Selling Your Car To Raise Cash

One of the hottest topics of the summer has been the rising costs of oil, gas,and driving, in general. There's an entire movement growing around fuel efficiency and cutting back on driving costs. People talk of new concepts like "hypermilling" and old ones such as keeping your car's tires filled with air. The easiest, and least discussed, method to lower driving costs is to sell your car and stop driving!

Getting rid of your car sounds extreme, and might be for some. However, if you're one of the millions of American families with more than one vehicle, consider sharing and downgrading. If you live near public transporation routes, consider using them.

The total cost of vehicle ownership is higher than most think. Besides pumping fuel for every inch of distance you drive, cars require continuous insurance payments and maintenence. Most importantly, cars come with a high opportunity cost on their value.

To illustrate opportunity cost, let's say you have $20K in credit card debt with a 12% APR (many people have as high as 30% APR). If you own a car that is worth $20K (meaning you could sell it for that much today), you'd end up paying $200 per month pure interest payments on that debt you could otherwise pay off by getting rid of your car.

Totalling the obvious and more subtle costs can easily bring monthly vehicle expenses to $500. Remember that this is after-tax dollars going to what is often a luxury. We should all give it some serious consideration on whether or not we can downgrade to a single car per family, car pool with friends, or take public transportation.

By: Rob Viglione

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Robert Viglione is a writer, investment manager, and real estate broker. If you like this article check out The Freedom Factory where Robert and his team discuss everything from financial to political freedom.