The True Cost Of Car Commuting To Work (Hint: It’s A Lot More Than You Think)

[FiftyIsTheNewTwenty]

An 11-mile car commute over 30 years can mean more than $1M in lost retirement savings.

"Based on number crunching by Mr. Money Mustache, each mile in your commute costs $795 per year. But that cost goes up drastically when you factor in lost opportunity."

http://www.investmentzen.com/news/the-true-cost-of-car-commuting-to-work-hint-its-a-lot-more-than-you-think/

[TomTX]

Too many annoying popups on that site.

[Erica]

Maybe think of it as a business

We don't pay for our cars.

He buys and repairs them

Pays cash, up to $3K

Then after driving a few yrs, sell for a bit more than he bought it for

Look up Auto Recycling & Auctions

If one isn't mechanically inclined, maybe just pay for the repairs.

Who knows. Might still come close to breakin

Someday we want to make our own gasoline

[StreetCat]

Self-driving cars will mitigate this, right?  Probably won't entirely solve the problem, but at least reduce it?

[Chris22]

The vast majority of their cost is $25/hr of "lost wages". Not a valid cost for most people, especially salaried.  I would have no more or less wages if I teleported to work.

[dragoncar]

Too many annoying popups on that site.

Plus, it's quoting MMM.  Isn't it just a rehash of http://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/

[Metric Mouse]

The vast majority of their cost is $25/hr of "lost wages". Not a valid cost for most people, especially salaried.  I would have no more or less wages if I teleported to work.

Shh... don't dispute the MustacheMath!!!

[NESailor]

The vast majority of their cost is $25/hr of "lost wages". Not a valid cost for most people, especially salaried.  I would have no more or less wages if I teleported to work.

Shh... don't dispute the MustacheMath!!!

haha...haven't we had discussions about this before?  MMM makes bold (and sometimes a bit wacky) statements to make what is usually a pretty valid point.  Part of his shtick.  If he didn't we wouldn't all be here on this pretty informative, smart, and generally friendly forum.  I appreciate his online persona for what it is - an online persona.

Even if the math is a bit of a stretch, I think the point still remains.  Commuting sucks a lot more than most people admit.  With daycare dropoff I piss away about an hour/day in the car and I only live 9 miles away from work (I ride when kids are at home during summer break).  I agree that it's time completely wasted.  Probably not a $million in 30 years level of waste but I am actively looking for a solution to this.  Like FI before 40 (38 is a stretch goal...am 32 now) so I can focus on work that doesn't involve wasting time getting to it.

[Chris22]

The vast majority of their cost is $25/hr of "lost wages". Not a valid cost for most people, especially salaried.  I would have no more or less wages if I teleported to work.

Shh... don't dispute the MustacheMath!!!

haha...haven't we had discussions about this before?  MMM makes bold (and sometimes a bit wacky) statements to make what is usually a pretty valid point.  Part of his shtick.  If he didn't we wouldn't all be here on this pretty informative, smart, and generally friendly forum.  I appreciate his online persona for what it is - an online persona.

Even if the math is a bit of a stretch, I think the point still remains.  Commuting sucks a lot more than most people admit.  With daycare dropoff I piss away about an hour/day in the car and I only live 9 miles away from work (I ride when kids are at home during summer break).  I agree that it's time completely wasted.  Probably not a $million in 30 years level of waste but I am actively looking for a solution to this.  Like FI before 40 (38 is a stretch goal...am 32 now) so I can focus on work that doesn't involve wasting time getting to it.

If you have to lie to make your point, it's not usually a very good point.

In this case, he claims a (probably materially accurate) $170/yr/mile you live from work.  Fine.

But then he claims a further cost of $625/yr/mile you live from work, based on a completely made-up, fictional number.  That's inflating his real numbers by about 370%, completely arbitrarily and incorrectly. 

Let's turn it around another way; usually bicycle commuting takes more time for most people than car commuting, simply because you can go faster in a car.  So does bike commuting also cost that same $25/hr?  Or is that different, because of vagaries like "don't have to go to the gym later" and "because bikes good cars bad?"  I mean, you can't have it both ways.  Yesterday my wife spent about two hours making a couple meals for dinner (one for last night, one for the week), did she spend $50/hr?  Shouldn't we have gone to McDonald's instead and saved a boatload of cash???  I mean, nevermind that she's a salaried person who makes $0 on Sundays, MMM claims her time is worth a made-up $25/hr (about half her actual hourly pay, BTW)!!!


As far as the time out of your life aspect of commuting, yes, that's a completely valid consideration, but I think he trivializes and invalidates his own argument by distorting it.  And frankly, I've had commutes ranging from about 8 minutes to about 1:15; my personal sweet spot is about 20 minutes.  More than that is annoying, but less than that and I don't feel I have adequate downtime between being "on" at work and being "on" at home (husband, father, etc).  I like a little decompression time between the two.  I'm currently commuting about 30 min each way, which is slightly longer than optimal, but I took a new job a little further from home, and that new job was about 5-10 min further than my last job and came with a $32,000 raise including bonus; I think I can afford the extra 20 minutes a day, even if it "costs" me an additional "$100/day" given the increased distance. 

