1 post tagged “fuel”

The hub and I have more car-related expenses than your average Joe.  We first realized this when we started going to a new financial advisor.  Our advisor, who we love and highly respect, asked us to please tally up our monthly expenses so that he could accurately siphon off what we weren't using and invest it accordingly.  When we took our homework to his office, he looked over our worksheet and said, "I see a mistake on here.  You spend $xxx on your cars every month?  Does that include car payments?"  Nope, it sure didn't.  Now, our financial advisor handles the portfolios for millionaires as well as Simpletons like ourselves.  I'm sure it wasn't so much the number on the page that shocked him but rather the proportion of that expense to our realized income.

Alright, so everyone feels like vomiting at the gas pump when they see how much that tank of gas just cost them.  What makes us so different, you ask? 

1. We both drive Jeeps.  I have an '02 Liberty that is four months from being paid off (Woot!).  I bought it as a replacement for the crumbling bucket I was driving when I was a grad student in Illinois.  Four-wheel drive was a must for getting to and fro in the snowy wintertime.  My husband drives an '05 Wrangler that we bought last year.  We live in Texas, so really, it was nothing more than an emotional purchase.  He loves Jeeps and has always wanted a Wrangler.  Both cars get about 16 mpg. 
2. My husband has an 80-mile (round trip) daily commute.  We bought our house in the burbs, and whaddayaknow... one month later, he got an unbelievable job opportunity in downtown Dallas.  Bad timing.  It's not only the mileage - but every road around here is a toll road.  So he pays at least $3.00 a day to drive to and from work, albeit there's really not a lot we can do about the tolls.

So those two factors mean quite a bit of dough for us every month.  And I don't have to tell anyone that gas prices continue to creep up essentially unchecked.  Consumer Reports stated a few years ago that the economics of a hybrid car just didn't work yet, that the cost savings on gas don't yet outreach the cost difference on a hybrid.  Finally, after shelling out yet another $60 at the pump, I did the math.  Last night.  At 10PM.  And wouldn't you know it, at Midnight I was wide awake - staring at a spreadsheet.

In my cost analysis - complete with graphs, of course, because when a scientist is explaining their data analysis, they need visual aids - I pretended that either Andy or I sold our current cars for a new one: either a Prius, a Camry, or a Camry Hybrid.  I calculated a spread of cost savings across various gas prices: $3.00 - $5.00.  There are two basic flexible costs for us per year in a car: the car payment and the cost of fuel.  This is where you can win or lose based on the car.  You can be saving a ton of money in gas, but if the car costs an arm and a leg (thus your car payment is significantly more than what you are already paying) gas cost per gallon would have to be really high in order for you to be making a net savings.

This is where I discovered that it wouldn't make any sense to sell my car.  We have four months left to pay it off.  So while in 2008 (if we sold my car today and bought a new one) I might see some savings with a more economical car, in 2009 and beyond gas would have to be REALLY high price to make up for the fact that I now had a new car payment instead of a $0 monthly payment.  On the other hand, Andy's car payment is higher than mine and we have three years exactly left to pay it off.  Replacing his car payment with another isn't really all that much different.  So the fuel efficiency of the car has a more dramatic effect on yearly cost savings.  So here's what I found.

CarAnalysis2008

Hard to see but the Prius is in Green, the Camry Hybrid is in Blue, and the regular old (not V6) Camry is in Purple.  I'm represented by triangles, and the hub is diamonds. 

So for the balance of the year, no matter the fuel cost, the hub would be in the black for cost savings across all fuel costs (well, from $3-5 at least) if he traded his Wrangler for a Prius or a Camry Hybrid.  I would only be in the black if I traded my Liberty for a Prius and if and only if gas prices remained over $4.25 for the balance of the year.  That's for 7 months.  Let's look at a full year.

CarAnalysis2009

Now the landscape has changed.  Compare the numbers (vertically) on the left.  See the magnitude of difference between 2008 and 2009?  Now we can see that, at any fuel cost, it doesn't make sense for me to trade in my car for a new one.  For it to make sense for the hub to buy either of the Camrys, fuel would need to be over $3.80/gallon for the duration of that time (maybe not all that unlikely).  But look at that Prius.  Hard to argue with 44 miles/gallon apparently!

Finally, what about four years from now, when there are no car payments to take into account?  This is just for sheer interest level.  Kinda predictable (obviously changing from a low MPG car to a high MPG car will save money on gas), but I figured I'd add for heck's sake.

FuelCostAnalysis

I emailed this to my husband last night.  Kind of cruel, knowing how much he loves that car; now he has to have this hanging over his head.  Pretty difficult for a guy to get excited about cruising around in a Prius, I imagine.  I'm not trying to make the case for selling his car, I'm really not - but we spend a frickin' lot on gas.  As fuel costs continue to increase, I think it's wise to keep these slopes in mind.