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#1 2013-08-27 13:03:55

MichaelBluejay
Webmaster
From: Austin, TX
Registered: 2008-05-26
Posts: 1,168
Website

The True Cost of Commuting by Car

Two years ago I made a calculator to figure the cost of owning a car, which shows that car-owning can easily cost $1 million or more over 35 years, compared to not owning one.  I was gratified that the calculator got some attention from popular personal finance blogs like Get Rich Slowly and 20-Something Finance.

But some readers countered that not having a car means having to live closer to work, and living closer-in means you'd have to buy a more expensive house.  I said that's true, but it's unlikely it would negate the savings, because would you really have to spend over a million dollars over 35 years to live closer-in?  However, I didn't actually run any numbers.

Well, another popular finance blog, Mr. Money Mustache, has a whole post about the true cost of car-commuting.  Even if you don't give up your car, his conclusion is that each extra mile you live away from work costs you $800 a year, or $16,000 of home value.  And that's for one worker.  For a couple who commutes, double the figures.  So for a couple who both commute, moving 10 miles closer in means they could afford a home worth an extra $320,000.  Says Mr. M:

Mr. Money Mustache wrote:

If these numbers sound ridiculous, it’s because they are. It is ridiculous to commute by car to work if you realize how expensive it is to drive, and if you value your time at anything close to what you get paid. I did these calculations long before getting my first job, and because of them I have never been willing to live anywhere that required me to drive myself to work**. It’s just too expensive, and there is always another option when choosing a job and a house if you make it a priority.

And making that easy choice is probably the biggest single boost that will get the average person from poverty to financial independence over a reasonable period of time. I would say that biking more and driving less was the trigger in my own life that started a chain reaction of savings and happy lifestyle changes that led my wife and I to retirement in our early 30s.

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#2 2013-08-27 15:26:59

AusTexMurf
Member
From: South Austin
Registered: 2008-11-21
Posts: 439

Re: The True Cost of Commuting by Car

Recently posted on BF:

"Every once in a while this question is posted in BF and I'm always amazed at the posters who claim no savings at all. This thread seems to have quite a few of us who have seen substantial savings.

About 15 years ago my wife and I had bought a new home and deliberately bought near a bike path that would take us right into Boston past both places where we work. We'd shared one car for several years already and saw no need to get a second car. But the following year we managed to save another 20 grand and considered plucking it down on a second car "for the convenience".

Well, we quickly rethought and decided to look for some land in the country for a second home. We lucked out and found 4 acres surrounded by 18000 acres of state forest with an old abandoned farm house on it. We got it for the 20 grand. I fixed up the old house over time in part with savings from biking every where. Eventually we even timber framed a new barn/studio with 140 of our friends doing a traditional barn raising. I often do the 136 mile ride from Boston or back on my bike and my commute into town is a twelve mile dirt road ramble where I am far more likely to see a bear or a coyote than a car.

Do I regret buying that second car? NEVER!"

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#3 2013-08-31 14:50:49

MichaelBluejay
Webmaster
From: Austin, TX
Registered: 2008-05-26
Posts: 1,168
Website

Re: The True Cost of Commuting by Car

Okay, so as I often do for problems like this, I just made a calculator to figure the financial penalty for living farther from work (along with an accompanying article).  I'm submitting it here for peer-review.  Go ahead, bang on it:  http://michaelbluejay.com/house/chooselocation.html

I was astounded at the results.  Even if you don't give up your car, each extra mile from work winds up costing you $100,000 of wealth over a working career.

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#4 2013-09-01 13:14:29

rich00
Member
Registered: 2010-01-18
Posts: 166

Re: The True Cost of Commuting by Car

I played with your calculator, but had to drastically reduce the figures for my situation.

I paid $3500 for my used Civic, and spent about $1000 in maintenance for it over the past 72000 miles and 7 years.


I often consider selling it because I do worry about an expensive repair looming. My gf and I took her car on this road trip we are on right now because I don't want to have to replace the tires on mine and they are getting in the low range.


There are a lot of variables that can change the outcome a lot. Whether your commute route has an extra stop light light can mean a sizable difference.

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