If you don’t control your money, your money will control you. Today let’s focus on getting control over the cost of auto repair and maintenance.

The cost of owning a car

Here’s a look at all the budget categories you may want consider when attempting to nail down your auto expenses:

1. Purchase price – payment (cash and/or financing and interest) to acquire the vehicle
2. Taxes – paid when you buy or sell the vehicle
3. Fuel – the gasoline/fuel you need to make the vehicle run
4. Insurance – all levels auto insurance including personal liability, collision, comprehensive, roadside assistance, etc
5. Tags and registration – state vehicle registration, license plates, and renewal tags
6. Repair and maintenance – tires, oil changes, and all other repairs and maintenance necessary to keep your vehicle operational

Today we’ll set aside the first five categories and focus solely on budgeting for repairs and maintenance.

Benefits of controlling these costs

Many of the benefits of controlling your auto maintenance costs are similar to those you experience when gaining control over any area of your money, so let’s focus on those that are specific to the topic. Proper budgeting for auto repair and maintenance will allow you to:

• Have a better relationship and better communication with your auto mechanic
• Prepare/plan better so you don’t have to race to get oil changes before your next trip
• Reduce your maintenance expenses going forward
• Relax in the knowledge that you’re prepared

You can achieve all of these things simply by setting aside enough money to cover your expenses. That way you won’t have to stress or worry about where the money is coming from — if it can be found at all.

A simple, average amount

Before we try to determine specific dollar amounts for your individual situation, let’s talk about a simple, average amount that people can start with. If you want a detailed break down of costs for your exact vehicle and situation… Scroll down to the next section.

Earlier this week, I spoke with my trusted auto mechanic — Sam — about how much the average person should budget for auto repair and maintenance. These are the numbers he gave me:

On average $1,200 per year per vehicle, is a great place to start. This means $100 per month for each vehicle.

Remember that these numbers are averages, so… While there will always be exceptions to the rule, this amount should cover “typical” maintenance expenses. Of course, it’s important to actually have this money set aside so you can spend it in a lump sum if necessary.

Robert Espe, a frequent DebtFreeAdventure, says the he budgets $2,000/car per year, and also reminds us that although there is no exact answer that will work for everyone.

Figure out your total cost of ownership

For all you fellow geeks out there who want to nail down costs to the exact penny… This section is for you! Rather than guessing at or estimating monthly amounts, use this information to figure out exactly how much it will cost you to purchase, own, operate, and maintain your vehicle over the entire life of ownership.

Here are a few tools to help you figure out exactly how much you are spending to help you get an idea of how much you need to budget:

• The Total Cost of Ownership Calculator from Edmunds
• The Car Operating Cost Calculator

The Edmunds tool is only for current car models, whereas the other one works regardless of your situation. Also note that these tools are very comprehensive, even taking into account depreciation. I recommend setting aside some time and playing around with these calculators so you can nail down the real cost of owning and maintaining each of your vehicles.

What about you?

Do you budget for automotive expenses? If so, how much do you set aside for these expenses each month?

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Consumer Reports recently released their 2009 listing of the most and least reliable cars. Whenever these rankings come out, I look at them with a bit of morbid curiosity. I’m mostly interested in seeing how far down the list the domestic carmakers

Looking at overall brand reliability, Japanese imports clearly rule the roost, whereas domestic brands are generally well down the list. Here’s the rundown:

• Scion
• Honda
• Toyota
• Infiniti
• Acura
• Mitsubishi
• Lexus
• Hyundai
• Porsche
• Mercury
• Saab
• Subaru
• Suzuki
• Kia
• Mazda
• Ford
• Nissan
• Volvo
• Buick
• Lincoln
• Volkswagen
• Pontiac
• Mercedes-Benz
• Audi
• Chevrolet
• BMW
• Mini
• GMC
• Saturn
• Jeep
• Dodge
• Cadillac
• Chrysler

Of course, these rankings are based on the average predicted reliability ratings of all models for each brand. It’s thus important to keep a couple of things in mind here…

First, the reliability ratings might not be entirely accurate, as there isn’t a whole lot to go on when making predictions for new models. In some cases, these predictions are based on data from just a single year.

Second, companies at the high end aren’t immune from producing a dud, whereas some at the low end actually have a decent model or two. For example, the Toyota Tundra is (slightly) below average despite coming from the 3rd best maker, whereas the Dodge Caliber is (again, slightly) above average despite coming from the 3rd worst maker.

CR points out that, “as a group, inexpensive small cars and midsized family sedans are the most reliable.” They also made clear that the difference between the best and worst models is dramatic. In fact, the Volkswagen Touareg (worst) is 27 times more likely to have problems than the top-ranked Honda Insight.

Interestingly, five of the top eight most reliable family cars were hybrids. The NY Times “Wheels” blog inquired about this surprising (at least to some) result, but CR held their ground.

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Have you been thinking about taking advantage of the Cash for Clunkers program? If so, you’d better hurry… Transportation Secretary Ray LaHood has announced that the program will end at 8PM on Monday due to dwindling funds.

This program has been a mixed blessing for the auto industry. The cash incentives have resulted in increased sales, but reimbursement delays have simultaneously created a financial burden on cash-strapped dealers. Some dealers have already dropped out of the program due to cash flow problems created by the delays.

It’ll be interesting to see what happens to new car sales after the program ends. I’m guessing that these rebates did little more than cannibalize future sales, such that car lots will be a very lonely place by next week. Then again, because the clunkers must be destroyed, a used car shortage could help prop up new car sales.

As an aside, charities that depend on used car donations are none too happy about the clunker-destruction requirement.

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Big news out of Washington today… Apparently the Cash for Clunkers program has been a bit too popular, and is reportedly being suspended out of fear of running out of money. This program was set to run through November 1st, or until the $1B allotment was used up, and it appears that the money might already be gone.

According to AP reports, nearly 23k vehicles had been sold under the program by late Wednesday, using up nearly $96M of the budget. However, many dealers have reported that large numbers of claims had yet to be processed by the government, thereby prompting the suspension.

According to Bailey Wood, spokesman for the National Automobile Dealers Association, “There’s a significant backlog of ‘cash for clunkers’ deals that make us question how much funding is still available in the program.”

For those that have taken advantage of this program, White House spokesman Robert Gibbs has gone on record that “all valid CARS transactions that have taken place to-date will be honored.”

Assuming that the money truly is exhausted, Congress is looking for ways to extend the program. Thus, it’s quite possible that it will be revived in the coming days. What do you think? Should it be brought back to life? Or should it stay dead?

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Up until a few months ago, if someone would have asked my wife or me to get rid of one of our cars, we would’ve just snickered and responded, “Impossible!” But then it happened… I wrecked my car.

A bit of background

From the time we met in 2003 up until seven months ago, my wife and I had always viewed two cars as a necessity. Then on Thursday, December 19th, 2008 I rear-ended a pickup truck at a busy intersection and wrecked my 2001 Jeep Cherokee.

At the time, my Jeep was worth about $5,000 and the initial quote to repair the damage was upwards of $9,000! In other words, it was totaled. I called a mechanic friend up and asked if he could come by and give it a once over to see if anyone he knew could do the body work for a reasonable amount of money. He obliged.

As it turns out, he did have a business associate who, despite being a wee bit unreliable, would be able to do the work for around $3,000 parts and labor. I jumped at the chance.

As the weeks rolled by and my Jeep was still “being fixed,” I grew increasingly impatient and my wife was far from happy. After all, she was the one responsible for carting me around until my Jeep was back in working condition.

The weeks turned into months, and now here we are in the middle of the summer and I still don’t have my Jeep back! We’ve certainly learned an important lesson about “getting a good deal,” but that’s a topic for another post.

Today I want to focus on how we successfully adapted to becoming a one car family. without killing each other, or hating the end result.

Changes we’ve made

My wife and I work in different towns, so she started dropping me off at a bus stop on her way to work. From there, I was able to catch a bus straight to my workplace. The stop was right off an expressway exit for her, so it took little more than five extra minutes each morning.

To save money, I purchased bus passes in 10 ride increments and wound up paying $1/ride. After work, I would catch a bus back to the dropoff/pickup spot and wait for my wife to arrive on her way home. We coordinated the pick up times via phone, and it worked out quite well.

Once summer came, and my wife began her three month vacation, things changed a little. Some days (fewer than I would like) I ride my bike about 10 miles to and from work. On days that I don’t ride, my wife gets up with me and drives me in.

I don’t want to spend too much more time talking about how we get around with just one car, so I’ll just say this: We do our best to coordinate our schedules, and we go out of our way to accommodate each other. A side benefit is that we get to spend more time together.

Tips for making it work

• Increase organization. Creating (and using!) a “Family Calendar” has gone from being a bit of an inside joke in our marriage to being a necessity. Before we commit to anything, we check the family calendar for availability and vehicle options.
• Embrace the bike. Unless you own a pair of shorts with a pad in the crotch, you probably don’t ride your bike as much as could/should. We didn’t either. If you want to increase your bike usage, get in better shape, ditch your gym membership, or all of the above… Simply get rid of one of your vehicles.
• Ride the bus/train. Using public transportation in small town USA might make you feel like a bit of a pariah, but… I got past that, embraced my options, and used them to improve my situation. I found that counting myself among all other people, regardless of income or status, was healthy on many different levels.
• Carpool whenever possible. Share rides with friends or neighbors when you can. Just be careful not to take advantage of them. It’s always a good idea to offer some sort of payment if you can’t fully reciprocate, and always work to fit your life around their schedule.
• Stay home more. Enjoy time with your family, complete projects around the house, read more, make/eat homemade meals, grow a garden, talk to your spouse more, and/or spend time with your kids. All of these things will have a positive impact on your life.
• Simplify your life. Getting rid of a vehicle may seem like it complicates things, but we found that it actually made our lives far simpler. The whole process forced us to “trim the fat,” so to speak. We’ve learned better communication and organization and, now that we’re seven months into it, we’ve come to enjoy the increased levels of simplicity and contentment.

