Author Topic: Vehicle Options - Is My Math OK  (Read 2335 times)

brian313313

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Vehicle Options - Is My Math OK
« on: October 25, 2016, 11:37:26 AM »
Currently, my wife & I have two vehicles. A VW Sportwagen TDI and a Ford F150 Regular Cab truck. We are moving and won't need two vehicles any more. Because of the TDI law suit, we plan to sell this back for $10k. The current trade-in value is $7k and maybe less since ours has some minor body damage. The F150 does not get much use currently so the poor gas mileage hasn't been much of an issue. However, if it's our only vehicle it will get a lot more use. Currently, we are at about 1000 miles a month on the VW and 500 on the truck. We'll probably be close to 1000 miles/month on the truck after our move.

A thought was to get something more economical, however, after running the numbers it doesn't seem like we really save much. I projected the costs of buying a new car with 35mpg vs keeping the truck with 17mpg. Because of the transaction costs, I only came up to saving about 25/month over 5 years. If I went out further, it would save more but I don't like trying to predict out that far because life changes.

Numbers, relative to the new car:
- Tax & dealer charges (assuming equal value of $17000)    $1790
- Gas mileage savings 4600 - 8117 = -$3517
- Depreciation & insurance should be about the same if the vehicles have the same value.
This comes to a $1727 savings over 5 years which is roughly $28/month. It doesn't seem like enough savings to justify changing vehicles.

I'm not trying to find the cheapest option here. I would get a new vehicle if I change because the savings on used aren't enough in my market to justify it. Plus, I'd rather pick options and have an easier transaction. I'm not in a bad position financially either so this is just a choice. I like the truck more than I'd like a car but I'm not so attached I wouldn't get rid of it if it saved a decent amount of money. For $28/month though, I'll just keep the truck. I'm just wondering if I'm missing something here. MMM always talks about how expensive trucks are but I'm not seeing it with the mileage I drive. (I work from home 50% and my wife no longer works.)

Thanks.




kendallf

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Re: Vehicle Options - Is My Math OK
« Reply #1 on: October 25, 2016, 11:47:23 AM »
If you ignore maintenance, the option of buying a cheaper, more reliable, less depreciating used vehicle, the insurance savings on such a vehicle, the lower transaction cost of such a vehicle, and probably some more things I'm missing.... sure.  It's nearly a wash.  :-)

acroy

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Re: Vehicle Options - Is My Math OK
« Reply #2 on: October 25, 2016, 11:50:29 AM »
Sell the truck, keep the VW, unless oyu really need a truck.
I bet that thing gets what, 40mpg mixed? Cool.

Jack

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Re: Vehicle Options - Is My Math OK
« Reply #3 on: October 25, 2016, 11:54:14 AM »
I would get a new vehicle if I change because the savings on used aren't enough in my market to justify it.

I highly doubt this is true.

ohsnap

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Re: Vehicle Options - Is My Math OK
« Reply #4 on: October 25, 2016, 11:54:36 AM »
I think the mustachian thing to do is replace it with a more fuel efficent used car for $10k and pocket the $7k difference, but I'm sure others will chime in with more advice on that.

I did want to address the following assumption:
...
- Depreciation & insurance should be about the same if the vehicles have the same value.
...

In our experience, this has not been true.  4 years ago we made 2 non-mustachian vehicle purchases that cost almost exactly the same - an F150 and a sedan.  The F150 costs less to insure (how can this be?!), and, it has also decreased FAR less in value than the sedan.  Like several thousand $ less.  It does cost more in fuel, of course, and it also costs more to register every year because our state charges more for trucks. 

ETA: depreciation only becomes a real $ cost if you are selling it.  We plan to drive our vehicles for about 12 years, so the depreciation at the 5-yr mark doesn't matter.  Only the 12-yr 150k mileage value of the car matters.
« Last Edit: October 25, 2016, 11:57:49 AM by ehallison »

Jack

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Re: Vehicle Options - Is My Math OK
« Reply #5 on: October 25, 2016, 12:05:23 PM »
I think the mustachian thing to do is replace it with a more fuel efficent used car for $10k $5k and pocket the $7k $12k difference, but I'm sure others will chime in with more advice on that.

; )

I did want to address the following assumption:
...
- Depreciation & insurance should be about the same if the vehicles have the same value.
...

In our experience, this has not been true.  4 years ago we made 2 non-mustachian vehicle purchases that cost almost exactly the same - an F150 and a sedan.  The F150 costs less to insure (how can this be?!), and, it has also decreased FAR less in value than the sedan.  Like several thousand $ less.  It does cost more in fuel, of course, and it also costs more to register every year because our state charges more for trucks. 

