Author Archives: tylerkaraszewski

My Chevy Volt

Note: the following article was written before I started this project, and so the car wasn’t purchased with the goal of saving $30,000 in mind. I’ve edited the article slightly from my original version because some of the numbers estimated turned out to be inaccurate now that I’ve had the car for a little while.

If you follow cars at all, and likely even if you don’t, you’ve probably heard of the Chevy Volt. This is America’s first venture into the plug-in hybrid, intended to one-up Toyota’s Prius and be a practical, mostly-electric car. It’s a very interesting car, both as an engineering feat and as a glimpse into what the future of transportation might look like, but it’s also expensive. Like the latest Apple product it comes with a steep early-adopter price — it starts at $39,000. This is the story of how and why I got one.

Parked outside my office, minutes after I got it.

I am a software engineer who works in the Silicon Valley. If you head south from the Valley on highway 17, you’ll find yourself in the idyllic little beach community of Santa Cruz, nestled between the Pacific Ocean and the coastal mountains. This is where I grew up. Maybe this is why living in the sprawling suburbia of the Valley never really appealed to me. I tried it for a while, and also spent a year in San Francisco proper. The city life was fun for a bit, but I always longed to be back home, close to my family and the beach. Last year, my wife and I bought a house just about fifteen minutes from my parents’ house, in a rural area a few miles outside of town, on the edge of a redwood forest, about six miles inland from the ocean. I love my house. My friends and family are nearby. We want to keep this place forever and let our children grow up collecting eggs from the chickens in the coop I built.

This means my office is fifty-two miles from my house. The fastest I’ve ever driven home from work was an hour and seven minutes. On a bad traffic day, it can be an hour and forty-five minutes. I’m a bit of a car enthusiast, and in principle, I don’t mind driving. But I’d like to be able to choose not to drive, and as much as I might enjoy certain types of driving, sitting in traffic is pretty awful. The first 30 minutes after I leave my house (and the last 30 minutes on the way home) is actually a nice drive, on a little mountain road through the forest with no traffic. I don’t mind this, but the big traffic-clogged freeways closer to work are no fun. So I’ve tried to mitigate my commute a bit by working from home on Tuesdays and Thursdays. There are a couple of other things I could do that would also help. I could move closer to the office — I could stay close to my parents and the beach and shave fifteen minutes off my commute, but I’d have to spend an extra $200,000 to buy a house in the area that would allow this. I could get a job closer to home; Netflix, as an example, is 25 minutes to an hour (depending on traffic) closer to home than my current office. I could try and work from home even more often, maybe going to the office only twice a week. Someday, I make one or more of these things happen, but that’s not today.

My employer likes to offer perks to employees, especially if the perks save us time, because presumably we’ll spend more time working if we spend less time doing other things. We get free lunch on-site, for example, because then we don’t need to take the time to walk around town to go to restaurants (Google and Facebook offer this same benefit). Recently, we started offering a shuttle down from San Francisco so that employees wouldn’t have to worry about driving, or train transfers, or any of the other annoyances of commuting. Of course, the shuttle bus has Wi-Fi, so people can work from the bus on their way to and from the office. But not everyone lives in the city, and a shuttle wouldn’t work so well for people scattered around the suburban parts of the bay area because there just isn’t the same sort of employee density that there is in San Francisco. Instead, the company decided they’d pay $250 per month to anyone who buys a car that qualifies for HOV stickers.

Let me explain the HOV stickers for those that don’t live in California. California has HOV (carpool) lanes on the freeways in the major metro areas around San Francisco and L.A. Because not very many people actually carpool, even when traffic is at a dead stop on freeways at rush hour, these lanes usually keep moving along at close to the speed limit. Because California cares a lot about the environment, and the lanes are otherwise mostly unused, the state offers special stickers to owners of environmentally-friendly cars that let you drive in the HOV lane even if there’s only one person in the car. This means that if you get an electric or plug-in hybrid car, like my Chevy Volt, you can drive in the otherwise-mostly-empty carpool lane. This saves you lots of time, which is why my employer decided to  subsidize these cars for employees.

As soon as our CEO announced this new car subsidy program, I looked up the cost of a Chevy Volt online. The current promotion was a two year lease for $249 per month. That payment on a car with a $250 per month reimbursement seemed too good to pass up — I went to a Chevy dealer near my office the next day. I had to fight with the dealership for a while to get the price close to what was advertised, but I ended up signing a 24-month lease on a 2012 Chevy Volt for $237 per month (including taxes and such), and I gave the dealer a check for $5,000.

