Car or Carless: Minimum Wage Challenge

going carless or not?

The fact that I really dislike driving would seem to make the choice here rather easy. If I had my choice, I would not drive at all (and quite frankly, it’s ironic the amount that I do drive with this attitude). I really miss the days when I lived in Japan where the public transportation was so efficient and widespread that there really wasn’t a reason to own a car no matter where you lived. I used to commute to work there by train and bus, and I did a whole lot more walking around (which I like) than I am able to do in the US. Unfortunately, the reality is that public transportation in the US is a shadow of what it is in Japan and that for most travel (unless you live in a big city), you’re going to need a car. So while I know that I will need to use a car next year, that doesn’t necessarily mean that I actually have to own one. I could simply rent one when I needed it as I have done in the past.

With the decision to be purposely homeless for the beginning of this minimum wage challenge, the next big budget question that needed to be analyzed was whether or not I should go carless. While this would be a big convenience issue for most people, the convenience aspect really wasn’t an issue for me. I have been carless for long periods of time in the past and even with the inconvenience, I have no problem making it work. While it does entail a lot of sacrifice, the financial rewards are pretty darn impressive.

For most people, getting rid of the car and getting around by other methods will save them thousands of dollars a year. The question was whether or not I would see these savings with my unique situation. The first assumption that most people would make is that going carless would be the least expensive option for everyone. While in the vast majority of cases going carless would be less expensive, in my case it looks like things turnout to be less decisive than they do for most. Here are a number of areas I considered when making the decision:

Car Payment

If I needed to make a car payment to own a car, then that would be the end of the discussion and going carless would be the best course of action. This, however, isn’t an issue since I already own a car which has been fully paid. I have a 2008 Nissan Versa with approximately 85,000 on it. I don’t have any monthly financing payments, so this cost isn’t something that I will need to worry about either way. When it comes to this part of owning a car, there is no difference between having a car or going carless.

Repairs and Maintenance

This is an area of concern. If I go carless and simply rent in instances where I absolutely need a car, I don’t need to worry about the cost of maintenance and repair to my car. I took a look and I spent $589 last year in this category on my car. It included a new set of tires, replacement of a license plate light, replacement of a back tail-light, oil changes, tire rotations, and other small odds and ends. In the 1.5 years that I have owned it, I haven’t had any major problems with it and as of today, it’s still running fine.

The question becomes what can I expect to pay in this area next year. If everything goes perfectly, it wouldn’t be much at all. I won’t be needing a new set of tires which was the major expense last year. If I have absolutely no problems with the car, I would pay less than $100 in this area for the year. Reality says that everything working out perfectly isn’t likely to be the case and that there will be additional costs along the way. The problem is that what these costs will be is anyone’s guess, but I do have the option to reevaluate whether I need a car if a major expense arises. With this in mind, there really isn’t much of a difference for me to keep a car or not have one, at least until i’m faced with the decision of having to pay a lot to keep the car running.


I know from experience that having a car will mean spending more on gas than not having one. When I have a car, I’m much more likely to use it to do everyday errands rather than alternatives like walking or biking simply for the convenience. I have little doubt that if I keep the car, I will end up spending more on gas. That being said, I also have control over how much I spend so the only one to blame in this situation would be me. If I put my mind to it, I certainly could rarely use the car and use alternative forms of transportation the vast majority of the time. While it’s likely I will end up spending a bit more in this area with a car, the fact is that it’s not mandatory that I do.


This is one area where it seems obvious that I would save money not having a car, but the truth is that my insurance costs would be only a bit more if I chose to rent when needed rather than keep my current car. I know that it’s possible to get a rental car for about $20 a day with a little bit of work online, but that is with the assumption that I have my own insurance. If I have to pay what the rental car agencies charge for their insurance, the daily rate will more than double in most cases making driving my own car much more reasonable.

