a nightmare and public transportation is great). I sold the car and haven’t regretted it for a minute. If I’m coming back somewhere late at night or carrying a heavy load of groceries, I don’t feel guilty about taking a cab because I know I’m still spending so much less than I did as a car owner, and as an added bonus, I don’t have to deal with the driving or parking.
In the end, I’ve so much adjusted to not having a car, I haven’t even gotten around to signing up for ZipCar. It’s amazing how quick it becomes the norm.
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Sell the car. I used to live in Houston where I could get everywhere on the bus. I owned a car. But I took the bus. The longer commute allowed me to relax and read.
If you find you absolutely need a car on some occasion, rent one. A rental car will always be available when you need it, but someone else pays to have it sit there, and your total monthly costs would still be lower.
Or there are cabs for the occasional times when the bus or the bike won’t do. Still cheaper than owning.
Sell the car.
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I think you know that selling the car is the best on-paper financial move. Sell the car for $14k, pay off your $12k. Put the $2k and the extra $600 or so (car payment + insurance) away for a few months. If you decide that you really miss the freedom and benefits of a car, go buy a certified used car (often with warranty) for $4-5k, cash.
But, if you just can’t bring yourself to do it, why not put your car into the car share program and at least make some money off it on the weekends?
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First of all, whoever told you you needed a tune-up once once a quarter was probably a mechanic that wanted your money. A tune-up is recommended annually. An oil change is recommended for modern cars every 5000 miles, which for you would be once per quarter. But an oil change costs $25 or less. (If your handy, you can do it yourself. The first time when you buy the items you need it will cost $25-30, but then it will cost about $15 forever after)
Second, does the Golden Gate have an electronic toll program? Usually, you can save on tolls by signing up for one. The EXpress Toll on E470 in Denver is 10% off the normal toll.
Definitely shop around for cheaper insurance. I’ve never heard of AAA being particularly price competitive. Check Progressive or Esurance.
If parking is free at work, but it costs to park downtown, is it possible to leave the car at work and take public transportation downtown?
Finally, I would suggest looking into carpool options. If you can find just one person to carpool, that cuts your gas & tolls in half. If you can get 4 people, then those are only 25%.
By combining all of these, it should be possible to cut $200-300 per month off your costs.
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When reading this, I really question why you had purchased a new car in the first place, when it seems as if the option to move back into the city was always an option and why something in the ~5k price range wouldn’t have worked.
I think your idea is sound to sell the car. Simply put you don’t need it, the overhead, headache and hassle from it. It’s a liability and it’s one that is going to depreciate as it get’s older and is worn from being parked on the street for long periods of time. Car sharing or even car rentals are a good option for city living so you can still ‘get out’. Clean it up really nice, take some good pics of it and put it on craigslist for a cost below current value, but more than what you have to pay your loan for.
For those who have a problem with purchasing lower priced cars for commuting use, don’t knock it until you try it. The key is getting the right type of car for commuting that has been well taken care of and is suitable for commuting. My winter Daily driver is from 1989 and has 183k loving miles on her.
Dave
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I’m definitely on the sell the car, take public transportation to work, and buy a cheap beater with cash to use on the weekends.
A cheap used car would cost far less in insurance, wouldnt have any car payments, etc…
You still have your freedom, but at 1/3 the cost.
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I think people are quick to say sell the car. I paid cash for my first new car 10 years ago, and it’s been so nice compared to the beaters that I drove until that point. Just the confidence that it is unlikely to break down is worth so much.
If you’ve got 0% financing, then you are paying cash for your car as well. Your $529/month is an expense, but it isn’t a “forever” expense like a telephone or cable subscription. When it’s paid off, you’ll have an asset. Technically, it’s a depreciating asset, but to you it is an asset. That car is going to get you around, and probably with minimal maintenance for a good long time.
25mpg average isn’t too surprising to me. My Ford Focus gets 40mpg on the highway, but with a lot of town driving is regularly in the 20s. You already know (from previous commenters) that you are getting rooked for the service, so you should change that.
I live in a rural area, so car necessity is different for me. But there are positives for you too. Your car payment isn’t going to go up. Over time, this car is going to get cheaper (and then eventually more expensive when it has become a beater, but that should be a long time from now).
If you are driving your car less, presumably you are already saving perhaps $200 a month in gas and tolls?
It’s a tough call when you are “on the edge.” If you get in a bind and have to sell the car quick to make ends meet you could take a beating. But you could also end up sticking it out (assuming no emergencies) and have it paid off in a couple of years and at that point it will become much cheaper.
