Author Topic: A case for driving  (Read 2275 times)

salmp01

  • Stubble
  • **
  • Posts: 120
  • Location: Minneapolis, MN
A case for driving
« on: August 22, 2012, 07:14:57 AM »
Let me start off by saying I知 a big proponent of not driving and I知 a huge fan of the forum!  That said I壇 like to explore a topic that is a bit un-mustachian.

I have a corporate job, I知 also a real estate agent and I own and manage several rental properties.  As a result of this, I need to drive and I need to drive quite a bit.   I ran some numbers and if I知 calculating this correctly I may be actually making money by driving.  I understand that I知 not including the environmental impact of releasing carbon in to the atmosphere so I壇 like to avoid any discussion on this (I know this is a big deal).

Below are my assumptions:

Fed bracket = 28%
State (MN) = 7.85%
Medicare = 2.9%
Social Sec = 0 (for now I max this out with my corporate job)
Total Tax = 38.75%

Miles Driven in 2011 (for real estate activities) = 22000
Reimbursement rate = .555
Total write off = 12,210  which means I知 essentially getting $12,210 * 38.75% = $4,731

I have a 2009 Toyota Matrix that I bought 1.5 years ago for 10k (it had a salvaged title but it痴 a great car).
Mile per gallon = 32
Cost per gallon = $3.50
Total Cost for gas = 22000/32 * $3.50 = $2406

So far I知 gaining 4731-2406 = $2325/year
This is where I知 having trouble determining the additional costs.  I looked up the value of a 2003 Toyota Matrix (this is the oldest model) and one with 100k was worth $5263 and the same car with 250k was worth $3213.   I plan to drive this car for about 8 years and will probably have well over 200k on it.  So am I safe to assume that if put on an additional 100k 150k miles that this will only decrease the value of the car by 2k?  If this is correct I would add on an additional $256/year.
I have found that the Japanese cars I致e owned in the past have needed very little maintenance and I have fairly cheap access to car maintenance/repairs so I was assuming that the additional mileage would cost me about $1000/year (I知 thinking that this may be high).

One other thing is that need a car where I live.  So even if I didn稚 have a real estate job and rental properties I壇 still require a car.  My analysis above is based on driving an additional 22k miles per year with a car that I already have. 

So here痴 the breakdown:

Gain from driving:        $4,731
Cost of Gas           2,406
Additional Depreciation    256
Maintenance/Repairs    1,000
Total Gain                 $1,069/year = $8,552 over 8 years

Am I missing anything?

MrD

  • 5 O'Clock Shadow
  • *
  • Posts: 95
Re: A case for driving
« Reply #1 on: August 22, 2012, 08:30:05 AM »
Your numbers look pretty good but if you really want to take a deep dive into these analytics I think you should also consider accidents in your calculations.

More time on the road means higher chance of an accident, this could mean numerous things like: life long injury, traffic tickets, higher insurance, payouts for deductibles.

Not saying these things are that likely, just saying they are things to consider. I consider myself an excellent driver (don't we all) I have never had a ticket or even been pulled over and I have only been in one accident. I was driving to the airport early in the morning and the car in front of me made a right at a stop light (or so I thought), I waited a couple of seconds and it was clear and I made a right on red as well. I then ran into the car I thought went (his stalled his car out). It was only $300 in damage but that was still a cost that I did not expect.


salmp01

  • Stubble
  • **
  • Posts: 120
  • Location: Minneapolis, MN
Re: A case for driving
« Reply #2 on: August 22, 2012, 08:34:23 AM »
Quote
Your numbers look pretty good but if you really want to take a deep dive into these analytics I think you should also consider accidents in your calculations.

Good point!

igthebold

  • Bristles
  • ***
  • Posts: 470
  • Age: 40
  • Location: NC Piedmont
Re: A case for driving
« Reply #3 on: August 22, 2012, 08:49:33 AM »
Two minor comments: don't forget the laddering of your federal taxes.. 28% tax bracket doesn't mean you pay 28%.

Also, as far as I'm concerned, if a business requires driving, it requires driving. A dump truck operator isn't going to say, "I'm going vehicle free!" Doing the driving efficiently, which seems to be what you're doing, is the way to go.