Author Topic: I think I have already made a mistake  (Read 11614 times)

rbiser

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I think I have already made a mistake
« on: April 22, 2013, 09:58:50 PM »
My wife and I have two debt free cars one of which is the subject of this question.

Our 177000 mile 2001 V6 Auto Trans Mercury Cougar recently needed some repairs as the transaxle warning light was on and it wouldn't shift or was shifting unreliably. Took it to a trusted mechanic and he said it needed a transmission rebuild but he doesn't do that sort of work so he referred me to a local Aamco franchise. They came back with an estimate of 2100 (ended up being 2400 with tax) to rebuild the transmission and they guarantee the work for 12 months.

Not eager to either start looking for another car or become a one car household I told him to go to work.

When it was ready I picked it up and on the drive home parts fell off and all of the transmission fluid came gushing out. I coasted to a stop out of traffic and phoned the shop. They were embarrassed and handled it great, sent a vehicle to pick me up, a tow for the car, and paid for a rental for me while the Cougar was in the shop the second time.

After a second round of repairs everything seems great.

But I am worried that I have already made a mistake. Should I have paid 2400 dollars to fix a car worth less than that? How do you mustachians decide when to move onto another vehicle? Should I now start looking to sell the Cougar and Buy something else before my 12 month warranty on the transmission is up?

I am not a car guy so I assume the 2400 was legit and of course don't want to keep paying such huge sums such that God forbid leasing a car would be cheaper.

Dynasty

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Re: I think I have already made a mistake
« Reply #1 on: April 22, 2013, 10:39:16 PM »
$2400 doesn't sound bad.

Aamco does.

Auto transmissions are generally on borrowed time after 150K.  If the transmission is still working right in the next eight thousand miles, i think you'll be okay to drive your car until the next major component breaks.

What's your plan for when that happens?


Joel

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Re: I think I have already made a mistake
« Reply #2 on: April 22, 2013, 11:30:14 PM »
It's probably a good idea to start saving for a car.

However, you can not take into consideration what you have paid in the past on this car when you are trying to evaluate getting rid of it.

You need to consider the car in it's current condition (including any repairs - a rebuilt transmission can last awhile!) and figure out how much it costs. Do you need to spend 5k for a one-time repair that replaces your engine and extends the life another 150k?  Or are you spending 1k per month on miscellaneous expenses because everything is falling apart?

Paying these repairs are likely better than buying a brand new car... However, it may make sense to try and find a slightly newer car with less repairs required.

I've bought, drove, and then traded up from a 93, 97, 03, and finally an 07 honda civic. It is the best bang for your buck in a vehicle that I have found. Relatively low price, maintains it's value and does not depreciate too fastly, is fuel efficient, and relatively cheap and easy to maintain.

rbiser

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Re: I think I have already made a mistake
« Reply #3 on: April 23, 2013, 07:08:10 AM »
@Dynasty:

If there is another repair bill more expensive than the car (1600 Private Party up to 4300 Stealership price) I am going to sell it as is on craigslist.

Oddly I had another car with the same transmission as the cougar a 1998 Mazda 626 that made me swear off of auto transmissions and get a manual 4cyl tacoma. I eventually sold the tacoma (2004 standard cab) because I am 6'4" and had to hunch to drive and it made my back hurt. Our other car is a 2010 Toyota Highlander (bought previous model year new with cash through USAA's buying service and paid less than any 2008+ used Highlander I could find anywhere in the country online. Even so don't want to buy another new car) with an automatic transmission. I went auto on that because Toyotas are statistically much better than the 90's Mazda transmissions. We'll see, I hope this Toyota goes a million miles.

Is Aamco not well respected by people that know about cars?

When we do replace the cougar we will get something like a used Toyota Yaris or Honda Fit. Although as Joel points out civics or maybe corrolas are available farther back.

@Joel

Coming from Dave Ramsey Land we have 25k uninvested and are debt free so could buy a used car at anytime if we had to.

The car is (I thought before this transmission failure and still suspect) in great shape for a 12 year old car. I know the people my wife got it from and no one takes better car of cars than they do. We have records of all maintenance and the recommended schedule was followed, no wrecks etc. This is the first repair that's been needed since my wife got the car 3 years ago except for new tires and a battery.

So repairs have averaged less than 1000 per year including tires and battery and oil changes.

Do you just look at the trailing average of repair costs to decide when to replace the car? With the aforementioned Mazda I knew it was a pile of junk and even the mechanic was telling me to consider getting something else.

Now the car is throwing a code for the EGR valve but (I had to look up what that was and what it did thanks google!) it doesn't stutter or stall so I think I just need to figure out how to take it off and clean it before we have our emissions inspection.

