When Leslie Handler's 20-year-old Subaru finally broke down for good, she and her husband decided to experiment with being a one-car family to see how much money they could save.
The couple from Fairless Hills, Pennsylvania, added up how much it cost them to own their 1998 Subaru Forrester and their 2006 Chevy Equinox. They spent:
- $275 a month in gas ($3,300/year).
- $125 a month for parking ($1,500/year).
- $250 a month for car insurance ($3,000/year).
- $2,500 a year in oil changes, registration, tires, brakes and repairs.
After discovering they were spending more than $10,000 a year to own two cars, they were even more motivated to find a way to live with just one car -- their 2006 Chevy Equinox, as that was the more reliable of the two vehicles.
Handler started dropping her husband off at the train station in the mornings on her way to work. "It was much easier than we ever expected. I don't miss the second car at all. It's actually a source of pride we can do it so easily," Handler says.
Handler says they spend half as much in gas each year and they've also saved about half the cost of car insurance. Plus, they have saved about $700 a year in maintenance. Total savings is around $3,850 a year.
So if you're also thinking of downsizing to one car to save money, then keep reading. You'll learn what questions to ask to figure out how much money it would save you. You'll also learn some tips on how to survive with one car.
How much would you save by downsizing to one car?
According to a 2014 report from KPMG, an accounting and consultancy firm, 57 percent of American households have two cars or more.
Question 1: Do you have a car payment? If so, can you sell your car for the loan amount? (If you can't, you may as well keep that car.)
Question 2: How often do you fill up, and how much does a tank of gas cost on average? If you fill up every two weeks, and it costs $40 to fill your tank, then that's $1,040 in annual savings.
Question 3: How much does it cost to insure your second car? If your car insurance renews every six months, then multiply your rate by two to get your annual savings.
Question 4: How much do you pay for car maintenance? This varies dramatically based on the age of the car and whether it's still under warranty. If it's an older car, ask yourself how many oil changes you pay for a year. Also review your records to see how much you spend on maintenance and repairs. If you always go to the same mechanic, ask them to pull the last few years' records so they can give you the exact amount.
Total annual savings by downsizing to one car: $_________*
Remember, if you sell your second car you’ll save even more that first year because you’ll have a nice little bonus.
Is downsizing to one car right for you?
If you're considering downsizing to one car, it's important to not only count the savings but to also think about how this decision will impact your life.
If you and your spouse both work and you have kids at home, having only one car can be tough.
"It's not a situation for everyone, despite the savings opportunities," says Michael Martin, a financial advisor with Florida-based Legacy Financial Partners. "This kind of budgeting requires lots of thought, requires great discipline and regular planning."
So far, this hasn't been an issue for the Handler family. Handler says it's only about twice a year where they find they need to be in different places at the same time and have to figure out how to coordinate with only one car.
How to test if you can live with one car.
One thing you can try is to experiment living with one car before you sell your second one.
Lee suggests asking yourself, "How would we get by if one of our cars just died and we were without a car next week?"
Some ways to get by on one car may include:
- Taking public transportation.
- Driving your spouse to work.
- Shifting your shopping habits from offline to more online shopping.
- Planning your trips.
- Carpooling or using services such as Uber.
How to downsize to 1 car.
If you're seriously considering downsizing to one car to save money, then a simple next step would be to call your insurance company to see how much money you would save by removing that car from your policy. Knowing the potential savings may motivate you to take the next step and become a one-car family.