DINC – Dual Income No Children!

However, having just this past year or so graduated to two (2!) cars with dual front airbags and cup holders, I’ll look forward to the other innovations in about 10 more years. In the meantime, drive paranoid!

One last point: if you buy a used car with airbags, insist that they be inspected. Scam artists are failing to replace deployed airbags, and if it were me, I wouldn’t buy a used airbag-equipped car that was in a collision where they deployed. It is really important to have a competent mechanic look the thing over before you fork over any money.

As far as interest, I was including that in the car payment of $500.

Sharon,

Who needs to get a Kick Arse bike, when I already own 3. Have a buddy that owns a bike shop. Can you say Huge Discount!!!

I do have insurance, a helmet, a job and a enough sense to ride on a bike path! Did I mention I am a DINC as well?

I will not ride my motorcycle on the freeway/interstate either! Free wheelin’ back roads for me!

Julia, you don’t need 4wd in SoCal, though. Check out used wagons – my folks had a Taurus wagon forever and it did well. Or, I had a ‘97 Ford minivan for a long time as well and it was very roomy. Mpg was around 23.

So looking from a purely cash flow perspective, I compared two scenarios. In each one, we have the following constants:

- we have $5,000 cash up front.
- we drive 1,800 per month
- gas costs $3.50/gal

Scenario 1) Pay $5,000 cash for a used car that gets 18MPG (like my 98 GMC Jimmy).

Scenario 2) Finance a new car that gets 30MPG – don’t care whether it is hybrid or not or what type of vehicle. The purchase price is $25,000. We use our $5,000 as a downpayment and finance $20,000 at 7% = $425/mo [http://www.cars.com/go/advice/financing/calc/loanCalc.jsp?mode=full]

*Scenario 2A) Same as 2, but we get 40MPG.

Here is the break down I came up with over 5 years (so everything is extended by 60 months):

Scenario: 1 2 2A
Upfront cost: 5,000 5,000 5,000
Payments: 0 25,500 25,500
Gas: 21,000 12,600 9,450
————————–
TOTAL OUTLAY: 26,000 43,100 39,950

*CASH FLOW DIFFERENCE:
In this case, buying a new car costs an additional $17,100 over 60 months (cuts to $13,950 in 2A).

[*Before anyone cries foul, I know I did not include maintenance or insurance. Admittedly unscientific, but I'm considering it a wash. Old car = less insurance more maintenance, new car = more insurance less maintenance.]

Let’s look at monthly cash flow:

Scenario: 1 2 2A
Payments: 0 425 425
Gas: 350 210 158
————————–
Monthly OUTLAY: 350 635 583

Again, strictly looking at Cash Flow, buying an old car with worse mileage is less total outlay AND less monthly outlay.

For those with a Balance Sheet perspective, you may point out that there will be residual value in the new vehicle while the old vehicle will be essentially worthless. This is not entirely correct, but let’s (generously) assume that the new car retains half it’s original value. It is now worth $12,750. Let’s also admit that no car is worth $0, so we’ll say the old car is worth $500.

Scenario: 1 2 2A
5-year diff: 0 -17,100 -13,950
Residual Value: 500 12,750 12,750
————————–
Balance Sheet: 500 -4,350 -1,200

So from a balance sheet perspective, the only scenario that remains positive is the old car purchase.

I’m sure there are plenty of faults, and I look forward to reading them, but let me head a few off at the pass. Pointing out the obvious, there are a lot of moving parts here that could affect this analysis that you could use to improve the situation.

1) In the obvious category, the more gas you use, or the better MPG, or the higher gas prices go, the better the new car looks. The balance sheet break even occurs in this scenario at around 50MPG.

2) You could get a used car with much better MPG than 18. There are always Hondas and Subarus in this price range that get 30+. If that is the kind of used car you get, I’m not sure there is ever a break even.

So my conclusion is that unless the sustainable MPG is very high (50+) or the price of gas gets really outrageous, the disparity in MPG itself is not enough of an argument to justify a NEW hybrid.

Please take this with a grain of salt and forgive the pun:

Your Mileage May Vary.

2004 Expedition avg MPG is 14, monthly fuel is $400, average cost over 5 years is $450.

2007 Prius avg MPG is 46, monthly fuel is $122, average cost over 5 years is $622.

2006 Civic avg MPG is 32, monthly fuel is $175, average cost over 5 years is $542.

Obviously this goes down if your fuel costs are split over two vehicles, and it doesn’t take into consideration equity or repairs.

But the numbers say the most cost effective way is to keep the old car rather than get a new one. Perhaps consider paying it off, then setting aside a “virtual” car payment, and getting a slightly used fuel efficient car, but not necessarily an expensive hybrid?

Don’t be put off by a sedan vs. a giant truck. Two Britax seats fit very comfortably in our backseat. My friend can fit two Britax seats in her Prius. Also, I can fit a Bugaboo, a smaller stroller, and groceries in the trunk without any cramming. Don’t write it off until you go to a lot and put your usual stuff into the cars you are considering. And if you aren’t having more kids, you’ll be gear-free in another year or two, so maybe waiting and saving the down payment up does make sense if you find the fit is just too tight for you. Even a mini van or something like a Honda CRV would do better than the Expedition, no?

Another thought, which hardly anyone has touched on – do you feel there will be a psychological benefit for you in driving the Hybrid? That’s worth factoring in, if making an conscious effort to be greener (while continuing to mitigate how much you drive and batching errands in certain areas on different days) while make you feel like you are doing more than you were. In my area, SUV owners are typically the butt of jokes, so there may be social pressure in your area.

Trent – I felt like you may have missed the mark with this one. Adding a third vehicle just sounded strange to me. Even a small payment plus insurance, taxes, title will easily eclipse the fuel savings.

come on, you’ve *got* to be kidding me. the warranty alone covers the batteries for 10 years/100k miles, 15 years 150k in california. i’m so tired of hearing this “fact” floating around. last cost i got on a hybrid battery was $2800 from toyota.

i have not read every single comment, but one point i did not see considered is the interest that you pay taking out another loan. it often adds up to a real chunk of cash that should be considered carefully before getting into a new car.

And if you get to a dealer before they sellout. :)

Apparently there’s a large supply problem with the hybrid batteries and long wait lists at dealers who maybe get one car every few months, if they’re big dealers.

The funny thing is all the car companies continue to massively promote cars that they can’t really sell at the moment because advertising green gives them a huge pr boost.

I’d also point out to Sharon that, if safety is really your primary concern, you shouldn’t be driving at all.