Having a 3rd vehicle

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Another thread started by bustergot me to thinking.Cost of gas to drive a truck getting 13mpg 25,000 a year is $3000 @ $1.80 gallon. If you drove a car getting 26 mpg 25,000 a years is about $1500 @ $1.80 gallon. Gas savings over 5 years is a whopping $7500 Over 10 years its $15,000! You will save $1500 a year in gas if you drove a gas saver. I have a 17 year old truck and drive it on the weekends, that way i can drive the gas saver on the commutes to work. I pay an extra $230 a year to insure this truck. You can figure how much a year it will cost to operate your vehicle at the link. You select your car type,Find your car and click on it.YOU will see a link that says "Customize", and go from their HWY and CITY by driving percent, and price of gas. Its an excellent tool to use. FUEL COST GUIDE [ February 09, 2005, 02:27 AM: Message edited by: goodoleboy ]
 
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The other issue you have to look at is the extra cost of owning a second vehicle. Say you have to tie up $10,000 in a depreciating asset (vehicle) versus $10,000 in an appreciating asset (stocks) -- under certain circumstances, you are still better off paying the extra $$$ for the fuel. A $10,000 vehicle that lasts you 10 years, and a discount rate of 10% will cost you $1627/year to own exclusive of maintenance, insurance, or fuel. Not too many situations in which you could drive a 2nd car for less than $1500/year fuel savings once you factor in incremental depreciation and incremental insurance. A cheap old wreck perhaps, but then reliability (and perhaps safety) starts creeping up as a concern. Of course, as the price of fuel goes up, the break-even point tilts more in favour of having the extra vehicle. [ February 09, 2005, 03:35 AM: Message edited by: pitzel ]
 
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If you can drive the second vehicle while waiting on economical repairs on the first, that can offset its expenses. Mail ordering expensive, major parts cheaply and installing them at one's convenience on the weekend saves money and stress.
 

goodoleboy

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quote:
Originally posted by eljefino: If you can drive the second vehicle while waiting on economical repairs on the first, that can offset its expenses. Mail ordering expensive, major parts cheaply and installing them at one's convenience on the weekend saves money and stress.
Thats exactly what i have done. I had the alternator go out couldnt even find a place to rebuild the alternator. A rebuilt unit from autozone was $150. I looked for a few weeks and found one for $25 at a salvage yard. Im going to be changing my timing belt on my daily driver.Shop cost is $600, my cost for parts is $200 and I can spend a few weekends doing it right. As far depreciation, my truck is 17 years old its a 4x4 i paid $2900. Its not some newer truck by that will depreciate any further.If you live in the midwest prices of truck that are 4x4 dont go down in value once they hit that price point they stay the same.Ive seen trucks 20-30 years old that are 4x4 sell for around what i paid w/ no major refurbishing.Yeah some things dont work, but it is dependable. [ February 09, 2005, 05:34 AM: Message edited by: goodoleboy ]
 

Al

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I'm sure it makes sense in some cases to have an extra vehicle. At one time I owned 4 of them.. [Eek!] while I had two kids driving. I felt like I was in heaven when I got rid of the 3 rd vehicle and am now down to two. I think a better solution is to not have a fuel gobbler in the first place, but that's just me.
 

goodoleboy

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quote:
Originally posted by Al: I think a better solution is to not have a fuel gobbler in the first place, but that's just me.
To be honest we must have a truck our ranch requires its use almost bi-weekly. I can say i dont use it every week.But when i dont have a load to carry the 4wd is needed. Ive debated on getting a new truck and keeping a single vehicle but that gas figure stopped me right in my tracks. [ February 09, 2005, 07:28 AM: Message edited by: goodoleboy ]
 
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When I did contracting work, I could justify the extra cost of gas and insurance for a truck. Now, I am doing what eljefino does. I replaced my truck with a Saturn, a car I can work on myself for most things. Then I have my old Sentra. A/C is gone, but runs well. I practice learning repairs on it and what I am not able to do gets done by the local mechanic. He is very reseanable. It has been great to have both vehicles since I am on call most of the time and drive over 12,000 per year with my work.
 
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My extra vehicle is Home Depot's 'Load 'n Go' truck. I can live with a '98 Saturn as my daily driver since I can almost always go to Home Depot and take their Ford Super Duty 1-ton for a couple hours for $40. I just make sure that I have all my hauling errands lined up and ready to go.
 
