What does it cost to drive a kilometer?
Driving can be very expensive. Everyone knows how much they pay for their vehicles and they know how much they pay for gas and insurance and everything else, but does anyone actually add it all up and see how much does it cost to drive a kilometer in their particular mode of transportation?
For me personally, I drive a 2009 Toyota Rav4. I bought the Rav4 used in 2013 after the 14 year old Grand Am that I inherited had everything break in it. Seriously, the AC broke on my drive from Halifax to Calgary in June of 2011 and the heater broke in January 2013. Needless to say, spending several thousand dollars to get them fixed on a car worth maybe $2000 once everything was fixed wasn’t really a great financial decision.
I bought the vehicle because I thought it was the right thing to do. I do need a vehicle occasionally to get certain places that public transit doesn’t reach. Sometimes it’s nice to do a small road trip to the mountains or wherever I want to go.
The cost of the having the vehicle doesn’t bother me, I personally think it was a great deal. I bought it used in 2013 with 69,231 kilometers (43,018 miles) on the odometer, fully loaded, leather seats, spare winter tires and rims, all of the options. It would have cost me just under $22,000 if I have paid for it outright in cash. Everything comparable was several thousand more and the Rav4 had won best in its class for several years running by consumer reports and many Car and Driver comparisons.
Lately I’ve been wondering how “good” a deal I really got for myself or is it just expensive personal travel? I took a look into my old files from when I bought it to find out what it’s currently costing me (and my girlfriend) to drive each kilometer.
So here’s the break down:
- Down Payment – Self-explanatory, the initial payment to buy the vehicle
- Total Financing payments – All of the payments I made up to writing this article
- Estimated Gas –I haven’t kept all of the gas receipts, because why would I? So the estimated gas is just based off of the total kilometers driven, divided by the average fuel economy the Rav’s computer is telling me, which is 10.8liters/100km (or just over 21MPG) multiplied by $1/liter, which is a generous assumption considering January 2015 it dropped under $0.80/liter for a short time.
- Insurance – cost for insurance from purchase price to now.
- Parking – I live near downtown Calgary in an apartment so this is surprisingly very cheap considering Calgary has the second highest parking costs in North America, second only to NYC.
- Maintenance – mostly oil changes, tire rotations and recently some brake pad replacements.
Holy crap, that’s just shy of $1000 per month. I always knew what I was paying for my vehicle, or at least I knew what payments I was making each month towards it, but I never actually added them up to see that I was paying almost $1000 each month of my take home pay on it. Needless to say, for someone who thinks he does well with his finances I was quite disappointed with myself for not know this monthly cost as a whole.
I was so disappointed in myself that after I put this together I just kind of sat in silence. It’s like when one of your parents gives you that “…not mad but disappointed” speech but I gave it to myself in my head.
So what does it cost to drive a kilometer in your vehicle?
As I mentioned above, I bought the car with 69,231 kilometers on it and as of writing it had 84,580 on it. So in the 29 months I’ve averaged just shy of 530km each month. Compared to most car owners, this is incredibly little driving each year. It’s mostly done in large chunks as well to go visit friends elsewhere in the province.
I’m sure some of you are wondering how I can drive so little. Well the reason for so few kilometers has to do with the fact I work away from Calgary and leave my vehicle for my girlfriend to use while I’m away. But we also live a block away from the downtown core and are less than 10 minutes walking to all of the major attractions and events. So needless to say, this vehicle is definitely a luxury and not a necessity. So with this luxury, what does it cost to drive a kilometer?
ONE DOLLAR AND EIGHTY SIX CENTS PER KILOMETER? Wow, that’s considerably more than I would have guessed. If someone randomly asked what it cost to drive a km, I would have probably guessed somewhere in the range of a dollar. In actuality I’m almost paying double the cost of my answer for the imaginary person I just made up for this story…incredible!
Ok, so I got a little sarcastic there, I apologize it’s how I cope with shock. I’m shocked because this is a pretty big eye opener for me in terms of possible wasted spending. I mean there are tons of options that would be much cheaper than owning the Rav4 that come to mind, but to meet all of my transportation needs I would really have to use a variety of them.
So let’s break down how I could cover my transportation with cheaper methods.
I’m bracing myself for another self-shaming session here once I run some numbers but first I need to establish my transportation needs.
- Taxis – I’m calling this a need just because I don’t think I could consistently get up at 4:30am to catch a bus to catch my 7am flights when I need to go back to work and missing one of these flights would cost hundreds to rebook and possibly result in missed work. Currently I fly out every two weeks so I would need about 26 cabs a year. Over 29 months so far, this would have been at least $3190 plus a few late night arrivals due to delays, so easily $3630 to date in airport cabs.
- Car2Go – The nearest grocery store is a good 15 minute walk away. So being lazy, I could use one of the many Car2Go around my apartment. Let’s say I go for groceries once a week, and for simplicity I’m there and back in less than an hour, completely doable for me. That’s 14.99 each week, over 29 months and we’ll simplify it a alittle with 4 weeks/month. $14.99 x 29 x 4 = $1738.84. I haven’t included the $35 one time sign-up fee since there are plenty of opportunities throughout the year to have that waived.
I probably also go to a mall once a month to pick up a few odds and ends or gifts for others. This I’ll sum up with a generous 3 hrs/month of Car2Go, a lot could be alternated with public transit, but for the convenience, I’ll stick with the Go2Go pricing. 29 months x 3hrs/month x $14.99/hr = $1304.13.
- Rental cars – To get down to visit my friends in other communities I could have rented a car (there’s a rental car on the same block). The average daily price for an economy car with unlimited mileage is $74.31. I do maybe 10 days’ worth of driving a year where a Car2Go or Taxi would not be an ideal option. $74.31 x (29/12 x 10) = $1795.83.
So there it is, by replacing 90% of my driving (the other 10% would be walking or I just wouldn’t have gone on the drive) with the above options, I would have paid $8468.80 over those 29 months. That’s a difference of $20,036.54 or an extra $690.92 each month that I could have invested.
That’s one way of making my transportation costs cheaper. Probably one of the cheapest, I could make it cheaper by getting up earlier on my fly days and taking the bus, but that would make for an extremely long and tiring day. I could also have bought something like a 5+ year old civic or corolla and paid in cash to avoid the financing charges, which would have also saved a lot of money.
There’s plenty of ways to save more money, but in all honesty, would I have invested it or would I have just spent it elsewhere? I think I probably would have invested the majority of that savings. I don’t by a lot of things, but I may have just spend that on another vacation instead, so it’s really hard to say how it would have affected my savings and goal of financial freedom.
Do you see anything I may have left out in my calculations? Have you ever calculated how much it costs you to drive a km? It was definitely a shock to me, so get ready to brace yourself if you haven’t already!