As the financial adviser of my little family, I have to be more than a spender; I have to be a planner. In the past few weeks gas prices have gone up by quite a bit. In our area the price ranges between $3.49 and $3.89 a gallon. The "powers that be" are predicting that the average price per gallon will reach over $4 a gallon if not more. To offset the additional cost some people are thinking of buying an additional car that uses less gas per mile. These are the reasons that plan will not work for my family.
Actual price of the vehicle
I originally thought we would buy the cheapest car we could, but the cheapest aren't always the most reliable. Even if we purchased something that was around $2000, which is cheap for a vehicle, it doesn't make financial sense. At $5 a gallon, our gas expense would be around $260 a month in our current truck. Keeping that in mind, I know we could drive nearly seven months just on what we would spend on a new vehicle alone.
In our state we are required to have insurance on any vehicle we own. We still owe a balance on our current truck, so it requires full-coverage insurance. We pay about $1200 a year for insurance now, and that will only increase with another automobile. If our yearly cost went up by just half it would cost us $1800 a year, or an additional $600. That means we could drive for another two and half months on what the insurance would cost us.
Taxes and Registration
The cost of registering a vehicle depends on a lot of things. Without knowing the make, model, and year of the automobile you purchased, there is no way to know what it will actually cost you per year. However, just based on what it costs us for our current truck, I know that I could at least pay for a month worth of gasoline with what the taxes and registration would cost.
There are a few things you have to do to keep your vehicle performing its best. Regular oil changes and yearly tune-ups are just the beginning. Even our current vehicle would require maintenance, despite not being used. These things may not cost a lot individually, but they do add up. All the money you would spend on that second vehicle could be just as effective being used as gas money.
Looking at the numbers it's clear to me that getting a second vehicle doesn't make financial sense for my family at this time. However, I know the option is still there if our circumstances change sometime on the future.
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