Their complaints are totally justified! According to The Nest, transportation expenses count as the second biggest expense in U.S. households, running as much as 10 to 20% of the household income.
Man, don’t I know the feeling!
Car expenses have been a huge drain on our household for a long time. For well over a decade, I’ve commuted an exceptionally long distance to work every weekday: 60 miles each way, 120 miles round trip!
Start adding up those numbers over the weeks, months, and years, and it’s no wonder I’ve easily gone through 3 different “work” cars over the years.
So here’s something to throw into the discussion the next time it comes up: Is the price of gas really all there is to this burden? Or are there more factors that contribute to the real cost of driving per mile that you may not have considered?
Don’t forget: To keep your car running like a champ, there’s a lot more to it. You’ve also got to pay for oil changes, new tires, fluid changes, un-expected repairs, and – worst of all – depreciation of the car itself.
So let’s indulge in this fun little exercise and see if we can really figure out what the average cost per mile for my commute to work really is costing me each day.
How to Figure Out the Real Cost of Driving:
In order to get a sense of the actual car cost per mile, we’ll consider my current car, a used 2011 Chrysler 200, and examine these main categories:
Gas / Fuel:
Why? Because it’s so in-your-face all the time! It’s something we spend money on day after day, week after week after week.
Looking up the stats for my vehicle, it looks like my car gets 31 miles per gallon for the highway (the vast majority of my travel to work every day).
At a price of approximately $3 per gallon, that works out to:
$3 per gallon / 31 MPG = $0.10 per mile
Oil Changes:
Oil changes can be another big expense for your car – especially if you do them the right way and follow your vehicle’s recommended maintenance schedule.
I know there are a lot of people out there who don’t get oil changes as often as they should. That doesn’t fly in the MMD household. Because of my long commutes, I take the suggested schedule for auto maintenance very, very seriously! The last thing I want is to be broke down on the side of the expressway in the dead of winter because I was too cheap or lazy to get my oil changed when I was supposed to!
My car rocks an oil change schedule of every 8,000 miles (not 3,000 miles like those rip-off lube and scoot oil change places would have you believe). The price per change is around $40 each time, so my cost is:
$40 per change / 8,000 miles = $0.01 per mile
New Tires:
Like my rant about auto maintenance, I also take my tire selection very seriously as well. With the cold, icy Michigan winters, it’s a very wise choice to invest in a nice set of tires that will handle excellent in the snow.
New tires for my car cost around $600 and are rated for about 60,000 miles (roughly every 2 years with how much I drive). So the average cost of driving per mile is:
$600 / $600 = $0.01 per mile
Thankfully the tire store I buy my tires from does free tire rotations for life. So there is no residual cost or charge there.
Other Maintenance and Unexpected Repairs:
This one gets a little hairy.
Ideally when you buy your car (either new or used), you shouldn’t really have too many bumps and bruises within the first 100,000 miles. But once you get up there into that +100,000 range, two things start to happen:
- You start to need more maintenance such as transmission fluid exchanges, spark plugs, tune-up’s, etc.
- Unexpected repairs start to happen more frequently. These would be things such as engine troubles, brake pad changes, suspension problems, etc.
Looking back at my last commuter vehicle, we spent roughly $2,000 per year over the life of that car. At an average rate of 30,000 miles per year, that works out to:
$2,000 / 30,000 miles = $0.07 mile
Depreciation:
Next to the cost of gas, if you really want to think about how much driving is really costing you, you need to factor in depreciation because it’s a lot more than you think.
To put it simply, depreciation is how much you paid for the car over the life of its use. It’s the “net” amount; how much you paid versus how much you sold it or traded it in for after you were done with it.
If you financed your car, don’t forget to factor in the amount of interest you paid the bank.
My latest car cost a total of $12,620 in principal and interest. I expect that when I go to trade my car in, it will probably fetch around $2,000.
As far as mileage, I expect it to last approximately 150,000 miles, and I bought it used for around 20,000 miles.
Therefore:
($12,620 – $2,000) / (150,000 – 20,000) = $0.08 per mile
Note that the way we calculated this is called a “straight-line depreciation”. Real car depreciation is actually more of an exponential decline with the greatest decline in value happening within the first 2-3 years of a car’s life. After that the decline starts to become more gradual. To get a better idea, check out this infographic on Edmunds. This concept is one of the main reasons why I prefer to buy used cars over new ones.
So What is the Real Car Cost Per Mile of Driving?
