We live roughly 11 miles from work. Luckily, the Mrs. and I, work in extreme close proximity to each other, so we can share a nice car ride to work together every morning, and again at the end of the day.
Even though we live within a mile from the highway that leads right to our workplace, our 11 mile commute takes anywhere between 45 minutes to an hour. Every single time we drive to work. And again every time we drive home.
When we were in the process of buying a house, we were told that no matter where we lived we’d be fighting crazy traffic every morning. We were led to believe that sitting in shitty Maryland traffic day after day was the norm. Everyone does it!
The house we decided to buy was pretty much our dream home. 3 bedrooms 2 and 1/2 baths (one of which being a 12′ x 12′ enormous luxury bathroom). Hardwood, granite, stone face, the works.
Our monthly mortgage payments came out to about $2200 a month, but after closer inspection, it seems like our distance from work should be added into the cost of home ownership.
The first and most obvious calculation is of course gasoline consumption. FuelEconomy.gov states that my 2008 Volkswagen Passat has an average MPG rating of 22 miles, with premium gasoline. More realistically, including warmup time, acceleration, braking, stoplights, and dealing with Maryland drivers, I’m probably averaging something closer to 15 MPG.
The old VW traverses about 484 miles each month, divided into two daily 11 miles trips over an average of 22 commuting days . As we speak, the current local price of premium gas is: $3.95/gallon (GasBuddy.com). 32.35 gallons of gas is the amount that it takes to get us to and from work in one month. In dollars: $127.45.
But that’s not too bad, right? An extra $100, who cares! Well, it’s actually a lot more than $100, since that was only our FIRST addition to the cost of home ownership for us.
Next, you have to take into account wear and tear of the vehicle. CommuteSmart.info has a nice calculator to show “true cost” of your monthly commute. Their estimate of $3.357/gallon adds $.59 to every single mile you drive when you take into account general degradation, vehicle registration, insurance, tires, license, depreciation and finance charges. I ramped up the estimated cost of a gallon to the $3.95 (mentioned previously) bringing the total monthly cost of driving to: $472.71, of which only about $127 of that is gasoline.
Driving together every day for a month is ideal, but it isn’t always the case. Occasionally we have meetings or appointments we need to attend, and they are never as local as we would want them to be. I won’t add those numbers in here. Just imagine a bigger number.
So far the cost of commuting has added $472 to our mortgage, bringing it to a total of $2672 per month.
The most precious expense to Mrs. Moneyseed and I, is our time. It’s invaluable, but I’m going to assign it a value anyway, because that’s what Vicki Robins and Joe Dominguez taught us in Your Money or Your Life. At 90-120 minutes per day commuting, we waste almost 38.5 hours per month in traffic (EACH!). The value of 1 hour of each of our lives is about $8. It’s fair to say that we spend $616 worth of life energy EVERY month, sitting in traffic.
Amending the original mortgage cost of $2200 with the cost of commuting, and the value of personal time lost, we are left with a grand total of $3288.
What can we do about it? Well, we’ve had a hare-brained idea recently, inspired by the trek towards early retirement to reduce the cost of our commute. Without the availability of public transportation or the safety necessary for travel by bike, there’s only one real option: move closer to work. We’re not married to the idea of moving, but the idea of saving money daily is intoxicating.
We could rent our current house out pretty easily for the amount that would make a mortgage payment on it non-existent for us. That gives us the freedom to move without having to pay two mortgages out of the same coin purse we were using for the single home.
After searching the Internet and talking to our realtor, we found a few houses with price tags that are $150,000 lower, and are within 3 miles of work. With a 15 year mortgage, we’d be looking at a monthly payment of about $1400. Aside from the fact that it would be paid off in half the time, our payment would be $800 lower than our current home.
Being 3 miles away from work (and under extremely lazy conditions) the cost of commuting for one month would be: $273.53 Between the location of our potential home and our current place of work there are virtually no known traffic spots. Smooth sailing, 6 miles a day. As far as life energy is concerned, we would be spending a significantly less amount of time behind the wheel. 7.33 hours combined between the two of us @$8/hour that adds about $58.50 to our total. $1400 (mortgage) + $273.50 (commute) + $58.50 (life energy) = $1732, or $1556 LESS than our current situation.
Our full intention with living close to work is to be able to commute by bike whenever it’s nice enough to accommodate this behavior. We would literally be the only people that biked to work, but we’re also the only ones that are going to be retiring in their 30s! I consider biking to be a positive because not only is it free, it’s also great exercise!
The downside? Becoming landlords. We could take the easy route and hire a property manager, but since we live in the local area I feel like that would be a waste of money. I haven’t done too much research on the process, or the pros/cons of becoming a landlord. So I’m turning to you, Moneyseeders.
Do you have any horror stories about becoming landlords? Have you had any problems with the ownership of a second property? Do you think this idea could potentially put us in over our heads?