by The constant pursuit of savings is a great habit in our household. Just when we think we’ve finished maximizing savings in a particular category, we go back and see if we can push it even further. After all, every dollar saved is a seed that will grow into passive income.
In 2014, we relocated two miles from work resulting in significant fuel savings. We sold our second vehicle this year because it sat in the driveway most of the time. We kept the 2007 Toyota Camry that I bought certified pre-owned. That car was paid off a long time ago, and it’s nice not to have car payments.
What are the most popular vehicles types?
Electric and hybrid vehicles are all the rave now, and I must admit that I like where Tesla is headed. One thing is certain: if I had one of these, I would take over the wheel when passing a truck or on sharp curves, as one unfortunate person recently discovered! The self-driving car is a relatively new technology with no doubt some flaws.
MMM’s tweet prompted me to assess our current situation and determine whether there is a better way for us to save money in the auto category.
That’s a lot of money saved for a brand new car!
“Tatiana, should we look into this?”
That was my initial reaction, followed by a few searches. We haven’t looked into more fuel-efficient vehicles in the past because, once we retire, we’ll most likely move abroad without a car, so the long-term savings of such a vehicle won’t make sense for us. However, we felt compelled to investigate an advertisement like this one, promoted by MMM.
Which fuel-efficient vehicle could be right for us?
If we were looking for a more fuel-efficient vehicle, we would most likely begin by comparing hybrids. Hybrids can travel much further than electric vehicles without needing to be charged, allowing us to take long trips without stopping.
We could save money on electricity by charging the car at work. We’d probably go with the Toyota Prius, so let’s compare it to that.
Fuel efficiency
Our Camry gets 24 miles per gallon in the city and 34 on the highway. The new Prius Hybrid gets 52 miles per gallon. These are in accordance with the specifications.
A round-trip work commute is 2.6 miles long and takes 6 minutes to complete. (I know, it’s sick how close we live to work.
Don’t be jealous; simply relocate closer to your workplace, if you can!) We carpool to work, so I usually drop the wifey off on my way to work.
To compare fuel consumption, I entered our commute information into Fueleconomy.gov.
Today’s commute in the Camry costs us $0.54 roundtrip. If we were to go all out and drive a brand new Prius to work. We’d have to pay $0.20 per day. That’s a $0.34 difference.
How much would those savings amount to over the course of a year?
We typically work 46 weeks per year, so the savings would be as follows:
$0.34 x 5 workdays x 46 weeks = $78.20
If we keep working for another three years, we’ll save a whopping $234.60.
We’d have to pay sales tax, registration, and other fees if we bought a car. Due to our short timeframe, we’ll never break even, so the savings will be lost to fees.
We’re done here!
There’s no need for us to spend any more time on this, folks.
Upgrading to a more fuel-efficient vehicle failed the first set of metrics for us. There’s no need to compare repair costs or factor in the hassles of buying and selling a car, the inconveniences of registering it, and other annoyances.
Add in the opportunity cost of buying a new car instead of investing the money for the next three years, and it’s painfully obvious that switching would cost us a lot of money. Upgrading may make sense for you, so run your own numbers if you’re considering it.
If we were going to keep a new car for more than ten years and/or lived much further away from work, upgrading might have made sense in the long run.
For the record, we’d only consider buying a new car if the savings were substantial, such as those provided by MMM’s ad. Or if we wanted to buy a car in another country but couldn’t trust the used cars there. We’d rather let someone else drive it off the lot and absorb the 20% depreciation hit.
Our biggest savings came from reducing our commute a few years ago!
Great analysis. Sometimes the analysis is over before it even starts. We still drive a gas guzzler – don’t ask how we got it 😉 – but since we drive only very few miles (5-6K miles/year) it’s not really worth it to switch. We plan to drive our current car for a few more years and if more reasons accumulate (repairs and maintenance of an older car, gas prices, etc.) we will reconsider.
Cheers!
ERN
Hi! How did you end up with a gas guzzler!?! Just kidding, no judgment here. Overall, we drive very little as well. Sometimes I even forget that there’s a gas tank to fill. I’m okay with handling some repairs at this point. The biggest expense this year was replacing the alternator. We’re hoping to retire before our car so that we don’t have to spend on major repairs. Thanks for stopping by!
We were able to save a ton due to DW commute being 30 miles round trip everyday and moving from a gas guzzler suv (18mpg) to a pre-loved Prius (46mpg).
They were 7 and 8 years old respectively and we made an even trade so no acquisition costs for us. Which made the savings even more compelling.
On a recent long range trip we averaged 56mpg!!!
Hi LM,
56 mpg is impressive! That made perfect sense for your situation. Thanks for stopping by!