Making it permanent?

What really surprised me was that my wife asked me the other night if we should just sell my Jeep when we get it back. That’s actually what inspired me to write this post. If you knew my wife, you’d be surprised, too. She’s taken this all in stride, but was pretty annoyed with the whole situation at first.

Over time, however, the idea of having just one care has grown on her. When you add up all the associated costs, getting rid of the Jeep altogether would save us around $350/month. That’s money that we could be using for getting out of debt instead of tooling around town.

So no… We still don’t have the Jeep back, and we’re now seven months into the repair process. I’ve begun calling the bodyshop guy every day to ask for status updates, and things have started moving faster. We’re still not sure if we’ll sell the Jeep when we get it back, but we sure are leaning that way.

We just don’t seem to need it anymore!

What do you think?

If your hand was forced, as in our situation, could you and your wife/family get get by with one less vehicle? How much trouble would it cause? How much money would it save?

What if you weren’t forced? Would you ever consider getting rid of an extra vehicle voluntarily?

Or perhaps you’ve already done it… If so, please weigh in.

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In case you haven’t heard, I just wanted to point out that President Obama recently signed the so-called “Cash for Clunkers” program into law. Starting July 1st, would-be car buyers can get a $3500-$4500 credit for trading in their “clunker” and purchasing a more fuel efficient vehicle.

Officially known as the Car Allowance Rebate System (CARS) Act, the “Cash for Clunkers” program is intended to: (1) get gas guzzlers off the road, and (2) stimulate new car sales. We’ll just have to wait and see how well it works on both accounts.

Details of the Cash for Clunkers program

According to the official CARS website:

• Your vehicle must be less than 25 years old on the trade-in date
• Your vehicle must be in drivable condition at the time of trade-in
• Only purchase or lease of new vehicles qualify
• Generally, trade-in vehicles must get 18 or less MPG (some very large pick-up trucks and cargo vans have different requirements)
• Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in
• You don’t need a voucher, dealers will apply a credit at purchase
• Program runs through Nov 1, 2009 or when the funds are exhausted, whichever comes first
• You can combine the CARS rebate with other State and Federal incentives, such as the hybrid vehicle credit
• Not all dealers will be participating in the program, so check before buying
• The vehicle that you are trading in is required to be destroyed

Note that, because your trade-in will be destroyed, the dealer is unlikely to offer you more than its scrap value. Still, for a crappy old car, the scrap value plus the $3500-$4500 credit might be worth taking advantage of.

Another point to keep in mind is that, while transactions taking place on or after July 1st will qualify, full details of the program won’t emerge until later in the month. Thus, you might want to wait a bit before jumping on this.

More info is available from the official site. If you’re curious about what sort of (official) mileage your old car gets, you can check it out at FuelEconomy.gov.

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As a followup to my earlier articles on how to save money on health insurance and life insurance, I thought I’d tackle car insurance. What follows is a list of six tips for reducing your premiums and saving a ton of money.

Keep your driving record clean

In other words, don’t get nailed for speeding like I did a few months back. I was fortunate in that it was a first offense, and I was able to keep my record clean by pleading nolo contendre (no contest) and paying the fine, but… Next time I won’t be so lucky, as I’ll wind up with points on my license and higher insurance premiums.

Increase your deductible

If you’re willing to bear a greater portion of the risk, you can save a significant amount of money. Simply call your agent and ask them to increase your deductible. Just be sure that you have enough cash on hand to cover your out-of-pocket expenses in the event of an accident.

Drop unnecessary coverage

If you’re driving an older car, you might want to consider dropping your comprehensive and/or collision coverage entirely. After all, what’s the sense in paying a ton of money to insure against damage to a car that might not be worth repairing? Note that I’m not suggesting that you drop your insurance coverage entirely, just the portion that pays for repairs on your own car.

Bundle multiple policy types together

I can’t speak for all insurance companies, but we get a nice “multi-line” discount for carrying multiple policies with a single company. We actually have two car policies, our homeowner’s policy, a personal articles policy (for my wife’s engagement and wedding rings) and an umbrella policy all with the same company.

Ask about other discounts

You might qualify for discounts for being accident-free, renewing your policy, driving relatively few miles each year, taking a defensive driving course, etc. Be sure to talk to your agent and get what you have coming to you.

Shop around

Assuming that you’re doing everything else right, another great way to save money on car insurance is to comparison shop. You can either call around to local agents, or check an auto insurance comparison website. Whatever you do, be sure to buy from a reputable company so you won’t run into any problems if/when you file a claim.

So there you have it… Six simple tips for saving money on car insurance. If you have any further suggestions, please be sure share them in the comments.

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A reader name Patrick just wrote in to point out a recent IRS press release about a special tax break for new car purchases in 2009. From the release:

“The Internal Revenue Service announced today that taxpayers who buy a new passenger vehicle this year may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns next year.”

While you’ve been able to deduct sales taxes for quite some time now, this deduction was previously limited to those that itemize their deductions, and you also had to make a choice between deducting your state income tax and your sales tax.

Details of the New Car Sales Tax Deduction

The deduction is limited to state local sales and excise taxes on up to $49,500 of the purchase price of a qualified new car, light truck, motor home, or motorcycle. In order to qualify, the vehicle must have been purchased between February 16, 2009 and January 1, 2010.

The deduction phases out for individual filers with modified adjusted gross income of $125k-$135k and joint filers in the $250k-$260k range. As noted above, you can claim this deduction even if you don’t itemize your deductions.

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Consumer Reports just published their Annual Auto Issue, and guess what?

“The best vehicles are built by Honda, Subaru, and Toyota. They make well-rounded cars that excel across the board…”

That’s not to say that every model made by these companies is highly recommended. In fact, the Honda Element, Toyota Yaris, and Toyota FJ Cruiser scored low enough that they weren’t recommended.

Amongst domestic automakers, Ford came out on top. However, they were only the 12th best carmaker out of the 15 under consideration. Suzuki, General Motors, and Chrysler brought up the rear (in that order).

This is what CR has to say about Chrysler:

“Overall reliability of Chrysler vehicles, which was average last year, dropped to below average this year. No Chrysler, Dodge, or Jeep vehicles are recommended.”

Yes, you read that right… Consumer Reports doesn’t recommend a single Chrysler, Dodge, or Jeep model. Ouch.

What about GM’s claim that they build 19 cars that get at least 30 mpg on the highway? That’s technically true, but those cars are “a relatively low percentage of [their] fleet.” Moreover, CR has found that “even non-SUVs from Detroit tend to have among the worst fuel economy in their class.”

The good news for GM is that their newest models actually performed reasonably well in CR’s testing, though their reliability still lags behind the competition. Similarly, Ford has some models that do quite well, but most fall somewhere in the middle of the pack. And Chrysler? Well…

“Most models… have noisy, inefficient, unrefined powertrains; subpar interiors; and poor visibility.”

It’s hard to believe, but they’ve actually gotten worse since last year, when they tied for last place with Suzuki.

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True story: My brother’s car broke down and we couldn’t get it to move. My husband, my brother, and I pushed it off the main road and called around to see what it could be done. We got the car towed to a local shop (our previous mechanic retired, so we just found someone nearby).

We learned the hard way

Shortly thereafter, we got a phone call from the shop. My brother needed to pay around $1,200 to replace his clutch. The amount surprised us, and we asked if it would be possible to get it running so he could get home. Unfortunately, it wasn’t.

We had the car towed back to my brother’s home thinking that it’d be awhile before he had enough saved up for the repairs. Shortly thereafter, I received a call from my mom to let me know that the car was running again. She had an acquaintance who does car repairs, and she asked them for help. The total cost? Less than $20!

Do you know what they found? The car had no oil in it! They also replaced a missing hose. My brother is very fortunate that he didn’t lose the car. He’s also fortunate that he didn’t spend $1,200 on an unnecessary repair. He has now learned how to check and change his own oil, and we all learned a valuable lesson: Learning some of the basics of car repair can save you a lot of money.

Do-it-yourself isn’t hard

Maintaining a vehicle costs money, but just blindly trusting a mechanic can cost you even more money. In fact, typical labor rates range from $50-$120/hour. Being able to handle some basic car repairs can increase the life of your vehicle and keeping money in your pocket (some of which should be set aside for huge repairs).

If you’ve never done this before, start small. Don’t risk ruining your engine or transmission just to save a few bucks. Here are some relatively easy things you can do to keep your car in good condition:

• Check all fluids in your car (motor oil, washer fluid, and transmission fluid) and adjust their levels as needed
• Check, clean, and perhaps replace the air filter your car. When air filters are clogged, your gas mileage deteriorates.
• Check your tires to make sure the pressure is correct as determined by your owner’s manual. Keeping your tires at the proper inflation improves gas mileage and can extend the life of your tires.
• Check and maintain your car battery. Keep it clean by removing any deposits on the posts. They usually last around 5 years before needing to be replaced.
• Replace your windshield wiper blades if they are worn. Tell your local auto parts shop which car you need them for and they’ll find the match. You might also want to apply some Rain-X at the same time.