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Incidentally, my 3 vehicles are a 91 dodge dakota and two saturns, for myself and my wife. [Smile] "Saturn, the spare car not just seen behind RVs anymore" [Big Grin]
 
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Well, all 3 of ours are daily drivers, so I don't think any qualify as "spares". We can do some carpooling when needed in a pinch. But back when I worked for a Caddy dealer we had one well-off couple as customers (great tippers, too). He drove a Lincoln Mark whatever, she an Eldorado ragtop, and the "family car" was a Fleetwood factory stretch. They called it the family car, but when I asked how many kids they had, he said, "None, it's for practice at making a family..." and grinned from ear to ear...
 
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We ended up getting a bigger vehicle because we were taking both Taurus sedans on trips. We considered asking to borrow a friend's Suburban, but he only gets 10 mpg, while both cars were getting a combinedt 14 mpg. We ended up with a 3/4 ton quad cab Dodge pickup, with a diesel, canopy, two seats mounted in the bed, and a CO detector. I get 17 to 18 mpg around town and 19 to 20 mpg on the highway. The Cummins seems to get better mileage as it ages, we're talking 200k to 500k miles, as mid 20's don't seem that unusual on some of the older trucks.
 
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Pizel, I don't quite buy the depreciation component of your model. Cars are losers in that respect. You don't know the true depreciation of a vehicle. The market determines that ..it's not like a house at tax time. Cars cost money ..period. Their price new is determined by the manufacturer ...used by the market's perception of them. Other than something like a 500SL, where it was worth $20k more delivered than what it was ordered at ...they're all losers. That being said, there's little common economic sense to a "spare" vehicle. It's merely a component of time/hassle/convenience ..which you pay for up front instead of dealing with the consequences of not having one (rental, carpooling, etc.). Pickup truck owners, on average, are just paying a high premium for an apparent lifestyle. The cost of "just throwing a sheet of plywood in the back" comes at a very high price for mayby 1-5% utility. Same with turbos ...whatever. If it was as simple as economics ...everyone ..well maybe 99% of the public would be driving new or used Honda's. It then comes down to "choice". The user who is going to own a 4wd full size pickup may be well served economically by owning a 25 mpg beater as a daily driver. The two car daily driver (newer) houshold may be well served to drive economical new vehicles for their long commute and still keep the paid off minivan for its expanded utility on the weekend where their econoboxes can not fit the family (Christmas trees, groceries, etc.). Bottom line economic models totally ignore the religous component of transportation and the price people are willing to pay for "having".
 
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This is why I bought my 1994 ford aspire. 30 to 43 mpg (depending on weather, but usually about 36). So in the past 30k miles I've saved a decent chunk over my truck/crown vic. =)
 
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It makes very little sense to be putting a lot of miles on a truck with one or 2 people and no cargo. If you are not hauling things day in and ay out, you are better off with a car that gets decent or better mileage. Depending how much real need for a truck you have, either the old truck or the Home Depot make good sense. The less need for a truck, and the less inclined to your own repairs, the more sense the Home Depot makes. It makes a lot of sense to have something extra around. Unless you are trading every 3 years, your daily driver is going to be down for repairs or in the shop sometimes. It gives you something to drive and to chase parts with. It may be old, but it doesn't have to be a beater. When it comes to starting when I hit the key, and stopping when I hit the brakes, I will put 77 truck up against most other stuff built before 2000. The body is a disaster, but everything works. Of course it lack many of the things that can go wrong. It is a simple basic device. I figure Henry Ford would have been able to figure out and fix anything on it except the digital AM/FM cassette stereo.
 
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We looked at the typical options of: minivan - can be expensive, typically not much cargo volume once the seats are full, seems to be average durability at best. SUV - typically expensive, high depreciation, poor mileage is common especially with load, durability is mixed. Another car - can be expensive (for car seating six). truck - can be expensive, gas engines can have poor mileage especially with load. Our 4x4 Dodge quad cab with a Cummins engine was less than $26k, and I'm expecting 500k miles out of it. Cars seem to hit $15k real quick these days, unless buying small or used, and I'd only expect 250k miles out of one but would be happy with more. Buying beaters for a few thousand and less and driving them until they die is economical, but often too exciting for the wife and family and sometimes just exasperating for the mechanic of the house. Besides, we also have a larger dog, a Russian wolf hound, and although he will fit in the back of one of the cars there's not much room left when he does, so again a truck made sense. On a final note a coworker with a Subaru paid close to what I did, and he sometimes gets the same highway mileage.
 
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"Our 4x4 Dodge quad cab with a Cummins engine was less than $26k, and I'm expecting 500k miles out of it." let me know how the 500k theory comes out.... Yes, the engine may last that long but the rest of the vehicle will be toast LONG before that. from a pure practicality standpoint, a minivan is impossible to beat. Nothing is perfect in all situations, but a good minivan comes closest. It can be hard on the fragile ego however....
 
