Valérie Plante came under fire this week when she said it was possible to raise two children in Montreal without owning a car.
I don’t know about two children. But as the parent of a family without a car and a very busy child, I can say that it is possible to give up owning a motor vehicle. You have to plan, use your leg muscles (walking, cycling), use public transport and Communauto when you have no choice, that is to say often when you are the parent of a future Cole Caufield or a future Kylian Mbappé.
Around 30% of Montreal households do not own a car, a rate which exceeds 50% in the central districts, which are also among the densest in the West (Ville-Marie, where 89,000 people live, has a greater population density than Amsterdam or Berlin).
No, a life without a car is not possible or desirable for everyone. Yes, people who live 72 kilometers from their workplace need a vehicle. And if I moved to the suburbs, to the region or to a place without reliable public transportation or Communauto, I would buy myself a “laziness machine” before even dropping off my boxes.
Beyond the choices, I especially try to see vehicle ownership for what it is: financial suicide for a minority and a machine for incinerating wealth and adding years to work for a majority.
Or, in the more colorful expression of Alexandre Leblond: “Your retirement is in your driveway. »
Financial planner, financial security advisor at Livsta and economic columnist at the BLVD 102.1 station in Quebec, Alexandre Leblond gave this title to a book he began writing at university.
“But I gave up when I realized no one would want to read that…”
In his office with his clients, Alexandre Leblond often has to discuss taboo subjects, such as death, inheritance or separation.
“It’s going well,” he said. But the minute we broach the issue of car loans, some people become defensive. They feel attacked. “I have to carry my hockey bag!” There is no nuance. »
Over the course of these meetings, he realized that before being “utilitarian”, a vehicle is first of all “identity”.
“The auto industry is so good. The dealership calls you, you arrive, they make you a coffee, the vehicle is isolated, in a room, with a ribbon. They give you the keys… It’s like a ceremony in Game Of Thrones, but to celebrate the fact that we just put you in debt tens of thousands of dollars. You can’t blame people for falling into this. »
If it burned 5 or 6% of our paycheck, this little game of social positioning would be of no consequence. But the costs associated with the purchase and use of one or more motor vehicles are the highest household expense after housing.
According to J.D. Power Canada, the monthly payment for a new vehicle is $880 on average. And more than 30% of people with an auto loan pay more than $1,000 per month.
The average new vehicle in Quebec was worth more than $64,000 in 2023, while the average after-tax income was around $42,000, notes Mr. Leblond.
“Concretely, that means that for a year and a half, you get up every morning, you go to work, and the only thing you pay for, day after day, is your tank. Not your insurance. Not your essence. Not the interest. Not your house. Not your children’s studies. Your tank, which produces nothing, and which is parked doing nothing 95% of the time. »
As for luxury vehicles, the science is clear: contrary to expectations, people who drive them do not derive more pleasure from their experience than people who drive a regular vehicle.
Consult the article of Michigan News (in English)
Opportunity cost
Most people know that you shouldn’t spend everything on a car. But the long-term effect of a financial decision, often called opportunity cost, is unfamiliar to many.
People believe that their vehicle costs them $600 or $700 per month. In fact, it costs them hundreds of thousands of dollars that they will not have in 10, 20 or 30 years because they did not invest that money.
Alexandre Leblond
A sum of $700 per month gives almost $600,000 after three decades when we assume an annual return of 5%. An amount that could change a worker’s life and allow them to be financially free years before the usual retirement age.
Personally, as I’ve explained here before, over $110,000 of the money in my TFSA is attributable to not owning a car in a decade. This habit alone could be responsible for $1 million in my account in less than 20 years.
Read the article “How to become a millionaire thanks to Communauto”
My thing ? There is no trick. I simply invested each year the difference between what I pay to travel and what it would cost me to purchase and maintain a motor vehicle.
Residents of Limoilou, in Quebec, Alexandre Leblond and his wife travel in a 2016 Hyundai Accent purchased with cash. “I go to work on foot, by bus, by electric bike. I try to practice what I preach,” he says.
The distance to work is less than the Canadian average of 8.7 km in each direction – a distance that is short enough for many people to cycle or e-bike at least part of the year.
His realizations about the true cost of a vehicle come from his father, who had a career as a Licensed Insolvency Trustee (LIT).
“People who have payments of $2,000 a month on an F-150 pickup truck and are unable to arrive, my father has seen a lot of that in his career,” he says.
The vehicle his father drives? A Honda Fit with 405,000 kilometers on the clock.
“His choice of vehicle is one of the reasons he can do whatever he wants in life. He is free because he invested his money instead of buying cars. »
Mr. Leblond does not force anyone to follow his advice. He believes that his role is to give the figures, and let people choose.
“If you really need a pickup truck, one option is to buy a 2005 Dodge Ram and move on. Or rent a van on Turo when you need it. But people don’t want to, because they build their identity around a vehicle. Some people even put their vehicle as their profile photo on social media. That goes a long way! »
A few months ago, a Deloitte survey revealed that 86% of Canadians aged 50 to 64 are at risk of running out of money in retirement and would have to go without after stopping working.
For what ? No need to look far. Your retirement is in your driveway.