If you sold the car, could you honestly say that you’d turn $600/month around into savings or other debt reduction?
Just thoughts.
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Disclaimer: I’ve never not had a car since turning 16, and I dislike public transportation.
I vote for keeping the car. As others pointed out, your expense analysis is changing because you have no tolls and reduced gas expenses since your commute is shorter. There are a lot of great suggestions about shopping around for insurance, making sure you’re following the maintenance schedule recommended by the manufacturer and not some mechanic’s ‘recommendations’ etc.
You are deriving value from having a 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.” Stay the course. You will have a paid-off car in two more years, and then no car payments (and still minimal maintenance) for 8-12 more years before that car becomes comparable to the $2000 beater some are recommending. The car payment can then be applied towards your student loans.
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Also, the tougher it is to get to SF, the tougher it is to dine at the fancy, overpriced restaurants in SF. Having a car makes it too easy to get out and blow money on Stuff. I moved from the middle of a big city to a distant, under-developed suburb and have saved a lot of money getting away from easy temptations.
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I think the biggest mistake this writer made is buying a NEW car with a loan instead of saving money and buying a USED car and paying it in cash. Otherwise, the writer never owns her car. The bank owns it. Get it straight!
There is nothing financially savvy about this train of thought:
1. I need a car, but I don’t have money
2. I’ll borrow money to buy a car
3. A car = investment (it is not an asset it is a liability due to its immediate depreciation)
4. But I can’t afford the cost of ownership of a car
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Stop analyzing and sell it. I don’t mean to be cruel but …. with as much debt as you have, you shouldn’t have bought the car in the first place. Expensive lesson.
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This one is simple, sell the car and pay off your debt. San Fran has great public transport. And with the option of zipcar for out of town trips this is a no brainer.
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I’d say the logical answer is to sell the car. How long are you going to stay in the San Fran area? Have you tried the public transit to make sure you aren’t going to be frustrated every day (only because you aren’t on your own schedule anymore, in my experience)? Can you sign up for Zip Car in your area should you need a car? Is Zip Car affordable with your budget (I’m assuming yes, but I’ve never looked at the fees.)?
I’d say take a week (or two or a month, whatever) and test out not driving the car at all. See if you will be comfortable. If so, sell the car. The test will make it easier, since you, right now, are stuck in a rut of driving everywhere. It’s hard to break a habit.
And, unless you’re using the dealership to make sure you don’t void your warranty, find a new mechanic..$109 each for 4 “tune-ups” seems very high to me. I think I was paying $50 at the dealership for an oil change and tire rotation (high, yes, but I didn’t want to take any chances with my warranty…overly-cautious, obviously!).
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Maybe it was a mistake in buying a new car with payments right out of school, but what’s done is done.
Strangely enough, being essentially a non-driver, I don’t know if this is a slam dunk to sell the car NOW. As others have pointed out, the expenses with her car are changing in the short term, and in 2 years she will have a paid off car. I doubt that she will be able to sell it for more than her car note. We did something similar in buying a used but reliable hence expensive van, making payments for 2 years. We now don’t have a car payment and hope to use it as long as possible. For our family of 4 it doesn’t mean that we drive everywhere. We often walk our kids to school, I take a bus to work or walk from work, and my husband will often bike to work. But admit it, it can be a real convenience to have your own car. I also don’t recommend the 2K beaters seriously there is a reason they are 2K. So if you are able to keep up with your bills still having the car I would either keep the car while keeping expenses for it low (change insurance, do the minimum recommended maintenance, take public transportation to work at least some of the time), or b) sell the car. But if you really really miss having a car buy a car outright but one that is reliable that you feel comfortable driving.
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I think many respondents have been a little too eager and quick to jump on the “sell the car, take the bus” choice because it’s the trendy-sounding, chic, urbane option. But that doesn’t make it the best choice for Sarah.
——
“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?”
Because it wouldn’t fit my lifestyle,and I don’t want to. Billions of people live without clean drinking water, that doesn’t make it a wise choice.
—–
There’s also a lot of conventional wisdom on here that might not be applicable, either.
“Don’t borrow money to buy a car!” “Buy a used car.” “Buy a beater.”
She borrowed money at 0%. She bought a reasonably priced and highly practical (not showy), extremely reliable and sensible Toyota. Toyotas (and Hondas) presently are experiencing nearly linear depreciation rates. That means that there is practically no benefit whatsoever to buying these cars used. New, they are great cars; used, they are highly over-valued.