Look at your car’s manual and follow that maintenance schedule given, some repair shops recommend more frequent maintenance schedules to increase their revenue.

DIY doesn’t mean you can’t have help

If it makes you feel more comfortable, help someone else with their do-it-yourself maintenance. This will give you a chance to ask questions and take notes. And once you’re ready to do your own maintenance, be sure to keep records of what you did and when.

If you need some sites to learn how to perform some of these maintenance checks, here are some helpful links that I found and used for the article:

• Change Your Own Oil
• Keep Your Battery Connections Clean
• Replace Your Fuel Filter
• Change Your Wiper Blades

If you doubt your abilities or want a professional to handle it, then by all means, find a good mechanic that you can trust.

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In need of some Holiday cheer? How about a bit of bailout humor?

If you don’t laugh, you’ll cry. Enjoy!

Source: Buffalo Beast

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The Insurance Institute for Highway Safety recently released their list of the safest cars of 2009. What follows is a rundown of the “Top Safety Picks,” which “do the best job of protecting people in front, side, and rear crashes based on good ratings in Institute tests.” This year, there were 72 such picks, which is double the number from 2008, and triple the number from 2007.

The ever-increasing number of winners makes me wonder if cars actually getting safer, or if carmakers are just getting better at beating the tests. Hopefully the test results are reflective of real-world safety improvements.

While the list of winners is rather lengthy, there are some notable features. For example, Ford and their subsidiary Volvo had 16 winners, whereas Honda/Acura has 13 winners. Also, Honda, Acura, and Subaru have at least one Top Safety Pick in every vehicle class in which they compete.

Here’s the full list of winners…

Large cars

• Acura RL
• Audi A6
• Cadillac CTS
• Ford Taurus
• Lincoln MKS
• Mercury Sable
• Toyota Avalon
• Volvo S80

Midsize cars

• Acura TL, TSX
• Audi A3, A4
• BMW 3 series, 4-door
• Ford Fusion w/optional ESC
• Honda Accord, 4-door
• Mercedes C class
• Mercury Milan w/optional ESC
• Saab 9-3
• Subaru Legacy
• Volkswagen Jetta, Passat

Small cars

• Honda Civic, 4-door (except Si) w/optional ESC
• Mitsubishi Lancer w/optional ESC
• Scion xB
• Subaru Impreza w/optional ESC
• Toyota Corolla w/optional ESC
• Volkswagen Rabbit

Minicar

• Honda Fit w/optional ESC

Midsize convertibles

• Saab 9-3
• Volkswagen Eos
• Volvo C70

Minivans

• Honda Odyssey
• Hyundai Entourage
• Kia Sedona

Large SUVs

• Audi Q7v
• Buick Enclave
• Chevrolet Traverse
• GMC Acadia
• Saturn Outlook

Midsize SUVs

• Acura MDX, RDX
• BMW X3, X5
• Ford Edge, Flex, Taurus X
• Honda Pilot
• Hyundai Santa Fe, Veracruz
• Infiniti EX35
• Lincoln MKX
• Mercedes M class
• Nissan Murano
• Saturn VUE
• Subaru Tribeca
• Toyota FJ Cruiser, Highlander
• Volvo XC90

Small SUVs

• Ford Escape
• Honda CR-V
• Element
• Mazda Tribute
• Mercury Mariner
• Mitsubishi Outlander
• Nissan Rogue
• Subaru Forester
• Toyota RAV4
• Volkswagen Tiguan

Large pickups

• Ford F-150
• Honda Ridgeline
• Toyota Tundra

Small pickup

• Toyota Tacoma

Source: IIHS.org

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I was recently presented with an opportunity to run a little gas mileage experiment. I’ve done this in the past when I investigated the degree to which I could improve my gas mileage by altering my driving habits around town. Interestingly, I was able to increase my mileage by 15% in return for a few minor driving tweaks.

This time, I had to make a 350 mile roundtrip on the interstate. As such, I decided to drive “normally” on the way out, and to go out of my way to keep my speed in check on the way back. I filled my tank at the beginning, at the turnaround point, and at the end. Thus, I was able to calculate my mileage for each leg. For background, I have a 2005 Honda CR-V that’s supposed to get 23 city mpg and 29 highway mpg.

The impact of slowing down

As noted above, I drove “normally” on the way out of town. For me, this meant running at roughly 75 mph. In order to keep things as accurate as possible, I decided to use the cruise control to hold my speed steady. While I realize that I could’ve done a good bit better mileage-wise if I had controlled my speed manually (especially on hills), I wanted this to be an apples-to-apples comparison. Upon arriving at my destination, I learned that my outbound mileage was 25 mpg.

On the way back, I decided to ratchetthe cruise control down to 65 mph and hang out in the slow lane with the trucks. At the end of the trip, I was surprised to learn that I had achieved 32 mpg – that’s a 28% improvement! To be fair, I was driving into a bit of a headwind on the way out, and had the wind at my back on my return. Then again, it was considerably warmer on my return trip, so I had to turn on the A/C to stay cool.

While I fully expected to see an improvement, I was a bit surprised by how much of an impact slowing down had on my mileage. Of course, that 28% improvement was based on a relatively small amount of data (i.e., one roundtrip of 175 miles each way), so it might not be entirely accurate. Nonetheless, speed obviously has a pretty major impact on highway mileage.

Is slowing down worth the trouble?

Sure, slowing down saves gas. But in an economic sense, was it worth it? Let’s take a look at the numbers… For simplicity, I’ll base my calculations on a 100 mile trip and $4/gallon gas — you can easily extrapolate from there.

At 75 mph… 100 miles would take 1:20, and would consume 4 gallons of gas.

At 65 mph… 100 miles would take 1:32, and would consume 3.125 gallons of gas.

So… I’d spend an extra 12 minutes on the road, but would save 0.875 gallons of gas at an estimated cost of $3.50. Extrapolating this out to an hourly rate, I could “earn” $17.50 per hour (tax free!) of extra driving, not to mention the environmental benefits of burning less fuel. Not bad considering I was relaxing and listening to podcasts the entire time.

While your mileage may (quite literally!) vary depending on your vehicle of choice, driving style, etc., the bottom line here is that you can definitely save a few bucks (and be a bit greener) by slowing down.

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With all the recent talk about high gas prices and strategies for improving your mileage, I thought I’d highlight a recent article from Consumer Reports on getting the best fuel economy for your buck. CR dug through their recent ratings and compiled a list of the most reliable cars ranked by their cost per mpg.

The price/mpg ratio is an interesting approach in that it’s more or less equivalent to the quick-and-dirty method of valuing stocks based on their price-to-earnings (P/E) ratio. They also filtered their list to remove cars that have high ownership costs after purchase to protect against the whole penny-wise, pound-foolish thing. Here’s what they came up with:

1. Honda Fit Sport ($464/mpg)
2. Honda Fit ($476/mpg)
3. Toyota Prius ($540/mpg)
4. Mazda3 i ($576/mpg)
5. Toyota Prius Touring ($591/mpg)
6. Nissan Versa 1.8 SL ($596/mpg)
7. Honda Civic Hybrid ($605/mpg)
8. Honda Civic EX ($607/mpg)
9. Hyundai Elantra GLS ($650/mpg)
10. Toyota Scion tC ($658/mpg)

Despite their high overall mileage, it’s interesting to note that hybrids stumbled a bit on this list to their higher price. Nonetheless, the Prius did quite well, especially considering that it’s a good bit larger than the Fit. It’s also worth noting that the Toyota Yaris ($370/mpg) and the Hyundai Accent ($425/mpg) beat out the Honda Fit, but they scored too low in other tests to be included.

Source: ConsumerReports.org

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About two months ago, I wrote an article detailing my progress in improving my gas mileage. By making a few small adjustments to my driving style, I was able to improve my mileage by 15%. Today, I wanted to share a more general tip for saving money on gas: track your mileage mileage.

If you’re at all competitive or motivated by numbers, then I can virtually guarantee you that your mileage will improve, and thus you’ll save money, if you simply keep track your mileage at every fill up. Not only does this make you more cognizant of your driving habits, but it helps make a game out of improving your gas mileage.

The old school way of doing this is to simply keep a small notepad or ledger in the glove compartment and then record your miles driven and amount of gas purchased at each fill up. But guess what? If you have a web-enabled smartphone, it’s even easier. You can now track your mileage online using a web-based service.

The two such services that I’ve heard the most about are FuelFrog and Fuelly. Both of these sites allow you to update your information on the go. FuelFrog relies on Twitter, whereas Fuelly has a mobile version of their website.

After looking at the two, I’ve decided to create an account with Fuelly. To me, the mobile web interface is a more elegant solution than Twitter, and I also like that fact that I can easily compare my performance against that of other users.

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When it comes to finding a good mechanic, I’ve always relied on the recommendations of others. We’ve moved around a good bit over the years, so finding a new mechanic has been a fairly regular occurrence for us. While our friends and colleagues have never steered us wrong, there are a number of things that you can do to increase your odds of having a good experience.

