The cost of transportation has a major impact on most people's budgets. Many car owners spend more on their vehicles than on any other expense, minus housing.

For people who live far from public transit lines or who often have to get to out-of-the-way locations, a private automobile may be a necessity. But in major urban centres, many consumers find they get better value for their dollar by using transit to get to work, and renting a car for vacations and weekends.

CALCULATING THE FULL COST OF CAR OWNERSHIP

To figure out the best deal, you have to calculate the cost of driving your car. Even if you don't plan on switching to transit and rentals, a breakdown of your car costs can help you find new ways to save money. For example, if you gas and maintenance cost are very high, it may be a good time to join a car pool.

There are two categories of automobile costs. Variable, or operating costs, include maintenance and repairs, tires, gas, and oil. Operating costs are worked out on a per kilometre basis because they increase with distance driven.

The costs of ownership, or fixed costs, include insurance, depreciation, taxes and licensing and registration fees.

Operating costs are worked out as an average per kilometre travelled. Keep track of all oil and maintenance receipts. To figure out gasoline costs, fill the tank, and then keep an eye on the odometer. After you've gone 200 kilometres, fill the tank again and note the amount of gas used. Repeat the procedure several times until you can average the results.

Armed with oil, gas and maintenance averages per kilometre, you need only know what tires cost to arrive at operating expenses. Last year, tires cost an average of 76 cents per kilometre.

Then calculate total yearly operating costs by multiplying the average cost per kilometre by the number of kilometres you drive in a year.

To figure out annual fixed costs, total the yearly cost of auto insurance, vehicle finance charges and licence fees.

Then work out depreciation ---the difference between the purchase price of your car and it's selling price. To find your annual depreciation, subtract the trade-in value of your car from the purchase price, then divide by the number of years you've owned the vehicle.

Adding these together gives you your annual total fixed costs.

Now you can find out how much your car is actually costing you. Once you've made these calculations for your vehicle you can compare the costs of car ownership to the costs of using public transit and rental cars.

Think about your options and the costs before you buy. The convenience of owing a car may be well worth the expense. You may discover, however, that other less costly forms of transportation options will meet your needs.