The True Cost of Commuting
It was a beautiful evening in my neighborhood, and I was enjoying one of my giant homebrews on a deck chair I had placed in the middle of the street, as part of a nearby block’s Annual Street Party.
I was talking to a couple I had just met, and the topic turned to the beauty of the neighborhood. “Wow, I didn’t even realize this area was here”, the guy said, “It’s beautiful and old and the trees are giant and all of the families hang out together outside as if it were still 1950!”. “Yeah”, said his wife, “We should really move here!”.
Then the discussion turned to the comparatively affordable housing, and the other benefits of living in my particular town. By the end of it, these people were verbally working out the details of a potential move within just a few months.
Except their plan was absurd.
Because these two full-time professional workers currently happen to live and work in “Broomfield”, a city that is about 19 miles and 40 minutes of high-traffic driving away from here. They brushed off the potential commute, saying “Oh, 40 minutes, that’s not too bad.”
Yes, actually it IS too bad! … But this misconception about what is a reasonable commute is probably the biggest thing that is keeping most people in the US and Canada poor.
Let’s take a typical day’s drive for this self-destructive couple. Adding 38 miles of round-trip driving at the IRS’s estimate of total driving cost of $0.51 per mile, there’s $19 per day of direct driving and car ownership costs. It is possible to drive for less, but these people happen to have fairly new cars, bought on credit, so they are wasting the full amount.
Next is the actual human time wasted. At 80 minutes per day, the self-imposed driving would be adding the equivalent of almost an entire work day to each work week – so they would now effectively be working 6 days per week.
After 10 years, multiplied across two cars since they have different work schedules, this decision would cost them about $125,000 in wealth (if they had for example chosen to put the $19/day into extra payments on their mortgage), and 1.3 working years worth of time, EACH, spent risking their lives daily behind the wheel*.
That’s EVERY ten years. And that’s with a commute that most Americans claim is “not too bad”.
You’ll note that most 30-year-old couples today, about 10 years into adulthood, don’t even have $125,000 in net worth. And they probably drive around quite a bit in expensive financed cars, mostly as part of a self-imposed commute. These facts are directly related!
The alternative I would have recommended to this couple, if they had asked my opinion, would be to make sure their house is within biking distance of both jobs, immediately sell both borrowed cars and replace them with a single ten-year-old manual transmission hatchback, and finally, let the good times roll. Setting aside $10k to keep the new car on the road, they will certainly enjoy their $115,000 of extra cash after ten short years, and if they combine this trick with a few of the other MMM classics, they’ll be able to move to historic old-town Longmont as EARLY RETIREES within ten years, instead of being broke wage slaves still commuting out of here every morning when the year 2021 rolls around.
Now, I will admit that it is possible to bring your cost per mile down somewhat. That’s one of my own specialties, which is why I still keep a car of my own around for affordable family roadtrips. If you buy the right car for $5,000, you might be able to squeeze 100,000 miles out of it with no major repairs. In this case the car depreciation is 5 cents per mile.
Gas, at $3.50 per 35 miles (assuming 35MPG), is 10 cents/mile
Tires, at $300 per 50,000 miles are 0.6 cents
Oil, at $25 per 5,000 miles is 0.5 cents
Miscellaneous things like wipers and occasional maintenance visits: $200 per 20,000 miles = 1 cent
So the ultimate cheap driving in a paid-off economy car still costs at least 17 cents per mile. Most people cannot drive this cheaply. And this is ignoring the cost of insurance since I’ll assume you’d have a car even if you didn’t commute to work. Most people aren’t willing to go completely car-free (although if you are, good for you!).
Besides the option of picking a home close to wherever your work happens to be, there may also be the option of picking a job that is close to your home in the town of your dreams. Get a new job! (There are apparently plenty of them here in my own city, many being worked by people who commute in from other places, even while an equal number of people commute OUT of my town to work somewhere else).
