March 27, 2014 by Speakers' Spotlight
Preet Banerjee Ditched His Car And Saved Thousands
When you think of a neuroscientist, an author, a television host, and a racecar driver, you rarely think of it being one person. Preet Banerjee is all those things–and more. Best known as a personal finance expert, host of Million Dollar Neighbourhood on The Oprah Winfrey Network, and financial panelist on CBC’s The National, Banerjee inspires others to become financially empowered. Sharing his world-class expertise and unique ability to take the complexity out of money matters, Preet speaks on topics including behavioural finance, neuroeconomics and investor advocacy. Preet recently wrote in The Globe and Mail about giving up his long-term relationship…with his car:
Breaking up is hard to do, but boy do things look different in the rear-view mirror.
Late last year, my relationship with homeownership ended as my girlfriend and I became renters of a downtown Toronto condo. As of the New Year, I’ve also ended my relationship with my car.
When we decided that we would be moving into the city, I knew that getting rid of my car was an option worth considering. Two cars made sense living in the suburbs, but not downtown in a major city. But as a first degree gear-head, I was willing to entertain the idea of being indulgent with having more car than I need. Or just having a car, period. After all, I had either trained or worked full-time in the auto-racing industry for three years, and had been a serious hobbyist for many more. Cars are a true passion for me.
I believe that if you run a surplus with your personal budget, you don’t have to feel guilty about your vices. For some, that’s lattes on a twice daily basis, for others maybe it’s a sportscar. In my particular situation, it was merely having access to a car – even though I could live without it.
A 2005 Honda Accord doesn’t turn heads, but it’s been well maintained and runs like new even though it hit a quarter million kilometres on the odometer in 2013. It was worth more to me than what I could sell it for in the market. That made the decision to go car-free even harder. What if I sold it, found out I still needed a car, and wanted a replacement?
Of course, that was simply me trying to rationalize keeping it.
While I haven’t had car payments for years, insurance and parking alone were costing me $300 a month, and that’s only because I found cheap long-term parking that was a 20 minute walk from my condo.
There is a minimum amount of maintenance required for a car, even if you don’t use it regularly, and going anywhere downtown requires additional parking charges, and of course fuel. With minimal usage, I was looking at $500 a month, at a bare minimum.
After three months had passed, I realized that I had used the car approximately once a month. It was clear that on the practicality scale, the luxury of having access to a car for my situation ranked somewhere near “ridiculous.” Like a closet with 100 pairs of shoes.
My girlfriend’s car was on its last legs and she was planning to buy a new car in the spring. An obvious solution was for her to simply use my car. The only problem was that she didn’t know how to drive standard.
I believe to learn how to drive a standard transmission car, it’s well worth paying for the cost of a professional driving school. Anyone who has tried teaching or learning a loved one will attest to that. So after $550 for the lessons, my girlfriend was ready to take over ownership of the car. Handing over that key was tough, but at least I’d get visitation on weekends.
After factoring in the cost of public transit, taxis, and the occasional car rental when needed, we’re now saving thousands of dollars a year. I had already known that ditching the car would have made financial sense, I just didn’t know if I would be able to deal with it emotionally. Turns out my fatter bank account is a great consoler.