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Cost per mile Mon, Jun 07, 2010
It's often said that the worst investment you'll ever make is purchasing a car, not only because it's a big ticket item, but also because it leaves you with nearly no resale value in the end.  So basically, you're dumping a ton of money into something that gives you nothing in return, which could be accomplished just as easily by gambling or starting a heavy drug habit. 

But I think this is a flawed way of thinking.  Sure you're putting money into an investment that generates no return, but you're neglecting the fact that a vehicle provides a service:  Transportation.  And the act of transporting oneself from home to work, or work to store, or store to Hawaii, isn't free.  It's hard to put a value on that service, but it's pretty logical to think of it in terms of gas mileage, e.g. my car gets 30 miles per gallon, and since work is 10 miles from home, it costs 10/30 = 0.33 gallons, which at today's rate (~$2.50/gallon) costs about $0.83. 

But thinking in terms of gas mileage ignores the other costs associated with owning a car, such as the actual cost of the car, gas, scheduled maintenance (oil changes, new brakes, new tires), unscheduled maintenance (new windshields, body work), insurance, speeding tickets, etc.  With that in mind, a pretty useful way to pseudo-visualize the true cost of owning a vehicle is to think of things in terms of cost per mile.  To aid in this, I created the following calculator (go ahead, change some numbers): 

Car Price
Monthly Expenses + +
Yearly Expenses + +
Years Owned
Total Mileage
Cost Per Mile

The default values correspond to a car that costs $20,000, a monthly gas expense of $100, a monthly insurance expense of $100, a yearly maintenance expense of $300, a yearly "etc." expense of $100, owning the car for 6 years, and driving a total of 120,000 miles.  This equates to a cost per mile of $0.31, which is significantly more than simply looking at gas mileage ($0.83/10 miles = $0.08 per mile).  And it doesn't factor in the hard-to-quantify things like carbon emissions, junkyard costs, and other environmental factors.  But hey, it's a start. 

So my 10-mile commute to work this morning cost about $3.10, which is kind of a lot. #travel


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