I Happily Filled My Tank With $5.49/Gallon Gas

5 minute read

I’m currently driving across a chunk of the United States with my family in our minivan. The van has a 20+ gallon tank. I put ~14 gallons into it. At $5.49/gal, I dropped just under $70 to fill it.

Ouch.

There has to be a better option than spending a day and a half stuck in a tin can. Then again maybe some perspective is in order.

We needed to be back home with family for about 10 days. We had about 3-4 weeks to plan our trip. The nature of our visit wasn’t something that could be done virtually or simply forgone. Typically, we default to piling into our minivan and hauling across the country. This time, I thought it would be interesting to look at some alternatives to see what the time vs. money tradeoff looks like.

Our Baseline

Our trip is about 900 miles one way. Our van gets about 25 miles per gallon on the trip. A little more in the flat states. A little less in the hilly ones. 1800 miles / 25 miles per gallon means round trip we’re buying about 72 gallons of gas.

All of our fill ups have been less than $5.49/gallon, but let’s use that as our worst case. For gas alone, we’re talking about $400 of gas.

We’re pretty good about taking care of our vehicles. Therefore, I’m comfortable saying we’ll get 100,000 miles of life out of this car. 1,800 /100,000 is just under 2%. Let’s pretend it’s straight depreciation of the vehicle purchase price (~$20,000) relative to mileage. That works out to about $360 of depreciation for this trip.

With 900 miles of road to cover, we either leave in the middle of the night and do 16 grueling hours all at once or we split the trip into two days. During the early parts of the COVID-19 pandemic, we did the former. We didn’t stop for anything except to fill the gas tank and empty our bladders. It was not fun. Now, we’re a bit more willing to make a stop midway, so we’ll say 16 hours of driving + 8 hours at a motel for a total of 24 hours one way. Adding the hotel costs $140 to the round trip price.

Total cost: $900

Total time: 48 hours

Intangibles: we travel with our dog, a cooler full of healthier snacks and have little contact with others (especially important for a 2 yr old still ineligible for COVID-19 vaccination).

Flying Commercial

Instead of 13 hours of road time (it’s actually closer to 15 with young kids), we could have taken a short flight. If we catch a nonstop flight, our door to door travel is 30 mins to the airport, 1.5 hours at the airport to clear security, a 2 hour flight, 30 mins to get bags and rental car, and then 2 hours to drive to our destination. 6.5 hours total (assuming everything goes smoothly) one way. Not bad relative to the drive time in the van.

Given that we had a relatively short time to book airfare, the cheapest flights I c0uld find are about $215 per person one way. With four humans, our flight cost is 4 x $430 = $1720.

Of course, we have to do something with the dog. No, we’re not going to ship her in the cargo bay. So, it’s either boarding at a kennel for something like $55/day or at home care for closer to $80/day. Our trip was 10 days. Yikes, we’re at somewhere between $550 and $800 just for the dog. Let’s go with $550 to be conservative.

Next, we need a rental car and two car seats when we get where we are going. That’ll be $850 for a full-size car for 10 days.

Total cost: $3120

Total time: 12 hours round trip

Intangibles: way less travel time with a potentially cranky toddler, more COVID-19 exposure, more people to annoy inside of an airplane with a cranky toddler.

Train

We’ve been on plenty of trains in Japan and Europe. Before kids and COVID, we took the train into and around Washington DC. But, as much as the notion of a train excites me, I don’t usually think about it as a serious method of transportation in the United States. For this exercise, here’s the numbers:

Amtrak quoted me $227 one way and $159 return. At $386 per person round trip, taking a train is actually cheaper than the prices I saw for flights. Total travel fare would be $1,544.

We still need to take care of the dog and rent a car upon arrival. $1,544 + $550 + $850 = a total cost of $2,944.

We need 30 mins to get from home to the train station. The train ride is slated to be about 24 hours with 2 train transfers. Again, we need 30 mins for getting from the train and into a rental car. Then, it’s 2 hours to get to where we are going. Total time is about 27 hours one way or 54 hours total.

Intangibles: less rigamarole to get to/from the train than an airport, someone else drives the train, moving sleepy kids between trains at odd hours.

Private Flight

I’ve never looked into this before, but why not? We’re almost A-list! It turns out that anyone can rent a private jet. For around $15,000 (give or take a few thousand bucks), we could get our own private plane to whisk us across the country. By the way pets are allowed on domestic private planes…guess we can bring our dog with us (and save big bucks on that costly kennel fee)!

