I like to crunch numbers. I don’t enjoy math, but I like to see how things work out in real life. Yeah, I don’t understand either.
I am looking for a cheap, economical car to buy. Right now it seems like these are few and far between, so I have been looking at a Buick that is pretty cheap, that gets mileage of 19/27 (city/hwy). This got me thinking….how much more am I actually paying for gas each month for a change in MPG?
Break out the spreadsheet. I made a spreadsheet that shows how much I will pay per month for a car that gets an avg MPG of 20, all the way up to 35MPG, at different gasoline prices. For instance, if I use the current price of $4 a gallon, I will pay $114.40 per month in gas (since I drive about 1000 miles a month) in a car that gets 35MPG. If I drive the same amount in a car that only gets 20MPG, I will spend $200 in gas (an extra $85.60 for you math challenged).
As gas prices go up (and they are sure to do so with our current Genius in Chief), I will pay an extra $28.6 per month for every dollar it goes up (at 35 mpg). At 20mpg, that is an extra $50 per month.
When Obama took office, gasoline cost about $1.87 per gallon. In our minivan (which averages 20mpg) we paid $93.50 a month to drive 1000 miles. Right now we are paying about $200 to drive the same distance.
The question I’m considering right now is this: which is better: to buy a more economical car for more money, or to buy a less economical car for less money? If I bought a 35MPG car at $5000, the gas for the three years I owned it would cost me $5148 (at an avg gas price of $5), so the total cost would be $10148 over 3 years. If I bought a 20MPG car at $3000, the gas over 3 years would cost me $9000, so my total cost would be $12000 over the same amount of time.
I’m thinking I shouldn’t buy the Buick. I need to find a car that averages over 30mpg. Anybody know where I can find one for less than $5000?
Don’t forget to add in the lost opportunity cost of buying a car in the first place.
ie IF you didn’t buy another car at all, but applied it to a credit card bill, how much interest would you NOT be paying? And you should add the interest you’d still be paying (that you could have reduced) to the cost of the car that you buy (if you buy the car and don’t apply the money to the debt). And subtract it from the c0st of NOT buying a car (mileage on the van) as it will be interest you won’t pay. So by not buying a car, you’ll actually lower your cost of gas via reducing the amount of interest you have to pay on a debt.
Did you put that spread sheet away yet?