While purchasing insurance from the rental car agency is outrageously expensive, it’s possible to get liability insurance from regular car insurance providers for these instances. Purchasing this type of rental car insurance would be less expensive than insurance on my own car, but using self bought and credit card rental insurance comes with some inherent risks.

The major risk is that there will be some damage to the rental car. By using my credit card in conjunction with buying a liability insurance policy, I would have a $250 deductible for any damage done to the rental car. In this instance, it isn’t a major accident which is of concern, but a minor one which is much more likely to happen, and for which I have little control over. With a rental car, I can’t decide whether or not to fix the cosmetic damage, and will have to pay no matter what.

Take, for example, if a rock hits the window of the car (which did happen this year to my car) and leaves a crack in the window. For my car, I simply left it to see if the crack would spread. It didn’t, so I have a small chip in my windshield, but it does absolutely no harm and is not an issue. If, on the other hand, this was done to a rental car, I would automatically have to pay for the windshield repair.

Another example is a small dent I have in the rear of my car that also happened this past year. I’m pretty sure I know what happened. A kid likely swung the door open quickly and it hit the back of my car leaving a dent (it’s exactly what it looks like) and then the car left without leaving a note. With my own car, since I have a high deductible, I simply decided not to get it repaired. If it had been a rental car, however, I would have had to pay for the deductible to make the repair. Both these situations show that I have much more flexibility in deciding how to handle small repairs if I keep my own car rather than opt for using a rental car.

The difference in insurance costs is about $200 for the year which is a significant amount, especially on a minimum wage budget. I need to decide is the flexibility and risks that come with using a rental car outweigh the savings I would get with insurance.

Registration and Taxes

Another area of consideration is the cost of registration and taxes for the car which ends up being several hundred dollars. This includes getting a smog certificate which I think my car would pass without an issue (so there wouldn’t be any additional repair costs), but still adds to the overall cost. Add this cost to the extra cost for insurance and the possible maintenance and repair costs that could appear and going carless is definitely the less expensive option of the two.

With all this in mind, it might be a surprise that I’ve decided to keep the car on a trial basis much like I’m going to try traveling on a trial basis for the first few months. The registration on the car comes up in April of 2013, which will mean I won’t have to pay the renewal, licensing and registration fees for this until then. This should give me a good indication of whether it makes sense for me to keep up the car, or to see that it’s simply too expensive to keep and to find alternative ways to get around.

The main reason for me making this trial decision is because I have decided to travel full-time. If I had a place of my own in a set place, I would go carless. In that situation, I would only need to rent a car maybe once every several months. Being on the road, along with the new rule that I can’t stay with friends or relatives for more than a week, means that I will have to travel a lot more often which would require me to rent a car (or pay for other types of transportation) at least several times each month. This tells me that keeping my current car will actually be less expensive with this lifestyle.

There is only one way to really find out. Over the next three months I will track the costs of the car and compare them with what I would have had to pay without it. That should put me in a good place to make a judgement as to whether I made the right decision or not toward the end of March. At that point I can reevaluate the situation and make another decision from there.

What do you think? Have I forgotten expenses in either scenario that I should be considering? Am I not searching for less expensive alternatives that can get me around more effectively at less cost rather than a car even while traveling full-time? In a similar situation, what choice would you make given the thought process I have outlined above? I’m not sure that this is the correct decision, but it certainly will make things interesting for the first few months of this challenge…

Next entry: Preparation

(Photo courtesy of hoshner447)

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15 Responses to Car or Carless: Minimum Wage Challenge

  1. lakeside says:

    Maybe I’m the only one, but it seems to me that you have gone so far outside the realm of the average minimum wage earner that this exercise is nearly pointless. The average minimum wage earner is not self employed, does not have the option of traveling around and staying with friends and family while earning money, and does not have the sort of flexibility that you have because you aren’t REALLY earning minimum wage, you’re only playing at it.