Adding up everything we’ve talked about so far:
Gas / Fuel: $0.10
+ Oil Changes: $0.01
+ Tires: $0.01
+ Unexpected Repairs: $0.07
+ Depreciation: $0.08
= The true cost of driving per mile = $0.26
Now that might not sound like a lot to some people, but it sums up very quickly when you consider how much someone who commutes (like me) drives.
For example, since I commute a total of 120 miles per day, 5 days a week, that’s:
- $31.22 per day
- $156.08 per week
- $676.34 per month
- $8,116 per year!
- $33,817 for the life of the car!!
WOW! That really puts a new perspective on the true cost to own that $12,000 commuter car.
What Can You Do?
Let’s face it – your car is a costly tool that gets you from one place to another. And in order to make it work, you need to pay to play.
But there are some things you can do to keep those automotive costs down. Here are some of my personal tips:
- Buy used. Remember how we said that depreciation happens the greatest within the first 2-3 years of a car’s life? You can bypass this by buying a used car that is roughly 2-3 years old and still has very low miles.
- Buy reasonable. Do you really need a vehicle that starts at a price tag of $60,000? Even though it may be a better brand or higher quality, ultimately the value of the machine always goes one place – DOWN! To minimize the force of depreciation, buy vehicles that are a good compromise of quality and affordability.
- Get your car serviced regularly. If the owner’s manual says to change the oil every 8,000 miles or air filter every 32,000 miles, you better believe that you should do it! Yes, it will cost you some money, but its far, far cheaper than paying for the engine or transmission troubles that could develop as a result of negligence.
- Rotate your tires religiously. Tires will wear unevenly if you don’t get them rotated every 8,000 miles (or whatever your owner’s manual suggests). Not only does this increase how quickly you’ll need new tires, but it can also cause unnecessary wear and tear on your suspension and other linkages.
- Don’t Wait! If you start to hear a weird noise or clunk, don’t wait around. Usually that’s an early sign that something is wrong, and you’ll be able to fix for a reasonable price. But if you wait, it could snowball into a much larger, and more severe problem.
Readers – How much does your car cost you per month? What other factors should we consider when keeping our overall car costs down?
Images courtesy of Katy | Flickr, Mike Kline | Flickr, John Greenfield | Flickr, Mike Mozart | Flickr, Amara U | Flickr
These are some of the reasons why I bought a used car, MMD. Imagine all those expenses when combined. To keep the expenses down, I sometimes commute and I don’t find any problem in here.
I kind of miss commuting with a friend to work. Not only did it give me someone to talk to, but financially it also helped curb racking up so many miles and having to spend so much on auto maintenance.
That does not even factor the cost of the time lost by tacking on extra hours to your workday or the stress cause by sitting in traffic. Plus the cost skyrockets per mile when sat in traffic with AC blasting.
Oh man, I don’t even want to think about how much in life I’ve lost due to lost hours waiting in traffic.
I don’t even want to think about cost per mile, but I agree that buying a good used car saves a huge amount of money. Another option is thinking really hard about where you choose to live. If I had it to do over again, I’d try to live closer to where I needed to be every day.
Good point. For my post retirement career, I hope to occupy my time with activities that are within a 1 to 10 mile radius of my home. After 20 years of driving, I think both my brain and my wallet deserve to relax.
I have no idea how much my car actually costs me each month. I do know that I need to take your advice and get the tires rotated more than I have been.. Tire rotation is something that I have been very bad with over the years.
Surprisingly it really does help extend the life of the vehicle and tires to do oil changes and tire rotations religiously. Yes, it stinks having to wake up on a Saturday morning and sit at the Valvoline shop or Discount Tire for an hour. But with all the commuting I do, I can’t really afford for my vehicle to be anything less than in tip-top shape.
That was a cool experiment and adding it all up at the end summed up the post well. So every 4 years your changing cars? I assume you could push the 150K mile limit if you get a car that can go 200K. Obviously you’ll get less value at resale but you might reduce the cost to own per mile. I think I can push my current Camry to 10 years, I commute 30 miles each way. Plus the resale value for certain brands are better than others.
4 or 5 years of driving tends to equal out to 150K or 200K miles for me (depending on how many miles the car had when I purchased it). 2 cars ago I let it go past 200K miles, but that was because it didn’t have any major issues in the 150-200K mile range, and so I just ran with it. My last car started to really rack up major issues around the 150K mile mark, and I was afraid of having to sink more good money into something that was basically worthless. Plus I also really didn’t want to risk being broke down somewhere on the side of the road in the winter.
