photo credit: Kecko

A few weeks ago, Mr. Savvy and I decided that relying on the kindness of friends was getting old when it came to transporting/hauling stuff.  So this past weekend, we bought a pickup truck (no, that’s not our truck).  Now, one could argue that it would have been cheaper to simply rent a truck for the occasions we need to haul something.  However, that’s not really convenient.  So let’s see if convenience is costing us.

Around here, you can rent a truck from Home Depot for $19.99/hour.  Let’s assume each rental would be for two hours.  That gives a cost of $42.38/rental (including tax).  Our cost of ownership of the truck for the first year will be $967.20 (purchase, insurance, registration).  That means we would have to use the truck 22 times in the first year to break even on our purchase.  I’m quite sure that we will use the truck at least that much this year because we have a couple of landscaping projects we’d like to complete.

For subsequent years, the cost of ownership will drop to $367.60 (insurance, registration) which will only require 9 uses to break even.  Once again, I believe we’ll use the truck at least that much.   Note that I didn’t include the opportunity cost (cost of using funds to purchase the truck upfront vs saving or investing).  I didn’t want to overly complicate the calculations.  I also didn’t include gas or maintenance.  These costs will be neglible since the truck won’t be driven much (in terms of mileage) and can be considered the ‘cost of convenience’.  So it seems that financially and otherwise, it was worth it to purchase the truck.

This type of calculation can often be useful when decided whether or not to make a purchase or when evaluating various options.  Of course, it would be wise to make this calculations BEFORE you actually make a decision