Ask the right person

Beyond simply asking for personal recommendations, I’ve found that it helps to ask the right person. Look for someone that’s lived in the area for awhile. Someone that’s been around the block a few times can not only steer you to a good mechanic, but can also warn you away from the bad ones. Another tip here is to ask someone with a similar car to your own — not every mechanic knows how to work on every brand of car. Another reasonable source of information is the Car Talk Mechanics File.

Choose the right kind of shop

It’s important to understand the difference between the different types of repair shops. While dealerships will be full of mechanics that specialize in your particular make/model, they also tend to have the highest prices. When it comes to warranty work, the dealership is a no-brainer. But if you’re paying out of pocket, you’ll wind up paying more by going to the dealership. If you can’t find a good alternative, this is likely worth it. But if you can, you’ll save yourself a decent chunk of money.

Next up, we have the chain store auto shops. While these places typically offers lower prices than a dealership, the workmanship may suffer. Often times, such places are staffed by entry-level employees and the quality of work will be highly variable. If we need anything more than a new battery, we usually go elsewhere.

Finally, we have independent repair shops. This is by far my favorite option, but it’s not always easy to find a good one. In most cases, the prices will be a good bit below what dealerships charge, and they’ll have mechanics on-site that specialize in a wide vareity of makes/models. You’ll also get a bit more personal attention at an independent repair shop, and you’ll probably also get better continuity, with the same people servicing your car year after year.

Check for trade association affiliations

So you’ve decided that you want to go to an independent repair shop, and you’ve gotten a few recommendations. What next? One thing to look for is whether or not the shops you’re considering are affiliated with trade associations such as the Automotive Service Association (ASA), National Institute of Automotive Service Excellence (ASE), American Automobile Association (AAA), etc. This isn’t foolproof, but these sorts of associations require members to adhere to certain ethical standards and, in some cases, certification means that mechanics meet minimum training standards.

Miscellaneous warning signs

When choosing a mechanic, it helps to do a bit of extra homework. Here are some things to be on the lookout for:

• Double check to make sure they handle cars like yours — a quick tour of the parking lot should suffice.
• Check for complaints with the Better Business Bureau.
• Check the terms of the warranty — six months is great, 30 days…. Not so much.
• If the shop operates on a cash-only basis, you might consider taking your business elsewhere.
• While you want to be able to get in to see your mechanic on relatively short order, an empty shop is a bad sign.

Other considerations

A good mechanic is really only useful if you can make use of their services. Here are some other things to consider:

• Is the shop open convenient hours?
• Are they located in a convenient (and safe) area?
• Are they near public transit?
• Can you get a ride to where you need to be while your car is being worked on?

Photo credit: sgrace

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According to the recently released J.D. Power & Associates list of the most reliable cars of 2008, Lexus is the most dependable automotive brand. In fact, it wasn’t even that close, with Lexus logging over 20% fewer complaints per vehicle as compared to runner-up Mercury. The top ten list follows:

1. Lexus
2. Mercury
3. Cadillac
4. Toyota
5. Acura
6. Buick
7. BMW
8. Lincoln
9. Honda
10. Jaguar

Interestingly, Ford Motor Company nailed down three of the top ten spots with Mercury (#2), Lincoln (#8), and Jaguar (#10) all placing in the top ten. My personal favorite, Honda, slipped from 5th in 2007 to 9th in 2008.

Here’s a look at the top models by segment:

‘Regular’ Cars

• Subcompact: Hyundai Accent
• Compact: Toyota Prius
• Midsize: Buick Century
• Large: Ford Crown Victoria

Sporty Cars

• Compact: Mazda Miata
• Midsize: Chevy Monte Carlo

Premium cars

• Entry: Lexus IS 300
• Midsize: Lexus ES 330
• Large: Lexus LS 430
• Sporty: Lexus SC 430

Sport Utility Vehicles

• Compact: Honda Element and Toyota RAV4 (tie)
• Midsize: Toyota Highlander
• Large: Toyota Sequoia

Pickup Trucks

• Midsize: Ford Ranger
• Large: Toyota Tundra

For the sake of comparison, Consumer Reports released their list of the most reliable cars for 2008 earlier this year. These rankings are broken down by type of vehicle, though the categories differ slightly from the J.D. Power rankings:

• Family cars: Toyota Prius, Honda Accord (4-cyl), Ford Fusion (V6)
• Large cars: Buick Lucerne (V8), Toyota Avalon, Dodge Charger (V6)
• Small cars: Toyota Yaris Hatchback, Honda Fit, Toyota Yaris Sedan
• Minivans: Toyota Sienna, Honda Odyssey, Chrysler Town & Country
• Small SUVS: Honda Element, Mitsubishi Outlander, Subaru Forester (turbo)
• Midsized SUVs: Toyota Highlander, Honda Pilot, Toyota 4Runner

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As a followup to yesterday’s article about the types of cars that are most frequently stolen in the United States, I though I’d share some tips from the National Insurance Crime Bureau for protecting yourself against auto theft. There’s nothing particularly earth-shattering here, but they’re still worth keeping in mind.

• Common Sense. The cheapest form of defense is to simply lock your car and take your keys with you.
• Warning Devices. Having (and using) a visible or audible alarm is another way to make sure will still be there when you come back.
• Immobilizing Devices. “Kill” switches, fuel cut-offs, and smart keys can all be quite effective. If your car won’t start, it’s unlikely to get stolen.
• Tracking Devices. If your car gets stolen, a tracking system can help local law enforcement officials quickly find and recover it.

On top of these tips, I’d also add that you don’t want to leave anything of value laying out in plain sight. While having your car stolen would suck, being the victim of a “smash and grab” isn’t much better.

In the end, if someone really wants to steal (or break into) your car, they probably will. That being said, it doesn’t hurt to make your car a less attractive target than the one parked next to it.

In the end, this is a bit like putting up an alarm monitoring sign in your front yard even if you don’t have an alarm system. No, the sign (or even an alarm system) won’t stop someone that is determined to get into your house. It might, however, make the casual thief move on down the street.

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The National Insurance Crime Board has just released their list of the most frequently stolen cars of 2007. Topping the list once again are two older sedans from Honda — the ‘95 Civic and the ‘91 Accord. Here’s the full rundown:

1. 1995 Honda Civic
2. 1991 Honda Accord
3. 1989 Toyota Camry
4. 1997 Ford F-150 Pickup
5. 1994 Chevrolet C/K 1500 Pickup
6. 1994 Acura Integra
7. 2004 Dodge Ram Pickup
8. 1994 Nissan Sentra
9. 1998 Toyota Pickup
10. 2007 Toyota Corolla

And here’s the list from last 2006:

1. 1995 Honda Civic
2. 1991 Honda Accord
3. 1989 Toyota Camry
4. 1997 Ford F-150 Pickup
5. 2005 Dodge Ram Pickup
6. 1994 Chevrolet C/K 1500 Pickup
7. 1994 Nissan Sentra
8. 1994 Dodge Caravan
9. 1994 Saturn SL
10. 1990 Acura Integra

All in all, the list was fairly stable, with the top four slots remaining unchanged and six of the ten entries being identical between years. Despite these parallels, the vehicle theft rate dropped by 8.9% in 2007 vs. 2006.

As an aside, I’ve always been surprised at how this list tends toward older, presumably less attractive cars. On the surface, you’d think that people would be most interested in boosting late model, high value cars. It’s important to keep in mind, however, that most cars are stolen for their parts, and older (but popular) models provide the best market for stolen parts.

Photo Credit: Matt Biddulph

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With all the recent talk about how to improve your gas mileage, I thought I’d highlight some of the “coming attractions” in the automotive world. I’m talking here about plug-in hybrids (a.k.a., plug-in electric hybrid vehicles, or PHEVs), which are hybrid vehicles that can be recharged by plugging them into an electrical outlet, thereby reduces their reliance on gasoline.

Here’s a quick look at what’s on the horizon from the major carmakers…

Chevrolet Volt

GM claims that the Chevy Volt will be production ready in 2010, though I recently read that they are only planning on producing 10k units in the first year with an additional 60k coming in the second year. The Volt isn’t a true hybrid, in that it will run entirely on electricity. The on-board battery is projected to give the Volt a 40 mile range on a full charge. If the battery runs down, a small gas-powered motor will kick in to recharge the battery. GM’s goal is to keep the cost of the Volt under $40k.

Saturn Vue Plug-in Hybrid

GM plans to bring the Vue Plug-in hybrid to market in 2010. The Vue Plug-in will be an enhancement to the Vue Two-mode Hybrid that’s expected to hit the market in 2009. This vehicle will have a more typical gas-electric hybrid drive-train, but will also have an electric-only range of 10 miles.

Ford Escape Hybrid Plug-in

The Escape Hybrid Plug-in will combine a hybrid drive-train with lithium ion batteries that are expected to allow the escape to achieve 120 mpg during the first 30 miles of driving at “moderate speed” following a full recharge.

Ford Edge with HySeries Drive

The Ford Edge HySeries is similar to the Chevy Volt, though it use a hydrogen fuel cell as opposed to a gas engine as a backup generator. Like the Volt, the wheels are powered solely by electricity. Ford is projecting a 25 mile range on a full charge with the HySeries being able to go another 200 miles on a full tank of compressed hydrogen.

