Let me start off by saying I’m a big proponent of not driving and I’m a huge fan of the forum! That said I’d like to explore a topic that is a bit un-mustachian.
I have a corporate job, I’m 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’m calculating this correctly I may be actually making money by driving. I understand that I’m not including the environmental impact of releasing carbon in to the atmosphere so I’d 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’m 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’s a great car).
Mile per gallon = 32
Cost per gallon = $3.50
Total Cost for gas = 22000/32 * $3.50 = $2406
So far I’m gaining 4731-2406 = $2325/year
This is where I’m 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’ve 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’m thinking that this may be high).
One other thing is that need a car where I live. So even if I didn’t have a real estate job and rental properties I’d 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’s 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?
