Emissions
My car just failed an emissions check. I have an offer on the table to sell it for $2000 and walk away.
When I bought it two years ago, the purchase price and other “miscellaneous” items came to $3300 and I have spent about $2000 in repair and maintenance (including nice new tires) over that time. I have also spent $3600 on gas in that same period.
The monthly operating expenses are $150/month for gas and $80/month for maintenance, so about $240/month give or take. If I sell it, the capital outlay would have been $1300, or about $650/year or 50/month, which is equivalent to a nice low car payment.
If I don’t sell it and can keep it passing emissions tests, I’m sure I could drive the car for another 8 years at which point it will be worth nothing, so capex becomes $330/year or $25/month, basically negligible. I’d expect the repair bills to average lower if I’m not replacing tires all the time, but to remain about the same if emissions continue to give me trouble and are repairable.
Decision time: sell the car now or try to get it to pass the smog? I’m pretty happy with the car otherwise, and I have one free retest I can do before I have to make a final decision.
My goals in rough order of priority are:
1/ maximize convenience
2/ minimize cost
3/ screw the system
I’m thinking about buying some of this stuff and driving around a bunch tonight and going for the re-test tomorrow. If I still fail, I sell the thing to the dude tomorrow. If I pass, I have another two years before I have to make the decision again.
Better ideas?
May 23rd, 2012 at 10:01:07 am
You are comitting the sunk cost falacy. Ignore what you operating expenses “were”. Your goal should be to choose what you think will be the best outcome between your future choices.
May 23rd, 2012 at 05:19:01 pm
Is it still the sunk cost fallacy if I’m amortizing the cost over time?
May 24th, 2012 at 07:24:14 pm
Usually it is not too expensive to fix “emissions” problems unless the car is worn enough to be burning oil. I suppose another expensive possibility with modern cars would be a broken computer module or something. Usually, however, its plugs, filters, and adjust to spec — a few hundred perhaps, but not thousands.
Jim