Commute vs rent cost

[Gin1984]

Would you increase your rent by $400 to cut your commute by 15 minutes each way?  This would increase our spending so we are not eligible for the savers credit but otherwise would just decrease our savings rate from 39% to 30%, no other changes.

[BicycleB]

Would you increase your rent by $400 to cut your commute by 15 minutes each way?  This would increase our spending so we are not eligible for the savers credit but otherwise would just decrease our savings rate from 39% to 30%, no other changes.

I wouldn't, but it's your choice. The factors that leap to mind:

1. $40/hr tax free to commute (15 min x 2 per day x 20 days = 10 hrs, 400/10 = 40)...not a fun job, but the pay is pretty good
2. 400/mo = 9% of income, 15 minutes each way = 6% of a typical workday. Commuting pays better than your job.
3. 30% savings rate implies 28 years to retirement, 39% implies about 22.5 years (see table of savings % vs years in link below). That's a 5.5 year savings! Commuting 30 minutes/day now saves about an hour and a half per day of future work. Good odds.

http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

[MrThatsDifferent]

Definitely not, not for an extra 15 min. If you said an extra 45-60 minutes, I’d consider, but 15? Never.

[use2betrix]

Not even a chance if it’s a decrease of a 9% savings rate from 39>30.

Not even if it was 39>34 probably. 30 minutes a day isn’t that much. It’d be different if current savings rate was like 75% and changing to 70%.

[Milizard]

I like to figure out a rate of pay after adding in commuting time and costs for gas and mileage (whatever you choose to allocate for the increased depreciation and repairs necessitated by additional miles).

For example, just the additional time it may take me to drive to and from a potential new job, compared to a different new job = $2/hr for an 8 hour day.  Also, it necessitates an additional hour of daycare for 2 kids ~ $8 for that hour, so total difference is $3 less net income per hour for the farther away job, and I haven't even considered gas and mileage!  My situation is not quite that simple, though, as the job title and potential experience could possibly more than make up for the difference in net pay.

[Cassie]

For a hour less each way sure. But not for 15 minutes.

[use2betrix]

I like to figure out a rate of pay after adding in commuting time and costs for gas and mileage (whatever you choose to allocate for the increased depreciation and repairs necessitated by additional miles).

For example, just the additional time it may take me to drive to and from a potential new job, compared to a different new job = $2/hr for an 8 hour day.  Also, it necessitates an additional hour of daycare for 2 kids ~ $8 for that hour, so total difference is $3 less net income per hour for the farther away job, and I haven't even considered gas and mileage!  My situation is not quite that simple, though, as the job title and potential experience could possibly more than make up for the difference in net pay.

I also factor in more criteria as well. 

I’m going through a similar situation but it will make sense for me to move this spring. My job location is changing next spring. My commute will go from 25 mins each way to 55 mins each way. My non-mustachian 4Runner gets about 16 mpg (plus other wear and tear) we want to move to a slightly nicer and larger apartment (1 bed/ba to a 2 bed/ba with attached 1 car) new apartment will be about $600/mo more. Moving closer, I’ll save $250/mo in gas (and more in oil changes/tire wear and tear) I will no longer have tolls compared to old job, saving another $120/mo. I’ll be working more hours at new location (60 hrs) so that extra 1 hr/day I’ll save by moving also goes a long ways. The net cost of new place will still be about $250/mo more. A bit less considering more factors which I didn’t list (cheaper restaurants and overall cost of living in that area)

I find that $250/mo to easily be worth the 24 hours in diminished drive time. That $250 is also only about 1.6% change in savings rate. My move will bring me down to a 17 minute commute.

[tralfamadorian]

If the 15 minute reduction allowed me to commute by bike or walk and I could sell my car, then yes. Since you mentioned a 9% decrease in your savings rate, then I presume that it not the case.

[soccerluvof4]

No.......

[TomTX]

Would you increase your rent by $400 to cut your commute by 15 minutes each way?  This would increase our spending so we are not eligible for the savers credit but otherwise would just decrease our savings rate from 39% to 30%, no other changes.

I wouldn't, but it's your choice. The factors that leap to mind:

1. $40/hr tax free to commute (15 min x 2 per day x 20 days = 10 hrs, 400/10 = 40)...not a fun job, but the pay is pretty good
2. 400/mo = 9% of income, 15 minutes each way = 6% of a typical workday. Commuting pays better than your job.
3. 30% savings rate implies 28 years to retirement, 39% implies about 22.5 years (see table of savings % vs years in link below). That's a 5.5 year savings! Commuting 30 minutes/day now saves about an hour and a half per day of future work. Good odds.

http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

You neglected the vehicle costs of commuting further. We don't have an exact number, but can ballpark it at $5/day. Figure 21 days/month worked, and that's an extra $105 in monthly costs due to the additional commute.

[mm1970]

15 minutes each way?  It depends on the current commute.  Others are saying "oh yeah for an hour!"

Ugh, my whole commute is 15 minutes each way (usually 12 mins in the am, 17-18 in the pm).

From 45 minutes to 30 or 30 min to 15?  I'd consider it.

From an hour to 45 minutes?  prob not worth it because 45 min still sucks.

[KarefulKactus15]

Guess I'm an oddball. 

Id pay 200$ to go from 45-30  and would pay 400$ to go from 25-> 10 or below.

Check out "Happy City" for a good understanding on how crappy a commute is.

I only saw people mention what the OP,s time is worth.   No risk calculation for increased / reduced risk of motor vehicle accident or the cost of the vehicle operation? **(I now see someone put the number at 105$)**

*Update* I think I read somewhere that 15 minutes is the happiest commute.

