Glimmerick

Last post, I wrote about how it wasn’t a good idea to trade in a car to buy a new Hybrid. In fact, if someone had a Toyota Tacoma, a truck, it still wouldn’t make sense economically. So today I want to illustrate another option, that can almost double your gas milage without having to purchase a new Hybrid. I have been a long time fan of Honda Civic’s especially the ones from the 90’s. My 1994 Honda Civic averaged 35-37 MPG, and and the freeway, it has gotten 42 MPG many times. While looking up trends in MPG, it seems that less and less cars are getting more fuel efficient. This surprised me a lot. According to Fueleconomy.gov, with the new specifications, only one car from 2008 averages over 35 mpg. That is ridiculous.

I know that most people wouldn’t be as excited as I would to get a 10-15 year old Civic, so I will spare you the lengthy comparisons. This is what I know about them: They have never given me any problems running, the ‘94 easily gets 35-37, the ‘00 easily gets 35-36 combined, and they are neat little cars.  For the rest of you who want a newer, more hip car, I have compared 3 decent looking cars with the Prius to show you that good mileage can be obtained without spending a bundle.

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That one reason? It simply is not worth it! Just because gas prices have gone up, people think that they will save a ton of money by simply buying a hybrid. “But this new car gets almost 50 MPG! I am going to save so much money in gas!”  Yes, you will save some in gas, but what about the higher insurance costs? Monthly payments? Financial Guru Dave Ramsey fully agrees as well.

Scenario 1

Here is my scenario. Driver Dan has a 2002 Toyota Tacoma, and he feels like someone has just poked him in the eye every time he fills up. He sees an ad on TV for a new Prius, and decides to go check it out. After all, that Prius will get almost 25 more miles to the gallon than his pickup.  When he is talking to the car salesmen, he finds out that he can trade in his pickup for almost $6,600 dollars! That means he can get his new Prius for around $17,000 with the trade in. Not too bad for a new “gas sipper” he thinks to himself…

According to this car loan calculator, the monthly payments would be around $330 a month. Right away, this “$17,000 car” is closer to $19,700 with all the interest included. How much would he save in gas? Considering  the average American drives 15,000 miles a year, his truck would consume $3,225 (gas at $4.30).  With the Prius, he only spends $1387 on gas. What a deal right? Wrong! Add in the $330 a month, and he spends $5437 during the course of the year, over $2,000 than he would have spent if he stuck with his truck, which only gets 21 MPG… Of course if you change your driving habits, it is possible to get 60 MPG with a Prius, look at this post from Guy’s Blog.

My next post will talk about alternatives to getting a Hybrid, escaping burdening car payments, all while getting simliar gas mileage.

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80% of Starbucks’ revenues come from customers who visit their stores an average of 18 times a month. ~BusinessWeek

I’ve been looking around to see how much the average person visits Starbucks a month, and I’ve come up with anywhere from 6 to 18. Let’s just create an example, and figure out how much you could save by retirement. I like using this handy tool, Dave Ramsey’s Investment Calculator.

OK, Let’s say that Steven Investor visits Starbucks an average of 8 times a month, only a couple times a week. This is not unusual by any means. Let’s say that on average he spends a total of $5, which is also not unusual considering that a tall Mochal (tall is small) can cost as much as $3.40, and food is equally price gouging. All I did was take that $5 average ticket price, times 8 times a month to get $40 a month. Now some months he may buy more or less, but this is a completely reasonable scenario. He may buy pop everyday at work, or get a candy bar at the vending machine, either way, I’m sure many of us can find $40 a month we can easily cut back on or eliminate.

Here is where it gets interesting. Instead of spending that $40 a month, I put that into a mutual fund that averages 8% a year over the next 42 years. I am still young, and retiring at around 60 would be great considering trends now a days. 8% is a great number I like to use, as it is not overly optimistic, but not a pessimist’s ideal.  The stock market has averaged over 10%  a year since 1926. That would be great in today’s economy, yet less than ideal during the “dot com” years. Now $40 a month doesn’t seem like much, but with compounded interest taken into consideration, it can be worth hundreds of thousands of dollars by retirement depending on age.

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