Compound changes (Cars Suck II)

Well, I was a bit slow on finishing this post, life catches up to you sometimes and you just need a rest. As I read over the previous post I found something that I thought I may have misstated in that last few sentences. "...what kind of impact on the local landfills do you think it would have if they suddenly got filled with old SUV's?" well, that's just kind of stupid, since where do they discard of used vehicles into landfills?? They would of course be reclaimed and recycled but I think you get my point, and it's on that point that I'd like to pick up.

 

Many car owners are, or are thinking about trading in their SUV's for better mileage vehicles, oft times going from the 8-12 mpg range to the 20-30 mpg range. What's the problem with that, right? I look at it in a couple of ways.

In my situation were I to trade in my 1994 F-150 truck for a higher mpg vehicle I would likely get little trade in value for it. I'll assume $1000.00 to be generous, it is after all my truck and I want a good value for it. And let's say that I buy a pre-owned, high mpg vehicle like a Honda Civic for instance. I quoted one from a local dealers web site for $9,488.00 and assumed 6.9% APR for 48 months. The payment per month comes up to $202.00. Now I also have to remember that my insurance rate will go up because I now have to have full coverage. Luckily, it's older so it only goes up by $12.00 a month. To this point I have committed to invest $214.00/mo toward reducing my gas consumption. I did some calculations (I can provide them if you're really geeky like that) based on many of the commuters in my community that drive about 30 mi. into the city for work. This is not my situation, but it is most common among those who are really looking into making this trade in. If they were driving a 12 mpg vehicle, I figured about 16900 mi/year. or 493.00/month at a price per gallon of $4.20. The same driving in the Honda Civic would only cost them about 185.00/mo. (that is assuming that the higher mpg doesn't incentivize them to drive more.) But now we have to add in that additional $214.00 that I committed to, bringing the monthly total to $399.00. That's still a savings, but only $94.00! Hardly a budget sealer, and were I to use my actual mileage, I would actually be spending an additional $158.00/mo because I don't have to drive as far.

Now for that scenario I used my paid off 1994 truck as a trade in that netted me $1000.00 toward a new vehicle. So many people today are trading in relatively new, 2-3 year old, trucks and SUV's that initially cost them 40, 50 even up to $70,000 dollars new and are upside down in them to the tune of many thousands of dollars. I heard a program on "All things considered" a couple of weeks ago about people that stood to have up to a $30,000 deficit if they traded in. That doesn't go away, you still have to pay it one way or another and that $94.00 savings every month won't cover it very quickly. Unfortunately we've become a nation of monthly shoppers and if we can "make the payment" we think we can afford it. I'm guilty of it, God knows I've done some stupid stuff in my day.

My point in all this mathematics is this; just as I don't believe we can drill our way out of peak oil changes, I also don't believe that we can buy our way into monthly savings. It's really no different than refinancing your home to pay off your credit card debt. You didn't make the problem go away, you just moved it so it doesn't hurt as bad, effectively financing the new cell phone you had to have over the next thirty years! We need a change of mindset as a nation. My generation is one of the first in this country that feels itself "entitled" to so many things that took our parents a lifetime to acquire; in short, we're impatient.

And now that I've digressed substantially from my bitch about cars, let me try to bring that ship back into port. Yeah, cars suck. I think we'd all agree with that statement from time to time, but we're stuck with them at this point. The thing I think we need to remember is that there's not only one idea to take into consideration. It's not all about gas mileage, nor is it all about carbon emissions. There's a lot of gray area here to be reckoned with and to find a solution to all of it would be near to impossible. But, finding solutions to some of them, based on our needs is attainable, and will compound over time. I guess it's like the old riddle, "would you rather get a million dollars in one month, or a penny doubled every day for 30 days?" The quick million sounds good but compounding makes those pennies add up to over five million. Just like those pennies if we compound a few changes in our daily behavior, where we can and in a way that we feel comfortable about, with the example we can help to spread to others we can equal a very large change. We'll have to make that change sometime, I guess I just think we should start with what we can now, and compound it as we progress.

 

I’m having my son in town to visit this weekend so I’m taking a few days off. I’ll talk to you again early next week. Have a great weekend all!

P~