So I did some thinking.  Currently I have a 12 minute commute.  I would be willing to pay 1.8-2.3x my current rent in exchange for a car free lifestyle.

[mschaus]

This isn't a straight yes or no: Need to consider the time, as people here have, but also the hidden costs due to car mileage. Also other cascading effects: perhaps being 15 minutes closer lets you use an entirely different mode of transportation to get to work? Maybe ride a bike once a week, or in the case of cities, eschewing car ownership and train/uber to work could even be effective.

Highly relevant from this very blog, includes calcs of car usage:
https://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/

[John Galt incarnate!]

Would you increase your rent by $400 to cut your commute by 15 minutes each way? 

Absolutely NOT.

[Milizard]

This isn't a straight yes or no: Need to consider the time, as people here have, but also the hidden costs due to car mileage. Also other cascading effects: perhaps being 15 minutes closer lets you use an entirely different mode of transportation to get to work? Maybe ride a bike once a week, or in the case of cities, eschewing car ownership and train/uber to work could even be effective.

Highly relevant from this very blog, includes calcs of car usage:
https://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/

I did, as have a number of other people here.  I'm not sure why people keep saying that it hasn't been brought up when it has?  I didn't estimate a number, as it is vehicle and area specific.  I know others brought up a few more factors as well.

[use2betrix]

I often use commute time to listen to educational podcasts and audiobooks. It’s actually a helpful way to “force” me to do these things, as I can get easily distracted by other things at work or home.

This doesn’t impact the direct cost, of course, but to me it helps minimize the feeling of “time lost” as well.

[mschaus]

This isn't a straight yes or no: Need to consider the time, as people here have, but also the hidden costs due to car mileage. Also other cascading effects: perhaps being 15 minutes closer lets you use an entirely different mode of transportation to get to work? Maybe ride a bike once a week, or in the case of cities, eschewing car ownership and train/uber to work could even be effective.

Highly relevant from this very blog, includes calcs of car usage:
https://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/

I did, as have a number of other people here.  I'm not sure why people keep saying that it hasn't been brought up when it has?  I didn't estimate a number, as it is vehicle and area specific.  I know others brought up a few more factors as well.

Yes, good job mentioning that, but it seems to have been missed by most posters, so we need to repeat it! We agree the problem needs a holistic view.

[swinginbeef]

I've been doing this math recently, comparing a new job that pays less but is closer, to see how it works out. In my case, the commute would go from 32min/22.2mi to 13min/5.6mi. Using the IRS mileage rate ($.545/mile) and my current hourly payrate, it comes to a "savings" of nearly $10k/year.

And at 5mi, I'd cycle as often as reasonable. YMMV

[GetItRight]

No way, that 15 minutes each direction commute savings would save me about $400/yr in fuel. Net loss of $4400/yr. I might consider it if the new property was a significant upgrade so far as catering to my hobbies and interests, but around here the closer to where most jobs are the less you get and you said no other changes so I'm assuming comparable living quarters.

[TomTX]

No way, that 15 minutes each direction commute savings would save me about $400/yr in fuel. Net loss of $4400/yr. I might consider it if the new property was a significant upgrade so far as catering to my hobbies and interests, but around here the closer to where most jobs are the less you get and you said no other changes so I'm assuming comparable living quarters.

You totally neglect wear on your vehicle and the value of your time. That's 125 hours per year.

[GetItRight]

No way, that 15 minutes each direction commute savings would save me about $400/yr in fuel. Net loss of $4400/yr. I might consider it if the new property was a significant upgrade so far as catering to my hobbies and interests, but around here the closer to where most jobs are the less you get and you said no other changes so I'm assuming comparable living quarters.

You totally neglect wear on your vehicle and the value of your time. That's 125 hours per year.

True, from a quick and dirty math using 5 years of vehicle costs add $300/yr for vehicle maintenance, though I doubt it's that high for such minimal additional usage. The value of my time in this scenario is zero, I can't consistently or appreciably monetize 15 minute blocks in the early morning or late evening with my side gig. Maybe others can, but I can't. I'll be generous and call it $4000/yr net loss if I was to make this move. Still no way I'd do it. You also don't consider the value of your time finding a new place, moving your stuff, getting everything settled in, organized, caught up on maintenance and repairs, making it a livable and workable space, etc. There's a lot of that involved in this scenario and I wonder how far out ROI is in that time spent.

[TomTX]

I'll just note that it won't be 15 minute blocks. It will be 15 minutes added to your morning block of time before work and 15 minutes added to your block of time after work.

Or, show up at work 15 minutes sooner (if you can) and have 30 minutes added to your evening block.

[Mississippi Mudstache]

Nope. I might pay an extra $400/month to slash 30 minutes from my commute each way, but not 15.

[FiftyIsTheNewTwenty]

Consider not just the work commute, but all your other trips.  It could be worth it if it eliminates a lot of other driving, by being within biking/walking distance of school,  shopping, entertainment, outdoor activities, and of course your friends.

[mschaus]

I'll just note that it won't be 15 minute blocks. It will be 15 minutes added to your morning block of time before work and 15 minutes added to your block of time after work.

Or, show up at work 15 minutes sooner (if you can) and have 30 minutes added to your evening block.

Tom, absolutely right. Also, for everyone else, this crazy blog I found has all sorts of neat ideas:
http://www.mrmoneymustache.com/2012/10/18/why-your-time-is-worth-way-more-than-25-per-hour/