We definitely wouldn't buy a brand new car, although a 2012 Prius C i found listed for 16k is rather tempting, I would love to find a car under 3000 that would last 5+ years until a major repair was needed and then repeat the cycle.
« Last Edit: April 23, 2013, 07:10:12 AM by rbiser »

sdp

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Re: I think I have already made a mistake
« Reply #4 on: April 23, 2013, 11:36:51 AM »
You are comparing the cost of repairs against the value of something you already own!!!  you need to compare the cost of repairs to the alternative- getting a new car.  your car is a consumable, not an investment, once you own it, it isn't worth anything (unless you realize it was a dumbass puchase and plan to sell it before you get your moneys worth out of it), just like a loaf of bread.  You buy the bread thinking about the use you will get out of it (how many sandwiches can I make? Is it healthy for me?), not by how much it will be worth tomorrow!
I generally think that if I get 8cents a mile out of the cost of ownership of a vehicle then I am doing good. Some people use 10cents, some people use 5cents. If you buy a car for $5,000 then you should be able to get 65K to 70k out of the car don't forget to take into account insurance and mainenance costs not just the purchase price.  If you apply the 8cents/mile formula to your $2400 bucks, then it was a good investment in the car if it extends the life of the car by atleast 30K miles, which it could easily have done.  Don't get caught into the mindset of thinking about what the car is worth vs, how much you spent for it.  It is a consumable just like food, bicycle tires, clothes, and shoes.  The goal with all these consumables is to extend their lifespan by taking care of them and using them less frequently.  If your bicycle has flat tires and you need to replace the tubes, the value of the bicycle probably doesn't enter your mind unless you think you can buy a new replacement bike that will suit your needs for less than the value of the new inner-tubes (which you probably can't) so you buy new tubes, it is your bike after all!  Shoes on the other hand are more expensive to get resoled than replaced most of the time so we donate the old shoes and buy the new ones that make sense, but we don't dwell over the purchase price of the old shoes, that was a different transaction that has already happened.  We compare the resole price to the new shoes... not the old shoes.  Same with a loaf of bread, we eat it and use it without thinking twice about how much you could sell it to the neighbor for.... Just be prudent with your initial purchases and don't let past purchases muddy up your perspective going forward.

rbiser

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Re: I think I have already made a mistake
« Reply #5 on: April 23, 2013, 12:06:30 PM »
@sdp:

I like your x cents per mile approach, how did you (as in the math) pick 8 cents per mile instead of 5 or 10?

Sadly my wife doesn't have a bike, I have been wanting to get one for her since we got married but before I started reading MMM I always considered that a "fun" money purchase and it never seemed to rise to the top of the list of fun purchases in our 20 dollars per week each accounts or the 30 dollar per week couple fun money account. I always seem to buy coffee or books or camping gear with my money, and she buys whatever women buy with hers (mostly girls night I am sure) the 30 covers travel, restaurants etc.

I have been cruising craigslist for a 43-48cm women's bike for 2 months and not much has come up yet. With my elitist bike background I don't consider a bike that was less than 1k new to be worth it. My wife on the other hand doesn't care and initially suggested we get her a bike at walmart.

But back to the topic at hand.

So, in your system if it needs nonpredictable repairs (oil change, tires, etc.) in the next 30k miles I should ditch it rather than throwing more money at it?

racherinh

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Re: I think I have already made a mistake
« Reply #6 on: April 23, 2013, 02:46:09 PM »
I just bought a used bike on e-bay that is $1000 new - the bike of my dreams, at 60% of the price (after shipping). Some things I've found faster on e-bay (vehicles) and somethings are a better deal on craigslist (photography, exercise, and craft stuff).




sdp

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Re: I think I have already made a mistake
« Reply #7 on: April 24, 2013, 02:06:47 PM »
There are articles online that break down the X cents per miles formula.  But lets make our own example.  Let's say we buy a nice used honda civic with less than 100K miles on it.  On average people drive 12,000 miles per year as per Kelly blue book research.  so the civic will be limited to 2005 and newer civics.  Based on kelly blue book a 2005 base model civic in flagstaff, AZ (Where I live) with 100K miles on it is worth 7,000 bucks.  lets say I find some little old lady with a really nice one and buy it from her for a great deal.  5,500 bucks.  it has 80,000 miles on it because she only drove 10,000 miles per year.  I expect to get atleast 200,000 miles out of my new purchase, so I should own it for about 120,000 miles.  Now lets assume that I am Mustachian so I drive HALF the distance every year as most people, or 6,000 miles per year.  I should be able to expect to own the car then for 20 years before it dies.  I bought it with cash so I only pay 14 bucks a month on insurance and registration is 100 bucks a year-268 bucks/year=5360 of the life of the car.  So if the car is the best built civic ever and never ever needs any mainenance or new tires or oil change then the total cost of the car over 20 years is: $10,860 and if I drive it for 120,000 miles then that is just over 9cents per mile.  And this example is for a fancy, fairly new Honda.  You can get cheaper cars that you own for less miles that might be a better deal.  A car you buy for 1000 bucks doesn't have to get you very far for it to be a better deal.  And of course you can use the same formula to see if it makes sense to fix-it or buy another one.  Let's say the engine head cracks and it costs 2400 bucks to fix.  at our 6,000 miles per year and 9 cent per mile, we should only fix the car if we can reasonably assume that after the fix, we can get another 26,000 miles and 4.5 years out of it.  It is a gamble as you don't know what will happen to the car in the future, but if you can reasonably assume the use you can get out of it, then you can predict if the costs involve make sense. 

