MPG & Cost of Ownership

I've noticed a few folks already slowing up their average speed on the road. Will it really save them some fuel? Yes, a little. But not enough to save the amount they're going to need to fuel that vehicle in the future. It's time to reconsider the vehicle you're driving and get one that best suits your actual needs based on cost of ownership.

It's not too complicated to see how much the cost of your next fuel-saving vehicles will impact your gas bill. Fuel mileage is taking centerstage faster and faster nowadays and the money spent on better MPG's will more quickly outpace the time it takes to offset a car's price tag.

Using a 15,000 average miles driven per year and a soon-to-be $4 per gallon gas price, see how quickly fuel costs outpace the price differences of your car.

24 MPG Vehicles
625 gallons per year X $4 per gallon = $2500
Monthly Fuel Cost: $208

35 MPG Vehicles
428.5 gallons per year X $4 per gallon = $1714
Monthly Fuel Cost: $142

At a more common 20,000 annual mileage average, the differences add up even faster:

24 MPG Vehicles
833 gallons per year X $4 per gallon = $3332
Monthly Fuel Cost: $277

35 MPG Vehicles
571 gallons per year X $4 per gallon = $2285
Monthly Fuel Cost: $190

Cost of ownership affects more than the monthly household budget. Cost is affected by length of ownership and operating costs accrued over that ownership period. The greatest economy can only be achieved when the cost of ownership is spread out over longest period of time. Trade-in and resale values will soon hold fewer advantages than in previous years when operation costs (purchase price, taxes, title and registration fees, financing interest, fuel, insurance, maintenance) were cheaper and permitted frequent changes in vehicle ownership.

Calculating total cost of ownership for your vehicle is sobering when fully considered. For example, a $15,000 vehicle comes with many costs. For example:

Purchase Price: $15000 + fees
Taxes: $1000+ per year
Insurance: $800-$1000 per year
Financing Interest: $400-$600 per year
Fuel: $1700 - $3300 per year ($2500 average @ $4 per gallon)
Maintenance: $250-$500 per year

Typical Cost of Ownership $600-$700 per month or $22 per day

The moral of this story is simple:
Drive as cheaply as possible - gas is just going to get more expensive.
Don't drive unless you have a reason - get organized to control this lifestyle cost.
Watch every contributing expense that affects cost of vehicle ownership - from checking insurance rates to keeping your tires properly inflated.
Slow down a bit and fill up less often.