Author Topic: Should MMM sell his xA and use the van full time?  (Read 5132 times)

lifeinhd

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Should MMM sell his xA and use the van full time?
« on: April 26, 2015, 09:47:54 AM »
I did some back-of-envelope math and I think MMM would actually be better off selling his 40 MPG xA and using his 27 MPG Odyssey for all his driving.

Assumptions:

-xA is worth $5k if he were to sell it
-xA gets 40 MPG
-Odyssey gets 20 MPG
-Gas is $4/gal
-Insurance on the xA is $20/month (not sure of actual figure)
-MMM drives 5k mi/yr

Driving the Odyssey 5k miles at 20 MPG burns 250 gallons of gas, or $1000 worth at $4/gal.
Driving the xA 5k miles at 40 MPG burns 125 gallons or $500 at $4/gal.

So, $500 extra to drive the Odyssey over the xA. But, assuming he spends $240 insuring the xA, that figure decreases to $260.

$5000/260 = 19.23 YEARS he would need to drive the xA to make up that difference. And this figure doesn't even account for tires, oil, and maintenance on the xA, nor the investment gains he would make putting that money to work. Plus the Odyssey gets more than 20 MPG, the xA is likely worth more than $5k, and gas will likely remain below $4/gal for the foreseeable future, so it might be more like 25 years before he breaks even.

Keeping the xA around sure seems like a losing proposition to me. What do you think? Am I missing anything?

Exflyboy

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Re: Should MMM sell his xA and use the van full time?
« Reply #1 on: April 26, 2015, 10:04:51 AM »
Maybe, but the last guess was that the MMM household was worth between 3 and $5M.. so if that's true.. who cares?..:)

But your right, there probably is not much justification to owning more vehicles than you need other than convenience. My Wife and I have two vehicles (both 35+ mpg) and I mostly stay at home during my RE. The "problem" is my Neon cost me $350 and I rebuilt the engine/transmission and repainted some cosmetic damage.. Heck its almost brand new again, So I keep it out of convenience at about $280/year in insurance and license fees.

When my Wife quits work next year, well then we got a problem..:)

Ricky

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Re: Should MMM sell his xA and use the van full time?
« Reply #2 on: April 26, 2015, 06:19:18 PM »
Maybe, but the last guess was that the MMM household was worth between 3 and $5M.. so if that's true.. who cares?..:)

Yeah...that's what I was going to say. Plus, we don't know his use cases. In general, of course someone should get rid of a second car if it's not being utilized.

TheFixer

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Re: Should MMM sell his xA and use the van full time?
« Reply #3 on: April 26, 2015, 09:04:13 PM »
Yes, ditch the car.  I was in a very similar situation, having a 45MPG commuter truck and a 15MPG work SUV.  Drove the 2 a total of 5K/year.  Sold the truck & cut back a bit on driving. Result: insurance reduced 50%, license plate reduced 66%, maintenance expenses reduced 60%, driveway Tetris reduced 100%.  Fuel expense increased by 100%, but overall, having a 2nd cheap hi-MPG vehicle was costing me more money because I don't drive much.

Melody

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Re: Should MMM sell his xA and use the van full time?
« Reply #4 on: April 27, 2015, 06:28:08 AM »
yes! ... at least over here, it makes no sense to own two vehicles that both do very limited mileage due to the cost of insurance and registration. Also as others have pointed out - driveway tetris. Even if you have enough space to store the two cars side by side, if you drive as little as MMM says he does, you're bound to have flat batteries with alarming regularity and then it becomes a case of being "owned" by your stuff - "oh I better drive rather than ride, because the XA hasn't had a run for a while".

nereo

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Re: Should MMM sell his xA and use the van full time?
« Reply #5 on: April 27, 2015, 06:48:54 AM »
yes! ... at least over here, it makes no sense to own two vehicles that both do very limited mileage due to the cost of insurance and registration. Also as others have pointed out - driveway tetris. Even if you have enough space to store the two cars side by side, if you drive as little as MMM says he does, you're bound to have flat batteries with alarming regularity and then it becomes a case of being "owned" by your stuff - "oh I better drive rather than ride, because the XA hasn't had a run for a while".
I think modern batteries are better than you give them credit for.  We drive our car once every ~2 weeks and have no problems.  My job has a work truck that gets used extensively at times but then will sit for over a month.  we've had no issues getting it started each time.  MMM mentioned buying two tanks of fuel last year, meaning he drove ~800 miles.  Extrapolating here but that seems like somewhere between 20-30 trips, certainly more than once-a-month.

.... there was a car-talk episode about what to do when leaving your car for years (caller was being deployed overseas).  Their advice was to drive it once a month for a couple of miles, letting the engine come to temperature and going through all the gears.