On the flip side, if you know it is a junker and you think it will barely last another year (or 6,000 miles because we are mustachian) then you can figure out how much it is worth to you.  6,000 miles X 9cents  = 540 bucks.  If it breaks again and the cost of the repair to limp the car through another year costs more than 540 bucks, then you might have to think twice.  of course if it is broken and you think you can get more than 540 bucks on craigslist for the broken car, then that might make sense too( but ONLY if you have a new car fund that can purchase a new car with cash)
Hope this helps.
Cheers,
Scott

P.S. I would never buy a fancy new honda civic for the absurd price of 9cents per mile, sounds too expensive to me.  I try to keep my cars with an initial purchase price of under 8cents per mile.  so far I have been successful. 1978 VW bus (had it forever! but haven't driven it in years, because it needs some engine work, hey! its a volkswagen!) and a 2003 chrysler sebring. I bought with 82,000 miles on it for 2100 bucks and I hope it lasts 160,000 miles = 7.2cents per mile for the next 13 years. so I have some leeway to fix it and still stay under my 8cents per mile

rbiser

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Re: I think I have already made a mistake
« Reply #8 on: April 24, 2013, 08:53:31 PM »
@racherinh:

I will pick up the search on ebay, my poor luck on craigslist may be because rather than colorado, oregon, or washington where everyone bikes I live in the obesity capitol of america Memphis TN.

I found this in Nashville:
http://nashville.craigslist.org/bik/3741173436.html
But it is overpriced according to this:
http://priceonomics.com/bikes/trek/2100/2007/?q=2007+Trek+2100

priceonomics.com is an awesome site btw it tells you what most anything is selling for across all sorts of auction sites and online classifieds.

@sdp:

I created a spreadsheet on google drive:

https://docs.google.com/spreadsheet/ccc?key=0AtsW6m_DA8c4dGlVSzU1U1NIQU9kSmxFRjREV1dWY1E&usp=sharing

I got the idea from

http://criticalmas.com/2013/04/car-repair-spreadsheet-why-didnt-i-think-of-this-earlier/

He isn't using it to track cents per mile but it is a great idea nonetheless.

I have the spreadsheet set up to compute the trailing cents per mile and not the guesstimated cents per mile for the future. I don't know enough about cars to know how to make a good guess about how many miles this repair bought me. Something else I need to learn to take more control of my life.

Do you only consider best guess going forward in your cents/mile analysis?

It seems better to say if the repair will cost x and buy y miles will current sunk costs plus x divided by current mileage plus y exceed 8 cents per mile.

No? Or should I always ignore the cost history of the car?

Trailing cents/mile is certainly easier to compute.

For example on the highlander it looks like predictable maintenance oil/rotate/tax/title/new tires works out to 4.3 cents per mile.

Assuming nothing ever needs to be repaired other than those predictables it needs to make it 26k/(0.08-0.43)=700k miles before I hit 8 cents per mile and that isn't factoring in insurance.

I didn't put insurance in the spreadsheet but that is about 1400 bucks per year for the gold plated policy I have on the two cars.

My insurance plan is sitting at about 5.3 cents per mile per car.

For the cougar the trailing cents per mile is 16 plus 5.3 for insurance so 21.3 cents. We will have to make it to 200k miles before we know if the transmission job as worth it (230k if we factor in my insurance plan).

sdp, this analysis is enlightening, and 8 cents per mile is a very rigorous standard. 700k miles to go to make the fancy highlander worth it. 30k to go to make the transmission rebuild worth it on the cougar.

sdp

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Re: I think I have already made a mistake
« Reply #9 on: April 24, 2013, 09:19:40 PM »
You can use the total cost history of the car to evaluate if you made a wise purchase originally.  But that doesn't help you now.  But if you are  considering a future repair cost, ignore it.  it is a previous transaction that you cannot do anything about.  What you are really comparing is the cost of the repair vs. the cost of a new-to-you car.  Then the only thing that matters is the cost-per-mile of the repair vs cost-per-mile of the new car.

