A study found that households with 3 or more cars are the single largest group among American car owners. The national average is 2.28 vehicles per household. Obviously, Americans are very much in love with the automobile.
According to the AAA, the average American spends $9,369, excluding loan payments, to drive ONE medium sedan 15,000 a year. In arriving at this estimate, AAA figures in fuel, routine maintenance, tires, insurance, license and registration, loan finance charges and depreciation costs.
22 years ago, my husband and I sold one of our cars to pay for our wedding and honeymoon. We intended to replace the sold vehicle eventually — after we built up our credit score so we could get a car loan — but as time went by, we discovered that sharing one car between the two of us was no big deal. We learned to carpool, drop one another off, take turns, group errands, walk, bike, take the bus, work from an in-home office, go places together. Surprisingly, 22 years later, we still share just one car.
It would be difficult to figure out exactly how much my husband and I have saved over the past 22 years (with the effects of inflation), but it is easy to calculate how much more we can save if we continue to share one vehicle:
If we continue to share one car instead of owning two for the the next 29 years, invest our compounded annual savings and earn an 8%* annual rate of return, we could save an additional one million dollars**.
Would you be willing to ditch a car for a cool million? Let us know in the comments.
*The actual rate of return is largely dependent on the type of investments you select. From January 1970 to December 2008, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 9.7% (source: www.standardandpoors.com).
**actual value with annual investments adjusted for inflation @ 3.1%*** annually.
***A common measure of inflation in the U.S. is the Consumer Price Index (CPI), which has a long-term average of 3.1% annually, from 1925 through 2008.