I must admit; our transportation situation is… dare I say… obnoxious. My vehicle: a decade old F-150. My wife: a GMC Acadia with a few years on it. Approximately 90% of our driving includes ferrying nothing more than 2 kiddos, groceries, and our own asses. With a fleet such as the one we have sitting in the garage and driveway, we should be in the moving business or over-the-road truckers. We should probably get a Christmas card from O.P.E.C. They might as well put a card reader on the driver side door to gain entry. At least then there would be no way to hide the truth about how much of our hard-earned income is going into the tanks and out the tailpipes. If I am really deadset on achieving FI then I need to confront the liquified dinosaur-munching monsters sitting in front of the house.
Now I’ve oversold it… I really love(d?) my truck and have gotten a hell of a lot of use out of it. It has been a (mostly) trusty companion on quite a few of my most enjoyable activities. It has hauled loads of rock, mulch, soil, and building materials. It has helped move a wide variety of appliances and furniture from one place to the next. It has accompanied me to the family farm, and has been the mainstay of years of college football tailgates.
But I’ve paid for it, and paid dearly.
This truck was bought, brand-spanking new, the moment I graduated from college and landed a full-time gig. Had I known what I know now, I should have purchased a used vehicle and maxed out my 401k. Alas, while I had a head full of book knowledge from my college tenure, there was nary one iota of financial sense. Besides, I was single, and I was gonna be hot shit with my new bitchin’ ride.
The truck has been paid off for a few years now, but I still remember the loan payment: $408.32 and the term 72 months (I feel sick just typing that). Had I bought a used vehicle with cash for say $15,000, I would have had about $15,000 extra to invest over that period. Investing $408.32 monthly into a low-cost index fund for 6 years would have perhaps netted me about $35,000 assuming a 6% average annual return or, if I kept that until today, it would be about $67,000!!!! That’s like a year of living expenses which would still be compounding and compounding for years to come… with a forecasted value of about $285,000 in 15 years from now, or approximately 10% of the total portfolio value we need for FI all by itself!!!
Of course, once wasn’t enough for us, so we doubled down on the dumb driving decisions and did the same thing again with the Acadia!!!! The only bright spot with that decision is that it was 0% interest and a 60 month installment vs 72, and after we got smart and paid off the balance after 2.5 years. And I haven’t even touched the gas mileage and insurance premiums yet!!!!!
My hands are shaking, and I feel heartburn coming on…
After a lap around the house and a drink of milk and Tums I am back in the saddle. Needless to say, it’s no wonder that people’s transportation choices are one of, if not THE, biggest deterrent to our ability to achieve FI.
So what now?
Alas, the old truck needs to be replaced soon. The maintenance bills are starting pile up and pieces are literally falling off (to whomever was following me when the chrome exhaust tip shuffled off its mortal coil, I am so deeply sorry). She has Stage 1 Rustiphoma which is rapidly spreading and a windshield with more crack showing than an overweight plumber’s backside. Stashing two growing girls into a back seat meant to hold a lunch box is becoming quite the challenge and I’m sure my wife really appreciates chewing on her kneecaps when she’s riding shotgun with a kiddo in the seat behind her.
It’s time to send her off to pasture, but I will be tough to see her go. I mean, trucks are cool right? Every “real” man drives a truck.
I’m going need some strength to see it through. So, I move forward, fortified by these inspirational words:
I could uproot the whole family, move right next to my work and walk or bike to work. Sure. That sounds lovely. (there are people that do this, and I have nothing but respect for y’all, but I ain’t there yet). Also, I would probably have to look for a divorce lawyer, hereby eliminating any financial winnings.
How about I buy a new (to me) vehicle, with much better mileage than the old BP-binging family truckster and WITH NO CONSUMER FINANCING.
Ok, I think I can make this work and preserve my marriage. So, what should I be looking for in a new ride? Well, what do I really need the vehicle to do? Like, most of the time.
- Drag my butt to the office and around town for work.
- Drag my wife and kiddos around.
- Load and transport groceries.
- Occasional hauling of building materials or bikes.
I can cover items 1 through 3 with just about any 4-door vehicle. How about item 4… well, we do have that land yacht Acadia. I’ve packed tons of building materials and small furniture into the beast on past occasions. …Ok, so I will consider a 4-door sedan or hatchback.
I want something significantly more fuel-efficient… about an average of 30 mpg or better.
I want something as reliable as can be. So, I will probably look at a Toyota, Honda, or Subaru.
I want something safe. These manufacturers have several that fit the bill here as well.
I want something my wife will drive. And this is KEY. A big part of my master plan is to try to get her to leave the battleship in the garage and drive a smaller, much more fuel-efficient vehicle as much as possible. My wife suggested a Honda Accord or Toyota Camry. Happy wife, happy life, amiright?
So let’s put the potential benefits into my favorite terms DOLLAR $IGN$. Here’s what I am thinking on fuel savings… I’ve assumed that I can get the wife to drive at least one day out of the weekend in the new, more efficient vehicle. We typically drive more on the weekend than on a given weekday, so I am assuming 1/5th of the Acadia miles will go to the new car.
|
Current Fleet |
Mr. HOF | Mrs. HOF |
Total |
|
|
Miles Driven |
8,800 |
12,000 |
20,800 |
|
|
Vehicle MPG |
15 |
20 |
||
|
Avg. Fuel Cost/Gal |
$2.25 |
$2.25 |
||
|
Annual Fuel Cost |
$1,320.00 | $1,350.00 | $2,670.00 | |
| Proposed | Mr. HOF | Mrs. HOF
(Acadia) |
Mrs. HOF
(New Ride) |
Total |
|
Miles Driven |
8,800 | 9,600 | 2,400 |
20,800 |
|
Vehicle MPG |
30 | 20 | 30 | |
| Avg. Fuel
Cost/Gal |
$2.25 | $2.25 | $2.25 | |
| Annual
Fuel Cost |
$660.00 | $1,080.00 | $180.00 |
$1,920.00 |
Expected fuel savings of $750.00 per year (which will vary based on travel and fuel prices obviously).
And, buying used, with cash, is certainly more appealing to me than new with consumer financing…
| Costs |
2018 Honda Accord |
2015 Honda Accord |
|
|
Purchase Price |
$26,000.00 | $15,000.00 | |
|
Sales Tax* |
$1,547.00 | $892.50 | |
|
Interest** |
$2,560.00 |
$0.00 |
|
| Total Cost |
$30,107.00 |
$15,892.50 |
|
| *Missouri Department of Revenue Online Calculator | |||
| **Assumes 3.6% Interest for 60 months
(pretty typical terms these days) |
|||
… to the tune of $14,214.50!
Instead of spending my hard-earned bucks on buying a new, shiny, overstatement of masculinity, I’ll buy something efficient and reliable and plow the difference into investments and get the power of compounding back on my side.
So, I think my path is set here. I will report back once the deed is done. It would be cool to record our mileage and check these numbers down the road. Sounds like another post to add to the list.