Share with us more of the details on the highlander. I like your spreadsheet.   I would be interested to see the math and the initial price of the car and how you got to 700K before it becomes a cheap car.  this would help a lot of people to see.

People can also use this formula to evaluate whether it makes sense to just keep the car they have or trade it in for cashola.
Thanks
Scott
« Last Edit: April 24, 2013, 09:35:22 PM by sdp »

rbiser

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Re: I think I have already made a mistake
« Reply #10 on: April 25, 2013, 10:03:04 AM »
@sdp

Yeah, if you look at the spreadsheet I have two tabs, one for the Highlander and one for the Cougar. The tabs are at the bottom of the page if you want to switch between the two sheets.

The first sheet is for the Highlander that I bought new in 2010 for 24k plus tax on a 31k sticker price. If you are a USAA member they have a service that will negotiate new car purchases for you. That just goes to show how incredibly marked up cars are since I am sure that the dealership still made a profit on the 24k, if someone went in and the 31k sticker price that is an extra 7 thousand dollars to the dealership. I am not sure if you can always get such good deals through USAA or if dealers were particularly desperate at that time.

But, 24k plus sales tax is $26175 for a brand new 2010 Toyota Highlander.

I have been driving it about 15k miles per year including a lot of road trips. Since I have the oil changed etc. on the manufacturers suggested schedule of every 5k miles that is 3 times per year at about 100 dollars each time now that my free service from toyota is finished. Throw in the title and whatnot and lets say that is 500 dollars per 15k miles. This is a fixed cost of 3.33 cents per mile for oil changes etc. This will be constant across most cars assuming you pay someone else to change your oil and rotate and balance your tires and whatnot. The title is also pretty constant.

A) 3.33 cents per mile for predictable service about the same for any car

I also assume that new tires will be purchased about every 50k miles. tirerack.com puts a set of 4 tires with a 60k warranty at around 500 dollars. So a fixed cost of 500 dollars per 50k miles for tires equals 1 cent per mile for tires, this will be pretty constant across all cars.

B) 1 cent per mile for predictable tire replacement about the same for any car

I also have a lavish insurance plan (I am with Nassim Taleb about insurance in general and not MMM) that is 800 dollars per year for the Highlander's portion from USAA (get them if you can). Since I am driving about 15k miles per year this is equal to 5.3 cents per mile

C) 5.3 cents per mile for gold plated insurance, highly variable based on your personal feelings about risk

But ignoring C the cost of insurance if I paid 26k including tax then the number of miles the highlander needs to last before maintenance is needed that isn't part of A or B before the running cost per mile is equal to 8 cents is equal to:

Purchase_Price/(0.08-(A+B))

26175/(0.08-(4.3))=707432 miles

This will take me 47 years at my current mileage per year.

If I included insurance in the analysis it would never make it A+B+C > 8 cents. (ignoring the decrease in the cost of insurance over time)

Of course this whole analysis is in 2010-2013ish constant dollars and ignores inflation over the life of the car.

The way that I am doing the analysis I think 8 cents per mile will be unattainable for anyone. Cut the cost of oil changes etc. in half because you do it yourself and you are still looking at A/2 + B = 2.66 cents per mile plus insurance for a car you got for free and never needs maintenance.

Back to your example

Lets say that your C is 14 bucks per month like you suggested = 168 per year and you are driving 6000 miles per year.

C=2.8 cents per mile instead of my 5.3 cents per mile

A/2+B=2.66 cents per mile because you are a better man than I am and do all your maintenance yourself just paying for parts and some tools

So if you ignore C like I did above and just focus on A/2+B

Purchase_Price/(0.08-(A/2+B))=Miles to Awesome!

Where miles to awesome is how far you have to go with no unforeseen repairs.

Purchase_Price/0.0534 = Miles_to_Awesome

if you buy a car for 540 dollars

540/0.0534 = 10000 miles to awesome

if we include insurance in the figure

540/(0.08-(A/2+B+C))=540/0.0254= 21000 miles to awesome

A thousand dollar car needs to go

1000/(0.0254)= 40000 miles with no unforeseen repairs to hit 8 cents per mile and confirm an awesome purchase.

In our case the Cougar was actually free to my wife and in spite of that we are running at 16 cents per mile since we just had the transmission rebuild done that kicked off this whole discussion.

A ten year old manual base Toyota Corolla with 120k miles on it prices out to 5200 on KBB in "Very Good" condition.