Toyota Prius Plug-in

There are a number of companies that already specialize in converting the Toyota Prius into a PHEV. On a full charge, these cars can go up to 7 miles at highway speeds using electricity alone. Unlike other plug-in hybrids, which use lithium ion batteries, the modified Prius uses an oversized nickel metal hydride battery. Toyota has since announced that, come 2010, you should be able to buy a lithium ion-based PHEV of some sort direct from them. As an aside, I just read that Toyota will be outfitting the 2009 Prius with solar panels to power the air conditioning. Not a huge step forward, but still… It’s something.

Toyota 1/X

The Toyota 1/X concept car, which was unveiled in 2007, is powered by lithium ion batteries and a small 0.5 liter flex-fuel engine. This car, which sports four seats and weighs in at just 926 pounds (compared to 2,890 pounds for a Prius) is capable of covering 600 miles on a four gallon tank of gasoline. The car is also partly made of bio-plastics produced from plants.

Dodge Sprinter Plug-in

The Dodge Sprinter is essentially a delivery van, and the plug-in version combines PHEV technology and an efficient diesel engine. The NY Times has added Sprinter plug-ins to their fleet and, after an overnight charge, they can go 20 miles on electricity alone.

Jeep Renegade Concept

The Jeep Renegade concept car, unveiled this past winter at the Detroit auto show, features all-wheel drive, two electric motors (one for each axle), and a 1.5 liter, 115 horsepower, 3 cylinder engine. On a full charge, it can go 40 miles on electricity alone, and it supposedly has a 400 mile cruising range.

*The CNN/Money slideshow lists the wrong mileage for the Toyota 1/X.

Source: CNN/Money*, Photo Credit: abeall

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On our way home from the airport last week, we noticed that our Honda Odyssey was “shimmying” way too much at highway speeds. We’ve also noticed a good bit more road noise than we recalled having in the past. We actually first noticed the problem on our way to the airport, but were hoping that it was just the roads that we were driving. Unfortunately, that wasn’t the case.

Upon returning home, we took a closer look at the front tires. There were much more heavily worn than the rear tires. The next day, our local tire shop confirmed our suspicions… The front tires were shot. No big deal, right? Tires wear out all the time. Ah, but in this case, the tires didn’t actually have that many miles on them relative to their rated life span. On top of that, the rear tires looked almost new.

The problem? We hadn’t rotated our tires.

Why rotate?

As it turns out, your front tires experience a good bit more wear and tear than your back tires, especially on front-wheel drive cars. They carry more weight, they’re responsible for putting the engine power to the road, they do a disproportionate amount of braking, and they do all of the steering.

Also, depending on your driving habits, the left and right tires each face their own unique burdens. For example, highway driving often means a lot of cloverleafs, which result in high speed right-hand turns. In contrast, on surface street, left hand turns are typically taken at higher speeds, but right turns are tighter.

The end result of all of this is uneven tire wear. The goal of rotating your tires is to ensure that the entire set wears at the same rate, resulting in an overall safer set of tires that don’t have to replace tires out of sync. Ultimately, you should be rotating your tires in accordance with the manufacturer’s specifications even if they don’t show signs of uneven wear. But we didn’t.

The end result

In our case, we burned up a pair of tires and didn’t have a leg to stand on warranty-wise since we hadn’t rotated them. While we could’ve just replaced the two worn tires, we weren’t particularly happy with these tires in the first place. For one thing, they appeared to have worn faster than they should have, even after accounting for the lack of rotation. In addition, while they had gotten much louder as they wore out, they weren’t exactly quiet in the first place.

We ended up talking to the tire shop about this and they agreed to buy back the two rear tires (at a reduced price) so we could replace them with a full set of matching (and better) tires. In case you’re curious, the old tires were Goodyear Integrity, whereas the new tires are Goodyear Assurance ComforTred. We’ve only had them a week, but we’re already much happier with them. They’re much quieter and also seem to give a better ride (though the latter point is a bit subjective).

Staying the course

Now… We just need to commit to regular rotations. It really shouldn’t be that big of a deal, as the tires come with free rotations. As long as we make a point of getting our oil changed at the tire shop, we can just have the tires rotated when the Odyssey is in for its regular service.

To assist with this, we’re stealing a page from MightyBargainHunter’s book, who recommends using one of your trip odometers (most cars nowadays have two) to keep track of mileage between service visits.

Photo Credit: livinus

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As a followup to my previous post about the best cash back credit cards for buying gas, I wanted to highlight a comment by a reader named Dave. As Dave pointed out, the Discover More card offers 5% cash back on a different set of “bonus” categories every three months. Well…

For the period of July 1 – Sept 30, 2008 the 5% categories are gas and hotels.

And after that, the 5% rewards will switch over to grocery stores, restaurants and movies. Unfortunately, the 5% rewards are capped at $400 in eligible purchases per reward period. All other purchases will receive up to 1% unlimited cash back. Given this, I’m still partial to the Blue Cash Rewards Card from AmEx, but the Discover More card isn’t a bad alternative. Click here to apply now.

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Since I’ve recently written about how to save gas, I thought I’d go ahead and highlight some tips from Jean Chatzky in the latest issue of Money Magazine. In the end, she figures that her tweaks will save her over $1,300 dollars and 0.74 tons of carbon dioxide emissions per year. Not bad. So how’s she doing it?

Drive a smaller car: While it might not be realistic to replace your gas hog or add another, more fuel efficient car to your fleet, most families have more than one car. If that’s the case for you, simply choosing to drive the more fuel efficient model whenever possible can dramatically decrease the amount of gas that you burn. If your family needs to use both cars at once, try to prioritize the more efficient vehicle for longer trips. The less time your gas hog spends on the road, the less fuel you’ll use.

Log and plan your driving: By keep a driving log for a week, she was able to spot patterns in her driving, learn how to effectively combine trips, and cut out unnecessary trips. She also started calling stores before she drove to them to make sure that they had her desired item(s) in stock. This has allowed her to delete at least one “random round trip” each day. Beyond the fuel savings, it sounds like she’s saving time, too.

Use public transportation: She’s switched to taking the train to work almost exclusively. For her, it’s a financial wash, but there’s a environmental (and conservation) benefit in that she’s burning far less gas. Also check with your employer. Some offer transportation savings account that let you pay your public transport fares out of pre-tax dollars. This could turn a financial wash into a clear gain if it’s available to you.

Make your gas go further: You can dramatically improve your mileage by accelerating smoothly, obeying speed limits, and minimizing unnecessary braking. This is perfectly in line with my recent driving experiment — recall that I was able to improve my mileage by 15%.

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With gas prices skyrocketing, I thought it would be worth putting together a roundup of the best credit cards when it comes to cash back rewards on gas purchases. Unfortunately, the American Express has announced that, effective immediately, they are reducing the reward on gas purchases made with the AmEx Simply Cash Business Card from 5% to 3%. That’s the bad news. The good news is that there are still some pretty sweet deals out there.

What follows is an overview of one of the best options for a “mainstream” gas reward credit card. While there are a number of brand-specific offers available, I much prefer to be able to choose amongst gas stations based on price as opposed to being tied down to a single brand. Here goes…

» True Earnings Card from Costco and AmEx

This is technically a business card, but anyone can apply for a business credit card. The beauty of this card is that it gives you a 3% discount on the already cheap gas prices at Costco (as well as elsewhere). You also get 3% back at restaurants and 1% on all other purchases. If you’re already a Costco member, the True Earnings card is definitely worth checking out. This card has no annual fee. Unfortunately, our nearest Costco is close to an hour away, so this one doesn’t work for us.

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When we picked up our rental car while this past weekend, I was reminded of the many hidden costs associated with renting a car. You can comparison shop until the cows come home, but odds are you’ll still end up paying more than you expected. Here’s a sampling:

Refueling charges

It’s no secret that rental car agencies stick it to you if you return your car with less gas than a full tank of gas, but this is starting to get ridiculous. When picking up your car, you have two main choices: prepay for a full tank of gas or refill it yourself.

The upside of prepaying is that they you’ll pay market price for gas. The downside is that you don’t get any credit for unused gallons. Thus, you end up paying for any gas that’s left in the tank when you bring it back. Given the recent runup in gas prices, you’re paying a lot for convenience with this option.

Conversely, if you choose to refuel it yourself and then fail to do so, they’ll gouge you like there’s no tomorrow. in our case, the price per gallon for returning it less than full is $7.99/gallon. Fortunately, I’ve never had trouble finding a gas station when returning a rental car, and I certainly don’t intend to start now.

Taxes

Regardless of how low the “normal” sales tax in a given area, you can typically expect to pay 10-15% (or more) in taxes when you rent a car. There’s nothing quite like building a tax base on the backs of visitors.

Airport fees

If you rent at the airport, you can count on paying additional “concession” fees. These are fees that are charged to the rental agency for the right to do business at the airport, and they’re pass on to you. Here’s a tip: If at all possible, pick up your car away from the airport. In our case, we rented from an agency about 2 miles from the airport, but we’re returning it at the airport — the concession fees only apply for renting, not for dropping off.

Additional drivers

I totally forgot about this one. We found a great price, but neglected to factor in the fact that my wife would need to drive, as well. If we were AAA members, this would have been free. But since we weren’t, they charged us $11/day (capped at 5 days) for her to be allowed to drive. I asked them to drop it, but they wouldn’t budge.

Loss and damage waiver (LDW)

In my opinion, this is second only to refueling charges in terms of price gouging. Rental agencies always push their loss and damage waiver on you when you’re signing up. This option typically provides you with zero-deductible coverage for any sort of loss or damage to the rental vehicle. Unfortunately, it comes at a price — usually $20-$30/day or more.

