Sunday, May 11, 2008
Gas Prices and Improved Cars
As the price of gasoline continues to rise, many people start to think about trading in their existing car for one that goes more miles per gallon of gas. When you do get such thoughts, make sure you look at the actual mathematics of the gas cost vs. car cost situation. Assume you are an average driver who might drive 12,000 miles per year. If you are consciously trying to limit your driving miles by such tricks as making many planned stops on a single trip rather than taking many individual trips, 12,000 miles per year is quite reasonable. Assume that your current car goes 20 miles per gallon of gas. If we assume that gas soars to a price of $5.00 per gallon, you would use 600 gallons per year for a cost of $3,000 per year. If you were able to trade in your car for one that has double the fuel economy, that goes 40 miles per gallon of gas, your annual gas cost would drop from $3,000 to $1,500. That's a good bit of savings. Now if you are going to keep your new car for five years, you have to find a new car that you can buy for the five-year savings, or $7,500 in order to spend the same for gasoline plus car costs as you would by continuing to drive your old car. Go ahead, enjoy your $7,500 new car if you can find it. If you want to pay even less than you are now paying, your new car would have to have an even lower price...And don't forget, this calculation was based on $5.00 per gallon gasoline. Perhaps "rusty but trusty" is the better solution until your current car has to be replaced for functional reasons.