“Wreck. Big wreck.” – Long, Sixteen Candles

20151005_153055

Maybe my new car?  I’d be stylin’ and profilin’ in this one!

Dear Internet, I was going to write to you about things other than cars, but, alas, it’s back to cars we go.  Please forgive me.

I’ve had the same daily driver car for nearly eleven years.  That’s over 38 metric years (which are 100 days each, and which I just made up).  You should see the names of the metric 10-day week!

Given that (ISSUE REDACTED-they told me I could talk about it after Donald Trump’s audit is done) occurred, the insurance company told me that the Wildercar is probably totaled.

I don’t appear totaled, but I thought that I’d use the experience to share a few (more) points about finances and cars.

My car was made before the final episodes of Malcom in the Middle and Arrested Development were made, so for me it’s quite a passing.  I’ve been in this car on tons of adventures with The Mrs., The Boy, and Pugsley all across at least sixteen mountain passes, two alternate realities populated only by members of the band “Journey,” and seven states.  And these aren’t small states like Connecticut or Delaware (which, let’s face it, are smaller than most master bedrooms in Texas), but proper states that you can’t throw an underinflated football across (talkin’ about you, Tom Brady).

I’ll miss the memories of that old car, since, according to math, if my average speed in it was 35 miles per hour, I spent 166 days behind the wheel.

But until the car I bought in 2012, this was almost the most expensive car I’d bought.

Here are my further thoughts on cars and wealth.

DEPRECIATION:

I bought it used, so the majority of the early depreciation was done.  Depreciation, for those of you not fluent in accountant, is the amount of money that evaporates from a car when you don’t keep it tightly sealed in a Glad™ bag.

The minute that you drive a new car off the dealer lot, it plummets in value.

Why?  Because we all agree it does.  Don’t argue!

The slightly longer answer is that most people would rather buy a <b>new car from a dealer with a nice pretty lot rather than someone selling it out in the alley behind the Costco™.  The really longer answer involves cats, string, and the feeble tug of Pluto on the brains of the members of the Federal Reserve, but we won’t go there.

My original purchase prices (cash only, right?cash only, right?) was about $11,000.  I anticipate that my insurance will end up paying me $4,000 due to a variety of factors.

Yeah, I lost $7,000 in value over ten years, but that was based on my price.

Remember I bought this used, about a year old?  Sticker price was about $22,000 for this car.  When it was sold to me, I bought it for half that – initial depreciation on this car was around $11,000!

So, yes, when I turn over the keys and title to the car undertaker, I anticipate that I will have (net) lost $7,000 over ten and a half years.  My net cost of ownership will have been $56 per month.  Per mile? About $0.05.  A nickel a mile!

OPERATING COSTS:

I’ve probably spent about $3,000 on repairs over the years, mostly standard stuff like exorcisms and at least two alternators.  Add in oil changes and tires and that’s probably another $2,000.  A warranty would have paid virtually none of these costs, so you can’t say that it makes sense to have purchased the car new.   Cost per mile?

About $0.04.

FUEL:

My guess on gasoline (at $3.50 a gallon over the life of the car) is about $0.14 per mile.  My car got okay mileage, not great mileage.

Now, you might say, “But John Wilder, life would have been so very much better for you if you didn’t buy so much gasoline!”

To which I retort, “HA!”

I looked at hybrids.

Toyota™ makes the Yaris® and the Prius©.  The Yaris© gets about 15 miles per gallon less than the Prius®.

As far as I can tell they are about the same size of car, so, assuming that you’re mainly buying that 15 miles per gallon, you could buy a Yaris™ and about 3,300 gallons of gasoline at three dollars per gallon for the same price as a Prius™.

If you look closely based on fuel economy, the Prius© is a better deal than the Yaris© after about 390,000 miles of driving.  Or 26 years at 15,000 miles per year average driving.

So, that’s the price of being a Prius™ owner.

I’d look at electric cars, but I don’t want to make the Tesla© and Chevy® Volt™ owners cry.

Insurance: 

I’m betting that insurance cost about the same $0.07 per mile – I did some back of the envelope numbers, and that’s what it came out to.

Unusually, I have full, full, full insurance.  I realize this goes against conventional wisdom and advice of many financial planners, but I have my reasons, and those reasons are:  ALL OF THE REST OF MY MONEY.

I got into a car accident in Houston way back when I was first starting to be worth slightly more than a used paper cup.  I rear ended they guy.  It was rainy, but it was my fault.  He said his neck hurt.

My blood ran cold.  I realized that every bit of my insurance was “Statutory Minimum.”

Crap.

He was (actually) joking about the neck hurting, but it was the best unfunny joke of my life.  Now I have insurance, umbrella insurance, and a little insurance person that follows me around looking for insurable events.  I gladly hand that person a relatively small amount of money to prevent to insure me against (unlikely) but devastating events.

My strategy as a 22 year old had been sound, “What are they gonna take if they sue me?”  Now that I’ve got WilderNetWorth, that equation has greatly changed.

Adding It All Up:

So, my costs to run my late, great, sedan are:

Item Cost
Ownership $0.05/mile
Fixing Stuff $0.04/mile
Gasoline $0.14/mile
Insurance $0.07/mile
Taxes $0.02/mile
Total $0.32/mile

 

Sure, you might do better, but most times you’d have to pedal to beat these numbers . . . .

 

Bonus Content, Not Available In Theatrical Release:

N+1:

Cars either run when you want them to run, or they don’t.  In our family we have a rule: Number of licensed drivers + 1 is the number of cars we have.  Not sure that it matters if they are older or newer cars, since you’ll have to have them in the shop sometime.  Have a spare, especially if it’s a cheap spare, kind of like United Airlines treats customers.

Air Conditioning:

For two years my air conditioning didn’t work in the Wildersedan.

I go to work in the morning and come home in the afternoon.  Most mornings in the summer are nice and pleasant.  If it’s a little warm?  Crack the window, what do you live in a mall?

Most evenings are as hot as the surface of Venus during a forest fire.  I rolled down the window and did what they did in 1950.  Dealt with it.  Still don’t know why no one wanted hugs when I got home in the afternoon in the summer on a hot summer day.

Yes, I’m that cheap.

Cost of Repair vs. Replacing The Car:

They say there is no price on love.

They lied.

There is some cost at which I’d just dump the car rather than repairing it – and for the late great Wildermobile that number was probably about $2500.  I had owned the car for years, and knew what generally went wrong, what was wrong, and what I could live with (see Air Conditioning).  Somebody else’s really old car?  That’s a learning curve.

Alternate Views:

Mr. Money Mustache (who I greatly admire) believes strongly in the philosophy of no cars and does a lot of pedaling.  He also (really) believes strongly in not having a job.  As soon as I decide to fully swallow the Mustache Pill, perhaps I will change my mind, but as of now I have a job, commute, and The Mrs. and I are sometimes a huge distance away from each other in a day.

Plus, he has no job.

 

Well, I’ll miss my old friend, from Detroit.  If there’s an afterlife for it, perhaps it’ll come back as Wal-Mart© shelf?

Anything but a Prius™ – I wouldn’t wish that on Kim Jong Whatever’s car.

Author: John

Nobel-Prize Winning, MacArthur Genius Grant Near Recipient writing to you regularly about Fitness, Wealth, and Wisdom – How to be happy and how to be healthy. Oh, and rich.