But guess what? Individual car insurance almost always covers rentals (check with you agent if you’re not sure). Moreover, many credit cards provide car rental insurance if you pay for your rental with the card.

Drop-off charges

If you pick up at one location and return at another, you might be subject to a drop-off fee, even if the other location is just down the road. This isn’t always the case, though, so check at the rental counter.

Partial days

Almost without exception, car rental agencies charge for each day, or portion thereof. Thus, if you pick your car up at 10AM, be sure to return your car by 10AM on the day you’re dropping it off or you’ll be charged for another full day. This is actually the reason we’re dropping our car off at the airport — the location from which we rented closes on Satrudays at 1PM and doesn’t re-open until Monday morning.

Since we were planning on returning the car late in the day on Saturday (following a morning pickup the previous week) they were not only going to charge us for an additional day, they were going to charge us the daily rate until they re-opened on Monday. By returning it to the airport on Sunday morning, we’ll pay the same that we would have with a Saturday afternoon dropoff, but without the charges running through Monday morning since the airport location is open 24/7. Better yet, there’s no dropoff charge.

Mileage limits

In many cases, car rental agencies limit you to a certain number of miles per day (usually around 150). Exceed this limit and you can expect to pay $0.25-$0.50 for each additional mile.

Frequent flyer fees

Many rental agencies charge a fee (usually around $2/day) if you want to earn frequent flyer miles in return for your rental. This is fine for business travellers (if they don’t mind wasting their company’s money) but it’s not a very good deal for individuals.

Child safety seats

When traveling with kids, it’s important to find out how much you’ll have to pay to rent a child safety seats. In our case, we had every intention of bringing out own. Unfortunately, we forgot two booster seats in our car at the airport. We actually realized it before the plane departed, but security was a nightmare and we didn’t want to roll the dice with a trip back out to the parking deck.

Care to guess what Hertz charges for a child safety seat? $60/week. Plus tax. Our solution? Buy a couple of new Graco booster seats at our destination for $18/each. We’ll probably leave these with family for future trips, but even if we didn’t we’d still come out way ahead.

GPS rental

If you want/need a GPS in your car, be prepared to pay $15-$20/day for the privilege. A much better option would be to print out directions from MapQuest or Google Maps before you depart. Also keep in mind that many hotels have free internet connections for looking up directions. Alternatively, if you absolutely have to have one, you might want to just buy your own and take it with you. For example, you can get this one for $150. This would practically pay for itself with a week-long rental and then you’d have it for future use.

Upsizing and reduced fuel economy

Last but not least, it’s not uncommon for a rental agency to run out of cars in a certain size class. In such cases, the standard practice is to upgrade you to a larger vehicle. That’s all well and good, except that bigger cars get worse mileage, and you might find yourself spending far more on gas than you had anticipated. Fortunately, we weren’t stung by this one. We got exactly what we asked for and the mileage hasn’t been too bad, even considering we’re hauling around six people (ourselves plus four kids).

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With gas prices on the rise, I thought I’d highlight a recent article from Consumer Reports on ways to save on gas — and ways not to. Given the results of my recent experiment on improving gas mileage, I can vouch for pretty much all of these.

1. Drive at a moderate speed. Keeping a lid on your speed is the #1 thing you can do to improve mileage. In their test car (a Toyota Camry), CR estimated that mileage dropped from 40 mpg to 35 mpg when they increased cruising speed from 55 mph to 65 mph. Speeding up to 75 mph dropped mileage another 5 mpg. While the extent of the drop will vary across makes and models, keeping an eye on the speedometer, especially when driving on the highway, will save gas.

2. Drive smoothly. Avoid rapid acceleration and hard braking. Once up to speed, try to maintain a steady pace. Jackrabbit starts burn excess gas, and unnecessary braking just converts energy gained from burning gas into heat (and it wears out your brakes).

3. Reduce unnecessary drag. Even empty roof racks can reduce mileage. Try to keep your luggage inside your vehicle, and if you’re not using your roof rack, remove it.

4. Don’t use premium fuel if you don’t need to. If your car is designed to run on regular unleaded, putting in premium won’t help. Using premium won’t hurt, but you’ll be spending an extra $0.20 per gallon for no reason.

5. Minimize driving with a cold engine. Engines run most efficiently when warm. Try to group errands together. This not only minimizes back and forth trips, but also maximizes efficiency by not letting the engine cool off too much.a

6. Keep tires properly inflated. Underinflated tires can cause a number of problems, not the least of which is reduced gas mileage.

7. Buy tires with lower rolling resistance. Less friction = less wasted energy, which translates into more miles per gallon. Believe it or not, this can account for a 1-2 mpg difference.

8. Avoid idling for long periods. If you’re burning gas, but not going anywhere, you’re getting zero mpg.

And here are three gas myths that don’t help at all:

1. Morning fill-ups. I’ve heard on more than one occasion that you should buy gas in the morning because it’s cooler, and the gas will be denser. The argument goes that this will result in more gas for your money. Problem is, it’s not true. Gas is stored underground, and the temperature barely changes at all over the course of the day.

2. Air conditioning vs. opening windows. While air conditioning can reduce your mileage, so does opening the windows. But in their tests, CR concluded that both effect were negligible. Note, however, that this testing was done at highway cruising speeds. I suspect that air condition might have a larger effect in stop and go traffic.

3. A dirty air filter. A popular recommendation at oil change places is to replace your air filter since a dirty filter supposedly reduces mileage. That being said, CR’s results indicated that, unlike the case with older cars, the mileage of newer models is unaffected by a dirty filter. The reason for this is that modern engines can compensate for a dirty filter and keep the air/fuel ratio constant.

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A few weeks ago, I mentioned that I was going to experiment with my driving style to see if I could improve my mileage. With gas prices topping $4/gallon, even small improvements can save you a pretty penny.

As for the changes that I made, I didn’t do anything too extreme. Rather, I simply focused on accelerating gradually, anticipating stops and coasting where possible to minimize braking, and minimizing air conditioning usage whenever the outside temps permitted (though this didn’t happen very often during the period in question).

I started this experiment with a full tank of gas and tracked my mileage for two weeks, at which time I refilled the tank and ran the numbers. As I noted when I first talked about this, I’ve been getting very consistent mileage, so I have a solid baseline from which to work. For background, I drive a 2005 Honda CR-V 2WD, and I typically get right at 21.8 mpg for in-town driving.

During the course of the experiment, I covered a total of 265.2 miles, all of which was most definitely “in-town” driving.

What about gas usage? As you can see below, I burned through 10.455 gallons.

This works out to 25.4 mpg. Just to be conservative, let’s round my base mileage up to 22 mpg… That works out to an increase of just over 15% in return for a few relatively minor driving adjustments. Not bad.

Given that I paid $4.019 per gallon, that’s an effective savings of just over $0.52 per gallon. But wait… I paid for the gas with my Amex Blue Cash Rewards card, which offers 5% off on gas purchases. Thus, my base price was really $4.019 – 5% = $3.82. The 15% mileage boost then takes that down to the equivalent of $3.32/gallon.

A few notes:

Like I said above, I didn’t go to any heroic lengths to achieve this improvement. I just drove a bit more carefully. I should also note that I’m normally a pretty reasonable driver, so it’s not like my baseline mileage was horrible due to lead foot. While I would imagine that the results would vary pretty widely across makes/models, it seems that pretty much any “typical” driver should be able to achieve a pretty nice gain.

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With gas prices increasing daily, I though I’d share with you some numbers from the Department of Energy regarding what goes into the price of gas as of April 2008. Here’s the breakdown:

73% – Crude oil
11% – Federal and state taxes
10% – Refining costs and profits
6% – Distribution and marketing

Not surprisingly, the cost of crude oil accounts for the majority of the cost of gas. For what it’s worth, the distribution and marketing category includes the cost of getting the gas to market plus and gas stations profits. These are pretty thin margins for gas station owners, though they’ve grown percentage-wise a bit over recent years.

Given the recent run up in oil prices, I though it would also be interesting to take a look at how things have changed in the past two years. For historical context, I’ve put together a graph of gas prices (right axis) along with a breakdown of the percentage contribution of the four different categories (left axis) for 2001-2008. All data are from the month of April during the year in question:

Note that the components are expressed in percentages, so a small percentage decrease could actually be an absolute increase (in terms of dollars) given the huge overall increase in price.

Source: DOE Gasoline Components History

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I heard on the news last night that some well meaning (but misguided) souls have been trying to arrange for yet another gas boycott to protest increasing prices. Unfortunately, gas boycotts don’t work — and for good reason. People don’t actually drive less. Rather, they fill up the day before or the day after, but end up using just as much gas. In other words, overall demand is unchanged, and the boycott has no effect whatsoever.

If you want to make a difference, the answer is simple: drive less.

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On our way home from vacation this past weekend, I paid over $50 to fill up on gas for the first time ever. I knew this day was coming sooner or later, as I’ve flirted with this number at times in the past, and I also regularly see $70-$80 (or more) purchases when I pull up to a pump after a big SUV pulls away. But still… It was a bit unsettling to stand there and watch the numbers scroll by until they settled just shy of $58.