Wow, I feel a lot better about working from home! My husband is on disability, so there’s no commute for either of us. Granted, we eat more convenience food than most, so there are a lot of short trips which add up.
Luckily, we were able to get a good deal last year on a 2012 Honda Civic with under 25,000 miles on it. We paid $14,000 with trade-in and because of some cosmetic issues with the paint. A year later, we’re still at less than 35,000. Hopefully, this sucker will last a loooong time.
Very nice! At that rate that Honda should be good for another 10 years.
And don’t forget the cost of insurance – whatever you pay for your auto insurance, plus whatever portion of your umbrella coverage you think appropriate to allocate to the financial risks of driving a metal box at high speeds surrounded by people distracted by their various devices.
Insurance! How could I forget? That just made the total overall cost go way up.
This is one of the reasons I don’t drive.
I read somewhere that Americans spend an average of $8000/year on cars. So your experience isn’t even particularly abnormal or expensive, MMD.
I just want to add that the picture you have in the beginning of this post looks like my logo character. That’s exactly what he would look like when driving. That’s what I look like on the extremely rare occasion that I drive.
Sincerely,
ARB–Angry Retail Banker
Wow, no driving? That sounds like quite a challenge. Of course, I’m sure its all relative to where you live.
How about getting a car with better mileage? My friend’s Prius does 60mpg so you’ll save a lot on gas. I know some people that commute with their Chevy Tahoe. Not the smartest choice… Definitely not 31mpg
Once you plug in the mileage into the big picture, you quickly see how it can really effect the true overall cost.
I tell people this all the time, it’;s not just the gas, the oil, the tires, the general wear and tear on the vehicle. Every mile driven is one mile closer to an oil change, which is not just oil but oil and filters, the tires slowly wears down with each mile and don’t get me started on the traffic. Gas prices on it own are very high but it still cost much more than gas alone to drive your car. At least now I know I’m not crazy and the only one that looks at it like this.
I noticed with the use of more ethanol in fuel, causes the fuel like to get damaged much faster than before. I think that should also be taken into account for the true cost of driving! Thanks for writing!
This was a very thought-provoking article. To be honest, I have never thought about it that way. I change tires about once a year and a half and spend about $100 dollars of gas a month. I haven’t even taken into consideration the my car’s depreciation haha.
So, we buy a new vehicle every 3 years and usually make money or get full price for trade-in. We don’t have to worry about out-of-pocket costs (due to limited or no warranty), and we do not have to worry about something being wrong with it when we purchase it (that shows up after the lemon time allotment). We live in CA, so emission issues and vehicles that pass these tests is a big deal. If something is wrong with a new vehicle, then it is the manufacture who pays. We have no issues with buying used, but on the same token, have not had ‘large’ issues with buying new either. As long as you maintain and take care of your vehicle, pick a vehicle that holds its value, and trade it in before the break even point turns negative, you should be fine. Unless you just don’t want a car payment any more.
It’s so important to understand how much good maintenance will do to your vehicle. I agree with all the used car comments but then again you better check the mileage before any purchase.
I include insurance, plate renewal, Licensing, tolls, parking, car washes, tickets and city stickers as well in my $/mile calculation.
cant believe you didnt mention license, registration, insurance, tolls or taxes…
Insurance, license are fixed costs. They will be the same whether you drive 0 miles or 10000 miles. So it is incorrect to lump those in to cost per mile. You should include those only when you calculate overall cost of ownership.
Buying a used car is one of the great financial lessons I have learned since owning my first car decades ago. I just make sure that I have the best mechanic with me to
AAA’s most recent estimates say $.60.8 per mile is Average Costs to operate a Vehicle considering. EVERYTHING. UBER is paying their Drivers $.60 Per Mile. I’m Retired and wanted to stay a little busy but I can’t make these numbers work! Guess I’ll just enjoy being Retired!
I just ran a spreadsheet and for a new $25K auto financed at 5 years, the first year was over $1.10 per mile!
Now the more you drive, the number goes down, buy a used car and eliminate the depreciation.
You have to factor taxes, insurance and other yearly charges as while they change with then amount of miles, they are factored in as are mandatory charges.
So after 5 years, assuming you get top $ for the sale of the car, at 12K per year I get around .60 cents per mile.
After 5 years, Insurance goes down, car is paid off, property taxes are less, but maintenance goes up.. So now I can pug in numbers to my spreadsheet and compare used vs new, loan amounts and other factors.