Wall Street Journal says: Your Car is a CASH GUZZLER

A Real Auto Bailout: Escape Your Car

by BRETT ARENDS

Last week, the auto industry finally got its bailout.

But is it time for Americans to rescue their own finances from their cars?

Families are now bracing for the mother of all recessions. They're looking for every chance to save a dollar.

Forget lattes and store-brand cereal. If you really want to see where your money is going, take a closer look at your car. Foreign or domestic, it doesn't matter. It's a cash guzzler, and it is probably costing you more than anything else except your home.

How much? First there's the actual capital cost of buying the vehicle. Obviously people can spend as little as a few thousand dollars buying an old clunker. But most spend a lot more. And that initial cost is just the start. Now add everything from gas and maintenance to insurance, registration, taxes, tolls, parking, tickets and so on.

You'll be lucky if you're spending less than about $4,000 a year. Most people will pay a lot more. If you buy the vehicle with a loan, you'll have to pay interest. If you pay cash, you have to factor in the interest you would have made on that money if you had saved it instead. That's a real cost too, and a substantial one, though most people forget about it.

In 2007, the most recent year that numbers are available, the American Automobile Association figured its members paid about $7,800 a year on average to own and maintain their cars. That figure dropped to about $6,200 for small-car owners.

The AAA's numbers were tabulated before the surge, and recent collapse, of gasoline prices. It's hard to imagine gas prices will to remain at today's panic-level $1.60 per gallon for long. But even if they do, that will only cut the AAA's figures by about $400 annually.

These are not trifling costs. Drivers are hemhorraging money. The federal Bureau of Labor Statistics calculated that in 2006 vehicles sucked down nearly 17 cents of every family dollar.

Maybe it's time for smart families to consider some really tough choices.

Life without a car may seem inconceivable. They are useful and can be fun. In most parts of America, you really can't survive without one. And they've been hammered into the culture and the national psyche.

But a lot of things are happening these days that nobody expected. Rules are changing. People need to make every dollar count.

Trading down to the cheapest car possible is one move. Dumping one vehicle from a two-car household is tougher to do, but offers real savings. Moving into a city with a downtown, and getting rid of your cars completely, can save you even more. When you factor in the savings, city real estate might actually work out in your favor.

Residents of inner-ring and upscale suburbs, as well as everyone in car-dependent cities like Dallas and Atlanta, are in the worst of all possible worlds on this. They're paying plenty for real estate – and then paying even more on top of that to run a car for each adult in the home.

Surely they'd be better off moving out to the country, where they would still need their cars but at least real estate is cheap, or into a downtown where they could lose the cars.

Necessity, they say, is the mother of invention. We are going to see a lot of necessity. It may lead to some interesting developments.

Write to Brett Arends at brett.arends@wsj.com