Join Date: Jul 2002
Location: Tucson, AZ, USA
Re: LT cost of ownership
If the cost of insurance isn't related to mileage of commuting to work, then it's fixed, not variable. The same holds true for registration,
It might be that if you need to replace the clutch because of a failure, you'd encounter that it if you don't use it to go to work. So, that cost won't vary if used for work.
Look closely at depreciation. If the additional mileage does not put your LT into the next mileage deduction, then it is fixed, not variable cost.
You have the same issue with maintenance, if the extra mileage does not result in hitting one more scheduled mileage maintenance, then that cost was, is fixed.
The same holds true for oil changes. I do mine on an annual basis. Extra mileage so far hasn't effected that.
My around town mileage is usually 40mpg and interstate mileage 50mpg.
Consider 8K for the rear tire and 10K for the front. Here again, if the extra mileage does not trigger an extra set of tires by the time you retire your LT, then that cost was “fixed”. Another way to look at it is will the extra mileage exceed 8K consuming the rear tire and then 10K consuming the front, should you assign tire cost to work mileage?
Assigning costs isn't as based upon strict formulas as is widely believe. And, assigning costs does not follow the same guide lines and rules for internal use as the mandated rules for taxing purposes.
You are trying to figure out something for internal use, bot for tax purpose, an external use
For tax purposes you generally want to assign as many costs as possible to shield what you have to declare as income, so that you retain more of your “cash”.
After wiz-through cost accounting course in college, I became more appreciative of how it is an art, why internal accounting was very different from tax accounting, why revenue becomes income, why a cost becomes an expense, why internal balance sheets don't look like tax balance sheets, and the importance of “Cash Flow”.
For me the opportunity to ride instead of driving a car is the opportunity to enjoy my life vs just passing through life.
Sine my step-father died at 71, in good health, my father in his 40s, one of my grandfathers fairly soon after early retirement, and I will be 65 this year, I look at if I'm wasting my time between now and death, am I just passing through remaining time, am I enjoying time?
Fortunately, I seem to enjoy writing every once in a while.
Best from Tucson
"He was a foul caricature of himself, a man with no soul, no inner convictions, with the integrity of a hyena, and the style of a poison toad." H. S. Thompson