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quote:
Originally posted by 1sttruck: Our 4x4 Dodge quad cab with a Cummins engine was less than $26k, and I'm expecting 500k miles out of it.
500k? you'll get tired of the vehicle before you hit it. my dad drives 30k miles/yr and he wants to trade in every 100k cuz he's get tired of the vehicle but unfortunately he's stuck with his sentra for along time
 
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quote:
It can be hard on the fragile ego however....
Oddly enough ..I never felt this way. I owned a new BMW when I was 21 ..got me lots of girls. I had 3/4 ton pickups ..got me a few horse women. Both gave me presence on the road in their own way. Never really identified the minivan as an extension of my personality/ego, though ...nor felt "less" driving it. Probably the struggling child rearing years bleached that out of me. Owning a jeep did the rest. I never quite look at a car the same way after driving it. Unless I hit the lottery ..I don't think I'll be buying any new vehicles out of choice for a long time. The thrill just doesn't last long enough for what they take out of you in $$$
 
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quote:
Originally posted by Gary Allan:
quote:
It can be hard on the fragile ego however....
Oddly enough ..I never felt this way. ...... Never really identified the minivan as an extension of my personality/ego, though ...nor felt "less" driving it.

obviously Gary, your ego is very intact and sound. I've owned a couple and thought they were the most practical vehicle ever.
 
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quote:
Originally posted by Gary Allan: I don't quite buy the depreciation component of your model. Cars are losers in that respect. You don't know the true depreciation of a vehicle. The market determines that ..it's not like a house at tax time. Cars cost money ..period. Their price new is determined by the manufacturer ...used by the market's perception of them. Other than something like a 500SL, where it was worth $20k more delivered than what it was ordered at ...they're all losers.
The $10,000 example was straight-line depreciation, and the $1600 calculation was a levelized payment series for the 'cost' of the $10,000 vehicle given an interest rate of 10%. The underlying assumption is that if you didn't spend the $$$$ on an extra vehicle, you would have that money available to invest in a portfolio of investments yielding 10%. It is a pretty simple calculation actually, if you own a license of Microsoft Excel, merely type this formula in: =PMT(10%,number_of_years,purchase_price) Obviously if you buy a new car for $20,000 and it has a service life of 20 years, then the calculation would be: =PMT(10%,20,20000) Which should return a value of: $2349/year As for your comments on market-based depreciation, the underlying assumption above is that you will keep the vehicle for its entire life. Market based depreciation is a market-signalled approach to the determination of remaining utility in an asset, often discounted for uncertainties such as questions concerning maintenance, abuse, odometer rollback/tampering, and other risks not explicitly govered by a warranty or guarantee, etc. Also other factors cause an increase in the discount rate, for example, relative fuel efficiency -- a reason why diesels hold their value so well. If you keep a vehicle for its entire service life, you really do not need to worry about depreciation.
quote:
That being said, there's little common economic sense to a "spare" vehicle. It's merely a component of time/hassle/convenience ..which you pay for up front instead of dealing with the consequences of not having one (rental, carpooling, etc.).
Exactly. Well, there are some circumstances where one would exceed that theoretical 'hurdle rate' as calculated above. For example, if fuel was $4/gallon, it would make a lot more sense to have that second efficient vehicle than to drive the primary vehicle more often.
quote:
utility. Same with turbos ...whatever. If it was as simple as economics ...everyone ..well maybe 99% of the public would be driving new or used Honda's.
Well, I threw the math out to the forum just to illustrate an approach one could use to evaluate the true economic benefit or cost of having an extra vehicle.
quote:
It then comes down to "choice". The user who is going to own a 4wd full size pickup may be well served economically by owning a 25 mpg beater as a daily driver. The two car daily driver (newer) houshold may be well served to drive economical new vehicles for their long commute and still keep the paid off minivan for its expanded utility on the weekend where their econoboxes can not fit the family (Christmas trees, groceries, etc.).
I won't deny anything you say, but every "choice" has a set of costs associated with it.
quote:
Bottom line economic models totally ignore the religous component of transportation and the price people are willing to pay for "having".

But they still exist nevertheless, and if one has a finite supply of money and wants to have more money available for other priorities or for the creation of personal wealth, I would suggest that heeding bottom line economic models is a prudent course of action that will pay great dividends over the longer term. [ February 09, 2005, 08:32 PM: Message edited by: pitzel ]
 
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