Wednesday, June 18, 2008

Deal or No Deal: Mileage Reimbursement

My employer has a lot of positions that require the employees to drive their own vehicles for work-related purposes. We are reimbursed for mileage (current rate: 50.5 cents per mile) which of course does not include your round trip commute to/from your home and the office.

Recently, I spoke with someone who was considering applying for one of these positions, but she was concerned about the high price of gas. I explained the mileage reimbursement policy, but she still wasn't convinced that she would be fairly compensated. I continued by explaining that while our mileage rate doesn't increase nearly as quickly as the prices at the pump, they are reviewed at least every 6 months but sometimes more often. Personally, I believe it's a fair system.

There are a lot of other factors that could come into play here. For one, how far do you live from the office? If you are commuting 60 miles round trip daily, you are going to be putting a whole lot of your paycheck into your gas tank, and it's not reimbursed. However, that's more of an issue of needing to find a job closer to home or a home closer to your job. So, I'm not going to consider that factor in this discussion.

Another factor is the type of car that you drive and the gas mileage that it gets. If your vehicle is getting poor gas mileage, then you aren't in a very good situation. However, this is also kind of a personal problem. Maybe you should look at finding a new car or a job that doesn't require driving.

Yet another factor is whether you would have a car at all or if you got or are keeping the car just because of this job. In my case, I'd keep my car whether or not I needed it for my job -- I need and want it for personal use. Because I would have the car regardless of whether I needed to drive for work, I'm not going to factor in depreciation, taxes, car payment, or insurance as I look into whether mileage reimbursement is a fair deal. I'd have to deal with those expenses just because I own the car even if it were only for my own personal use. (Actually, in my case, I own the car out right, so I have no payment. Hurrah!)

The two factors that do matter to me when looking at mileage reimbursement are the price of gas and the cost of maintenance. Sure, I'd have to pay for gas and to maintain the car even if I didn't drive for work, but those two expenses would be a lot less if I didn't. They are also directly affected by the number of miles I drive.

To date in 2008, the cost of gas per mile for my car is $0.099. Just less than a dime a mile (which incidentally is 2.2 cents more per mile than in 2006). The average cost per mile for maintenance over the past 6 years that I've had this car is $0.074. So, that's a total of $0.173 per mile for gas and maintenance -- the two big factors that I need mileage reimbursement to cover.

We are currently reimbursed for 50.5 cents per mile. That means that my reimbursement covers an extra 33.2 cents per mile. I appreciate that extra money because it helps offset the cost of depreciation, taxes, and insurance...and the car payment when I had one. For me, the reimbursement is not the raw deal that the candidate made it out to be.

But I wasn't going to crunch the numbers for her because I didn't need or want to know anything about the personal expenses. Who knows...maybe she was thinking of getting rid of the car or she has a gas-guzzler. I couldn't help her make the decision of whether the mileage reimbursement is enough for her.

Plus, if she couldn't figure it out on her own, she'd probably be a chronic complainer about having to drive for work -- and goodness knows, I don't need that!

There is great power and knowledge in the numbers my gas mileage spreadsheet can generate. It gives me peace in knowing that despite the high gas prices when I do have to drive for work, it's going to be okay.

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