5200/(0.0254)= 204000 miles to awesome. I am skeptical that nothing will need repair for miles 120k through 320k even on a very reliable Corolla.

8 cents per mile is an awesome goal but if you count all maintenance and registration and insurance it seems to be an ideal but unrealistic goal.

Or am I the not a car guy missing something?

On the sunk costs are sunk side of things then the new Highlander has come out ahead of the free old Cougar. The cougar has cost 16cents per mile since we have had it (if we get another 20k miles then we know that the transmission job was worth it (ignoring insurance if you don't then double that). Ignoring the purchase price (and insurance) the Highlander has cost 2 cents per mile since we have had it.

That is why I think the miles to awesome including the history of the car is a better way to see overall how sound of a purchase / maintenance of a car is.

ketchup

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Re: I think I have already made a mistake
« Reply #11 on: April 25, 2013, 05:20:31 PM »
Using your numbers, my $1000 car I bought a year ago and do all the work on myself should take 27k miles "to awesome" not accounting for insurance, which I think is fair, as you need insurance regardless of your vehicle. 

Using my own numbers from my own dorky spreadsheet, I've found that my 1988 Chevy Sprint costs me about 4 cents per mile in maintenance and repairs, doing everything myself (except a muffler job that I really didn't want to do outside in the middle of winter).  This accounts for the fact that as an older cheaper car, this car needs more in the way of repairs, as stuff tends to break on 25 year old cars.  On a newer car, this number would be less. 

With my real-world numbers on my real-world car, that gives me 25,000 "miles to awesome".  I bought my car last April with 46,496 miles on it.  It just rolled over to 66,000 yesterday.  Assuming constant driving habits (which are way too high at the moment, commuting 35 miles a day round-trip plus plenty of road trips), that puts me at "miles to awesome" by sometime in August.

I think 8 cents a mile is a very possible goal, but you need a combination of an older cheap car that ends up being reliable, and a willingness to do all sorts of annoying things to it yourself.

My car will also probably either fall apart due to rust by this time next year, or end up costing me a decent amount to repair said rust so it keeps rolling well past this time next year.  Meaning I probably won't get much lower than the 8 cent "goal" either way.

My own main goal with this car was to have the cost of gas and repairs lower than just gas in my dad's 22MPG 1994 Buick Lesabre that I had been driving before buying my Sprint.  That goal I hit pretty quick.

Joel

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Re: I think I have already made a mistake
« Reply #12 on: April 25, 2013, 05:43:15 PM »
Are you guys considering the cost of fuel in this 8 cents per mile requirement?

Comparing a brand new car with purchase price, maintenance, and fuel. The honda civic has beaten almost any comparable car that I have looked at.

Obviously when you compare a brand new honda civic to a used car it might be different, but it takes time to find a good reliable car, and it really takes a lot of work to be buying cars for 10k or 20k miles if you do drive regularly.

I ask this because I monitor the fuel and maintenance of all my vehicles... and my 2007 honda civic that gets 30+ MPG is costing me 11.8 cents per mile. Unless your cars don't use gas, how in the heck are they costing you less than 8 cents per mile including the purchase price?
« Last Edit: April 25, 2013, 05:49:04 PM by Joel »

sdp

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Re: I think I have already made a mistake
« Reply #13 on: April 25, 2013, 07:00:32 PM »
Joel,
My 8 cents/mile does not include the cost of fuel.  While the fuel efficiency IS probably the most important cost factor, I am assuming that it factors into which TYPE of car you are going to buy ( I am averaging 29mpg in my sebring).  Then as a separate calculation once you have chosen several car models and makes, THEN you can use the cents/mile formula to see if it makes more sense to buy this 1998 honda civic with 160,000 miles or that 2005 honda civic with 80,000 miles.
I brought up the 8 cents per mile formula to use to evaluate a "Fix it or junk it" scenario for a car you already own.  Of course if you factor in a replacement with better fuel mileage, or even a diesel that you make your own fuel for free, then all the sweeter.

 ANY car that is costing you 11.8 cents per mile including fuel is AWESOME!  I want one!  Including fuel, my sebring is projected to average 19.6 cents per mile assuming 200 bucks a year maintenance costs on average for 20 years, and no change in fuel prices going forward.  The other factor that we haven't talked about is what the value of the car will be at the end of our timeline.  So far, I have been assuming that as mustachians we drive the car well into the dirt and pop up the snorkel to get in a little deeper.  But in reality, we will most likely be trading the car in for atleast a little bit of money when that happens.  My assumption is that my 2003 chrysler is going to be worth, with 200,000 miles on it about.......ZERO. While a Honda Civic with 200,000 miles would be worth quite a bit more than that, so you can subtract the projected trade in value from the initial price of the car and I bet your 11.8 cents is actually even lower! sweet!
On a different note, I just looked up on Kelly Blue Book a 2010 Hummer with all the options and 30,000 miles on it.  $38,497 (I don't know how much it was new, 45-50ish? Maybe?) And it gets 14-18 miles per gallon.  Anyone care to do the numbers on it?
 

rbiser

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Re: I think I have already made a mistake
« Reply #14 on: April 25, 2013, 07:06:02 PM »
@Joel : We are not including gas in the analysis, your 11 cents per mile is just for gas right?