I still remember filling my old Honda Accord to the brim for under $10 in the mid- to late-90s. In fact, I once paid as little as $0.699/gallon. But on this particular fill-up, I was paying $3.399/gallon. On top of that, we now drive a Honda Odyssey and I had let the tank run down pretty far, such that I needed 17 gallons of the good stuff.

The only silver lining here is that I received $0.17/gallon in rebates from my Amex Blue Cash Rewards card. But even with the 5% discount, I ended up paying well over $50 to fill my tank.

Which brings me to my question…

What’s the most you’ve ever paid for a tank of gas?

Please limit your response to personal vehicles — any dump truck drivers out there might skew the results — and record your response in the following poll. As always, I also encourage you to leave any comments that might come to mind.

Note: If the poll doesn’t work properly in the RSS feed, you’ll have to click through.

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On the heels of Honda’s announcement that they’re discontinuing the Accord hybrid and GM’s news that the’re introducing hybrid versions of the Chevy Tahoe and GMC Yukon mega-SUVs we have this… News from Honda that they’ve developed a clean-diesel Accord that gets just shy of 63 mpg on the highway. And guess what? It should be available in the United States in 2010. Now if they’d only make a station wagon version I’d be in heaven. Yes, I realize that station wagons aren’t particularly cool, but they’re incredibly practical — even moreso when you throw in that kind of mileage.

[Source: Switched.com]

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General Motors recently announced that they expect a 40% mileage boost for city driving for the hybrid versions of their big SUVs. Sounds great, but guess what? This would bring their city mpg estimates of the Chevy Tahoe and GMC Yukon up to just 19 or 20 miles per gallon (these same vehicles will get a projected 20-21 mpg in highway driving).

While other brands are boasting 50-80% gains for their largest SUVs, GM doesn’t want to sacrifice towing capacity or off-road performance. Thus, they’re using a conventional four wheel drive system with low-range gears that will give soccer moms across the country the ability to tow up to 6200 pounds as well as the freedom to drive in mud or sand.

The downside for GM is that they’re projecting a lost on the sale of each hybrid, with the hybrid hardware adding $10,000 to the cost of each vehicle produced. While they’ll almost certainly add some of that back to the sticker price, they won’t be able to tack it all on and still sell vehicles. If these new hybrids catch on, however, GM will be able to push down the component costs and (hopefully) turn a profit.

My take: While I’m a huge fan of energy conservation, I hardly think that hybrid mega-SUVs are the way to do it. It’s better than nothing, but simply buying a smaller car would do way more to reduce your fuel consumption. Yes, I realize that there are circumstances in which such vehicles are necessary, but the vast majority of people don’t really need a monstrous vehicle. Okay, I’ll get of my soapbox now.

[Source: USA Today]

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Honda announced today that it will discontinue the production of Accord hybrids due to Toyota’s market dominance with the Prius hybrid. They will, however, continue producing Civic hybrids, which have fared somewhat better since their introduction. Since going on sale in 2004, the Accord hybrid has sold just 25,000 units, including 6,100 in 2006. In just the last month, 439 Accord hybrids have sold nationwide, as compared to 24,000 Prius hybrids.

While at least part of this difference has been ascribed to the fact that the mileage advantage of a hybrid is most pronounced in a smaller car, such as the Prius or Civic, Toyota still offers a hybrid Camry as well as hybrid Lexus models.

[Source: MSN/Money]

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In case you haven’t noticed, gas prices have been shooting up over the past few weeks. The runup has been driven by increased demand, as consumption is increasing twice as fast as last year, and it will likely accelerate in late May when the summer driving season begins. According to James Mulva, CEO of ConocoPhillips, “We’re surprised by … the increased demand. Even though the price of gasoline is up, the demand is up.”

Hoping for a reprieve as consumers scale back on their driving and opt for more efficient cars? Don’t hold your breath. According to David Pursell of Pickering Energy Partners, “Last year, we had pump prices well over $3 for the summer and gasoline demand was up. Would $4 gasoline cause demand contraction? I think it will, but I also thought $3 gasoline would.”

The real problem here (in my opinion) is that we’ve created a society in which driving isn’t optional. And unfortunately, fuel economy standards in the U.S. have lagged behind the rest of the world, meaning that we’re driving an inefficient fleet of gas hogs. The end result is that, no matter how high prices go, people will be forced to simply suck it up and pay them unless we make some major changes. Of course, money is a huge motivator, so maybe some good will come of this. Okay, end of rant. Back to your regularly scheduled programming…

It’s not just increased demand that’s causing the runup. It also seems that the supply side has been struggling as of late:

Gasoline inventories, measured by the days of demand they will cover, are at the lowest level in two decades for this time of year because of refinery fires, power failures and maintenance work oil companies failed to complete in 2006. No new U.S. refinery has been built in three decades, increasing the strain on existing plants.

Peter Beutel, an analyst at Cameron Hanover, Inc. thinks prices could threaten the $4/gallon mark if we have an active hurricane season. And we’re talking about a legitimate $4/gallon this time around, not a scam like they were running in Orlando.

[Source: Telegram.com]

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I just saw a news report about a gas station near the Orlando, FL airport charging over $4/gallon for gas — the average price in the area at the time was $2.87/gallon. As it turns out, they hadn’t posted their prices on any signs, and were apparently hoping that motorists would start filling up without looking at the price on the pump. And guess what? It worked. A number of people just started pumping and then had a rude awakening when it came time to pay.

[Source: Orlando News-Press]

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Yesterday morning I had a brush with the law. I was late for a meeting, and was driving like a bat out of hell when I crested a hill and crossed paths with a local deputy who was headed in the other direction. If you’ve ever looked in your rear-view mirror and seen the long arm of the law hit the brakes and turn around, you’ll know the sinking feeling that I had at that moment. The good news (for me, anyway) is that I drove away without a speeding ticket.

How did I avoid a speeding ticket? Good question. No, I didn’t cry or flash him cleavage. In fact, I’m pretty sure that the former would’ve been met with laughter and the latter would’ve gotten me arrested). Rather, I kept my cool and tried to make the deputy’s job as easy as possible. As soon as he pulled me over, I rolled down my window, pulled out my wallet and put it on the dash, then shut off the car and put the keys on the dash. I then put my hands on the steering wheel and waited.

When he approached, he informed me that he clocked me at 65 in a 45 zone. Ouch. But I didn’t give him any B.S. excuses. (Late? Come on, we’re all late! All the time!) Instead, I was contrite, matter-of-fact, and apologetic. After running my plates and checking my license and insurance (I have a clean driving record, and everything was up-to-date), he came back and simply said:

“I’m going to give your license back and just ask that you slow down. You were going way too fast for this road.”

Whew! No speeding ticket, no points, nothing. While I can’t say for sure that my actions helped me avoid the speeding ticket, they certainly couldn’t have hurt. Given how quickly a routine traffic stop can turn ugly, I know that I’d greatly appreciate it if a driver went out of their way to make things as easy as possible for me — and I’d almost certainly look more favorably upon their situation if they did.

Then again, maybe I was just lucky.

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I noted last week that my wife got in a fender bender. It was totally not her fault — someone rear-ended our Honda Odyssey when she was out and about. Anyway, we decided to pursue the claim directly through the other driver’s insurance company (Grange). Shortly after the incident, my wife went to a local body shop and got an estimate for the repair. Grange then cut a check to us for the cost of the repair, and we can (apparently) just sign it over to the body shop to cover the cost of the repair. Either that or we could do the truly frugal thing and deposit the check and charge the repair on a reward credit card… Actually, a truly frugal move would be to pocket the cash and drive around with a dented bumper. Anyway, the check arrived yesterday, so now all we need to do is schedule the repair.

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Last week my wife was out and about with the boys in our Honda Odyssey when she got rear-ended. Fortunately, it wasn’t a big deal, and the damage appears to have been largely cosmetic. Still, she went ahead and called our insurance agent, who advised that she call the police. She did, and when they showed up she and the other driver explained what happened (it was completely the other driver’s fault) and they wrote up the report.

We subsequently learned that we could proceed one of two ways: (1) We could go through our insurance (State Farm), pay the $500 deductible up front, and then get it back when we they get the money back from the other insurance company, or (2) we could contact the other driver’s insurance company (Grange), get the car fixed, and have them pay for it directly.

Long story short… My wife ended up contacting Grange directly late last week, and yesterday she took the car in for an estimate. As it turns, they’ll have to replace the bumper to the tune of a bit over $700. Stay tuned for further details.

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If you happen to have a Citi Driver’s Edge Mastercard then you’re probably aware that there are two different ways to access your rewards. The first is to redeem them through the ThankYou Rewards Network, and the second is to file a claim whenever you have your car serviced, and get the cash credited straight to your account.

As far as I’m concerned, straight up cash money is always better than some sort of cash equivalent, so I always try to opt for the account credit. It’s actually very easy to file the claim do — all you need is the receipt detailing the service that you’ve done on the car, and the web address for the online submission form. In case you can’t find the form, HERE it is… You might want to bookmark that for future reference.

