While most people are surprised to find out that I don’t have a cell phone , they are even more surprised when they also find out that I also don’t have a car. As with the cell phone, the reason I don’t have a car has nothing to do with lack of money. I can afford to buy a car and it would fit into my budget of spending less than I earn After deciding to travel 2 weeks each month this year, I decided that I would need a car for many of the trips I wanted to make. I knew that I would be driving a lot of miles during my trips, but wouldn’t have a real need for a car during the times I wasn’t traveling. I assumed the obvious frugal choice would be to buy a quality used car for about $5000 and drive it into the ground. Then I decided to run some numbers and was surprised to see that renting a car ended up making the most financial sense.

I knew it was possible to rent a car for under $20 a day including all fees which would come to about $300 a month or about $3600 for the year. While this is less than the $5000, I would not have a car at the end of the year. The value of the car would make both costs about even. With this in mind, the advantage went to buying the car because I would have it to use all the time instead of only two weeks a month.

I then began to think about other costs associated with owning a car. Registration, fees and taxes would be a couple of hundred dollars. The difference in insurance costs would be about $1000 a year more for owning a car (when renting, using my credit card covers collision, but I ended up taking out a non car owner liability insurance policy to make sure I was covered there). Car maintenance would be a few hundred dollars a year at a minimum, and that was assuming that nothing went wrong with the car. Taking all this into account, I figured the two options were about even: buying the car would be more expensive, but it would give me access to the car all the time.

There were two main reasons that I ended up opting to rent instead of buy. With the number of miles I would be driving, the chance of nothing going wrong with the car during the year would be a poor assumption. Costs could be a few hundred dollars or thousands and there was no way to predict this. With a rental car, if anything went wrong with the car, the rental car agency would take care of it so there was no chance of additional costs surprising me.

The other reason was that owning a car actually would limit what I wanted to do. I wanted to travel. If I owned a car, it would mean that all my travel would need to be within driving distance. If I wanted to fly someplace and rent a car, it would add even more to the cost of my transportation (since the car I owned would be sitting at home).

I could drive long distances, but this would mean spending less time exploring the areas I wanted to see while traveling. For example, I am currently traveling Arizona and New Mexico for 11 days. I flew to Tucson where I was able to rent a car for $193 including all fees. Had I owned a car, I would have had to drive to Tucson which would have taken 4 days (2 days there and 2 days back) and would have cost about the same (the airline ticket compared to the cost of gas for the car would have been about the same).

I’ve been surprised at the number of times I have found out that what I at first assumed was the obvious frugal choice ended up not being the most cost effective for my personal situation. It is the reason that I always run the numbers (making sure to include as many of the incidental costs that usually get forgotten) before making final a decision.

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