One trick I have found in being able to pay off my mortgage in five years, in quitting my job and being self-employed and in frugalising my way to financial independence, is by questioning every expense we have.
It’s easy to fall into the trap of ‘oh, we couldn’t manage without this’ or tricking yourself that something costs less than it really does by thinking about the monthly, incremental payments in isolation and forgetting about the bigger picture.
It’s easy too to view life as linear progression, that once something is achieved or acquired, it must never go away again. Clearly, any rational person knows that this is nonsense and life really doesn’t work like this, however our emotions are powerful and it’s hard not to view the loss of certain things as a step backwards.
One discretionary spend that fits into these categories is car ownership. For many, owning a car is seen simply as a fact of life. It’s something to work towards in youth and as we get older ours cars become fancier and fancier, and also more and more expensive. Yes, car free sounds great but there’s specific reasons that apply only to you that necessitates ownership.
I’m not claiming any moral highground here. Up until a couple of weeks ago we were also car owners. And although I knew we *could* manage without it, I didn’t really want to. Cars can be great because they enable you to reach places quickly and easily that are so difficult to reach on public transport and I do so value being able to escape the city when I need to.
However, a couple of weeks ago some passing criminal got a little bit confused and thought our car belonged to him. And since it belonged to him, it was perfectly fine to drive it around quite quickly and then destroy it. Yeah, thanks.
When it happened I went through a whole gamut of emotions from shock to anger to grief and then lost hours of my life in a sea of car-related admin. Urgh.
Once the dust started to settle, I started to really consider the role of the car in our life. And since I’m so focussed on our finances, of course I started to add up everything to car cost us:
- car tax – £185
- insurance – £530
- MOT and repairs – c£400
- fuel – c£600
- TOTAL for the year £1,715
Plus of course, the car needs to be bought in the first place.
Excluding the not insignificant cost of actually buying the car, basic running costs came to £33 per week for us. This is a great example of something not seeming to be that much. But it is. £33 week in, week out matters.
Let’s see what else £33 a week could buy:
- £33 could pay for a cleaner for 4 hours a week
- £33 could pay for a takeaway once a week with change left over
- Monthly, £143 could pay for train tickets to the seaside, a room in a cheap hotel and leave enough left over for ice-creams
Without doubt, these things would make life a lot easier and over time I would really feel their benefit (the cleaner especially!)
However, let’s look at the bigger picture. I wrote in this post about my goal of saving up £25,000 in order to use the interest to fund travel and other family adventures. This money is currently working away in a Vanguard 60% Equity Stocks and Shares ISA
- £143 with an average interest rate of 4% in a S&S ISA becomes £21,056.72 in 10 years
- £143 monthly overpayment on the mortgage clears it six years and six months earlier, saving £9,763 in interest alone
These numbers are massive and cannot be easily dismissed. Simply by removing this one expense we are able to reach our financial goals much more quickly.
Er, yeah. But how are you actually gonna get around?
There are two great advantages to car ownership as far as I can see. Firstly, they offer speed in a way that most public transport does not. Secondly, they offer spontenaity which again isn’t easily matched by sticking to timetables.
In order to go car-free we need to look at these supposed benefits more closely.
Several years ago, when Thing#3 was brand new and I was on maternity leave we were also car-free. At this point I used to take Thing#2 to swimming lessons. We’d go on the bus as it was the only practical way at that time and the whole journey door-to-door would take just over an hour each way. When I got a car, we could do in in 12 minutes. At first I couldn’t believe the difference and wondered how I ever thought wasting such a huge amount of time every week was a good idea.
However, during that hour door-to-door we enjoyed a number of benefits including screen-free chatting, fresh air, exercise and feeling plugged in to the local community. Maybe it’s just me, but I find parenting much easier when we’re moving rather than confiined to the house and so although the car was undoubtedly quicker, how much did it really add to our overall quality of life?
Let’s face it, it’s hard to be spontaneous with little kids – but having a car undoubtedly makes it easier. By having a car, it’s possible to bundle up the kids, shove them in their seats with a sandwich in their mitts and go somewhere else, whether that be the woods to calm their frayed nerves or my mother’s to calm mine.
I’ll be honest, this is the part of going car-free that worries me most. However, being as financially motivated and frugally hard-wired as I am, I intend to work on this and you lucky people will get to read much more on this topic as I navigate these new way of life.
So that’s where we’re up to: car-free to facilitate our quest for financial independence. Oh yeah, and health. And the environment.
Over the next few weeks I’ll talk much more about our experiences of car-free living and address the practical issues it presents. But for now, I’ll say that, despite my initial misgivings, I’m enjoying getting a closer look at the transition from summer into autumn, I’m enjoying not battling through traffic jams and I’m enjoying spending much more time on my bike. I’m also enjoying topping up my travel fund and I keep this very much at the front of my mind when those hills seem a little steep and the rain is a little cold.
Over to you. Do you honestly think the cost and stress of car-ownership is worth it? Have you ever lived car-free?