Quote:
Originally Posted by Thymeclock
So have I. However, you need to factor in all the money you put into it to repair it, plus the value of your labor (sweat equity), besides which it continues to depreciate (lose value) as you own it. Usually the only time you can break even or show the slightest profit is when it's a beater, it's totally depreciated, and you paid almost nothing for it.
|
If we want to figure out the money, effort (in $$), depreciation, etc. that it costs to get the car ready vs what we get out of the car is greater than 1 (indicating positive return) or less than 1 (indicating negative return), what would you call it? Not "ROI"? Is there a different well understood term that conveys the same meaning?
I understand that a person shouldn't expect the value of a vehicle to go up, but it is still a tangible asset and is still providing some kind of return. Just like any investment, the ROI can be positive or negative. For a vehicle, it may not be in simple $$ terms, but in most cases it can be distilled down so it can be calculated in $$ terms. For instance if you have to go somewhere regularly (e.g. commuting), you can calculate the value of your time which you save vs walking or cycling (calculation depends the value you place on your time, of course). Obviously even a cheap car can do the job, but if it's not reliable then you have to add the cost of fixing in there as well... which might highlight that a newer or more expensive, more reliable car is a better way to spend your money.
I'm not going to say that the ROI (or whatever you want to call it) on a vehicle is going to come out positive, only that the same concept can be used to figure out how much (or little) it is costing vs alternatives.
The same goes for FE modifications... Some $$, effort, reduction in resale value (maybe) is being put in with the expectation of some reduction in fuel consumption... the first part is the investment which includes tangible assets (which will depreciate very quickly in this case) while the second is the return in the form of improved efficiency.