We are focused on purchase price, maintenance, insurance, and registration costs which seem to dominate differences in MPG

your 11.8 cents per mile for gas @30MPG is roughly my 15.7 cents per mile @21MPG (city in the Highlander or the Cougar, highway the Highlander hits 25 and the cougar hits 30-35).

So a gas guzzling gigantic SUV vs a midsize fuel efficient sedan 3.9 cents per mile. The question of new or used and reliability dominates any concern over fuel efficiency.

10 MPG @ 3.30 $/G = 32.9 cents per mile for gas

20 MPG @ 3.30 $/G = 16.5 cents per mile for gas

30 MPG @ 3.30 $/G = 11 cents per mile for gas

40 MPG @ 3.30 $/G = 8.2 cents per mile for gas

50 MPG @ 3.30 $/G = 6.6 cents per mile for gas

MPG is the inverse of what most people actually care about, operating cost. You get diminishing returns as you chase higher MPG, to spend half as much on Gas you have to double MPG 10>20 or 20>40 and earlier gains are worth more as they are halves of a bigger initial total.

if you change your oil every 5k miles and do it yourself ~$40 vs at Jiffy Lube $100 that alone is 1.2 cents per mile almost the difference between 40 and 50 mpg with current (where I live) gas prices.

Real repairs (my transmission @ $2300 for example) and purchase price vs reliability dominate fuel efficiency differences even more.

A great purchase price example is the Toyota Yaris vs Toyota Prius C which are the same car except one is hybrid. 14k vs 19k for the base model of each. 33MPG vs 50 MPG respectively. 9.9 cents per mile vs 6.6 cents per mile. This means you have do drive the Prius C 150k miles before it is a better deal than the Yaris (10 years for me). And that assumes that maintenance is the same on both.



@sdp -
You responded while I was responding, my math makes me think that MPG isn't as big a deal as purchase price, maintenance, and reliability. See above.

@Ketchup -
You are right I don't do any maintenance myself and that is the major thing holding me back. I will check out some DIY auto books from the library and see about rectifying that.

sdp

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Re: I think I have already made a mistake
« Reply #15 on: April 25, 2013, 07:09:23 PM »
I just found a calculator on a different post by DESTRON over in the 'Share your Badassity'  these are pretty cool.

http://mustachecalc.com/

He has a cost per mile calculator.  After punching in my numbers on the sebring and owning it for 120,000 miles I get the cost per mile of twenty cents/mile.  My 19.6 rounded up maybe?  anyway, check it out, pretty sweet!
Whatever our cost per mile ends up being, atleast we are all now thinking about our cars as consumables with an associated cost per mile, VS. the rest of the world thinking about whether they can afford a certain cost per month!  better than the other 95% perhaps?
Sweet!

Scott

Joel

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Re: I think I have already made a mistake
« Reply #16 on: April 25, 2013, 07:14:08 PM »
Joel,
My 8 cents/mile does not include the cost of fuel.  While the fuel efficiency IS probably the most important cost factor, I am assuming that it factors into which TYPE of car you are going to buy ( I am averaging 29mpg in my sebring).  Then as a separate calculation once you have chosen several car models and makes, THEN you can use the cents/mile formula to see if it makes more sense to buy this 1998 honda civic with 160,000 miles or that 2005 honda civic with 80,000 miles.
I brought up the 8 cents per mile formula to use to evaluate a "Fix it or junk it" scenario for a car you already own.  Of course if you factor in a replacement with better fuel mileage, or even a diesel that you make your own fuel for free, then all the sweeter.

