Those Martins

And, now, for something completely different. It’s time for another financial breakdown.

Now that we have two children, we’ve been considering buying a minivan. There are a couple of excellent reasons to do so. We’ve taken a couple of overnight driving trips. Once you include two pack’n’play’s, clothes for the entire family, at least one stroller, and a bag of toys you’ve pretty much run out of trunk space. Then there’s the matter of spare diapers, wet wipes, baby food, baby formula, etc. Simply put, young children require a lot of trunk space.

There’s also the matter of visitors. Once you put two car seats in the back seat, the Camry is pretty much full. Going anywhere with visitors means driving two cars. A minivan would let us fit a lot more people into our car and would save us from doing caravans around Dane County.

But can we afford to buy a van? Ah, now that’s a badger of a different color. Let’s break down the decision. (For purposes of comparison, I’m assuming that we swap the Camry for a Honda Odyssey.)

Operating Costs

Most minivans have 6-cylinder engines. Our trusty Camry has a 4-cylinder engine. The Camry has a much lower profile than a van, giving it less wind resistance. So, how much more will we spend on gas if we swap the Camry for a minivan?

Well, some quick number crunch revealed that we average driving 18,168 miles a year in the Camry (or 1514 miles a month). Gallons per mile is a much better fuel metric than miles per gallon, so I’ll calculate our fuel usage in blocks of 100 miles. Our 18,168 annual miles comes out to 181 blocks of 100 miles. The Gallons per Mile Calculator gives me a quick comparison of fuel efficiency.

    Vehicle
    Gallons per 100 miles
    Cost per 100 miles  

($2.75 / gallon) Annual Fuel Cost

Toyota Camry

4

$11.00

$1,991.00

Honda Odyssey

5

$13.75

$2,489.00

A minivan would be 25% more expensive to drive than the Camry. At current gas prices, that’s about $498 more per year.

Purchasing Costs

The average used Honda Odyssey costs around $12,000. We currently have $4,800 saved towards a new car. If we bought right now, we’d need to take out a $7,200 auto loan. I hate going into debt for any longer than I have to, so we’ll only take out a 3 year loan. Currently, those are costing around 7.9%.

I ran the numbers through the Bankrate auto loan calculator. A $7,200 3 year loan at 7.9% would cost us $225.29 a month. We’d pay a total of $910.43 in interest. That’s our cost of borrowing.

Nuclear Scenario

I always look at our expenses two ways: what we can afford right now with me working full time and Christine working part time and what we could afford if Christine wasn’t working. I have two reasons for doing that. The first is that she could drop out of the workforce at any time, due to pregnancy. The second is that I don’t want her to have to work. I’m glad she enjoys working, I’m glad she gets a chance to get out of the house and spend time with other working adults, and we both enjoy what her extra income gives us. But if she ever wants to stop working, I want to make sure that she can do that without completely shredding our budget.

The “nuclear scenario” is what our budget looks like if she’s not working. At the moment, without Christine’s salary, after all bills are paid and savings are made, all groceries are bought and clothes are sought, we would have a $28 budget surplus.

That’s obviously not enough to support an auto loan.

Creative Alternatives

Do we really need a minivan for everyday, around town driving? After all, most of the time we’re just transporting people, not multiple sets of luggage. And the vast majority of the time, we’re just transporting ourselves, not extra guests. What about renting a minivan for the times when we need one?

We recently spent about a week driving from Madison to Cleveland to Pittsburgh and back. What would it have cost us to rent a van for that trip? I did a quick check at Budget Rent A Car. After taxes and fees, renting a minivan for our recent trip to Pittsburgh would have cost us $425.

We could completely pay for one such rental a year, out of the money we’re not spending on gas for a minivan.

Recommendation

We’ll continue driving the Camry and saving for a minivan. We’ll probably readjust our budget priorities to set aside more “new car” money than we have been. If we need to take a long trip or accommodate guests, we’ll consider renting a minivan for the extra space. We’ll delay purchasing a minivan as long as we possibly can. Hopefully when we do need to buy one, we can pay for it entirely with cash.