  2. jeffrey says:

    As I have said a number of times, I am not in any way trying to live on a minimum wage budget like an average minimum wage earner. That is not the point of this challenge. The point is to show what can be done only using a minimum wage salary. It is to show how decisions are made when money is limited, how sacrifices in one area can let you do many things in other areas and that a limited amount of money doesn’t mean that you can’t do much if you are willing to use creativity. If you are wanting to follow a challenge that mimics what the average minimum wage earner must face, this is not the challenge for you.

  3. jay says:

    Another option, if available, is car sharing such as Zipcar. The rates look pretty reasonable.

    As far as your car, you clearly have to think past these next 12 months. Do you really want to end up carless? Also, reinsuring yourself after a break usually ends up being pretty expensive. Maybe garage it, pay the lower fees and insurance, and go “carless”. That’s a legit strategy for folks who find themselves with a drastic, but potentially limited, loss of income. Don’t know if that logic “fits” the challenge, though.

  4. Alexandria says:

    I personally found having a car key to living on a very low income (though it was a choice most don’t make in the same situation). I am not sure how it really relates to the challenge though. I found it kept me far more available for more employment options, but it doesn’t sound like you need a car on the income side. Anyway, I paid hardly anything for my car, the gas and insurance/tags approximated the cost of public transportation, which meant my only real/additional cost was repairs. Which was offset by being available for a wider variety of jobs, not to mention the convenience side. (My low income experience was in college, so I needed jobs that paid more per hour, so I could work less. But just to share I found a car extremely fruitful on a VERY low income).

    The flip side of this is you are screwed if you don’t buy your care carefully, end up with a lemon, have a long string of bad luck, etc., etc. Of course it could go terribly wrong, and might be best to go carless considering your situation.

  5. I think you definitely should go carless. While I love having a car and do not know how I would function without one, if I was making minimum wage I would try to forgo it and take the bus, even if it required long or undesirable commutes.

    While this wouldn’t work for your challenge, I would try to get a second job and work 80 hours a week as long as possible… that would allow me to justify a car and have more flexibility in my spending options.

  6. Joan.of.the.Arch says:

    You could call your plan something other than minimum wage challenge, as it seems to have to be re-explained every time. Maybe if you did not refer to minimum wage, but perhaps to the the dollars/month you are giving yourself to work with.

  7. lakeside says:

    Fine — than maybe calling it a “Minimum Wage Challenge” isn’t quite the way to go.

    You’re NOT facing the challenges of a minimum wage earner — I agree. You’re just a person who makes more than minimum wage who lives a somewhat unconventional lifestyle who is talking about saving money in one area or another. That’s like nearly every other post – just talking about saving money.

    I think the title of your “challenge” is somewhat misleading.

    You say that the point is to “show what can be done using a minimum wage salary.” Yet you are making choices/decisions/sacrifices that no minimum wage earner could ever choose to make. So why don’t we just that the phrase “minimum wage” out of the title.

    I actually think it’s kind of offensive to people who actually ARE trying to survive on minimum wage.

  8. jeffrey says:

    I would disagree with you — you are limiting your view to the typical Wal-Mart and like minimum wage earner. I know plenty of artist friends that have lived years on a minimum wage salary. I know many people that start businesses of their own that must live on a minimum wage salary while the business is taking off. To narrowly limit it to your perception of what a minimum wage earner is “supposed to be” is one of the problems.

    If you find it offensive, then there is no need to follow it. You may not like that I will be trying to live on minimum wage in a way you see fit, but I am still going to be trying to live on this limited budget. Whether you feel it is the “correct” way or not, it is still on the same budget.

    And I totally disagree. While the reasoning may be different, making housing choices and car choices are huge decisions that everyone living on a minimum wage must make. The choices of what is important, where there money will go and how they keep their spending below what they make is of vital importance. I would encourage you to expand the narrow view you seem to have of what “minimum wage” means.

  9. lakeside says:

    Perhaps my view IS too narrow. I don’t know a lot of minimum wage earners who can make the choice to be “purposely homeless” as you can.

    But what would this world be like without differing opinions?

    Since my issue is with semantics, not content, I’ll keep any further thoughts to myself.