EDIT:  Forgot to chime in - think MMM (and anyone else who is FI/RE) should do whatever maximizes their personal happiness.  I certainly understand wanting a van/pickup for hauling heavy/bulky construction items and a fuel efficient XA for longer road trips.  If money wasn't an issue, I'd be tempted to do the same. 
« Last Edit: April 27, 2015, 06:54:55 AM by nereo »

Melody

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Re: Should MMM sell his xA and use the van full time?
« Reply #6 on: April 27, 2015, 07:00:53 AM »
800miles for me would be say 2 road trips a year rather than a bunch of short trips because mmm is bad ass and bikes all the time... Unlike me, who wimps out at the weight of the kitty litter!!!!

nereo

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Re: Should MMM sell his xA and use the van full time?
« Reply #7 on: April 27, 2015, 07:07:40 AM »
800miles for me would be say 2 road trips a year rather than a bunch of short trips because mmm is bad ass and bikes all the time... Unlike me, who wimps out at the weight of the kitty litter!!!!
800mi would be a single road-trip for us, and the only reason we still have a car.  As I said, I don't know his precise schedule and I'm largely talking out of my ass about what the MMM family does, but reading his posts he talks about how his low mileage in 2014 was due to fewer long road trips and mentions driving friends to the airport and other relatively short-range trips.
Regardless, my point is that modern (i.e. those built within the last 10-15 years) cars can go a month or more without being driven without any problems, and even then you only need to drive them for very short time period to keep them running well.

sisto

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Re: Should MMM sell his xA and use the van full time?
« Reply #8 on: April 27, 2015, 03:32:52 PM »
I've been considering doing something similar myself. We have 3 autos, 1 motorcycle, and a travel trailer. While evaluating my insurance needs this year and looking into other options I was considering how to downsize the fleet. I have them for convenience and recreation. The problem is what vehicles I have and why I have them. I have a truck, I have it for hauling stuff for projects I do around the house and also for towing my trailer. My daily driver is a fairly Mustachian Toyota Corolla and my wife drives a Ford Escape for her daily errands etc. The truck gets less than 1K per year and same with the motorcycle. Then the Corolla and Escape get about 5K per year. Haven't been able to figure out how to keep my wife happy while reducing the expenses and downsizing the fleet. So we are stuck. We also live in California so these are costing us a ton every year.

Retire-Canada

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Re: Should MMM sell his xA and use the van full time?
« Reply #9 on: April 27, 2015, 03:50:55 PM »

Keeping the xA around sure seems like a losing proposition to me. What do you think? Am I missing anything?

The van may be quite beat up and dirty if it's used to haul construction supplies and may not have the bench seats installed either.

And as has been mentioned the old MMM "Only a multi-millionaire fancy pants would own a construction mini-van AND! a Scion xA to haul him and his family around." facepunch doesn't apply when you are talking about a multi-millionaire family with literally so much money the current challenge is how to get rid of it all. ;)

Why are you worried about what MMM and family is driving?

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misschedda

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Re: Should MMM sell his xA and use the van full time?
« Reply #10 on: April 28, 2015, 08:04:22 AM »
And as has been mentioned the old MMM "Only a multi-millionaire fancy pants would own a construction mini-van AND! a Scion xA to haul him and his family around." facepunch doesn't apply when you are talking about a multi-millionaire family with literally so much money the current challenge is how to get rid of it all. ;)

Didn't MMM just write a blog post about how he tries to make all of his choices without regard for money? I don't think your argument about the right answer being different based on how much money he has holds water if he's only making decisions based on what makes him happy.

On another note--even if it's not better for his wallet, it may be better for the environment to keep both cars in order to lower the amount of gas he uses.

Retire-Canada

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Re: Should MMM sell his xA and use the van full time?
« Reply #11 on: April 28, 2015, 09:43:21 AM »
Didn't MMM just write a blog post about how he tries to make all of his choices without regard for money? I don't think your argument about the right answer being different based on how much money he has holds water if he's only making decisions based on what makes him happy.

Sounds great. So why is the whole premise of the OP's case study based on money then and not happiness?

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lifeinhd

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Re: Should MMM sell his xA and use the van full time?
« Reply #12 on: April 28, 2015, 12:56:16 PM »
Why are you worried about what MMM and family is driving?

I'm not really, but it was on my mind after I swapped my own 16 MPG 93-octane car for a more expensive 32 MPG 87-octane car and did the math after the fact. I found it would take me ~2 years to make up the $1350 difference at my current rate of driving, and I do a lot more driving than MMM does. I actually made a very fancy spreadsheet to estimate my break-even date; all I have to do is enter each fill up date, price of premium and regular gas, miles driven, and gallons used, and it updates the estimate.

nereo

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Re: Should MMM sell his xA and use the van full time?
« Reply #13 on: April 28, 2015, 03:20:11 PM »
Why are you worried about what MMM and family is driving?

I'm not really, but it was on my mind after I swapped my own 16 MPG 93-octane car for a more expensive 32 MPG 87-octane car and did the math after the fact. I found it would take me ~2 years to make up the $1350 difference at my current rate of driving, and I do a lot more driving than MMM does. I actually made a very fancy spreadsheet to estimate my break-even date; all I have to do is enter each fill up date, price of premium and regular gas, miles driven, and gallons used, and it updates the estimate.
Congrats on making your ride more efficient.  a 2 year ROI is pretty darn good - I've done a similar analysis for my truck and determined that it would take closer to 8-10 years for me to hit the break-even point (in large part because I only drive ~4k/year).  Consequentially I'm still driving it, and probably will keep driving it until it either rusts into dust or the equation changes (cheaper 40+mpg used vehicles become available and/or fuel goes above $5/gallon).  God it would be nice to have another "Cash-for-Clunkers" program again ;-)