Think for a minute about all the things you spend money on day to day: Food, housing, a car, clothes, utilities, entertainment, and so on.
You probably think of all of these things as essentials and mostly that’s right.
Everyone needs a roof over their head, clothes on their back, and food to eat. You can spend more or less on these things, but it’s hard to go without.
But do you need a car? Increasingly, says Kevin O’Leary of the CBNC investing show “Shark Tank,” the answer is no.
It’s not an easy leap to make. After all, most of us grew up in cars.
We rode in them with our parents, bought our first wheels in high school or college.
Thus began, for many of us, a series of short-term love affairs. Each new car was a new start, a new identity, a new way of showing the world who you are.
And it’s all a waste of money, says O’Leary.
As I write in this week’s MarketWatch column, O’Leary thinks cars are passé, a relic of a different time to be given up.
“You’re thinking about buying a car. Let me give you a new idea: Don’t,” O’Leary says.
“Cars cost a fortune in maintenance and insurance and just the amortization, which means as they go down in value, you’re losing money,” O’Leary explains.
O’Leary says he uses mass transit, ride-sharing and rentals from time to time. He says he doesn’t miss his old Benz at all (though he does sound a bit wistful about it).
Now, I realize that a lot of people live in suburbs and need a car to get anything done.
But consider this carefully. When you do retire, when the time comes to downsize and find a new place, where will it be?
It may turn out that O’Leary’s car-free lifestyle is a fit for you at some point in your retirement.
The cost savings of not owning a rapidly depreciating asset such as a car means your retirement money can grow instead of being taken out, taxed, and spent.
Not a bad idea.