A few years ago, with my last car, I did a little calculation to help determine the “cost per mile.” I was doing quite a bit of driving back and forth from Baltimore to Pittsburgh, then Baltimore to New Jersey, to visit my girlfriend (now by wife, so I suppose it was worth it :)) and so this number was important for me to know. I also found that it helped make other decisions in my life easier because it gave me a very tangible cost associated with driving somewhere, such as to the gas station across town instead of the gas station on my route home.
The cost per mile can be broken up into three major categories and one catch-all:
- Gas: Clearly the dominant value in the calculation, gasoline is something that has to be based on actual costs rather than estimated costs. You can’t take the cost of gasoline, the EPA value for your car’s mileage, and figure out based on that. Ignoring the inaccuracy of EPA values, though they’ve made a push to make them more accurate, your car is probably not the standard car. You have crap in your trunk, your tires are probably not inflated perfectly every single drive, and your maintenance isn’t going to be perfect (get that 30,000 mile checkup exactly at 30,000 miles?). So, keep a log for five fill-ups, reset your B trip odometer, and calculate your gas cost per mile that way.
- Insurance: This value is easy, simply take your premium and divide by the number of miles you drive in a given year. The “rule of thumb” is around 15,000 miles a year, but if you have an especially long commute then you can increase that. You can always just throw in a guesstimate because what you use as your miles driven per year isn’t going to drastically affect this number. For example, if you pay $2,000 a year and you drive 15,000 miles, that’s 13.3 cents a mile. At 20,000 miles a year, it’s 10 cents a mile. Sure the difference is 33% but you’ll ultimately use this value for trips in the tens or hundreds of miles… meaning a difference of only 30 cents – $3.
- Tires: Depending on how expensive your tires are, you might want to go through with this calculation or just consider it part of the noise. I know tires say they can last 30,000 miles, but I believe most of my tires run only maybe 20,000 miles. Either way, this math should be pretty simple. Divide the cost of the tires by the mileage and add it to the running total you’ve been using.
- Everything Else: I always throw in an extra 3-5 cents to cover everything else, from windshield wiper blades to routine maintenance to oil changes. I figure that a $20 oil change put across 3,000 miles (I actually changed my own oil with synthetic but do it once every 10,000 miles) is small enough to be considered noise in the equation so I use the 3-5 cents catch-all value.
So, what’s the final number? The IRS business mileage deduction is 50.5 cents a mile, how close was your value to this one? When I did this calculation a few years ago, I found my value was close to the mileage deduction back then (it was 40-something cents) but that was before the spike in fuel prices. For comparison’s sake, my value for gasoline back then was 7 cents a mile based on a car that was running around ~32 miles to the gallon (Acura Integra and I was doing a significant amount of highway driving).
How do you use this number? Let’s say it’s 280 miles between my home in Maryland and my parent’s in New York. The tolls between Maryland and New York, I believe, are around $60 a round trip. Given the cost of fuel alone (7 cents a mile), the cost of the trip is over $100 compared to the cost of a Southwest flight that can be bought for $39 a round trip. So, driving alone would cost over a hundred dollars and nearly 5 hours – flying would cost ~$100 and 3 hours… it’s a no brainer and the math is facilitated by knowing the cost per mile.
Finally, your car’s cost per mile is only part of the story. In my drives to Pittsburgh or to New Jersey, tolls played an important role and often threw the entire equation out of whack. Back then, the toll for the Pennsylvania Turnpike was around $8 a round trip and nearly $50 a round trip to New Jersey. Another factor was time. I could take a $15 Chinatown bus from Baltimore to Grand Central in NYC, then jump on an Amtrak train out to New Jersey… but it would take me like 15 hours to make the trip and time is money! (and back then, that was time I could spend with my beautiful soon-to-be wife, and yes she reads this blog)