What's your cost per mile?
Yesterday I was at the gas station just down the road from my house where I'm always joking with a long-time attendant as he rings up whatever my purchases might be that day.
This time he said with a laugh behind it, "Hey man it's probably about time to upgrade that car." He was referring to my beige 2003 Buick LaSabre. I replied with, "That's one of the best cars I've ever owned!
By my logic, it's absolutely true. Let me explain.
As a baseline for this thought process I use my wife's daily driver. The Jeep Patriot:
I bought this car in September 2012 immediately upon returning from Afghanistan. My truck had had it's last day before I deployed, and once I got home from a year long deployment, buying a car and getting the hell off of base for the weekend was priority number one.
I was able to bargain a great deal at a local dealership in Fayetteville, NC on this "certified" used Jeep Patriot. The car was sticker priced on the windshield at $18,100. That was before I went to work on the negotiations.
I drove that car off the lot for $13,500. Ask me how I worked that angle and I might tell you another time.
We still have this car and my wife drives it regularly. It's only got around 106,000 miles now. Kbb.com had it coming in with a value of between $7,000 and $8,000 dollars from private party and a trade-in value of $4,800. The dealership we actually took it too a few week ago only offered us $3,000.
In considering my cost per mile with this vehicle I do not factor in the lost opportunity to sell it immediately for a capital gain, reasoning instead I chose to consume the value of the car over its life expectancy.
$ 15100 = $18100 - $3000 = sticker price loss to depreciation
$ 9577 = (83,000m / 26mpg ) x $3/gal
$ 4500 = maintenance & tags for 7 years
$ 7000 = full coverage insurance (7 x 1000 annually)
$ 36177 Total Costs
89,000 miles driven
Its around $0.40 / per mile to drive this Jeep.
A few years ago, I become a fan of Dave Ramsey. I dove in and bought a 1971 Lincoln Continental for $500. It took another $600 in repairs to get it running. It was a pretty cool car except for it was older than I was by 15 years and was in poor running condition.
The gas gauge didn't work and I ran out of gas once on the way to work, of course in the middle of winter. I had to run to a half mile one way to a gas station in dress pants and dress shoes, buy an overpriced gas can for $16 and then another $10 to get a little bit of gas. I walked back feeling dumb.
I only owned the Lincoln for a couple years. It was definitely more of a hassle than it was worth in savings. The odometer never worked, but I probably drove around 5,000 miles in those two years. It sat where it's pictured for the better part of the second year.
$500 = Purchase Price
$600 = Repairs
$16 = gas can
$1500 = fuel costs (5000 m / 10 mpg) x $3 avg gasoline price per gallon
$250 = liability insurance for 2 years
($250) = I was able to traded the car to my mechanic in exchange for a brake repair on my next car
$2616 total cost
Divide by: 5000 mile driven
$0.52 / per mile to drive around town in this 1971 Lincoln.
After the novelty of Lincoln experiment wore off, I finally purchased another vehicle, this time significantly nicer. And significantly cooler. Enter the Impala SS; Supercharged V6, Motorsports speedway limited edition.
This car was bad to the bone.
I was able to scoop up this dream machine with $3,000 cash in the summer of 2016. It came well broken in with 191,000 miles on motor and body. I was in the market for this race car because I need to make a 1.5 hour one-way trip to commute back and forth to work.
I nearly lost my mind making the drive but an endless supply of podcasts helped me through. That was not a reasonable drive to make everyday.
The race car came to me in great shape. It only needed some brakes, but I traded the Lincoln to my mechanic in exchange for the parts and labor. Then I bought new tires for summer and winter costing around me $1200.
I almost got a ticket once for going way too fast on the highway. I think my veteran plates got me out of it. I didn't mention anything to him about it during the stop, but it's the only reason I could think why he hadn't given me a ticket for 17 over the limit. Thankfully for his generosity, we don't have to add an outrageously expensive ticket into the cost of this car.
The race car ran exceptionally well until it finally blew a head gasket at 248,000 miles. It may have blown the head gasket because I referred to it as my race car, but I'm thinking it was more likely something else to do with the near 250,000 miles on the engine.
With the repair cost estimated at $1800... it's still sitting in my garage waiting to be salvage for whatever value I can get back from it. I love that stupid car quite a bit.
$3000 = purchase price
$250 = traded Lincoln for parts and labor
$6577 = fuel costs (50000 m / 26 mpg) x $3 avg gasoline price per gallon
$1200 = new tires
$500 = misc general maintenance
$1500 = liability insurance 3 years
Divide by: 57000 mile driven
$0.22 / per mile to drive around town in this Impala SS race car family 4-door sedan.
After the death of my impala and a short but intense grieving period, I was able to find a new vehicle with the help of David Rice from David Rice Auto Sales. He's located just north of Schoolcraft on 131.
Dave found me the PERFECT car.
It is a 2003 Buick LaSabre custom with all faux leather interior. Family 4-door sedan V6 3800 with 81,000 miles. It was owned for over decade by a single elderly woman and before that was a short term lease. The best part was it lived most of its life in the garage resulting in it being kept pristine.
I paid $3500 cash for the car and after taxes and tags I was out the door for less than $3800.
I'm not sure how many miles I'll be able to get out of this gem, but I'm hoping its going to be a number for the record books. If I can get this vehicle near 250,000 miles like I was able to run my impala, then maybe I will be looking at costs per mile as such:
$3800 purchase price
$19500 fuel costs = (169000 m / 26 mpg) x $3 avg gasoline price per gallon
$2000 new tires = $500 x 4 sets
$2500 misc general maintenance over the life expectancy (12yrs)
$4800 PLPD insurance over life expentacy (12yrs)
$32600 total cost
Divide by: 169000 mile driven
$0.19 / per mile to drive around town in this Buick LaSabre all faux leather interior family 4-door sedan.
The haters are going to say I've played pretty loose and fast with my math here, but the point of the conversation is the broader thought process here.
When I purchased my nice practically new car after my deployment, I was hammered by the loss of value that all cars suffer from in the market place.
The super cheap car, the 1971 Lincoln, was an experiment that didn't work out very well. Here I went a little too cheap, and the lack of reliability prevented me from driving the amount of miles I wanted to and needed. It was not so much I worried about the appearance of the car, but rather I worried about getting home once I parked at my destination.
The impala was the first clear sign I was on to something with my strategy. It was absolutely possible to find a suitable daily driver in the $3000 to $4000 ballpark. By doing so, I am able to eliminate virtually any and all depreciation on the vehicle. The vast majority of the car's value will already have been depleted from someone else's net worth. For me, as long as I can keep the car running and clean, and don't put to many miles on it, I could still sell it for exactly about what I paid for it.
The notion that used cars break down all the time is not true to me at all. They don't break down very often, and each time your car starts, and you don't have a car payment, you're winning the cost per mile game.
Having a good mechanic and used car is about the best combination you can get. Any honest mechanic with your best interest in mind, will only fix essential systems or parts and more importantly, only when they are absolutely needed. This keeps your costs lower.
The most enjoyable perk of driving a used car is you don't ever require financing.
Financing means two things usually- you have to carry full coverage insurance on the vehicle which costs substantially more than just liability insurance. Secondly, financing means you'll be making a monthly payment with interest, on a vehicle that is losing 60% of its value in the time it takes you to pay off the loan.
And that my dear friends, is just not the kind of math I like to get behind.