Because the private flights leave from the General Aviation part of an airport, there is far less time required to go from the car to the airplane. And let’s be honest, if we could throw down $15,000 for a plane ride, we can afford a driver to get us to the General Aviation terminal. No $8/day long term parking for us! So the time works out to 30 mins to the airplane, a 2 hour flight, 30 mins to get bags and rental car, and then 2 hours to drive to our destination. 5 hours total (assuming everything goes smoothly) one way.

Total cost: $30,000

Total time: 10 hours

Wrap Up

Here’s a scatter plot showing each of these different options to visually represent the trade off between dollars and hours.

The gist is this: we all make trade-offs about how to spend our time and/or our money. If I absolutely needed to be with my family that same day, spending $15,000 for a private flight is truly an option. Fortunately, I’ve never been forced into that position. Instead, I’m optimistic about how much time I have left on this Earth, so we traded time for dollars. $900 (even with crazy high gas prices) is way cheaper than the nearest alternative.

Besides, who says that two days jammed into a car with your family can’t be memorable and maybe even fun? One of my favorite moments from this road trip: I read about a quarter of Little House On The Prairie to my daughters while my partner drove. At the end, our 6-year old was still entranced. Our 2-year old just looked up at me with a big toothy grin and said, “More cookies, please!”

How to Manage Your Emotions While Investing in a Downturn

3 minute read

“This too shall come to pass” –ancient Persian parable

The S &P 500 closed down 20% from its peak of 4800+ over the past 5 months. Financial headlines trumpet words like “crash” “bear market”, “extreme fear”, and “volatility“. Red is the predominant color on financial news service websites. Is it time to panic sell all your equities? Should you go all in on the US Stock market?

First: Don’t Panic

OK, take a deep breath. Don’t panic. 20% drops actually happen rather regularly. The current drop happened over a period of about six months. `Here’s an image showing the distribution of S & P 500 price changes for 6 month intervals.

Histogram of 6 month market returns

The light red dashed line is at -10% or “correction” territory. The dark red dotted line represents -20% or the threshold for a “bear market.” Look how much of the distribution remains to the left of both of these lines. Neither event is uncommon. In the histogram, I also highlighted the 0% line in solid blue. Take heart doom and gloom fans: most of the distribution is to the right of that solid blue line. That means that most of the time, the market has a positive return.

Let’s look at the same data differently so we can more easily quantify how often to expect a -10% correction and a -20% bear to occur within a 6 month window. Corrections happen about 10% of the time. That 20% bear market line happens about 3% of the time. There’s a reason why people smarter than me have said that over time, “it always goes up .”

Cumulative distribution of 6 month market returns

Second: The Market Isn’t That Cheap Yet

Believe it or not, we’re not at bargain basement prices yet either based on two widely accepted measures of aggregate market value.

1) the “Buffet indicator“, which looks at a country’s total stock market’s price relative to the economic output of that country. Economic output is usually measured as Gross Domestic Product. Here’s a detailed discussion if you want some real gory stuff. While the current market conditions have improved from late 2021/ early 2022, valuations are still relatively high.

2) the Cyclically Adjusted Price to Earnings ratio (CAPE) or Shiller PE is another measure of long term value. It too is still high by historical standards despite recent sell-off. As of this writing, the Shiller PE is above 30 against a long term average of about 17.

Of course, I don’t have a crystal ball that sees into the future. However, based on measurements like these that show some good predictive power with long term stock market returns, it might make sense to make a measured response.

How to Respond to a Market Downturn

With a 20% drop, your asset allocation is likely out of balance. you can think of the market on sale and consider this an opportunity to re-balance. Sell some bonds and buy some stocks to bring your asset allocation ratio back to your goal.

Continue investing regularly or dollar cost averaging. Stay the course and try to avoid any drastic action. You’re investing for the long haul. As we’ve seen above, dips happen regularly.

If you have low enough expenses, consider investing some extra funds while prices have reduced. I would be cautious of going all in at this time though.

Stay diversified. It’s tempting to think we’re able to pick individual winners. For most investors who aren’t spending their free time reading prospectuses our scouring the headlines for information about a company, buy the entire market (or at least a big chunk of it) and ride the tide.

Disclaimer: While we have a passion for providing entertaining, informational, and possibly useful articles about personal finance, we’re just random people on the internet with no formal credentials or expertise. Talk to a licensed professional advisor if you need advice.