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Before you can invest, you need to save. With that in mind, today I'm going to discuss a simple strategy that will help you save thousands of dollars a year.

Not only that, but it will also do the planet a favour and it might even help you live longer.

What is this miracle money-saving strategy? Getting rid of your car.

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I know, I know. Some people need to own a car. If you live in the suburbs or require a vehicle for your job or school, going car-free isn't really an option. But if you live in a city, ditching your wheels – or downsizing from two family cars to one – has never been easier.

Thanks to the dawn of Uber and car-sharing services such as Zipcar, you can enjoy the benefits of four-wheeled transportation without all the hassles and expenses. Improvements to cycling infrastructure and public transit have also made it easier to give up your ride and enjoy the substantial cost savings.

I'm proof that it can be done. For nearly 10 years, my family of four enjoyed a blissfully car-free existence. We walked, cycled and took the subway, and when we absolutely needed a car – for my kids' hockey games or an out-of-town trip – we rented or used Enterprise CarShare (it's cheaper than Zipcar). We've saved tens of thousands of dollars in the process.

Car ownership may be convenient, but it's expensive. According to the Canadian Automobile Association, the cost of owning a mid-sized car, based on 20,000 kilometres driven annually, is $10,729 a year. That includes depreciation, maintenance, fuel, insurance, licence and registration. For a mid-size SUV, the annual cost soars to $12,953.

Most of those costs disappear when you don't own a vehicle. Over the past 12 months, I spent just $2,643 on car rentals and car-sharing. Even after adding in the cost of public transit and fuel for car rentals (gas is included in the price of car-sharing) my all-in transportation costs were still comfortably under $4,000.

Compared with car ownership, that's a savings of about $7,000 a year – or more – that I can invest. Over 10 years, assuming a pretax return of, say, 8 per cent, it works out to an additional $110,000.

There are intangible benefits as well, such as never having to fight for a parking spot on my street or face the stress of an unexpected repair.

If you're thinking about going car-free, here are some tips to consider:

  • Treat it as an experiment. When my wife and I got rid of our 10-year-old Honda Civic back in 2006, the car was always in need of repairs. Our attitude was: Let’s sell it, and if we absolutely hate being without a car, we’ll just buy another one. We quickly adapted. If you tell yourself it’s an irreversible decision, you might never even try.
  • Assess your transportation options. If you live close to reliable public transit, you have a big advantage. I used to avoid buses – too slow and crowded – but I came to enjoy the freedom of reading a book instead of cursing while fighting traffic in a car. Having a subway stop close by, as we do, is a huge bonus. Also check out what car-sharing options are in your neighbourhood: These services are growing and new companies are frequently entering the market.
  • Buy a bicycle. More bike lanes equal safer, more enjoyable cycling. Got young kids? They can ride in a trailer or child seat. One of the best investments I made was a Trail-A-Bike – a sort of half-bicycle that attached to my seat post and let my daughter pedal along with me. Trust me, you’ll want your kid’s help when you’re riding uphill with one of these.
  • Search online for car rental deals. If you’re prepared to do some work, you will be amazed at how cheap some car rentals can be – especially if you aren’t renting at peak times. I’ve rented many cars for $20 to $25 a day (airports are often cheapest, and you can usually take public transit to get there). Over a week or two, the savings can really add up. Travel sites such as Travelocity.ca and Expedia.ca make it easy to comparison shop, but prices are sometimes lower on the rental company’s own website. Book early if possible. To save on insurance costs, get a gold or platinum credit card that covers you against vehicle damage. With Enterprise CarShare, you get a 10-per-cent discount on Enterprise car rentals.

Unfortunately, after a decade without a car, I reluctantly had to buy a used vehicle recently. My daughter will be attending a new school in the fall and, until she's old enough to take public transit on her own, I'm planning to drive her (it's too far to walk or cycle).

But after a decade without a car, the healthy habits we've adopted – walking, cycling, taking transit – are so ingrained that I expect our car will be spending a lot more time parked than on the road. As I once again deal with headaches of insurance, parking and oil changes, I'm already looking forward to the day when we will be gloriously car free again.

Follow me on Twitter: @JohnHeinzl

Editor's Note: An earlier version of this column incorrectly reported that investing $7,000 a year for 10 years at a pretax return of 8 per cent would produce a sum of $156,000. The correct figure is about $110,000, as stated above.

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