Here’s a table showing the entire cost breakdown, comparing driving the Volt to my old car (a paid-for 2007 Volkswagen GTI), with each expense computed as monthly cost over the duration of the lease:

Expense Volt GTI
Down Payment 208.33 0.00
Monthly Payment 237.00 0.00
Gasoline 21.25 227.68
Subsidy -250.00 0.00
Tax on Subsidy 62.50 0.00
Depreciation 0.00 95.83
Insurance 90.33 79.44
Electricity 15.00 0.00
Total Cost $384.42 $402.95

Monthly savings driving the Volt: $18.53.

It turns out it’s actually cheaper, just barely, for me to drive the new car. As you might expect, it saves tremendously on gasoline. In my first few days of driving it to the office, I’ve been getting 90% of the way to work before draining the battery and running on gas. This morning I drove 51.9 miles to the office, and used 0.13 gallons of gas, which works out to 399 miles per gallon. I can’t charge the car at work yet, but they’re installing electric car charging stations in the garage, so soon my drive home will use the same tiny amount of fuel. My old car averaged about 28 miles per gallon, and used premium gasoline, which currently runs about $4.25/gallon around here. My additional electricity cost to charge the car should be small, partly because half the charging will be paid for by work, and partly because Pacific Gas and Electric has a special rate program designed for owners of electric vehicles. My insurance goes up slightly with the newer, more-expensive-to-replace car.

51.9 miles on 0.13 gallons of gasoline

So in purely financial terms, you can see I come out ahead by getting the new car, which isn’t bad by any means. But there are other things to consider besides the financials. There are the environmental benefits of an electric car. It’s fun to drive a new car, it comes with the latest gadgets, like Bluetooth integration and automatic headlights, and it’s less likely to develop problems than an older car. But the biggest benefit is the HOV stickers. I figure I’ll save 15 minutes each way on my commute now that I’ll have access to the HOV lane. That’s half an hour a day, three days a week, or 75 hours a year that I won’t spend sitting in traffic. That’s nearly the amount of time you get off work for a standard two-week vacation. And there’s the stress reduction. Sitting stopped in traffic for more than a few minutes causes nothing but aggravation. I’d much rather spend fifteen minutes cruising past other people stuck in traffic than sitting in traffic myself, even if the total time of the trip stayed the same. With the savings in both cost and time, there’s no question, getting the new car was an easy choice.

Project $30,000

I’ve been reading about “personal finance” on the internet for quite some time now, and for most of that time, I’ve felt like I’ve been doing pretty well. I’m not drowning in credit card or student loan debt. I don’t spend more than I earn. I make a decent salary.

But I’ve come to realize that despite working in the Silicon Valley software industry for years now, I have very little of substance to show for it. My house is pretty nice, but I don’t really own more than about 5% of it. My bank accounts aren’t completely empty, but without raiding my IRA, I really could only support myself for a month or two if I lost my job. Even if I did raid the IRA, it’d give me less than a year. I have brand new cars and some really impressive vacation photos, though.

After seeing it mentioned many times, I finally spent some time reading through Mr. Money Mustache’s site and it has changed my entire outlook. I realize that what I really want is security and freedom – the kind you can only get when you know that even if you quit your job tomorrow, you’d still be able to provide food and shelter for your family. With enough money in the bank, you are secure in case someone else decides they no longer benefit from writing you regular paychecks, and you’re truly free to tell anyone “no” and go do whatever you like — even if it doesn’t pay as well, or pay at all. Starting now, my primary goal is to make that possible.

The number $30,000 is pretty arbitrary. I picked it because it seemed like a realistic goal to reach in a year. Thirty thousand dollars in one year on a software engineer’s salary, how hard can that be, right?

So, here’s steps one and two, which I’m going to work on simultaneously:

  1. $30,000 in liquid assets (cash/stocks/whatever).
  2. No more than $2,000/month in non-housing expenses (I think to start, I’m not including health care costs, either, I can change this goal whenever I want).

$30,000 is only a start. Once I hit that, I should be up to speed, and then we can *really* cover some distance. This site will track my progress, and the changes my family and I make in our lives to get there.