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Sarah, I did the almost the same thing– purchased a car, realized I hated the car and it was a huge mistake, and have since decided to sell the car.
You have to just chalk this up to learning! Don’t make the same mistake again, don’t worry about what your family will say (they are not paying, you ARE), and move forward. It’s uncomfortable, no doubt, to admit to a mistake– but it’s worse to say stuck because of pride.
Good luck!
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I’m with the few posters who suggested having a car-free “dry run.” Park it for a month and do not use it. For anything. No matter how much it would make life easier. Find a way to live without it. This should be long enough that you encounter basically all of your random errands that deviate from your routine and you can figure out how to deal with them without a car. At the end of the month, figure out whether the convenience of having the car offsets the rather astronomical costs.
I disagree with those who are in the “buy a $2000 beater” camp, because simply having a car is expensive regardless of whether or not it is paid off, especially in the city. You will still have to park (which is extremely not-free outside of the suburbs) and insure it and it will still need gas and maintenance/repairs.
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Sell the car and get a motorcycle or moped instead.
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I guess it depends on your financial situation. Would getting that $12k in the bank go to paying off debt, maxing out your Roth IRA, starting an emergency fund?
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The freedom that a car provides is absolutely worth considering. We were car-free for five years, but in the last year I felt trapped in my community or the corridor of the commuter lines. I ‘needed’ to get out to camping weekends, trips to the hardware store, etc for my sanity. If Sarah uses the car to get to the things that psychologically sustain her, then having a car is worth it.
That said, when we decided to buy, the only way it made financial sense was to get an used $2000 not-quite-beater. Anything more expensive, and ZipCar or rentals would have been cheaper. Sarah might find that with all the transit/cap/car share/rental options in SF, that using cabs and renting occasionally will come out cheaper, and get rid of that parking problem.
Sell the Matrix, and spend just as much as you were per month on other transportation options, and see how you feel about it. If it seems to be a hassle, then buy a cheaper car and use it in ways that make you happy and count it as money well spent.
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You said you live 8 miles from your work. Traveling by bike would allow you to make the trip to work in about 30 mins (assuming a 15 mph avg) which would be faster than the bus and just a little slower than the the car. Also with the bike, assuming the distance for normal groceries is even closer, you would be able to complete your normal errands. I also am told SF is a bike friendly city. Plus you get a free workout!
So my vote is to sell the car and get yourself a bicycle (you can even get one of those electric assist bikes to help up the hills).
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You should sell it! Our car-crazy society has bought the line that, “you need a car so you can have freedom!” when what most people get from buying a car is the opposite of freedom – debt.
Having at least 2 good options – bike and bus (and presumably taxi or zipcar if you had to), I think you’d be crazy to keep the car. Your health and your finances will thank you.
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What about selling the car and getting a scooter or moped? Then you could still get to dinner parties and swimming. You could buy the thing with cash, pay very little for insurance and gas and I don’t know about the parking, but I’m sure it would be cheaper (and easier to find spots?). Rent a car for a road trip like Tahoe. With all of the money you save in a year not having a car, (like $10,000) put some of it away and then go on a nice vacation or use some of it to go out to dinner and really experience San Francisco to its fullest. I imagine it wouldn’t be very fun to pay high rent living in a great city but having no money to enjoy the culture! Sounds like you have a good head on your shoulders! Do what you want to do : ) Good luck!
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I feel for you. I also made the mistake of buying a car I couldn’t afford… then paying and paying and paying on it, staying longer in student loan debt because of it. I finally sold, and felt so FREE! And I always told myself I could rent a car for a weekend whenever I needed in order to quell my psychological desire to own a car. I haven’t had a car for four years now in the city (who’s transport is similar to San Fran) and haven’t rented a car once! I thought I’d do it more often.
If you bike, think of the health benefits!
Since San Fran has such on awesome public transport system, I’d go for it! You can pay off those student loans faster. I always read and do crosswords on the bus. I bring earplugs for when its too noisy to concentrate.
In response to your parents, unless they live in the city most people think it is impossible to live without a car. It’s not! At this stage in your life its a luxury.
Also in response to her tune up costs those are probably just oil changes/maintenance checks at her DEALERship, which is known for being more expensive but a lot of new car owners seem to like to go to the dealer.
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sell the car. you don’t need it. you could either do as j.d. says and buy a “beater” if your ego can stand that OR you could rent a car for those occasions when you need one. If you rented a car once a month for a weekend at the end of a year it still wouldn’t come close to what you would spend on car ownership. Not only does this shiny new toy cost you money, but time spent in looking for parking AND in rationalizing and worrying about. get rid of it….it’s sapping your energy, trust me.
