I’ve been debating on buying a vehicle to drive back and forth to work for a while now, since I have such a far drive. My truck only gets 20mpg, and I could get a cheap Honda Civic that gets 35+ mpg. The savings in gas alone would be over $100/mo. Plus, it’ll keep miles off my truck, which should make it last longer. And any additional trips we take would be much cheaper in gas as well. And if my wife decides to stay at home more with our new baby, she has the freedom to sell her car (which would eliminate a big car payment), and we’d still have a vehicle for her to drive to work.
So, I finally decided to get a third car. I got a good deal on a Civic with 186,262 miles on it. Now, you might think that’s a lot of miles, but with the right car and the right care, it can last another 100k.
Here’s the math: I drive 60 miles a day for work, and assumed gas prices would be around $3.59 for a while. If they go up, I save even more money. So I took the 60 miles per day times 5 days a week times 4.5 weeks per month, and figured that I’d save $103.85/mo on gas. To be fair though, my insurance would go up for owning a third vehicle, and there would be added maintenance costs, since it’s an older car. My insurance will go up approximately $20.83/mo, and I figured an oil change every 3000 miles (or roughly 1.5 months with the miles I’d put on it) at $20 per change since I’ll do it myself (which is probably a little high), and I also added an extra $15/mo for extra maintenance expenses that could come up (totaling $28.33/mo). License plate stickers cost $99 per year ($8.25/mo).
In addition to the above, I also wanted to add in the depreciation of the car that could happen over the next few years. I got it really cheap, and it doesn’t have much more of a chance to depreciate, but I went to kbb.com and figured out what the resale value is right now, then added 30,000 miles and picked the same model two years older to figure out how much it could depreciate if I kept it two years. It was a difference of $400, or $16.67/mo.
After figuring out the total cost of ownership, I’d still save $29.77/mo. I overestimated some things throughout the list, so the actual savings should be a little better than that. I also feel a lot better every time I drive too, knowing that I’m getting that much better gas mileage. Here’s a breakdown of all the costs I did in table format:
|added license plates/mo||$8.25|
|savings in gas||$103.85|
Check out my six month update after buying the car to see how it actually panned out.
Update: I shifted directions after about a year and a half went by. See this post for an update on what I did, which makes a lot more sense than buying a third vehicle.