The $1 and $5-a-Day Electric Car

Falling prices for fully-electric cars are combining with incentives offered by the federal government and certain states to create some incredible deals on electric vehicles.

For example, if you want to lease the fully-electric 2013 Nissan Leaf’s basic model at the standard 24 month, 12,000-mile terms, you can expect to pay about $56 in fees at the beginning plus $290-per-month for the term of the lease. If you decide to not lease another Nissan at the end of the term, you would also have to pay a $395 disposition fee when you turn in the first car at the end. Thus, over the course of two years, including the disposition fee, you’d pay $7,411 for your car—or about $308.79-per-month or $10.15-a-day. My local Nissan representative Robert tells me that it should cost about $1.00 to fully charge the battery, so I calculate that it would cost at most around $11.15-a-day to be able to drive the Leaf (prior to any considerations about insurance). Maintenance costs during the lease term are also projected to be close to nothing, because the car does not have an internal combustion engine and does not use gasoline or motor oil.

Now you need to consider incentives. Since this is a leased vehicle, it would not qualify for the $7,500 federal tax credit for electric drive vehicles, but here in Georgia, I have the income level necessary to take full advantage of a $5,000 state income tax credit available for the lease or purchase of a zero-emissions vehicle. (Search for incentives in your state here.) Taken fully, this credit can knock about $6.85-a-day from the cost of a leased Leaf, so Georgia has turned my $11.15-a-day car into a $4.30-a-day car.

That’s already an incredible deal, because AAA estimates that the average cost to own a 2013 sedan is about $24.99-a-day.

The Leaf can get even cheaper when you consider the impact of owning another vehicle. I drive a Volvo C70, which AOL Autos says has a total cost to own of $25.54-a-day brand-new if I drive about 10,000 miles-per-year. Based on their cost assumptions, the cost to own a C70 includes about $118.92-per-month or $3.91-a-day in insurance.

I actually pay about $146 a month in insurance ($4.80-a-day) with a $500 deductible. My insurer has told me that if I adjusted my Volvo’s annual mileage estimates from 10,000 miles to 1,000 miles (because I would be driving the Leaf more than my Volvo), I should be able to get my combined insurance payments down to $176-per-month (about $83 for the Volvo and $93 for the Leaf) with a $1,000 deductible. That means that the new car could only add $0.99-a-day to my insurance costs, while moving my Volvo’s insurance costs down to $2.73-a-day. Using the AAA’s numbers, that would bring the daily cost to own a Volvo to about $23.47-a-day.

Now, we need to account for fuel. I cut my annual mile assumption for the Volvo by 90% so let’s adjust the AOL Autos calculations there. They estimate about $4.20-a-day in fuel costs for a C70 that drives 10,000 miles a year. If I cut that by 90%, that means I’ve reduced $3.78-a-day from the total daily cost-to-own, which is now $19.69.

After insurance and fuel reductions, I’ve essentially cut the daily cost-to-own my first car by $5.85 by adding a second fully-electric vehicle that costs $7.36-a-day. When you combine the reductions on the first car with the additional cost of the second car, it turns out that I get to use a fully electric car for the cost of about $1.51-a-day. And if I decide to lease another Leaf at the end, there’d be no disposition fee—knocking the daily cost of a fully-electric second vehicle down to $0.97.

In my mind, that’s a free car—and a no-brainer for everyone from earth-lovers to penny-pinchers.

How much $$ do you estimate that you spend on your car each day? What do you do to reduce that cost? Are you a driver with buyer’s remorse, a frugal driver-in-training or an electric vehicle aficionado? Share your story in the comments below or in our Community Forum!

Interest Rates Are Rising! Here’s What You Need to Do Now

interest rateThose of us with savings accounts know where interest rates have been in recent years: Nowhere. But the historically low rates used by the Fed to help stimulate lending and borrowing (and by extension, the entire economy) are very likely to rise soon. In some sectors, such as housing, mortgage rates have already doubled in recent months. Here’s what you need to do now to position yourself for rising rates:

Check Your Current Interest Rates

Find out what you’re paying on private student loans, car notes, mortgages, and so forth, because if any of these are variable, that rate will almost certainly rise in the coming months. Now’s the time to switch to a fixed loan if you can, or re-allocate additional funds in your budget toward debt servicing if you can’t. Rising interest rates make loans more expensive to re-pay, so act now to re-finance, if possible. In the case of variable rate mortgages (whose rates are already increasing rapidly), you should have acted yesterday, so get moving!

Re-Think Savings & Money Market Accounts

My “high yield” savings account has been paying me less than 0.8% interest – and I’ve gladly taken it, because safe sources of yield have been hard to come by in recent years. But many investors have shunned savings and money market accounts and CDs in search of better returns elsewhere. If you’ve been reluctant to hold cash because of low yields, it may be time to re-consider. (Who remembers the pre-recession days when such accounts yielded four or five percent?) Rising interest rates will provide you with better returns and a safer environment for your funds. That’s of real benefit if you’re expecting to make higher payments on variable-rate loans — or if you just plain want more money in the bank.

Bond Market Malaise

Rising interest rates mean a decline in the value of bonds (these move inversely), so the recent suggestion that the Fed might ease back on its bond purchases some time later this year has caused a mass sell-off in the asset class. Depending upon your investing style, this may be the time to re-consider your bond holdings. Some experts believe the worst is yet to come and are encouraging a complete departure, while others think the demand for bonds will re-surface as banks, major companies and government entities seek new purchases to roll-over older debt. They see this dip as a buying opportunity. Either way, one thing’s for sure: Bonds are likely to suffer in the coming weeks and months. Consider positioning yourself accordingly as you see fit.

Potential Five Ten Twenty Club Savings Example:

Let’s say you have a $10,000 savings account that is currently earning 0.5% interest (and that you don’t add a single penny to it). If rates return to their pre-recession levels of about 4%, you’d be earning eight times as much interest! Such a dramatic rise is unlikely in the near-term, however, so let’s focus on a more realistic new rate of about 2%.

Total Savings With 1-Year Interest Gains: $10,200 (vs. $10,050 at current rates)

Total Savings After 10 Years: $12,190 (vs. $10,500 at current rates)

Total Savings After 35 Years: $20,000 (vs. $11,900 at current rates)

..And, if rates do rise to 4% again, you’d have almost $40,000 after 35 years!

What interest rate are you earning on your savings account(s)? Have you started looking at whether your interest rates are variable or fixed? What do you plan to do next? Share your story in the comments below or in our Community Forum!

Disclaimer: This post is for your consideration only and should not be taken as actual financial advice. Please consider consulting a financial management professional before modifying your investments.