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the suggestions to try life without a car for a while are good ones!!!! That can let you see what it’s like since you are emotionally connected.
You could also try making a list of all the things you *could* buy with that money. pay off more debt? Take a vacation to europe? With $1k a month almost, the possibilities seem endless.
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Sell the car. Buy a clunker so you have something around if you desperately need it. Have liability insurance.
I definitely understand the psychological need for the car. Somewhere like San Fran has great public transportation. Perhaps you can use this clunker as a transition to car-free again.
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It is NEVER a good idea to buy an “old beater!” If you think the cost of maintaining a new car is high, you ain’t seen nothing untill you start shoveling cash into an old car. Besides the monthly repairs, which are inevitably very high, there is the massive inconvenience: As you are driving to the most important appointment of your life, the think will quit. Guaranteed. Oh, and of course there is the environment. (Republicans may skip here). Newer cars are more efficient than old ones. There are no exceptions. A car is freedom. Most cities in America are car towns. In KC, for example, a person literally cannot to there from here on a bus. Only two options: own a car or take a cab. If one has 400+ pounds of stuff to schlepp around as I do, the options become pretty narrow pretty quick. Nobody can REALLY afford a new car, except maybe folks in the Bill Gates category. Keep it and bite the bullet.
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Four tune ups?? Did I read that right? You do not need a tune up every 3 months.
I agree with JD. If you cannot be without a car, buy one cheap for cash and insure liability only. Make sure you get oil changes religiously (every 3000 miles if you’re not driving it a lot because sitting oil gets sludgy) otherwise every 3000-5000 especially if you use synthetic oil (it’s more expensive but good to use in engines with a lot of mileage). You can get a lot of use out of a good used vehicle and it’s a heckuva lot cheaper than making dreaded car payments. You will need to put money in for repairs (timing chain, serpentine belt, water pump, spark plugs, and so on) so budget for it. I bought my 2002 Nissan new and it’s still going strong almost 10 years later. Still looks reasonably new.
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Haven’t read other comments so apologize if repeat:
Why not pretend you don’t have the car for a couple weeks to a month and see how it goes? (Obviously you can’t pretend away the payments, but it would give you a better sense of how hard it would be to live without it).
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Sell the car! I lived in the Bay Area and was often in San Francisco. You don’t need a car much less something fancy, new, and freaking expensive as hell with crappy mileage. Psychologically you’re holding onto it? That’s some really expensive therapy lady. You can sell the car and afford to pay a therapist to get you over it!
OR: No shame, no blame. You did what you did when you did. It’s a mental sunk cost if you will. You’re going to want to kill yourself in another six months for not doing it earlier.
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I would NOT sell the car. We have our car, which we’ve had for 15 years and it still works great and I love it. We don’t use it a ton so it lasts a LONG time. You are paying for a car in 2 more years which can be around for an additional 12 years, which the only additional costs are use-based (gas/mileage) and insurance. You have no idea where the next 12 years will take you and it seems short-sighted to me sell a car that can last so long when you can use it now for the weekends, etc. And it sounds like you really enjoy having it. I would reconsider whether you want to drive to work or take the bus. If gas and parking aren’t much cheaper, take the bus and save the miles. You’ll use those miles later in the car’s life. If you treat your car well, it will last and last and last
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@SG from Germany
The reason 25 MPG sounds low to you is because you probably drive a diesel car. They get more MPG but pollute more. Most people in the USA don’t have diesel cars, so 25 is pretty good.
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Keep it. Swallow the pill for the next two years and pay it off. Look what you said below, you are also physically attached to it. Forget the year behind you and look 10 years out. You should immediatetly be able to lower all of the cost on your list based on your location. Less gas, lower miles=less maintanence,lower insurance-shop around for low mileage plans, less tolls, and even parking. Calculate your costs after the car is paid off and go out 7 years (10 years after purchase) to see potential savings. There is no reason the car won’t last that long if not longer, especially with lower mileage. Plus its hard to anticipate future needs, you may find yourself definitely needing a car in say 2 years from now and will have to go through this again. The beater is not a good idea. I have seen way too may people buy a 2k car get 6 months to a year or less out of it and then pay a couple grand for numeroous small issues or 1 big isssue. I think if you do all the calculations going out 10 years (and the car will probably last longer) you will find that your situation will be cost neutral or not a big deal either way.
“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”
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If you don’t need a car, get rid of it. Rent one when you need it.
