One thing these articles often neglect is the opportunity cost of car ownership vs bikes. The average used car in the US today is around $28k. Suppose you bought that car outright and sold it 10 years later. Assuming a reasonable depreciation of 15% per year, that car would sell for around $5.5k. That means (ignoring all other costs) your car cost you $22.5k. Now assume you took that $22.5k and invested it in the stock market. Assuming a reasonable interest rate of 8%, by the end of those 10 years your investment would more than double to $48.5k!
Cars are literally a mechanism to keep people poor.
don’t buy an average car, by the one someone bought ten years ago for $5500.
By your logic we should value her time at her billable rate. At a reasonable (downright inexpensive) hourly rate of $50/hr and 11.000 miles at an average of 10mph vs 30mph in a car (including stoplights), she’s lost 700 hours or $35,000 just in lost time. Were she a consultant selling her time in the open market she could have bought your average car, invested the $7k at 8% and simply used the growth/earnings to pay for gasoline and maintenance on the vehicle. And she’s still have $7k in the bank and a car worth $5.5k in ten years.
Of course that’s a silly way to look at it. But so is assuming we all have $28k just lying around to invest in the stock market. Things would be better if we all biked most places, but trying to justify it with MBA logic is a fools errand.
No, but you can ride a bike instead, which as the article demonstrates saves you a significant amount of money each year.
don’t buy an average car, by the one someone bought ten years ago for $5500.
That’s not how markets work. If everyone started buying cheaper used cars there wouldn’t be enough stock of said cheap cars. But even beyond that a $5500 car is going to cost you WAY more in the long run when you take into account the added recurring costs (e.g. higher maintenance).
At a reasonable (downright inexpensive) hourly rate of $50/hr and 11.000 miles at an average of 10mph vs 30mph in a car (including stoplights), she’s lost 700 hours or $35,000 just in lost time.
You are significantly overestimating the speed of cars and significantly underestimating the speed of ebikes. When accounting for traffic, stop lights, car accidents, etc., the average speed for car trips hovers around 18.5mph globally. Obviously that will vary significantly depending on your commute, but especially if you live in city bikes are at least on par in terms of speed. Most ebikes can reach speeds of 20mph+, and unlike cars they don’t get stuck in traffic.
Of course that’s a silly way to look at it. But so is assuming we all have $28k just lying around to invest in the stock market.
Why is that silly? What’s silly is the number of people choosing to put themselves into debt to own a car when in many cases they don’t need one.
I’m not trying to sit here and claim everyone should dump their cars and ride bikes. My point is that people severely underestimate how much of a money pit they are. If you live in an urban environment, the benefits of car ownership simply don’t outweigh the cons for the average commuter. The problem of course is that US cities have been designed to be actively hostile for active transportation, which is a major barrier for anyone looking to make the switch.
One thing these articles often neglect is the opportunity cost of car ownership vs bikes. The average used car in the US today is around $28k. Suppose you bought that car outright and sold it 10 years later. Assuming a reasonable depreciation of 15% per year, that car would sell for around $5.5k. That means (ignoring all other costs) your car cost you $22.5k. Now assume you took that $22.5k and invested it in the stock market. Assuming a reasonable interest rate of 8%, by the end of those 10 years your investment would more than double to $48.5k!
Cars are literally a mechanism to keep people poor.
By your logic we should value her time at her billable rate. At a reasonable (downright inexpensive) hourly rate of $50/hr and 11.000 miles at an average of 10mph vs 30mph in a car (including stoplights), she’s lost 700 hours or $35,000 just in lost time. Were she a consultant selling her time in the open market she could have bought your average car, invested the $7k at 8% and simply used the growth/earnings to pay for gasoline and maintenance on the vehicle. And she’s still have $7k in the bank and a car worth $5.5k in ten years.
Of course that’s a silly way to look at it. But so is assuming we all have $28k just lying around to invest in the stock market. Things would be better if we all biked most places, but trying to justify it with MBA logic is a fools errand.
No, but you can ride a bike instead, which as the article demonstrates saves you a significant amount of money each year.
That’s not how markets work. If everyone started buying cheaper used cars there wouldn’t be enough stock of said cheap cars. But even beyond that a $5500 car is going to cost you WAY more in the long run when you take into account the added recurring costs (e.g. higher maintenance).
You are significantly overestimating the speed of cars and significantly underestimating the speed of ebikes. When accounting for traffic, stop lights, car accidents, etc., the average speed for car trips hovers around 18.5mph globally. Obviously that will vary significantly depending on your commute, but especially if you live in city bikes are at least on par in terms of speed. Most ebikes can reach speeds of 20mph+, and unlike cars they don’t get stuck in traffic.
Why is that silly? What’s silly is the number of people choosing to put themselves into debt to own a car when in many cases they don’t need one.
I’m not trying to sit here and claim everyone should dump their cars and ride bikes. My point is that people severely underestimate how much of a money pit they are. If you live in an urban environment, the benefits of car ownership simply don’t outweigh the cons for the average commuter. The problem of course is that US cities have been designed to be actively hostile for active transportation, which is a major barrier for anyone looking to make the switch.