[Fishindude]

We calculate that by providing an employee a company vehicle for work use and to commute to and from, it is a benefit worth roughly $6 - 8,000 per year.
They save; cost of vehicle purchase, insurance, tires, fuel and general upkeep and repair.

[Chris22]

We calculate that by providing an employee a company vehicle for work use and to commute to and from, it is a benefit worth roughly $6 - 8,000 per year.
They save; cost of vehicle purchase, insurance, tires, fuel and general upkeep and repair.

Possibly accurate, but usually fleet vehicles are turned over in 2-3-4 years, whereas most people don't churn their personal cars that often, especially MMMers.  So is it truly an apples:apples comparison that assumes the person churns that often?

[runewell]

The vast majority of their cost is $25/hr of "lost wages". Not a valid cost for most people, especially salaried.  I would have no more or less wages if I teleported to work.

Yes I call out MMM's commute calculation as bogus.

I drive 15 minutes to work each way each day, but highway miles go quickly.  If I were to value that time at $25/hr x 1/2hr per day x 250 days = $3,125.  But how easily can you put a price on what your time is worth in the car? It would take me 90 minutes each way on a bike which would be an annual cost of $28,125 not to mention my food costs would be a lot higher.  The exercise benefit would be offset by my chance of getting killed during rush hour commuting.  And for at least 1/3 of the year it's not a realistic option in the winter.

[Fishindude]

Possibly accurate, but usually fleet vehicles are turned over in 2-3-4 years, whereas most people don't churn their personal cars that often, especially MMMers.  So is it truly an apples:apples comparison that assumes the person churns that often?

Our fleet vehicles typically last approx. 10 years, 250,000 miles before replacement.

[dragoncar]

haha...haven't we had discussions about this before?  MMM makes bold (and sometimes a bit wacky) statements to make what is usually a pretty valid point.

Exactly.  Where MMM shines is setting up a theoretical framework into which you can plug your own numbers.  Don't want to use $25/hr for opportunity cost?  Use something else.  For most here, it's actually probably much higher.  We tend to (1) earn more and (2) value our time more than the average person.  Even if you use a lower number, it still adds up to a lot, and the ultimate point is that you should be factoring whatever you calculate when comparing living situations and jobs.  You can't just say "well, I don't like this number so I'm going to dismiss the entire article and hand-wave the decision"

On the other hand, if you want someone on the internet to tell you one true number that applies to every single reader, maybe you deserve what you get. 

[Chris22]

haha...haven't we had discussions about this before?  MMM makes bold (and sometimes a bit wacky) statements to make what is usually a pretty valid point.

Exactly.  Where MMM shines is setting up a theoretical framework into which you can plug your own numbers.  Don't want to use $25/hr for opportunity cost?  Use something else.  For most here, it's actually probably much higher.  We tend to (1) earn more and (2) value our time more than the average person.  Even if you use a lower number, it still adds up to a lot, and the ultimate point is that you should be factoring whatever you calculate when comparing living situations and jobs.  You can't just say "well, I don't like this number so I'm going to dismiss the entire article and hand-wave the decision"

On the other hand, if you want someone on the internet to tell you one true number that applies to every single reader, maybe you deserve what you get.

Except you can, because there are very few people whom can simply work more hours and generate more money, and for those that does apply, EVERY aspect of their life needs to be considered from that perspective, not just commuting.  And most of them make enough money that the incremental commuting cost is immaterial (maybe Buffet would be better served being at the office researching investments 24/7, but he can afford the cost of driving his car and missing out on the incremental opportunity).

And for lots of people, there is an indirect relationship between commuting time and real cost, as the further from population centers/industrial areas they live, the cheaper the houses become.  If a house 30 minutes further from work is $100,000 cheaper, using the $25/hr rule, that's 16 years to make the payback disregarding opportunity cost of the saved $100k. 

Your point stands about MMM setting up a framework, not a rule, however this is one of those cases where he so wants to make an ulterior point (i.e., less commuting = better for the environment) that he tortures the numbers to make his point, and in doing so, completely destroys his own credibility.

[runewell]

Where MMM shines is setting up a theoretical framework into which you can plug your own numbers.  Don't want to use $25/hr for opportunity cost?  Use something else. 
On the other hand, if you want someone on the internet to tell you one true number that applies to every single reader, maybe you deserve what you get.

That is where MMM DOESN'T shine.  He promulgates a large number like $795 but glosses over the supposed $625 personal cost.  This amount is 4/5 of the total and yet it is a rather subjective calculation. 

Personally, I spend 15 minutes driving 10 highway miles to work each day.  If you buy the assumptions, my personal cost would come out to $3,125/yr or only $312 per mile.

It's not easy to value $25/hr as the correct price to put on this time either.  The website referring to this number calls it lost wages, but most of us are not wishing second jobs upon ourselves and actually losing wages by spending time in the car.  Certainly there is some price - which is why I have always kept my commutes at 20 minutes or less. 

