Un-Pimp My Ride 6

Let me introduce everyone to my new ride, a 2013 Dodge Challenger SRT Hemi, “A BRAND NEW CAR “(preferable repeated in the Price Is Right style a la Rod Roddy, RIP

 2013 Challenger

Alas, this isn’t my new car, although it probably would be if I wasn’t a finance geek. My new “whip” looks something more like this: 

Toyota Echo- Slightly less speedy and sexy than the Challenger

Toyota Echo- Slightly less speedy and sexy than the Challenger

I will describe my scenario and the powerful reasons I chose the used, paid in cash ten year old Toyota Echo over the sexy new sports car. The three primary expense categories for most everyone include:

  1. Housing
  2. Transportation
  3. Food- groceries plus dining out

I have done a fair job of bringing expenses down on housing, and now am focused on bringing down transportation costs. I understand that commuting presents huge costs both tangibly from gas, maintenance, wear and tear and intangible from the inordinate amounts of time stuck in traffic jams and related opportunity costs of lost time that could be spent with loved ones, working out, cooking meals, educational opportunities, etc.

Ideally, I would love to live within walking distance of my workplace and generally park my car. However, given, the nature of my work, frequent moves are required. In fact, I’ve bounced around to 19 different locations in my 4+ years in the working world, and the prospect of packing and relocating every 2-3 months coupled with the penalties in breaking leases and associated costs have led me to just settle on a central location in the approximate 40 mile radius I most often work in and deal with the associated commute. This has led me to drive an estimated 115,000 miles for work alone in the past five years, and is strong evidence why I’m looking to obtain financial independence sooner than later:

115,000 miles @ average 45 miles per hour= 2,555 hours

This staggering sum represents an extra 1.27 standard work years I’ve spent just travelling to work in less than five years time. In a word, depressing. However, financially, I managed to relatively limit the tangible costs. First of all, the car I was driving prior to my new commuter I purchased for $1,500 cash money and drove nearly 60,000 miles before deciding it was time to find a more reliable, fuel efficient vehicle before my 18 year old commuter blew up while approaching 200,000 miles. 

I wanted to analyze my cost per mile for this vehicle for comparison’s sake during my car shopping and to check to see how I was doing compared to the IRS estimated average costs of $0.56/ mile.

Vehicles present several costs including:

  • Depreciation
    • Purchase price = $1,500 Sale Price = $500. Depreciation amount = $1,000/60,000 miles = 1.6 cents per mile. Pretty darn good!
  • Maintenance
    • Rebuilt starter, serviced transmission, battery, steering column work totaled ~$1,200/60,000 miles = 2.0 cents per mile. Not terrible considering the age of car and my lack of mechanic skills
  • Insurance
    • ~$1,200/60,000 miles= 2.0 cents per mile. Carried only general liability coverage over 3 year span but paid premium for being a young male
  • Fuel
    • 60,000 miles/ 27 MPG= 2,222 Gallons of fuel @ $3/gallon= $6,667/ 60,000 miles= 11.1 cents per mile. The car averaged ~27 MPG over its glorious tenure while I’m saying gas averaged ~$3/gallon over that span.
  • Tires
    • $0 – I managed to stretch the existing newish tires for the whole duration of my ownership
  • Oil
    • 60,000 miles / 6,000 miles per change = 10 oil changes @ $25/EA= $250/60,000 miles = 0.4 cents per mile


I managed to use my old not-so-fuel-efficient commuter to the tune of 17.1 cents per mile! Not too shabby when you consider the current 56.5 cents per mile the IRS uses as its average for reimbursement. I managed to be nearly 70% lower than the current standard! Thanks in small part to the tremendously low depreciation cost. On my new commuter, I’m hoping to beat even this cost per mile but hopefully through reduced fuel consumption and minimal repair works. I went into my car search with three primary objectives:

  1. Fuel Economy- something averaging over 30 MPG was a must given my extensive commuting
  2. Cabin Room- As a 6’5” plus individual, this was the biggest challenge in my search for maximum MPG as I had to try several commuters on for size that just didn’t have enough headroom for me to ride comfortably or have good visibility
  3. Cost- I wanted something in the $7k and under price range for my cash purchase
  4. Eye Appeal- I wanted to receive the same extreme amount of attention from the female population as I did in my old 1996 sedan (only kidding and apologies to my girlfriend, I couldn’t resist)

Ultimately, I settled on a 2003 Toyota Echo which provided a great combination of the above four categories (well the above three categories, anyways). This little “Donald Duck” car was produced for only four years by Toyota and surprisingly presents ample head and leg room despite its tiny length. Its high cabin and short body length gives it a very quirky look. I actually test drove one of these little beauties four years ago before settling on another option. I was also encouraged by MMM’s list of “Top Ten Cars for Smart People” list which identified the Echo due to its fuel economy and reliability : http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/.

