A new year presents a fresh canvas for reimagining your financial life. You might think, "It’s not that simple" - and you’re right that certain commitments to things like home and health insurance are relatively fixed. But we tend to be loyal to our spending habits even when they’re no longer serving us well. I believe 2025 holds the possibility for spending by design, instead of spending by rote. 

Last month, I sold my car after 8 years of owning it. While I was feeling the compulsion to do what was habitual (i.e. buy a new car to replace my old one) I had a realization: given ride sharing services (RSS), do I really need to buy a car right away? For my own benefit and for you, my reader, I decided to experience the difference between owning versus using RSS. To do a fair comparison, I promised myself not to let frugality dictate my RSS usage.

It wasn’t easy because whenever I ordered a RSS (two to four times daily), I received an additional billing notification. It’s a death by a thousand cuts versus just making one automatic monthly car payment. It felt like I was being careless with money - purchasing 50 rides per month instead of making one car payment. I thought I must be spending a lot more money. 

But when I did the math, the numbers revealed a different story. There are many things to compare, but what surprised me, and many I’ve shared this with, is that the relative cost of RSS, the rough equivalent of a budget-chauffeur, is less than one might imagine. If you travel about 10,000 miles per year, the cost of ownership versus RSS is about the same. The more miles you tend to travel per year, the lower the relative cost of ownership versus RSS. (This ownership calculation includes the cost of the monthly car payment, gas, maintenance, registration fees, insurance, parking, car washes, etc.) 

If you drive more than 10,000 miles/year, often haul a lot of stuff, have pets or young children, or live in a less urban area with fewer RSS drivers, the advantage of ownership is clear. But RSS offers distinct advantages: freedom from parking concerns, the ability to fully focus on a phone call, no vehicle maintenance responsibilities, and the flexibility to walk to work and ride home. And RSS has its drawbacks: there are the drivers that keep pumping the brakes or drive unsafely, you have to plan ahead more, and you lose that sense of privacy (unless your city offers RSS with self-driving cars).

Many of us love to pay for something and be done with it. Whether it’s a vacation, a car, a house, a home renovation, or a new pair of shoes, we usually prefer to pay for the item outright (assuming we have sufficient funds) and not have to endure the agony of daily payments, as is the case for RSS. For example when someone pays off their mortgage, there tends to be a sense of relief from making mortgage payments. Sometimes, that extends to "the house/car doesn’t cost me anything, now that I’ve paid off the loan. Renting a home or car is throwing money down the drain." However, these statements are based on emotion, not numbers, as there are many hidden ongoing costs to owning a home or car.