 ANY car that is costing you 11.8 cents per mile including fuel is AWESOME!  I want one!  Including fuel, my sebring is projected to average 19.6 cents per mile assuming 200 bucks a year maintenance costs on average for 20 years, and no change in fuel prices going forward.  The other factor that we haven't talked about is what the value of the car will be at the end of our timeline.  So far, I have been assuming that as mustachians we drive the car well into the dirt and pop up the snorkel to get in a little deeper.  But in reality, we will most likely be trading the car in for atleast a little bit of money when that happens.  My assumption is that my 2003 chrysler is going to be worth, with 200,000 miles on it about.......ZERO. While a Honda Civic with 200,000 miles would be worth quite a bit more than that, so you can subtract the projected trade in value from the initial price of the car and I bet your 11.8 cents is actually even lower! sweet!
On a different note, I just looked up on Kelly Blue Book a 2010 Hummer with all the options and 30,000 miles on it.  $38,497 (I don't know how much it was new, 45-50ish? Maybe?) And it gets 14-18 miles per gallon.  Anyone care to do the numbers on it?
 

I was saying that my fuel and maintenance costs equated to 11.8 cents per mile (not just fuel, and certainly not including the purchase price), and couldn't understand where you were coming up with the 8 cents per mile. But that makes sense. I am not including insurance, because if you are choosing to have a vehicle, the insurance is roughly the same.

With that said, I'm thinking my 2007 honda civic that I bought with 50k miles on it for 15k (ex model, with navigation - paid a premium) with fuel, maintenance, and the original purchase price cost me about 17-18 cents per mile. That's assuming I can sell it for 1k with 250k on it, which is probably a low example. Needless to say, it's still a very good bang for your buck car. Whether you can afford to pay cash for a 2007 honda civic, or you can only afford a 1993 civic. I determined that I was going to purchase a civic based upon great fuel mileage, low maintenance costs, relatively cheap price, and high resale value. Then based on the amount of cash I had saved up for car replacement, I determined how new of a car I could afford. Then compare the models available for that price and lower, and determine what you need/want, and can find on the market.

I also considered similar 2-door coupes that were fuel efficient and similar cars when I was looking, I just could not find a similar car for sale to what I was looking for.

I see that a few posts snuck in while I was typing this. Fuel efficiency is certainly not the only consideration. (see above). I am able to do all my own vehicle maintenance, and in the first 150k of a honda civic, you have to do motor oil, tire rotations, air filters, transmission fluid, and spark plugs. This are all easy maintenance that anyone can do. Sometime around 120k to 150k, you will have to do a timing belt. This can be done yourself, but is definitely a bit more work. But for the most part, the hondas, when driven properly, are very low maintenance.

Joel

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Re: I think I have already made a mistake
« Reply #17 on: April 26, 2013, 11:27:35 AM »
How is 4 cents per mile not important when they have been saying the difference between an 8 cents per mile and a 10 cents per mile car is huge?

@Joel : We are not including gas in the analysis, your 11 cents per mile is just for gas right?

We are focused on purchase price, maintenance, insurance, and registration costs which seem to dominate differences in MPG

your 11.8 cents per mile for gas @30MPG is roughly my 15.7 cents per mile @21MPG (city in the Highlander or the Cougar, highway the Highlander hits 25 and the cougar hits 30-35).

So a gas guzzling gigantic SUV vs a midsize fuel efficient sedan 3.9 cents per mile. The question of new or used and reliability dominates any concern over fuel efficiency.

10 MPG @ 3.30 $/G = 32.9 cents per mile for gas

20 MPG @ 3.30 $/G = 16.5 cents per mile for gas

30 MPG @ 3.30 $/G = 11 cents per mile for gas

40 MPG @ 3.30 $/G = 8.2 cents per mile for gas

50 MPG @ 3.30 $/G = 6.6 cents per mile for gas

MPG is the inverse of what most people actually care about, operating cost. You get diminishing returns as you chase higher MPG, to spend half as much on Gas you have to double MPG 10>20 or 20>40 and earlier gains are worth more as they are halves of a bigger initial total.

if you change your oil every 5k miles and do it yourself ~$40 vs at Jiffy Lube $100 that alone is 1.2 cents per mile almost the difference between 40 and 50 mpg with current (where I live) gas prices.

Real repairs (my transmission @ $2300 for example) and purchase price vs reliability dominate fuel efficiency differences even more.

A great purchase price example is the Toyota Yaris vs Toyota Prius C which are the same car except one is hybrid. 14k vs 19k for the base model of each. 33MPG vs 50 MPG respectively. 9.9 cents per mile vs 6.6 cents per mile. This means you have do drive the Prius C 150k miles before it is a better deal than the Yaris (10 years for me). And that assumes that maintenance is the same on both.



@sdp -
You responded while I was responding, my math makes me think that MPG isn't as big a deal as purchase price, maintenance, and reliability. See above.

@Ketchup -
You are right I don't do any maintenance myself and that is the major thing holding me back. I will check out some DIY auto books from the library and see about rectifying that.

rbiser

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Re: I think I have already made a mistake
« Reply #18 on: April 26, 2013, 01:25:44 PM »
@Joel

I do think Fuel efficiency is important. But purchase price, reliability (and/or doing all the work yourself), or insurance choices (2.5 cents per mile difference between full coverage and liability coverage) Should be prior to that.