But despite the availability of both of these options, the idea of living close to work still seems to be completely alien to most people I’ve met. While I would personally consider it far more important than even the salary or the work performed, most people put commute distance below house price, perceived school quality, and neighborhood preference. With such a low threshold placed on commuting, most people don’t even put a reasonable effort into creating a nice local lifestyle for themselves. As you saw with the couple in my example above. They were willing to go from their existing negligible commute, to an Insane Asylum 80 minute round trip, just because they liked the scenic and neighborly vibe of my neighborhood.
“Schools” are often used as an excuse as well, but until you’ve reviewed every close-to-work school personally and interviewed the principal, you might be making quite a bad trade-off for your kids. What’s better – higher standardized test scores and more rich kids, or real-world diversity and an extra two hours to spend with Mom and Dad every day reading books? And how about an extra $300 grand or so towards the college fund, that you didn’t burn up in cars and gas during her school career?
To put things back on par, let’s whip up a couple of quick commuting equations. Let’s assume the average person’s marginal driving cost is halfway between the Ultra-Mustachian driver figure of 17 cents per mile, and Uncle Sam’s generous 51 cent allowance. So, 34 cents. Let’s also assume the value of a person’s time is $25 per hour, since this is close to a median wage for a suburban commuter. (If you don’t think you’d use your newfound leisure time that productively, you need to think more like an Early Retiree. I used mine for plenty of learning and domestic insourcing).
For each mile you drive across two times on your round trip to work daily, it multiplies to 500 miles per year, or a $170 annual fee
For each of these miles, you waste about 6 minutes in the round trip, adding to 25 hours per year ($625 of your time).
So each mile you live from work steals $795 per year from you in commuting costs.
$795 per year will pay the interest on $15,900 of house borrowed at a 5% interest rate.
In other words, a logical person should be willing to pay about $15,900 more for a house that is one mile closer to work, and $477,000 more for a house that is 30 miles closer to work. For a double-commuting couple, these numbers are $31,800 and $954,000.
Adapting the numbers for a $7.50 minimum wage earner, each mile of car commuting cuts $1.43 from your workday. If you drive 10 miles to go work a 5-hour shift at the Outback Steakhouse, your effective hourly wage is more like $5 per hour after subtracting car costs and adding drive time.
And these are all numbers for the United States, where cars and gasoline are much, much cheaper than they are in almost any other country. In Canada, you can add 30% to the gas prices and 50% to the car prices. In the UK, still more.
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.
Now, all this doesn’t mean you have to set up a tent on your employer’s front lawn to avoid going broke. Public transit, although an afterthought in most of the US, is great if it’s available to you, because you get your brain and your hands back for the purpose of getting some of your day’s work done while enroute.
But if you can walk or bike to work, it will cost you virtually nothing. And it also doesn’t count as using up your personal time because it is adding something that nobody except Olympic athletes is doing enough of anyway – exercise. You can take your time spent riding your bike ride directly out of time you would have otherwise spent in the gym, or waiting in the doctor’s office for prescription medication.
So there’s my answer for this potential new set of neighbors. I’ll see you in ten years!
And now that the truth has at last been revealed about the foolishness of commuting, I’m looking forward to reading about the empty interstates and bicycle-filled streets tomorrow morning.
* Note that I wrote this whole rant without bringing up that whole pesky “destroying the entire Earth” issue, since that part is controversial in the United States.. so I figured it’s best just to focus on making you rich :-)
** For the Record, I grew up in the Great Lakes area, on the Canadian side about 1 hour Northwest of Buffalo, NY. Then I spent a few years in an area much colder – Ottawa, Canada, with a climate slightly worse than Minneapolis, MN. Biking year-round in these conditions was completely feasible (and even fun), and I’ll do a post on how to enjoy winter bike commuting later this fall!
*** Also for the record, my wife and I still bike year-round here in Colorado, including for grocery shopping and dropping our Kindergartener off at school – thanks to the magic of bike trailers. Do a search on your local Craigslist and change your biking life.