There could also be an opportunity cost to living close to work.  What are you giving up in exchange for living close to work?  If you are closer to a downtown, one price to paid is in higher rents or housing costs.  Instead of burying a $625 number, MMM should have made it easier for the average Joe to make a determination for himself what that cost actually is.

[runewell]

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.

Biking to work in rush hour is more dangerous than using a car, and a much more expensive use of one's personal time @ $25/hr.  I don't care if it exercise, biking to work would be a drudgery for me. 

[dragoncar]

You can't just say "well, I don't like this number so I'm going to dismiss the entire article and hand-wave the decision"

Except you can, because there are very few people whom can simply work more hours and generate more money, and for those that does apply, EVERY aspect of their life needs to be considered from that perspective, not just commuting.  And most of them make enough money that the incremental commuting cost is immaterial (maybe Buffet would be better served being at the office researching investments 24/7, but he can afford the cost of driving his car and missing out on the incremental opportunity).

And for lots of people, there is an indirect relationship between commuting time and real cost, as the further from population centers/industrial areas they live, the cheaper the houses become.  If a house 30 minutes further from work is $100,000 cheaper, using the $25/hr rule, that's 16 years to make the payback disregarding opportunity cost of the saved $100k. 

Your point stands about MMM setting up a framework, not a rule, however this is one of those cases where he so wants to make an ulterior point (i.e., less commuting = better for the environment) that he tortures the numbers to make his point, and in doing so, completely destroys his own credibility.

rolleyes.  Like I said, use a number that works for you.  Even if you can't work an extra hour at $25/hr, you can do work valued at $25/hr.  If the person commuting outsources any labor, the tax-adjusted cost of that labor is the first thing to consider. 

Your comment about cheaper houses is exactly why MMM set up the framework.  It answers the question "how much more should you be rationally willing to pay to be closer to work?"

Regarding the bolded part, it's the opposite.  The more you make, the more your free time is likely worth.  So yes, the material costs of commuting are incremental, but your time should be considered more strongly.

Unless you are in great shape, I do totally buy the argument that time spent biking is "free" in terms of time not going to the gym, and greater health in the future.

Where MMM shines is setting up a theoretical framework into which you can plug your own numbers.  Don't want to use $25/hr for opportunity cost?  Use something else. 
On the other hand, if you want someone on the internet to tell you one true number that applies to every single reader, maybe you deserve what you get.

That is where MMM DOESN'T shine.  He promulgates a large number like $795 but glosses over the supposed $625 personal cost.  This amount is 4/5 of the total and yet it is a rather subjective calculation. 

I don't see how you come to this conclusion.  He clearly says "For each of these miles, you waste about 6 minutes in the round trip, adding to 25 hours per year ($625 of your time)".  At this step in the calculation, plug in your own number.  It's really simple.

[runewell]

I don't see how you come to this conclusion.  He clearly says "For each of these miles, you waste about 6 minutes in the round trip, adding to 25 hours per year ($625 of your time)".  At this step in the calculation, plug in your own number.  It's really simple.

And inaccurate, since each person's situation is different.  Every day I drive a total of 20 miles in thirty minutes.  So each round-trip mile takes 2 x 30 / 20 = 3 minutes for me.  Blindly using MMM's estimate would exaggerate the time spent by 100%.

[dragoncar]

I don't see how you come to this conclusion.  He clearly says "For each of these miles, you waste about 6 minutes in the round trip, adding to 25 hours per year ($625 of your time)".  At this step in the calculation, plug in your own number.  It's really simple.

And inaccurate, since each person's situation is different.  Every day I drive a total of 20 miles in thirty minutes.  So each round-trip mile takes 2 x 30 / 20 = 3 minutes for me.  Blindly using MMM's estimate would exaggerate the time spent by 100%.

That's my exact point.  The framework is solid but you have to adapt the numbers to your needs.

If you just take his final number yur  gunna have a bad time

[Metric Mouse]

I don't see how you come to this conclusion.  He clearly says "For each of these miles, you waste about 6 minutes in the round trip, adding to 25 hours per year ($625 of your time)".  At this step in the calculation, plug in your own number.  It's really simple.

And inaccurate, since each person's situation is different.  Every day I drive a total of 20 miles in thirty minutes.  So each round-trip mile takes 2 x 30 / 20 = 3 minutes for me.  Blindly using MMM's estimate would exaggerate the time spent by 100%.

Yes, that is the MO of MMM; exagerate to make a point, and then use funny numbers to try to fool people who are even worse at math than him into believing his point.

But what Dragoncar is saying is that MMM did get you to calculate the cost of your commute. It's obviously far less than the wildly inaccurate number he throws around, but just stopping to calculate the cost to see if it is worth making a change is worth the time it takes, in my opinion. For the vast majority of people the cost will not be worth the cost of making large changes, but for a very small subset of people it could work. Of course MMM presents this as some revolutionary money saving technique, which for most people it isnt, but it is worthwhile to calculate.  With MMM one has to sift through the sludge and peel away the improper calculations to find the good, but the good sometimes is there.