Where I live, we have to have a car since public transport only will get you to work… nothing back. How’s that work?!
If you want to keep it… You could save some money by doing your own maintenance for starters. Drive slower. You pay $5, so you must have fasttrak… that’s good. Carpool with someone to split the costs?
What about taking the bus on the days you don’t need the car? Just bike to the BART?
I hate spending extra $$$$, but love having a car. It’s really nice to just get in and drive to wherever I want.
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@Jane Diesel’s don’t pollute more, they pollute different. Diesel emissions are better for the environment than gasoline, worse on the human lungs due to the particulate size. All diesel’s should have a filter that get’s cleaned now and again I think.
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As a fellow San Franciscan who went through the same dilemma as you I can honestly say looking back that selling my car was one of my best financial decisions. San Francisco is an ideal place to be car-less. With a great city transit system, ever expanding businesses like Zipcar and RelayRides I don’t feel like I’ve lost one ounce of freedom. The money I’ve saved is innumerable as is the stress from trying to find parking or finding tickets on my windshield because I was 1.7 inches into a barely discernible, highly faded red zone. I would encourage anyone moving to San Francisco to do the same. Go for it Sarah. I promise you won’t regret it.
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Your old commute sounded atrocious! Your new 8-mile trip is even walkable and I understand SF is very bike-friendly, yes? A 20 minute drive for 8 miles sounds horrible too. Why keep a car for this torture?
Sell the money pit, pay off your loan balance, focus on killing your debts.
The clunker sounds at first like a good idea, but still needs a $300 parking space. So, before you do that, you might wanna give ZIPCAR a try, no? You’re used to living without a car anyway and you don’t need to listen to the “oh but you must have a car” crowd. Zipcar is awesome.
I bet you that for under $300 a month (the cost of parking alone) you can pay for cabs, buses and the occasional zipcar, without having to worry about insurance, repairs, parking, street cleaning days, oil changes, etc.
Just the other day we had a bunch of people saying that if you didn’t have a TV people would think you’re weird. That’s the kind of mentality (following the herd) that keeps people broke.
If the car is too much *for you*, and you know it, and you live paycheck to paycheck because of it, by all means get rid of it and start improving your financial situation today. The “freedom” of the car is illusory if it gets you places but you don’t have any money to spend in those places. Decide what freedom means *for you*.
Oh, and if you can bike to work a few days a week, you can do it every day– with the proper clothing, you can bike in any weather. One month of car payments should get you some science-fiction class bike gear (and a really good bike maybe 2-4 car payments?). You’ll also get in great shape and enjoy the endorphin rush while avoiding the stress of traffic.
PS- To answer the people who say “keep the car, who knows where you’ll be in 12 years”, I think you’d be better off saving cash for the next 12 years and then IF and WHEN you need a car you buy a used one with cash rather than putting a debt noose around your neck. Read Dave Ramsey for more info on buying a car with cash.
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Buying a $2000 “beater” would be a terrible financial move masquerading as frugality. Maintenance costs would likely be much higher than you are paying now, gas mileage would probably be less, and you cannot put a price on the safety factor, particularly on longer trips.
Buying a more recent used car in better shape would have been a better move than buying the Matrix to begin with, but selling the Matrix to buy a good used car would yield a negligible savings at best at this point. You would have to pay sales tax on your “new” used car; also, please bear in mind that just because Kelly Blue Book says your Matrix is worth $14000 is no guarantee that you would get that much for it.
Also, your life has changed a lot recently, and there is no guarantee that your circumstances won’t change again, and soon. Your easy commute may be short-lived, for any number of reasons.
Accept that you made a few bad choices, and keep the Matrix, unless you honestly think that you can live a car-free life with no regrets.
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Sell the car! It seems your main concern is your parents/friends think you should have a car. Well, I had the same response from my acquaintances and family when I decided to go car-less almost two years ago. AND I live in Rochester, New York – which has worse weather and worse public transportation. These last two years have been great, I love not having to deal with the car (plus all the $ down the drain).
Take the plunge – you’ll be happier and your bank account will be fuller.
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You could make one additional calculation: *suppose* you find out after 6 months that you really can’t live without that car: what would it costs you to buy another one?
Or better: would it cost you *more* than your current expenses?
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Sell the car. Look at the money saved. You are very lucky, because you live in a part of the country that you don’t have to deal with snow. I have friends here in Iowa that commute every day even during a snow storm. Also, think of the health benefits! Follow your heart. You already know your decision. Your car is, as you stated, just a luxury!
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