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Mr. Money Mustache is a family man living in the United States who retired from work, relatively wealthy, at about age 30. After several years of retirement, he noticed that his still-working peers were envious of his lifestyle. They were making more money than he ever had, yet they were somehow still broke. So he decided to write this blog to educate the world on how it is done.
I think the exception to the live close to work rule is if you have reliable public transportation (that you will actually use!)
Living in the shadow of your workplace is a bit anti-Early Retirement in my opinion. If you are always right near work, it can take over your life more easily. Sentences like ‘oh, I’ll just pop into the office and do one quick thing’ start to come out of your mouth on a weekend.
I specifically chose to live across town because I was not sure I would want to stay where I was working, and did not want to feel bound to it by convenience. Yes, the long train rides can be a drag, but I have found ways to make it work for me, and the ride is subsidized by work.
I’m a little late to this party, and didn’t have the time at the moment to read through all the comments. So, sorry if this has already been addressed. What’s your take on people that are looking for rural living? Want property- want our own land to wander around on, farm on, “vacation” on etc. We don’t want to see another soul for a month if we don’t want to. I’m currently in the process of a likely move to a smallish retirement community. The area is surrounded largely by forest lands (and ocean), and given the retirement setting, there aren’t a lot of homes that fit my bill. Heck, I’m not even old enough to purchase in a number of the neighborhoods. But most of them are small, and worse, “low maintenance”-i.e. no yard etc. This was not our first choice of town, it’s about 1.5 hours from where we really want to be. If I sign on with this company (and I’m “well paid”, low 6 figures) now, I will have the opportunity to transfer to the town we want to be when a new location is built in hopefully the next year. My odds are better as a transfer employee than a new hire (so it’s worth it to go to the town we don’t necessarily want to stay in). So I’m looking into real estate opportunities. Smack dab between these two towns, the one I will likely be working in and the one I’d rather be living in is great little oceanside village. Up the river a few miles is a home I’ve looked at more than once. Small farm 7, acres, already has chicken coops, fruit trees and gardens. It’s almost 34 miles exactly to either work location (and by google maps estimate) and 1 hour each way Times might be improved, but then again, its a coastal highway, so, at times the commute time might be worse. This house would work for employment in either town, meaning we could look to purchase immediately. We’re a frugal couple. That 6 figure salary didn’t come cheap, but all my loans are paid off, my (nice, newish car, bought used) car is paid off. We have no debts. We have enough in down payment to keep a 30 year mortgage under $1200 a month with taxes etc. Or, we rent, and to get what we need (for storage of a trailer, classic car) in this little community were looking at closer to $1500 a month, maybe more. And if we choose to rent in this area, for year, perhaps I get a job in the city I want to go to, and maybe cut the commute down to more like 15 miles/30 minutes. Keep in mind, we WANT this move. I’ve been waiting two years to see job opportunities come up in this area, there are maybe two viable options a year on a 100 mile+ stretch of coastline. What’s your advice in a situation like this? I start to tell myself that to I think its doable and worth it. No, I don’t want an hour commute each way every day (and, good or bad, I’m usually a 4x10hr a week worker), but when I factor in the prices of renting, and the happiness of my husband, who won’t be working, except on our land after this move (and future family), this out of the way house has everything we need and want, expect the commute. Or we wait, and find something, maybe, later that fits our needs and cuts the commute in half.
Thanks for this article MMM.
I’m from the snowy tundra of Rochester NY myself, but last year moved all the way down to Clearwater FL for a nine-month internship. I bought a bicycle on Craigslist there and started biking to work regularly (about 5 miles each way).
My co-workers thought I was pretty weird for a while when they saw me rolling in, sweat flying (FL summers – ouch), but hey, there was a huge shower and locker room at work. And these were the same people who would poke fun at me for eating PB&J, right after they ordered a $12 lunch and DROVE several miles to pick it up at a local take-out joint. Sheesh.