Yep. And the variance isn't due just to vehicle types, either. In reality, it's more due to the demographic characteristics of the typical driver. It's entirely possible for something like a Porsche 911 to be cheaper to insure than a Honda Civic Si, simply because the former is driven by old rich guys while the latter is driven by crazy teenagers that crash a lot more often.

brian313313

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Re: Vehicle Options - Is My Math OK
« Reply #6 on: October 25, 2016, 12:29:15 PM »
Thanks for all the feedback. The VW only gets about 30mpg mixed. On the highway, it's over 40 but I'm rarely on the highway.

I think the true Mustachian idea is to buy a bike and forget the car. :) I'm not quite there yet though. I won't really need the truck often enough to justify keeping it after the move.

Jack

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Re: Vehicle Options - Is My Math OK
« Reply #7 on: October 25, 2016, 01:24:01 PM »
The VW only gets about 30mpg mixed. On the highway, it's over 40 but I'm rarely on the highway.

The TDIs that get really good fuel economy are the older (pre-2007) ones.

Also, if you're rarely on the highway then you're better off with a hybrid. Therefore, sell all vehicles and replace with a (used, not new!) Toyota Prius.

JAYSLOL

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Re: Vehicle Options - Is My Math OK
« Reply #8 on: October 25, 2016, 01:51:28 PM »
Don't forget about the savings in the maintenance of a smaller, more efficient car.  New set of tires for a Toyota Matrix?  Half the cost of a set for an F150.  Quarts of oil for an oil change for a Honda Fit?  Less than half the amount needed for an F150.  Most things are going to cost half the amount or less for a little car than a big truck. 

Also, gas prices can go up, completely voiding your numbers.  I doubt they will skyrocket anytime soon, but it looks like we already hit the bottom for crude oil a while back and my bet would be moderately higher gas prices starting in the next few years.  IMHO, why not get ahead of the curve, invest the difference and laugh when prices do go up?

JAYSLOL

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Re: Vehicle Options - Is My Math OK
« Reply #9 on: October 25, 2016, 01:54:15 PM »
Don't forget about the savings in the maintenance of a smaller, more efficient car.  New set of tires for a Toyota Matrix?  Half the cost of a set for an F150.  Quarts of oil for an oil change for a Honda Fit?  Less than half the amount needed for an F150.  Most things are going to cost half the amount or less for a little car than a big truck. 

Also, gas prices can go up, completely voiding your numbers.  I doubt they will skyrocket anytime soon, but it looks like we already hit the bottom for crude oil a while back and my bet would be moderately higher gas prices starting in the next few years.  IMHO, why not get ahead of the curve, invest the difference and laugh when prices do go up?

Also, depreciation is NOT the same for cars of equal value.  The depreciation of a $10 Honda civic compared to a $10 F150?  Absolutely not the same.

brian313313

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Re: Vehicle Options - Is My Math OK
« Reply #10 on: October 25, 2016, 02:51:05 PM »
The Toyota Prius has been an interesting vehicle to me. I rented one on vacation once and it wasn't bad. I am not so good at negotiating used though. I see the 2 yr old vehicles selling for 90% of the new and to me it seems better just to get the new. It might encourage me to drive more though. :)

The tires on an F-150 are expensive, I'm sure. I'll need to check that out.

Jack

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Re: Vehicle Options - Is My Math OK
« Reply #11 on: October 25, 2016, 03:09:51 PM »
I am not so good at negotiating used though.

First of all, get better at it! Read a book (from the library, of course) or something.

Second, it doesn't matter so much if you're bad at negotiating because the private party you should prefer to be buying from, whom you found via Craigslist or Autotrader or whatever, is probably bad at negotiating too!

I see the 2 yr old vehicles selling for 90% of the new and to me it seems better just to get the new.

Again: two years old is way too new. Try this search to start (adjust the location and distance).

brian313313

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Re: Vehicle Options - Is My Math OK
« Reply #12 on: October 25, 2016, 03:34:32 PM »
Buying a quite older car is good advice for someone earlier on this path. Thanks to frugal living, I now have net worth and income that makes my time more valuable to me. My experience with CL has been a lot of cars that people are overstating their condition. Last time I tried that I looked at about 8 cars. Each one takes a couple hours to drive there, meet, & test drive. Some people will not show up. When I was younger I would buy in auctions but that again takes a lot of time and is for the less picky since you don't get as many options. Since I have people who want me to work a lot more than I want to work, I can just work some extra hours and make up the difference.

Regarding the initial post on the cost, I have received some good ideas to consider. I checked the Prius used vehicle values and they are not as bad as they used to be (all used vehicles that is). Also, the tires would be about half the price.

Thanks.