Absent a hybrid premium fuel efficient cars tend to be smaller and cheaper to maintain and insure so it all should hopefully work together. Brand considerations (Honda/Toyota) will drive up the purchase price but will hopefully be worth it on reliability long term.

Buying older with a smaller purchase price may lead you to drop comprehensive insurance and liability only leading to the 2.5 cent per mile drop as well.

So it seems that after optimizing everything else fuel efficiency is the deciding factor once you have narrowed your choices down.

Joel

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Re: I think I have already made a mistake
« Reply #19 on: April 26, 2013, 01:35:08 PM »
@Joel

I do think Fuel efficiency is important. But purchase price, reliability (and/or doing all the work yourself), or insurance choices (2.5 cents per mile difference between full coverage and liability coverage) Should be prior to that.

Absent a hybrid premium fuel efficient cars tend to be smaller and cheaper to maintain and insure so it all should hopefully work together. Brand considerations (Honda/Toyota) will drive up the purchase price but will hopefully be worth it on reliability long term.

Buying older with a smaller purchase price may lead you to drop comprehensive insurance and liability only leading to the 2.5 cent per mile drop as well.

So it seems that after optimizing everything else fuel efficiency is the deciding factor once you have narrowed your choices down.

I'm mostly saying that 8 cents per mile calculation is worthless because it's not considering everything. You have to include fuel mileage in the calculation. You can't exclude it and make a true comparison.

You have to include purchase price (and salvage value), fuel, maintenance, insurance, and registration.

rbiser

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Re: I think I have already made a mistake
« Reply #20 on: April 27, 2013, 06:15:11 PM »
@Joel- As I am on the look out for a good deal to replace the Cougar I agree about including everything in the cents per mile analysis when comparing prospective purchases. For cars you already own I think I am with sdp though. I have consulted Lemon-Aid and it lists the 2001 Cougar as definitely below average in terms of reliability. I assume it is on borrowed time with this repair. The trans has a 12 month warranty now but something else may go out and make the maintenance per mile keep creeping up.

I also agree that since I am not a gear head I don't car about sportiness and 21 MPG is lousy for such a small car (although it has legroom in the front passenger seat if you don't like the person in the back seat). When looking at a replacement the contribution of MPG to cents per mile is in my calculations.

I haven't looked at salvage value yet (it seems that every car terminates at about 1k scrap value) but ignoring that if you mainly drive in the city the Yaris seems to beat the Civic. Although as I am 6'4" I may prefer the Civic anyway.

But wistfully I listen to the clarion call of the bicycle horn to be a one car couple...

Jack

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Re: I think I have already made a mistake
« Reply #21 on: April 27, 2013, 09:34:25 PM »
Going back to the original issue of maintenance of automatic transmissions, keep in mind that you don't have to keep an automatic just because that's what the car came with. Volkswagen TDIs, for example, have notoriously bad (and expensive!) automatics, so it's fairly common for folks to swap them for manual transmissions when they fail (at half the cost, or less).

Pollyanna

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Re: I think I have already made a mistake
« Reply #22 on: April 29, 2013, 01:33:30 PM »
My husband and I have a VW Jetta diesel TDI, manual transmission, and it gets 48-54 mpg.  Diesel is a little more costly than gas, but the extra mileage out of each gallon is worth it.  It has 97K miles on it and we expect to keep it for a long while. 

rbiser

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Re: I think I have already made a mistake
« Reply #23 on: May 01, 2013, 05:43:22 PM »
@Pollyanna
The only time that I have driven a diesel was a work truck onsite. I am hesitant to go that route because diesel is available at fewer stations, not really a problem on long trips where you pass truckstops but more so around town.

@Jack
Well if the transmission goes again outside of the 12 month warranty I am definitely junking the car! That is good information in general though. Thanks.

rbiser

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Re: I think I have already made a mistake
« Reply #24 on: May 02, 2013, 04:45:48 PM »
FYI according to AAA here:

 http://newsroom.aaa.com/2012/04/cost-of-owning-and-operating-vehicle-in-u-s-increased-1-9-percent-according-to-aaa’s-2012-‘your-driving-costs’-study/

The overall cost per mile purchase/depreciation/salvage, maintenance predictable/unpredictable, gas, insurance, etc. for 2012 varies based on car type from 45 cents per mile for a small sedan to 76 cents per mile for a minivan or SUV.

So perhaps a good goal for cents per mile all inclusive is half of the average.

What do you think Joel and Scott?