The REAL cost of driving

Some of you may have read my earlier post, "The cost of driving."  As life-changing as that post was, I realize now that it just wasn't good enough.

In that post, I concluded that the cost of driving my car was 26.3 cents a mile. But after some consideration, I think that's too low because I'm underestimating the cost of depreciation.

My previous calculation simply looked at the drop in the value of my car if I added 20,000 miles to it. That came to 2.7 cents per mile.

But that's a very narrowly focused view of depreciation because it fails to take into account the fact that every mile driven takes you closer to the day when your car will just not be worth driving anymore and you'll have to buy a new one.  That last mile -- whenever it happens -- will be VERY expensive.

So it seems to me the fairest way to assess overall depreciation is to take the total cost of a new car and divide by the number of miles it lasts.  This requires some assumptions, and I'll start by estimated my next car will cost $25,000 (no, I'm not planning on buying a BMW).

So how long will a car last? This can vary widely. Some cars, well cared for, last well past 200,000. But some seem to have trouble getting past 120,000 without major engine work. I'm going to say 160,000 miles. (Disagree? Fine. Do your own calculation.)

Divide $25,000 by 160,000 miles and you get 15.6 cents per mile. I think that's a fairer estimate of depreciation.

Also, since my last post, the price of gas has gone up; I last bought it at $3.59 per gallon. That works out, for my car, to 16 cents per gallon.

Adding it all up: 16 cents for gas, 8.6 for maintenance, 15.6 cents for depreciation, and that totals 40.2 cents per mile.  That's my REAL cost of driving.