Author Topic: $0.575 Mileage Reibursment- Am I coming out ahead?  (Read 4546 times)

ryanht13

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$0.575 Mileage Reibursment- Am I coming out ahead?
« on: February 13, 2015, 12:05:33 PM »
I travel a lot for my job. I have the option to rent a car, for which I'm reimbursed, or drive my own vehicle (4cyl Honda Civic), for which I'm reimbursed $0.575 per mile. Gas in my area is ~$2.00/gal currently. Considering maintenance, wear and tear, depreciation, gas, etc., am I coming out ahead by driving my own car? It feels like it when I drive 500 miles and get a check for $287.50. Is there a break-even point with gas prices?

JLee

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Re: $0.575 Mileage Reibursment- Am I coming out ahead?
« Reply #1 on: February 13, 2015, 12:06:38 PM »
Run the math and see how it turns out. I'm sure you're coming ahead right now.

Gone Fishing

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Re: $0.575 Mileage Reibursment- Am I coming out ahead?
« Reply #2 on: February 13, 2015, 12:16:09 PM »
When you do your analysis, do not include insurance, taxes, registration fees, inspection fees, etc.  These are fixed costs that you would have anyway (presuming you would still have the car for personal purposes if it was not required for work).  Can't remember what gas prices were, or if I included fixed expenses but years ago I figured up around .25 per mile in the Civic I had at the time. 

Another way to think about it is if you drove that Civic 200,000 miles for company purposes, you would get $115,000 for it.  I agree with JLee that you are certainly coming out ahead!  Even if gas was $5 per gallon it would only be .14 per mile or so.   

wtjbatman

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Re: $0.575 Mileage Reibursment- Am I coming out ahead?
« Reply #3 on: February 13, 2015, 12:16:47 PM »
I can pretty much guarantee you are coming out ahead. Especially driving a 4 banger civic.

Syonyk

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Re: $0.575 Mileage Reibursment- Am I coming out ahead?
« Reply #4 on: February 13, 2015, 01:16:20 PM »
General "mileage based expenses" on a car:

Gas.
Tires (figure 60k miles for a set of tires, and your car probably doesn't use super expensive tires)
Oil (change your own, and if you're driving a lot, and it's highway, you can push the change interval up a good bit)
Brakes (change your own)

I suspect it's a serious net win for you.  I rode an old motorcycle for work a number of years back when mileage was around $.50/mile, and paychecks when I had a few hundred miles of transporting hardware (seriously... I got paid to ride a motorcycle 50 miles to install a router, AND got paid for miles!) were months I ate good. :)

I think at one point the guy who signed my paycheck commented, "You're making out like a bandit on this mileage, aren't you?  You took your motorcycle for most of these miles..."  I just responded with, "Yup."

Taran Wanderer

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Re: $0.575 Mileage Reibursment- Am I coming out ahead?
« Reply #5 on: March 19, 2015, 12:02:19 AM »
Ten years ago I did a thorough analysis:

Basic transportation (Honda Civic, Toyota Corrola):  $0.20/mile
Mid size luxury sedan/wagon (BMW 5, Volvo XC70):  $0.38/mile
Tahoe/Suburban, etc.:  $0.50/mile

I bought a car.  I drove 100,000 miles for work and then checked actual costs vs. the analysis.  I was within 5% for all costs including purchase, gas, insurance, maintenance, tax, registration, and even a minor crash and a car break-in while on company business.

Since then, costs have gone up.  I would project $0.25 to $0.30 for the basic transportation option today.  So, you double your money with a $0.575 mileage reimbursement, and you will definitely come out ahead.

johnny847

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Re: $0.575 Mileage Reibursment- Am I coming out ahead?
« Reply #6 on: March 19, 2015, 12:20:48 AM »
The IRS calculates the reimbursement rate based on the average car on the road today. Your Honda Civic gets better mileage than the average car, so yes, you're coming out ahead.

Here's a site that estimates what the IRS cost estimate breakdown looks like http://www.companymileage.com/howmileageratedetermined.html

As So Close mentioned, fixed costs should not count so long as you would have a car anyways.

The biggest cost in that estimate is depreciation, at 45% of the total (it's actually 55.56% of the total cost once you throw out fixed costs as mentioned previously). But depreciation is highly nonlinear - there is a lot of depreciation for the first 10k miles driven as opposed to driving another 10k miles when your car already has 90k miles on it. If you have a higher mileage car, as many Mustachians do, your depreciation should cost you less than gas.

chasesfish

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Re: $0.575 Mileage Reibursment- Am I coming out ahead?
« Reply #7 on: March 19, 2015, 05:04:44 AM »
You're coming out ahead.  10 years ago I drove the wheels off a Saturn for work, saved almost $20,000 and paid cash for my un-mustachian Honda Truck.  That was in the high $0.40/mile.  Your civic will be better on operating costs because its useful life is probably 2x that Saturn.

nereo

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Re: $0.575 Mileage Reibursment- Am I coming out ahead?
« Reply #8 on: March 19, 2015, 06:29:56 AM »
General "mileage based expenses" on a car:

Gas.
Tires (figure 60k miles for a set of tires, and your car probably doesn't use super expensive tires)
Oil (change your own, and if you're driving a lot, and it's highway, you can push the change interval up a good bit)
Brakes (change your own)
Forgot depreciation, which can be biggest mileage-based expense for a newer car, but as Johnny847 pointed out is very non-linear.

You have better than US-fleet-average fuel economy, and a less expensive vehicle that hopefully you purchased used.  Yes, you are coming out ahead.
I had a job which required me to drive ~3 hours each way in rural New England about 8 years ago.  I put 40,000 miles onto my used VW per year, but even after subtracting fuel and depreciation I netted about $10k.

Mrkineticz

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Re: $0.575 Mileage Reibursment- Am I coming out ahead?
« Reply #9 on: March 19, 2015, 08:32:30 PM »
Hey funny thing you asked this question I have a 2010 prius I drive 500 miles weekly my car gets 50mpg@ 10 gallons My reimbursement rate is .43 cents a mile (which sucks compared to yours) but my monthly reimbursement is 860 dollars. If you dont care about wear and tear on your vehicle then i feel its a win win situation. I practically feel like i dont pay for my vehicle because my reimbursement pays for everything. Given if i didnt have a car payment I would be able to pocket more. The great thing is that you have a very reliable car to drive around in why not just use and abuse until you have to buy another one.

monthly cost
-$92 gas
- $400 car payment
-$20 oil change (evey oil change is 3 months @ 6000 miles)
-$72 insurance
-general maintenance ( i can do the repairs myself)

Im still netting 276 a month