So far, its little 1.5 L engine has provided me with an average fuel economy of 41 MPG over the first 7,000 miles of driving! This has far exceeded my expectations given the EPA fuel economy estimates of 32 city/36 freeway for the sedan auto edition. I purchased this car for $5,700 with 80k miles. I wanted to run a projection of cost per mile with this new car to see how it will limit transportation costs, improve my cash flow, and hopefully pay for itself with savings. For comparison’s sake, I kept the fuel prices the same as the other @ $3/ gallon and assumed I would drive the car 120k miles until it reached 200k miles

  • Depreciation
    • Purchase price = $5,700 Sale Price = $2,500. Depreciation amount = $3,200/120,000 miles = 2.6 cents per mile. Current Kelley Blue Book is $3k for my model at 200k miles
  • Maintenance
    • Assuming $400/year x 5 years = $2,000/120,000 miles = 1.6 cents per mile. Consumer Reports speaks glowingly about the car’s reliability so hopefully I can beat this projection
  • Insurance
    • ~$2,500/120,000 miles= 2.1 cents per mile. $500/year x 5 years
  • Fuel
    • 120,000 miles/ 41 MPG= 2,927 Gallons of fuel @ $3/gallon= $8,780/ 120,000 miles= 7.3 cents per mile. This is where my Echo shines, besting my old car by 14 MPG good for a 52% increase which will save 4,444 gallons- 2,927= 1,518 gallons @ $3/gallon= $4,552 or 80% of the total vehicle purchase price! Plus, 28 fewer potential barrels of oil I will use.
  • Tires
    • $400 for 1 replacement set/ 120,000 miles = 0.3 cents per mile. The car came with brand new tires so this only one set should be needed for replacements
  • Oil
    • 120,000 miles / 6,000 miles per change = 20 oil changes @ $25/EA= $500/120,000 miles = 0.4 cents per mile


My projected costs for ownership carried through to the 200k mile mark where I plan on selling the Toyota provides a total of 14.3 cents per mile which beats my old car by 2.8 cents. This presents a 16% savings and a savings of 42.2 cents per mile vs. the IRS standard rate, saving 75% over the average rate. I acknowledge that fuel prices will likely rise, but I wanted to calculate an apples to apples comparison with my old car. This is a great rate, but I’m a little surprised that the margin between this car and my old car wasn’t more.  My new car makes its hay in the fuel savings category but loses some ground on the depreciation aspect. All, in all, looks to be a money saving maneuver to add to my net worth snowball!


6 thoughts on “Un-Pimp My Ride

  1. Pingback: Car Buying Principles to Save Truckloads of Dough ← Net Worth $nowball

  2. Reply Mr. 1500 Feb 20, 2013 9:41 pm

    Very smart.

    I can’t understand society’s obsession with vehicles. Many of my friends have vehicles that cost around $50,000 that they’ll trade in after only a couple years. Since they are young, just the money they would save by buying a reasonable vehicle could fund much of their retirement.

    Let’s say that they spent 20K (still a lot in my book) instead and invested the 30K and earned 10% interest, in 28 years you’ve got almost $500,000!!! Now, factor in the higher insurance, fuel and maintenance costs.

    Spending lots of money on vehicles is just completely ridiculous. Cut out the middle man and just flush your money down the toilet.

  3. Reply Net Worth Snowballa Feb 27, 2013 2:13 am

    Mr. 1500,
    Thanks for stopping by! I actually jumped into some more principles of car buying that look at some of the figures like you’ve posted and analyzing what kind of nest egg one can build by making wise vehicle decisions on my next blog post.

    You’re absolutely correct. The one simple financial decision to buy a reasonable, fuel-efficient vehicle could fund a large portion of retirement. Meanwhile, so many of my peers continue purchasing sports cars, lifted pickup trucks, and pricey European cars, it’s just astounding. You’re right, they might as well flush it on down with the brown.

    Good luck on your $1M magic number and your 1,500 day goal! I look forward to following your progress.

  4. Reply CashRebel Mar 22, 2013 9:14 pm

    14.3 cents per miles is awesome! I’m closer to 30 cents per mile with my Subaru Forester. For the longest time, I worried about trying to make i more efficient, until I realized that it was way easier to just use it less. I’m trying to move towards a car-free lifestyle, but some occupations do require cars, so it sounds like the Echo is a solid choice!

    • Reply Net Worth Snowballa Mar 30, 2013 9:23 am

      Yes, I’m loving the 14 cents per mile, especially when I have to use my personal vehicle for work travel and get to expense my mileage. Essentially, I’m paid 42 cents per mile in these instances. This doesn’t happen very often, but when it does it’s quite rewarding as last week I pocketed over $200 in savings from traveling to a required company training session.

      I would love to move to the more car-free life style you’re starting to implement, but unfortunately it’s not very feasible at this stage in my career. The most frustrating thing about this article was calculating that I’ve spent over 1-1/4 standard work years just commuting to my job that I’ve worked for less than five years. Kudos for parking your car!

  5. Reply linda15tmiller.tumblr.com Jun 30, 2013 9:42 pm

    Very good post! We are linking to this great article on our site.
    Keep up the great writing.

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