    What do you plan on doing with all the money that you will be saving over the course of the year? (I had thought your plan was to actually LIVE the life, not just do it on paper, right?)

  10. jeffrey says:

    You have missed the point on my choice of being purposely homeless. I could have chosen to live in a house (and may very well have to at some point in this challenge), but was looking to challenge beyond that. Being so isn’t going to save me money over renting a house and means I will face many more choice challenges. It wasn’t the easy way out — it’s actually a more difficult route. I could see the complaint if I was staying with friends the whole time so there would be no cost involved, but a rule was specifically made so I couldn’t do that. It means that I am going to have to scramble for lodging with a limited budget from time to time — something that is a fear of many of the minimum wage earners you are thinking about.

    If you have seen any of my previous challenges like eating on less than $1 a day for 100 days, you will know that I will live it and not just do it on paper…

  11. lakeside says:

    For some reason I can’t reply directly to your comment, so I’ll add it here.

    I am not doubting that you were going to actually do it. I was actually genuinely interested to know what you were going to do with the extra money you would have. If you mentioned it in a previous post I missed it.

    Are you going to just add extra to your investments? Are you going to donate it? Burn it? Fold origami? I wasn’t trying to question your determination — I was honestly wondering what your plans were with the extra money.

    I appreciate your further explanation about how you feel that you are actually making things harder by not doing the “usual” thing like renting an apartment. But that is where we disagree — I think it would be a more interesting challenge to live a more conventional life.

    You say that all minimum wage earners aren’t they typical Wal-Mart employee? I agree. But there’s probably more of them than there are starving artists or people trying to start their own businesses. To me PERSONALLY that would be the more interesting challenge.

    But to you it is not. And I agreed to not argue over the semantics of the phrase “minimum wage.” So you don’t need to try and convince me that you’re actually making it harder for yourself. We just have different ideas on what would be most useful to learn from a “Minimum Wage” challenge.

  12. jay says:

    Well, as you said up front this whole idea was in response to a challenge from your sister. The fact that you’ll share your experiences with us, I think, is great!

    If someone objects, they can just not read your posts.
    Go for it!

  13. Minny says:

    Hear, hear.

    In the original post the challenge was fully explained.

  14. Gailete says:

    I know my year of living on minimum wage I didn’t have a driver’s license much less a car. I walked everywhere or took a bus. I had had an opportunity while in college to visit Colombia and one of my souvenirs was a hemp bag that I used to haul my groceries back and forth for that over mile walk to and from work and stores (thankfully in the same direction!). I wasn’t doing this to see if I COULD live on minimum, I was doing it because I couldn’t find a better job at that point, I had to do it. In the midst of living with not much coming in, I also tithed 10% of what I made so I was actually living on 90% of my little income and a car just wasn’t on that budget nor at that point my own apartment–I paid for room and board. But by the end of the the year, when opportunity came knocking, I had enough money in my savings account, I could buy an airplane ticket two times in a row to fly out for job interviews and got the job! I also didn’t smoke or drink, so my worst money eaters was my Friday night special of some Doritos, M&Ms and a Pepsi while watching TV. I guess sharing this to say that with careful watching of your budget and what you are spending it is possible to live on a lot less than what you may think you can. It has been years now since that time, but those ways to save are carved into my memory.

  15. sootsprite says:

    I actually know plenty of people that make minimum or sub-minimum wages, travel, and pay little or nothing in rent. Some people are travelers on the renfest circuit and live out of their vehicle or in tents and get free space as part of their contract, camp with friends, or stay in the shops where they are working. I have friends who are musicians, who when they are not gigging are working crappy or odd jobs and couch-surfing. I also know artists who travel to music festivals, rainbow gatherings and the like who live with family during the off season. Other friends of mine don’t travel as much, but have free rent in exchange for helping with errands for people who are disabled, elderly, or ill. It may not be average, but that doesn’t mean that there aren’t a significant number of people making those kinds of choices.

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