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Here’s a quick rundown of the most and least reliable new cars (according to Consumer Reports) in ten different categories… Not many surprises here, but it’s still an interesting list to look at. All cars are 2007 models unless otherwise indicated…

Small Cars
Best: Honda Fit
Worst: Chevrolet Cobalt

Family Cars
Best: Honda Accord Hybrid (slightly better than the 4 cyl Accord)
Worst: Volkswagen Passat

Upscale/Large Cars
Best: Lexus ES350
Worst: Jaguar X-Type

Luxury Cars
Best: 2006 Lexus LS
Worst: Cadillac STS

Sporty Cars
Best: Lexus SC
Worst: Pontiac Solstice

Wagons/Minivans
Best: Pontiac Vibe (the Toyota Matrix is essentially the same car)
Worst: Buick Terraza

Small SUV
Best: Toyota FJ Cruiser (though I’ve never thought of this as being particularly small)
Worst: Kia Sportage

Midsized SUV
Best: Toyota Highlander Hybrid (slighly better than the regular Highlander)
Worst: Mercedes-Benz M-Class

Large SUVs
Best: Toyota Land Cruiser
Worst: Nissan Armada

Pickup Trucks
Best: Subaru Baja (this is hardly a truck!)
Worst: Nissan Titan

Interestingly, the hybrid version of a couple of cars aced out the standard version. Not by much, but still.

[Source: CNN/Money]

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Wow, how quickly we forget… After a month of “low” gas prices (which is to say high, but not as high as they’ve been) Americans have seemingly forgotten their newfound love for cars with good gas mileage and reverted to buying gas guzzling beasts. That’s right, sales of Chevy Tahoes and Suburbans as well as Cadillac Escalades went up 2-3X in October as compared to a year ago. Similarly, Ford Expedition and Lincoln Navigator sales jumped 40%, and Jeep sales went up 29%. On the downside, sales of the economical Chevy Aveo and Cobalt fell 30-40%, and the Toyota Prius dropped nearly 9%. Do we deserve high gas prices, or what?

It’s important to keep in mind that these are year-over-year numbers, so the effect of the new model year and/or seasonality should be (mostly) neutralized. To be fair, it appears that car sales were up in general during October, but it certainly seems like a disproportionate amount of that growth went on in the mega-car categories. The only silver lining in all of this is that Hummer sales were flat.

[Source: CNN Money via pfBlueprint]

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According to a recent AP news report, Americans are burning nearly 1 billion more gallons of gas each year than we did in 1960 due to our expanding waistlines… Based on recent prices in the range of $2.20/gallon, this translates into an additional $2.2 billion spent on gas each year. When you think about it, this makes perfect sense. After all, one of the most common gas saving tips is to remove excess items from your trunk to reduce weight. So adding a bunch of weight in the form of fat should have the exact opposite effect, shouldn’t it? Truth be told, this is a pretty minor effect on an individual basis, but when you add it up across the country, you start talking about a non-trivial amount of gas.

[Source: Washington Post]

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Is ethanol the solution to our oil dependency woes? The Bush administation seems to think so, but Consumer Reports isn’t so sure. In a recent article on flex-fuel vehicles that run on E85 (85% ethanol, 15% gasoline), CR reported that the fuel economy of their test vehicle (a flex-fuel Chevy Tahoe) dropped by 27%, from a paltry 14 mpg to an even worse 10 mpg, when running on E85 as compared to gas.

When the study was conducted back in August, gas was going for $2.91/gallon. So… After adjusting for the difference in fuel economy, you would’ve ended up paying the equivalent of $3.99/gallon for E85. And that’s only if you can find it… While E85 is common in corn country (the Upper Midwest) it’s a lot harder to find elsewhere. On the upside, there was no change in vehicle performance when running on E85, and E85 burns much cleaner than straight gas, so it produces many fewer smog-causing pollutants.

Perhaps the biggest problem right now is that the production of flex-fuel vehicles is setting the stage for a net increase of gasoline consumption. The reason for this is that automakers get fuel-economy credits for every flex-fuel vehicle that they build. Thus, even if these vehicles never run on E85, the automakers get to pump out even more gas-guzzling SUVs just for having produced them. How’s that for reducing our dependency on foreign oil?

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Coming on the heels of numerous reports on falling gas prices, OPEC has started talking about cutting output. After all, crude prices have fallen below $60/barrel for the first time in six months, and much of the world has shown a complete willingness to pay the higher prices that we’ve been faced with, so why not? In other news, now looks to be a particularly good time to start investing in barrels. Buy low, sell high.

[Source: Financial Times]

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I generally try not to talk too much about gas prices, but in this case I couldn’t resist. This past Saturday I bought gas for $2.139/gallon, and I saw it later in the day at a rural location further down the road for $2.029/gallon. I retrospect, I was struck by two things. First, I’m amazed at how quickly the prices have fallen. Second, and more importantly, I’m amazed at how quickly I came to view gas at slightly over $2/gallon as being “cheap.” But no matter how cheap it feels, I still recommend that you do simple things like drive conservatively (unlike our friends in Texas), think high mileage when shopping for a car, and consider public transportation whenever possible.

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This is a guest post from Andy Hough of Bank Bonuses.

With the recent rise in gas prices there have been many blog posts about ways to save on gas. I decided to test how well one of these tips would actually work.

Many posts suggested that keeping your car tuned up would help your gas mileage. Since my car needed a tune-up, I decided to see what the difference in my miles per gallon actually was.

Before the tune-up I was getting about 25.5 MPG. After the tune-up I managed 34.5 MPG, 9 more miles per gallon. That is 90 extra miles per 10 gallon fill-up. With a gas price of $3 a gallon it would have cost me $10.59 more to drive those 90 extra miles before the tune-up. The cost of the tune-up was $60 so I will more than make up for its cost in 6 fill-ups. Of course your vehicle might not need a tune-up as badly as mine needed one so your savings will vary. It is clear though that getting a tune-up when your vehicle needs one is maintenance that pays for itself.

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Here’s a list of five tips for saving money by saving energy (and thereby saving the planet). Pretty standard stuff (except for the last one), but this is a topic that’s near and dear to my heart (as evidenced by my recent posts on reducing our electrical usage), so I’m covering it anyway.

(1) Switch to compact fluorescent (CF) light bulbs. Been there and done that – I’ve been swapping out the bulbs in our new house to reduce both electrical consumption and the attendant heat load that incandescent bulbs produce. It’s a win-win proposition.

(2) Before buying an appliance, consult the FTC’s Appliance Energy Database. Buying smart (i.e., selecting an energy efficient appliance) can save you a good bit of money, and your decision will pay dividends for years to come.

(3) Fix the fridge. If you can close the refrigerator door on a dollar bill and then easily pull it out, you need a tighter seal. The economics of this one are actually somewhat questionable, as the estimated cost savings is only around $15/year.

(4) Drive nicer. Jackrabbit starts and jamming on your brakes can reduce your gas mileage by 5 percent around town and 33 percent at highway speeds. Also keep an eye on the speed limit, as speeding can reduce you gas mileage.

(5) Buy a Human Power Generator MkIII. This one is only for the hard-core energy savers amongst you… It’s a stationary bike/generator. Not only can it save money off your electric bill, but it can also save money on a gym membership. To be honest, this sort of thing might be one of the best motivators out there for me when it comes to exercise… It’s like a game — see how low of an electric bill you can get by generating your own power.

[Source: CNN/Money]

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According to a recent article, drivers in Honolulu (and perhaps elsewhere) are complaining of reduced gas mileage in the two months since Hawaii switch to gasoline blended with 10% ethanol. According to the Ethanol Promotion and Information council, most drivers using a 10% ethanol-blended gas will experience a 1-2% drop in mileage. But some drivers in Hawaii are claiming that their mileage has dropped by 25-30%. While I’ve heard of substantially lower mileage in cars running on E85 (a blend of 85% ethanol and 15% gasoline that can be used in certain makes/models) I never really heard anything about reduced mileage in the more ’standard’ 90/10 ethanol blend.

[Source: KHON.com]

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Leave it to Texas to raise the speed limit in the face of ever-increasing oil prices… That’s right, the state of Texas is raising the speed limit along 500 miles of interstate to 80 mph. To be fair, the increase is limited to ten fairly desolate counties in west Texas. But still…

The Insurance Institute for Highway Safety is projecting an increase in highway deaths, and the Department of Energy estimates that every 5 mph translates results in the equivalent of paying an extra twenty cents per gallon of gas (though I have no idea what assumptions this statement is based on). With regard to the safety issue, Tom Smith (Texas director of the consumer advocacy group Public Citizen) said:

You can repeal the speed limit law, but you can’t repeal the law of physics. People don’t survive crashes at these excessive speeds.

However, Transportation Commission Chairman Ric Williamson claims that the increased speed limit is safe on the roads in question. And with regard to the energy conservation issue, he went on to say that the state is responsible for drivers who “choose to consume their wealth.” Wow. Sounds like he’s bucking for an appointment as a White House energy advisor.

[Source: FOXNews.com]

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Just when I thought I had it all figured out, it turns out that the ‘new and improved’ Kroger gas discount is better than I thought (but worse than it used to be). According to the signs on the pumps, you can still get $0.10/gallon discount for spending $100 on groceries. Moreover, you can get an extra $0.05/gallon discount for paying with a Kroger 1-2-3 Rewards MasterCard. So they’ve basically replaced the $0.03/gallon discount for swiping you card with an additional $0.05/gallon discount when you: (1) spend $100 on groceries, and (2) pay for your gas with the Kroger 1-2-3 Rewards MasterCard. Like I said, better than I originally though, but you’re probably still better off getting the $0.10/gallon discount for your grocery purchase and then paying for it with a standard 5% reward card, such as the Citi Dividend Platinum MasterCard.

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