$90,000 – Choose your car wisely

All figures in this article are my best estimates based on vehicle miles driven, miles per gallon, and current gas prices ($2.49).  These numbers only include my professional working career which began in August of 2004, and my wife’s career which began in the summer of 2006.

I’m the proud owner of approximately 13,005 gallons of gasoline.

I don’t own a gas station, nor did I install tanks and a pump in my back yard, as some type of bulk purchase savings plan.  In fact, I only still possess around 12 of those  gallons.  I’ve burned all the rest.  I wish had pictures of an immense fireball, my hair chard and smoking, as I hold the remains of a match, now that would be worth it.  Instead, I meekly burned it in little small bits here and there.  Unfortunately, I don’t own my own oil well, so I’ve been forced to buy all this fuel.

$32,383

That’s what all that fuel has cost based on today’s gas prices ($2.49), certainly at times fuel has cost less then today, but at times it has also cost more, if you know what the average price as been between 2004 and today I’ll gladly update my numbers.

Let’s break that $32,383 down to each offending vehicle.  My old Ford Ranger which traveled about 18 miles per gallon, cost roughly $18,017 over the course of my ownership. Our Mazda 3, which travels 30 miles per gallon has cost around $11,952. And lastly, our Ford Focus (replaced the truck) which travels about 33 miles per gallon, has cost us $2,414.

 At this point its fun to take a quick look at fuel efficiency, combined with vehicle choice.

Choice, what choice?

I’m glad you asked.  Vehicles are an area of life where one can safety deviate from the heard and choose a path that veers away from financial ruin.  Please allow me to lead you down the rabbit trail.

 

If you have read my previous articles, you know that I own 6 rental properties.  As a real estate investor, lets pretend I followed the crowd, and instead of purchasing a new Ranger in 2004, I would have purchased at new F-150.  Surely that makes sense, as I had junk to haul!  Now for some numbers.  I bought a basic Ranger for $17,000, so lets say I bought a basic F-150.  A simple internet search reveals this would have cost around $21,455 or $4,500 more then my Ranger.  Thanks to the internet, I also know this truck travels at about 14.5 miles per gallon, which means I would have spent $22,366 on fuel assuming all miles traveled were the same.  This decrease in MPG would have added $4,349 to my fuel bill.  In total, the F-150 would have added $8,849 to my costs over the same time period, not including the increased maintenance and insurance costs associated with a larger more expensive vehicle.

Related: Real Estate Income Report – February 2017

Now, my wife, being the beautiful classy lady that she is, should not be expected to slum around town in a little Mazda 3, so lets say she purchased a nice Jeep Grand Cherokee.  In this instance, her miles traveled likely would have been reduced as she took the direct route over hill and stream, but lets pretend she was a bit odd, and drove her 4×4 off road vehicle on the roads.

Her Mazda was bought used so I will also need to adjust the Grand Cherokee price.  Her Mazda came with a sun roof and some other extras and cost her $13,500 which represents 78% of the new sticker price.  A new similarly loaded 2004 Cherokee costs $39,780, taking the same discount means that a similar quality used vehicle would have cost around $31,000.

This off road beast also traveled at 15 MPG meaning her fuel costs would have climbed to $23,904.  Combined purchase and fuel costs mean choosing the Grand Cherokee would have cost an extra $11,952 in fuel and an extra $17,500 in purchase price for a Grand total of $29,452.  As you can see, my wife made a much better initial car purchase than I did, and her savings are substantial.

Finally, we need to replace our Focus with a fiction Ford Edge.  I wasn’t able to find a used Edge with exactly the same mileage as our Focus, but based on my search, we may have paid around $18,000.  The Edge would be getting around 19 MPG resulting in a fuel bill of around $4,193.  Thus, the Ford Edge would have cost us an extra $8,500 in purchase price and $1,779 in additional fuel expense.  Since this vehicle would have been purchased to replace my truck, I would still have needed to purchase a utility trailer, so those costs are the same either way.

Related: Little Car = Big Car

Let’s add everything up; replacing the Ranger with an F-150 would have cost an extra $8,849, replacing the Mazda 3 with a Grand Cherokee an extra $29,452, and replacing the Focus with a Edge would have added $10,279, all combined this represents and extra $48,580 in expenses.  This doesn’t include increased costs in maintenance, insurance, and financing fees, as we’d have had larger loans for longer.

This $48,580 represents $3,736 per year.  Instead of buying the more expensive vehicle option, we could have turned this into nearly $90,000 based on a 7% annual return rate.  If you don’t have money in your account, check your driveway, its probably parked there.

 

 

Related posts

2 thoughts on “$90,000 – Choose your car wisely

  1. I agree, I love the 16 year old Acura CL coupe that sits in my driveway most days. It’s a money printing machine (I bike to work so try to minimize its usage).

    1. moderngol

      Awesome! I love days I can bike to work.

Leave a Reply to FinancePatriot Cancel reply

Time limit is exhausted. Please reload the CAPTCHA.