Hi all, first post.
My last car, a 2001 Honda Civic, died in 2012 due to critical transmission failure. It was in good repair, so its death after 11 years was quite unexpected.
I bought a 2011 Mazda3 hatchback in Dec 2012. It was a 1 year old former lease vehicle with full kit (big speakers! sunroof! And a bunch of useless upgrades!) selling a fair amount below the KBB value of a stock model. My plan at the time was to drive this one for at least another decade. I put $5k cash down and financed the remaining $11k or so.
At the time I was debt free, so I went in treating this like a "hair on fire" emergency, for which I would put off goals like adding to my IRA. But when the financing came through, I got a 2% loan. back of the envelope said that I'd be shelling out a measly $220 per year in interest at its worst. I decided to actually get the
longest term I could and financed for 5 years. The $207/mo payment is not very painful. (Monthly income is $2,800, monthly expenses are $1,800.)
Last month I discovered MMM. Suddenly my frugal and sensible purchase seems like a total waste. I take the plunge and start biking to work. (I'm only 3 miles away, why the hell did I wait so long?) Now I'm saving a bit of gas, and having a lot of fun, and I guess even getting exercise, although it barely feels like it.
I considered even ditching my car and getting a clunker, and saving myself the remaining loan principle.
But even after reading everything anti-car on MMM, I still want to keep my current vehicle. Here's my reasoning:
I have about $5k of equity in the car. A $5k car will be appx 10 years old have 100-150k miles on it. (I'll stick with 130k to make the math easier.)
Even if I pay off the loan and wait long enough, my car will become a 130k mi, 10-year old clunker. So what I'm paying for is the span between now and the point when my car is the same as our 10-year old hoopty. We can assume that other costs, such as insurance premiums, mileage, and maintenance are the same (if anything they are in the favor of the newer car, except maybe mileage).
Here's my math:Cost of paying off the loan (including $350 of interest expense): $9,500
Current mileage: 30k mi
Mileage of potential replacement car: 130k mi
Reliable miles between ooh-shiny and hoopyville: 100k mi
Maginal cost per mile: 9.5 cents
That seems pretty reasonable, doesn't it? Am I off-base here? According to
this I would expect financing and depreciation to cost the average sukka 28.2 cents per mile.
Mileage estimates:Total was 10k miles.
Commuting to work (6 mi round trip x 5 days/week x 50 weeks) = 1500 mi <-- replaced with bike travel
Commuting to school (10 mi round trip x 2 days/week x 46 weeks) = 920 mi <-- working up to bike travel
Big-ass Road trips = 2300 mi
That leaves 3,720 miles of mixed local shopping, errands, and inter-ish city travel that I can't split out. Maybe half (1,860 mi) could be replaced with biking?
So as a mature mustachian I'd maximize at about 4,000 mi of bike travel. (12 miles every single day? That seems like a lot...) And I'd expect to put 6k miles per year on my car. So when my car is 10 years old it would only have 72,000 miles on it. The 100k miles of value I'm paying for would last over 15 years with 6k annual miles of travel.
A note on the girlfriend: My girlfriend is also 3 miles from work and I think I've convinced her to buy a bike and try bicycle commuting herself. Her car is a 15-year old, 150k miles, gas guzzling American tank that are sold to old ladies (mid-90's Oldsmobile 98). It breaks down pretty often and we don't consider it reliable at all. She wants to replace it and has been considering a scooter. Her budget is tight.
Conclusion: It feels like a mustachian look at the numbers points to not ditching my car and replacing as many miles I can with bike travel as a responsible course of action. Am I crazy?