Page 89 - Benjamin Franklin\'s The Way to Wealth: A 52 brilliant ideas interpretation - PDFDrive.com

40 LOOK BEYOND THE PURCHASE PRICE

The price tag is often only the beginning of the payment. If you or
your business buy anything then consider the ongoing maintenance
costs, not just the purchase price. Or as Franklin put it: ‘…’tis easier to
build two chimneys than to keep one in fuel’.

DEFINING IDEA…
They think they can make fuel from horse manure—now, I don’t
know if your car will be able to get thirty miles to the gallon, but it’s
sure gonna put a stop to siphoning.
~ BILLIE HOLIDAY

Fuel is as timely a topic as ever, albeit one more associated with cars than
chimneys. When buying cars we realise that there will be ongoing costs in
the form of petrol, but we rarely take into account the full impact of
standing charges and running costs. Standing charges are the costs you pay
whether or not you use the vehicle. That means tax, insurance, the cost of
the capital used (on a purchase plan), depreciation and breakdown cover.
Running costs are mainly fuel but also all those little things you’re busy
tucking to the back of your mind—parking, servicing, repairs, wear and tear,
etc.

In the UK the AA (Automobile Association) provides tables to help you
calculate the cost of running and standing costs depending on the cost of
your vehicle. You may be horrified to learn that with a car worth £10,000,
driven around 20,000 miles a year, the combined running and standing costs
come to about 30p per mile. So that’s £6000 per year. More than you
thought? Undoubtedly, and that figure was based on fuel prices that have
since risen dramatically. Buy yourself a more expensive car and the cost per
annum soars, not just because it uses more fuel but because of the factor
depreciation plays in the costs.

Depreciation, the AA informs us, is ‘the biggest cost after fuel purchase’
and yet the chances are that it’s the factor least likely to be considered