As a note on bike repair costs. I bought a used road bike for $75. After a year of biking to work (3,300km) I finally spent another $75 to replace the worn-out chain and cassette. I did the repair myself, but if you used a bike shop it might cost you another $50.
For me, that was 2.3 cents/km (4.6 if you count the initial cost of the bike). Road bikes are simple machines that require very little upkeep if you don’t abuse them.
This article is the one that initially brought me to mmm… and it’s been the most frustrating to me. I relocated (for marriage) and left my job with a 2.5 mile commute for a new job with a 52 mile (round trip) commute. OUCH. It was my top choice Company in my field… and I was hoping that a transfer would happen rather quickly….that’s the only way I justified it.
I’ve been biding my time wasting 1-2 hours a day in traffic for the last 6 months, and finally got the news I’ve been waiting for… I’m being transferred to the location that’s 3 miles from my house beginning April 1st!!! I’ve already mapped out my bike route :) Thanks for the inspiration!
“I’m looking forward to reading about the empty interstates and bicycle-filled streets tomorrow morning.”
This is great. Looks like we’re closing in on 16 months since this post, and we’ve yet to read about the empty interstates! I am finally going to pull the trigger on getting my wife a bike (from Craigslist) and going to get my bike that’s been hanging unused in my parents’ garage for the last 4-5 years. And I’m going to do it by the end of April. (We got so caught up in consumerism before we woke up that we’re drowning in debt. I need a couple months to pay off a student loan and then that cash will be free to purchase her a bike.) Keep up the good work, MMM! Everytime I get ready to order “a catheter and a bedpan” I come read one of your posts.
I love to bike, but only in parks. I live in NYC and it is dangerous riding through so much traffic.
I am not the world’s greatest biker as I have problems keeping my wheel straight but I can bike for 15 miles no problem.
Would you bike to work if you lived in NYC? Also would you recommend riding against traffic, I see lots of restaurant deliverymen bike this way.
So this is my second post to this article, and really a follow up from my post about 6 months ago or so.
My dilemma before was that I was commuting about 2.5-3 hours a day to work and about 85 miles round trip, 5 days a week. Putting tons of miles and wear on my car, as well as missing important things in my life. Through a little stressful argument with my wife over the commute, I decided to put things into action. I really had 3 different levers available to me to save cost:
1) get a fuel efficient new car (mine is paid off), but this did nothing to save my time
2) move to a house closer into the city (i work all over the city since i’m an IT consultant so biking to work is kind of an unrealistic idea for me since i could be at multiple client sites during a single day)
3) get a new job (not really realistic since i’ve got a great career, make great money, and enjoy my work)
so.. update… we went with option 2, we moved about 28 miles closer to the city. my commute went from 85 miles a day to about 32 miles a day round trip. I’m sure some folks still balk at this and I know it’s not as short as this article calls for, but living any closer into the city gets you into some potentially bad areas. we moved as close as reasonably possible, plus moved very near my parents for future child care needs.
Also, update… we did not sell our old house and take that loss, we turned it into a rental property. We’re 2 years into a 15 year loan and found a renter who is covering 90% of the mortgage value, so we’re only coming out of pocket a little bit.
All in all, the new house mortgage is a good bit more than the old house, but our net worth overall has gone up because of the second house ownership. We’re saving about 400 bucks a month in gasoline costs alone, but most importantly, my commute is only 1 hour a day now. It’s been an amazing ride, but thanks to this blog MMM for really getting my mindset around how important it was to consider a move to resolve the issue.
As someone who commutes 4 hours round-trip everyday (company banns WFH) on public transits, all I want is to say “FUCK COMMUTING”
Invariably this strategy makes people who work in a city look at “bad areas” and get squeamish.
I would like to see a MMM guide to “Urban Warfare”: safeguarding and soundproofing an inner-city home and and maybe securing your car too.