I have an SUV (paid off) that gets 19 MPG. I drive about 1 hour to and from work each day (1.5-2 hours total daily commute). Before you state the obvious, I don't wish to move closer to work because I am lucky enough to live rent-free where I am.
In the last 12 months I've put about 20,000 miles on my car. My average cost per gallon has been $4.05.
I don't wish to sell/trade in my SUV because (a) I really like it, and (b) I'd like to keep it for road trips, hauling, etc. Again, it's paid off, so my only costs are insurance and licensing (and insurance would be reduced if I don't drive to work in it).
This leads me to the conclusion that I'm paying about $4263 yearly in fuel. Getting a car that gets 35 MPG would save me $1948 a year, or $5846 in three years.
Most of the recommended Mustachian vehicles are around $6000-$10,000. For my situation, I think a better budget would be around $2000-$4000. I don't want to wait more than two years for the investment to pay off.
I live in California, so rust is generally not a concern in used vehicles.
Also, my wife has a $25,000 student loan at 5% that we're paying off as quickly as we can. (Prioritizing that over saving for investment, as a guaranteed 5% return may be better than we can get through investment.)
Your thoughts? Find an older, high mileage, high MPG car for $2000? Bite the bullet and buy a newer, lower-mileage high MPG car for more? Or stick with the car I've got? Or am I being an idiot, and I should sell the SUV? (But what about road trips then?)
Thanks very much!
I would sell the SUV. Insurance costs go down, but not that much unless you label the vehicle as totally undriven. You'll be spending at least $400 a year just to park that thing in your garage, all while it depreciates whether or not you're driving it. Figure out your vehicle's resale price and multiply by about .10-.15 and call that P. That's about how much your car will lose in value the next year even if it's just parked (probably closer to .1 if it's really not being driven at all). Add that to the annual insurance costs, call that I. Take the present price of the vehicle and multiply by .05 to get a rough estimate of the amount of interest you would have gotten if you sold your car now and invested the money, call that the opportunity cost, O.
P+I+O= amount you lose just having the car, not counting gas or repairs. We can quibble about the amount of interest and whether or not you use the money to buy the new car, but this should be a ball park estimate.
How many times this year did you need to haul anything that couldn't fit inside an ordinary midsize sedan? 1 or 2? How many times this year did you take a road trip? 2? 3? Sum those up, call that H.
(P+I+O)/H= cost per trip of having the SUV around just for these trips, not counting maintenance, repairs or gas. My conservative guess is that this is probably over $100, maybe well over that. At that rate, it would be cheaper to rent a pickup or SUV from a rental agency for the day when you need it, even if you don't have something like Zipcar in your area.
What about road trips? Well what about them? Are you driving off road, through thick mud in the middle of a beautiful forest? How many kids do you have? If two or fewer, you probably can fit everything in the old beater you buy. Or you just rent an SUV for a weekend, heck you might find it's cheaper to rent a shiny BMW SUV for the weekend that let keeping your old SUV around. Everyone will get a kick out of that. Or you might have a friend with a bigger unused car, you know, maybe someone who wanted a more efficient car but didn't want to sell their old one because they liked it.
Finding an old high MPG car for $2000-4000 is a tad tough. At that price end you'll encounter a lot of old cars with questionable maintenance, body damage and a dearth of safety features we take for granted, like front and side airbags, which is probably a bit more of a concern if you'll be driving for 2 hours a day. Also the general selection may be a bit limited depending on how dense an area you live in. Yes, I can pull up a lot of pretty decent high MPG cars that have a blue book price in that range, but whether or not you actually can find such a car with the seller asking something in that range might be another question. I think a lot of people with cars in this price range are not the kind who routinely get new cars, so they'll often only sell after an accident, breakdown or a significant life change. You may find your choices are limited more by what's available than what you want. The $6,000-$10,000 range will definitely have any and every possible vehicle you could want. But there's no harm searching.