theholtsite

It seems like we often pay some fee or another for owning two cars. I was curious about the cost of travel, so I consulted our finance archives (thanks to DrBuck, my homegrown finance program) and I was able to estimate the average cost.

Before I get started, I will say that Jill and I have much lower insurance than a lot of people due to our perfect record and old, beat up cars. In 2006-7 we owned a 1994 Mazda 626 and a 1995 Ford Escort. In 2007 we sold the Mazda and bought a 2000 Beetle for $8,000. The cost for most people will be much higher since many of our friends own new cars and pay more in insurance. If anyone has data recent data on the average cost of insurance and car purchases, let me know.

Part 1: Buying a Car

“According to the National Automobile Dealers Association, the average price of a new car sold in the United States is $28,400.” –This site

Wow. Jill and I would never spend this much on a new car. Even our used Beetle at $8,000 was way more than we wanted to pay. We also like to keep our car for as long as we can – until it is more expensive to repair it than it’s worth. For my calculations, I’ll say that every five years we spend $8,000. This assumes we keep our car for ten years each. This is hard to test since we’ve only been married for seven years and got the Mazda very cheap from family with a lot of miles already on it. But my dad bought me the Escort around ten years ago and we still have it. So historically this price is probably high for us, but seems a good price looking at the future.

Approximate Total for Car Ownership: $1,600 per year

Part 2: Fees

Fees aren’t insignificant because there’s so many of them. I keep getting bills in the mail for various car-related things. Note that yours may be much higher due to our cheap cars.

Excise tax: For 2006-8, ours was $81 yearly.
Inspection: $58 per year for two cars.
Driver’s License Renewal: $40 every five years for two drivers. $16 per year.
Title Tax: This was $483 for our new Beetle. Using my ten-year $8,000 model, that’s $48 per year.
Vehicle Registration: $41 every other year for two cars. $41 per year.
Insurance: Varies widely, but ours is around $780 per year. I can’t find our statement right now because Jill’s my secretary and she’s not home, but I think that’s about right.

Total Fees Per Year: $1,024

Part 3: Repairs & Maintenance

This is where Jill and I probably pay more than a lot of our friends. With ten-year old cars, there’s no warranty and they break a lot more often. This is a pain, but it’s cheaper than buying a new car every three years for a warranty! This includes oil changes, repairs, towing, etc.

We paid about $2600 from 2006-7, which is $1,300 per year.

Part 4: Gas

This will increase in the future. The cost of gas of course depends largely on how far your commute is, where your relatives and beach houses are, and what kind of car you drive. Jill and I both commute about a half hour and drive smaller cars, so this may again be on the low side compared to you.

For us, the average monthly cost of gas from 2007-8 was $150. Per year this is $1,800.

Part 5: Conclusions & Totals

Approximate Total for All Expenses: $5,724 per year ($477 per month)

Assuming 10,000 miles per year for both cars (see this site for older statistics on mileage) we pay $0.57 per mile, which is higher than the IRS rate of 50.5 cents per mile.

Travel costs a lot more than you think. My data is based on cheap cars, cheap insurance, decent gas mileage, and keeping cars around ten years. For the majority of people, this expense will likely be MUCH higher due to more expensive cars, more frequent buying, gas-guzzlers, and higher insurance premiums. These calculations represent the conservative end of comprehensive travel costs.

I should note that $477 per month is less than $100 less than our mortgage. We pay almost as much per month to travel as to own a house!