Okay, so you want to say money on gas. There are any number of ways, but isn’t a better goal to reduce the overall cost of transportation? Of course it is. At the end of the day, we’re concerned about how much we spent to get us from one place to another, so there are many other factors to consider, not just the higher cost of fuel.
Have you thought about buying a new, more fuel efficient car? Many have, but that probably isn’t a good idea, especially if you don’t drive all that much to get yourself to and from work. The new car has:
What about a used car that doesn’t get good fuel economy? Would that be a better value for your money? The used car has:
If you do the math, you’ll probably find that the “cost of ownership” for the new car is more per year than the used car. Every situation will be different, and much depends on how old a car you get and how many miles you drive.
Consider a new car that gets 35 miles per gallon and an older car that gets 27 miles per gallon. The difference is 8 miles per gallon. Assume you drive an average of 15,000 miles a year and gas costs $4.00 a gallon. The new car will save you roughly $510 in fuel costs.
How far does that $510 go toward higher insurance, registration, and monthly payments. If you’re lucky, it will cover 2 monthly payments and that’s it. If you assume another 2 monthly payments worth of maintenance and repair on the older vehicle, that still leaves you in the red by 8 months of payments and all the other costs of owning the new car.
The fact is that we are most likely to spend way more money on a fuel efficient new car, in an attempt to save money through better fuel economy. It’s often a false economy at best. The bottom line is easy to understand when we do the math. Indeed, we save fuel, but we aren’t saving money.
We need to stop distracting ourselves with a fixation on getting better fuel economy and start focusing on spending less money. This is where “the rubber meets the road” in terms of our personal finances.