Car expenses can be complex.
You buy a car every x number of years. You might pay cash or finance. Every year you pay some type of tax or registration. Every sixth months you probably pay for insurance. Every few months you pay for an oil change. Every week or so you pay for a tank of gas. And then every once in awhile you hear a weird sound which may lead to you paying for an expensive repair. At the end of owning your car you might sell it, trade it or donate it. Most people have no clue how much their car actually costs.
We created a simple ratio and by answering 10 questions you will immediately have visibility into your total cost per mile (CPM). You can use this ratio on your current car or any future car you plan to buy. After reading this post, use NinjaPiggy's CPM calculator, for a simple way of calculating your CPM.
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We think CPM is the best way to think about transportation costs because not only is it a fun way to compare the costs of different cars, it also lets you compare other transportation options.
For example if you calculate your car CPM is $0.50 (per mile), then you know your 20 mile round trip commute is costing you $10 per day ($.50 * 20 miles) / $50 per week / or $2,600 year. Knowing this might lead you to take public transportation, carpool, telecommute or try to reduce your CPM number.
CPM is great for gamifying your car expenses; below are some examples of how you can work to improve your current CPM number:
- Cost of Car: Drive your current car longer! (as long it’s safe)
- Cost of Finance Charges: Pay off your car loan, get rid of this!
- Cost of Gas: Find the least inexpensive gas station in your area; implement maintenance and driving techniques that improve your car’s gas mileage
- Cost of Upkeep: Research and compares costs!
- Cost of Registration and Tax: we don’t have any great ideas on how to improve this, please email us if you have any legal suggestions!
- Cost of Insurance: Compare your insurance rates
Calculate your CPM now and let us know what you think.