A couple years ago when gas was over $3.25/gal here I put a spreadsheet together to compare the cost of ownership of keeping my Expedition (older rig with about 200k miles on it at the time) vs getting a comparable but newer, more efficient vehicle that I had to finance. I factored in things like insurance costs, registration cost, maintenance costs and of course fuel costs. The older vehicle had more money allocated for repairs and fuel, but cheaper insurance/registration and no payments. Basically what I found out was that gas would have to be around $20/gal to BREAK EVEN. Obviously the payment cost of the new vehicle really slanted the odds towards the older vehicle.
ExplorerTom,
Wow, $20 per gallon break even, at how many miles per year driven and did that include depreciation costs of the vehicles?
Seven years ago a good friend of mine and I were both looking for reliable trucks/SUVs for us to use as DDs and adventure vehicles. We both drive approximately 30k miles per year. I bought a 2000 Suburban 1500 for $4,100 cash. He bought a 2007 RAM 2500 5.9 Cummings for $36k. He also rolled into the payment the balance of his previous car loan to come out to $724/month.
Diesel is slightly more expensive and got slightly better MPG than my gas truck so our annual fuel cost remained the same.
Maintenance: I have spent a little under $2,500 over the last 7 years and the truck remains my daily driver. He spends $1,000-3,000 per year and is closer to $12,000 in maintenance and repairs.
Insurance. I pay $100 per month less than he does, however he was able to lower it slightly a few months ago when he finally made his last payment.
Value. My truck is worth around $1,500 without the modifications or closer to $2,500 with the mods. His is worth $7-8k.
Bottom line. 7 years in each of the trucks.
Suburban expenses: 45,000 fuel, 4,900 insurance, 2,500 maintenance, 1,500 depreciation. $53,900 total or $7,700/year or $642/mo.
Ram expenses: 45,000 fuel, 13,300 insurance, 52,128 truck payment, 12,000 maintenance, 28,000 depreciation. $139,628 total, or $19,947/year or $1,662/mo.
His nicer shinier truck cost him over $1,000 more per month than my shiny beater of a Sub. We were both working for the same employer and making nearly identical paychecks.
I am not saying that my way was right and his way was wrong, this is where anyone can do as they please with their incomes. When I ran these numbers back then I could not justify spending that much on a new vehicle that depreciates into virtually nothing. I chose the lower budget path of a used vehicle, and the money I saved allowed me to retire at 35 and enjoy as much time as i can with my kids. My buddy with the RAM is working 5-6 14hr days per week and will be for another 20 some years.
