Money without a car
#1
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Money without a car
According to the AAA, the average car costs some $8400.00 per year. In order
to compare fairly with using a bicycle, use the saved amount as $8000.00 per
year since the bicycle has some expenses. $400.00 per year can cover periodic
bike replacement and occasional public tranportation expenses.
If you save the extra $8000.00 per year in some conservative vehicle like
bonds paying 4%, a decade of not using one car produces a value of about
$8000.00 * (12) = $96,000.00. After 20 years the 4% factor is about 30
resulting in a future value of about $240,000.00. This isn't enough to fully
fund a retirement.
If a person entering the workforce can live car free for 20 years, invest
the savings more wisely than bonds, but not wildly speculative, say at 8%
return, the 8% future value factor is about 46. This gives a future value
of $368,000.00 for forgoing the use of a single car.
To many people the $8000.00 per year doesn't look like $96,000.00 in ten
years, because they don't save. It looks like $666.00 per month
or $20.00 per day. Either the rewards of reducing car use are more than
monetary or we who have voluntarily dumped our cars are acting irrationally.
A minimum wage earner can work less than 4 hours per day to acquire an AAA
"average" car.
to compare fairly with using a bicycle, use the saved amount as $8000.00 per
year since the bicycle has some expenses. $400.00 per year can cover periodic
bike replacement and occasional public tranportation expenses.
If you save the extra $8000.00 per year in some conservative vehicle like
bonds paying 4%, a decade of not using one car produces a value of about
$8000.00 * (12) = $96,000.00. After 20 years the 4% factor is about 30
resulting in a future value of about $240,000.00. This isn't enough to fully
fund a retirement.
If a person entering the workforce can live car free for 20 years, invest
the savings more wisely than bonds, but not wildly speculative, say at 8%
return, the 8% future value factor is about 46. This gives a future value
of $368,000.00 for forgoing the use of a single car.
To many people the $8000.00 per year doesn't look like $96,000.00 in ten
years, because they don't save. It looks like $666.00 per month
or $20.00 per day. Either the rewards of reducing car use are more than
monetary or we who have voluntarily dumped our cars are acting irrationally.
A minimum wage earner can work less than 4 hours per day to acquire an AAA
"average" car.
#2
Sophomoric Member
When you look at it that way--I sure would spend more than $400 a year on bikes! In fact, I think I'll start spending my surplus now.
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Originally Posted by gwd
If you save the extra $8000.00 per year in some conservative vehicle like
bonds paying 4%, a decade of not using one car produces a value of about
$8000.00 * (12) = $96,000.00. After 20 years the 4% factor is about 30
resulting in a future value of about $240,000.00. This isn't enough to fully
fund a retirement.
If a person entering the workforce can live car free for 20 years, invest
the savings more wisely than bonds, but not wildly speculative, say at 8%
return, the 8% future value factor is about 46. This gives a future value
of $368,000.00 for forgoing the use of a single car.
bonds paying 4%, a decade of not using one car produces a value of about
$8000.00 * (12) = $96,000.00. After 20 years the 4% factor is about 30
resulting in a future value of about $240,000.00. This isn't enough to fully
fund a retirement.
If a person entering the workforce can live car free for 20 years, invest
the savings more wisely than bonds, but not wildly speculative, say at 8%
return, the 8% future value factor is about 46. This gives a future value
of $368,000.00 for forgoing the use of a single car.
In case you haven't noticed, everyone's 401K plan (including mine) is anywhere between 20 - 40 percent less than what it was five years ago. So forget speculating that you're going to make 8% a year unless you're one of the lucky ones who went cash before the great dot com crash. When all the baby boomers retire and start taking all their cash out of the market, we'll all be lucky if we break even because the market just might crash again! Bottom line. You better hope there's Social Security around because you're going to need that check and Medicare! If both are gone, you better start Medicade planning 10 years before retirement because you won't be able to afford health insurance 40 years from now. I almost forgot. Medicade may not be around either! If that's the case we'll all be headed for Canada to retire!
Here's the good news.
Motor car ownership will be even more expensive than it is today and you'll have an inexpensive alternative. The bicycle.
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Originally Posted by gwd
If you save the extra $8000.00 per year in some conservative vehicle like
bonds paying 4%, a decade of not using one car produces a value of about
$8000.00 * (12) = $96,000.00. After 20 years the 4% factor is about 30
resulting in a future value of about $240,000.00. This isn't enough to fully
fund a retirement.
bonds paying 4%, a decade of not using one car produces a value of about
$8000.00 * (12) = $96,000.00. After 20 years the 4% factor is about 30
resulting in a future value of about $240,000.00. This isn't enough to fully
fund a retirement.
So if you can bank your savings for 20 years and not need a car in retirement, you're halfway there. Add in Social Security around age 65, do a few wise things like paying off a house or setting up a garden variety 401K plan , and you'll be set, at least for a basic retirement.
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take your lunch to work too and earn yourself half a million dollars
https://www.hellodollar.com/archives/...bag_it_to.html
https://www.hellodollar.com/archives/...bag_it_to.html
#6
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Originally Posted by Dahon.Steve
So forget speculating that you're going to make 8% a year unless you're one of the lucky ones who went cash before the great dot com crash. When all the baby boomers retire and start taking all their cash out of the market, we'll all be lucky if we break even because the market just might crash again! Bottom line. You better hope there's Social Security around because you're going to need that check and Medicare!
instruments. For me it is funding additional education. For someone else the extra cash could be
used to start a business. If a hypothetical low wage worker dumps the car- maybe not an average car but still saves a few thousand per year, the extra cash could pay for job training which would return much
much more than 8%.
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Don't worry about retirement in the distant (10 or more years) in the future. One of the things bike ownership has taught me is that you can live comfortably now and let the future take care of itself. I no longer plan to retire. I no longer plan more than 6 months to 2 years in the future since the future is not a set promise written in stone. My life and health has improved so much since I have eliminated much of the "worry stress" of what if? in my personal life.