The Hidden Cost of Cars

Todd Medema
16 min readApr 23, 2018

Almost $10 billion is spent every year to convince you that automobiles represent freedom and success, but modern urban planning studies show that every trip you make with a car makes you poorer, less healthy and less happy. Let’s cut through the crap and find out the truth.

Cars are Bad for Your Wallet

Source: AAA

You might be surprised at how much owning a car actually costs: AAA calculates the average cost of new car ownership at over $9,000/year!

Think you’re being clever with that used car? Money Under 30 estimates the cost of used car ownership at $6,000/year, which totals to over $2,000,000 lost over the course of a 50 year career at a 6.5% interest rate (stock market). Owning a car and driving it everywhere — even a used one — mathematically makes the difference between dying penniless or a millionaire.

With median US household incomes at $59,000, a household with only one car spends 10–15% of their paycheck (and thus their career) for the “freedom” to be trapped in rush hour traffic. In fact, car commuters spend over 100 hours/year trapped in traffic —plus another 300 hours/year paying off their car (at the average hourly wage of $30/hr). With that much time and money saved, you could retire decades earlier, start the project or company you’ve always wanted, or go on multiple vacations per year! Now that sounds a lot better than rush hour, doesn’t it?

It can be tricky to fully understand the cost of car ownership because there are both fixed costs (that you pay no matter what) and variable costs (that increase the more you use it). It’s a common assumption that most of the cost of a vehicle is fixed, and that there’s very little cost to each time you drive it (known as the “marginal cost” of driving it one more mile). In reality, almost all costs of car ownership increase with usage: deprecation, maintenance, even insurance go up. AAA estimates the true cost of driving a car an extra 10 miles is $5–7 (vs just 50¢ for a bike). Don’t get tricked into driving your car everywhere just because you own one!

Cars Increase Your Taxes

Todd Medema

Technology, Entrepreneurship and Design to make the planet a better place. Pittsburgh, PA. http://toddmedema.com