Here is a strategy that can provide a million dollars to a person with an average income, and it is enjoyable, healthy and ethical. Simply minimize your driving expenses and invest the savings. After a few decades you’ll be rich. It’s as simple as that.
Most households can reduce their vehicle expenditures. For example, owning and operating a typical new luxury car, SUV or van costs about $8,000 a year, and most households own multiple vehicles. If you buy a reliable used car, share it with other family members, and minimize your driving by using transit, cycling and walking when possible, you can reasonably cut your vehicle expenses in half. Although you’ll lead a less mobile lifestyle, you’ll enjoy greater financial freedom.
What happens if you invest the $4,000 annual savings at 7% annual return? In ten years you have $55,266, in twenty years you have $163,982, and in less than forty-four years you have a million dollars. In other words, excessive car costs waste a million dollars of accumulated wealth over a typical working lifetime.
Perhaps you have other priorities besides retiring rich. You can use the savings to buy a nicer home, put children through college, travel, or work fewer hours. This alternative is not transportation deprivation. You can still have a household car available when you need it, you simply can’t own a particularly flashy vehicle or lead an extremely automobile-dependent lifestyle.
Source: Todd Litman, "Evaluating Public Transit Benefits and Costs," Victoria Transport Policy Institute (www.vtpi.org), 2004, page 54.
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