The Real Cost of Commuting - Good Money Sense (2024)

A few weeks ago I found a nice desk on Craigslist that someone was giving away for free. It was perfect for the office my brother was planning to lease, so we headed out to pick it up. The person who was giving it away lived about 30 miles away and Google Maps showed that it would take 50 minutes to drive there. Only it was 6 PM and the middle of rush hour. By the time we got there, it was over an hour and a half later with a lot of time sitting in bumper-to-bumper traffic.

This is an all too common occurrence in many cities every morning and again later in the evening. According to the U.S. Census Bureau, in 2016 the average American spent 26 minutes in their car commuting from home to work. As a nation, we are wasting billions of hours of our lives sitting in our cars.

With most jobs located inside the city limits, a popular way of thinking is to buy a house out in the suburbs to save money. The idea is when you live further away you can get a bigger house with a larger yard for less than what you’ll pay in the city. The reality is the longer commute ends up costing us more than if we had purchased or rented closer to work.

We tend to think of how much driving costs us by how much we spend at the gas station each time we fill up the empty tank. The more forward-thinking ones also consider depreciation, higher insurance rates, cost of oil changes, tires, and additional wear and tear that comes with a longer commute.

For 2018, the IRS has set the standard mileage rate at 54.5 cents per mile. Depending on how fuel-efficient your vehicle is and whether you purchased a new or an already depreciated used car, your actual operating cost could be lower.

Let’s use for example someone I know. He drives a three-year-old car that he bought new. His commute to work is 22 miles into the city from the suburbs. In the morning it takes him about 45 minutes to get to work, and it takes him 1 hour 20 minutes to get home in the evening if he leaves at 5 P.M.

In his case, the IRS estimate of his vehicle cost is $24 a day for a roundtrip commute of 44 miles a day. If he goes to work for 50 weeks or 250 days a year, his car ownership and operating cost is $6,000 a year from only commuting.

The car’s operating cost, which may seem high, is not the most expensive part about commuting. The human time wasted behind the wheel is. Two hours spent commuting each day is 10 hours a week he spends sitting in traffic. Someone who earns a take-home income of 50k a year has an hourly rate of $25 an hour. This comes out to $250 a week, $1,000 a month, or $12,000 a year extra he could be earning if he wasn’t stuck in traffic. That $1,000 a month placed into a S&P 500 index fund at 7% return over 30 years would be worth over $1.2 million!

To put things in a different perspective, lets say he lives in the city next door to his place of employment and turns his time commuting into time spent earning more money. With that $1,000 per month in extra income, he can afford to purchase a home that costs $186,567 more, assuming a 30-year mortgage at 5% interest. If you also add in the $500 per month saved from no longer needing to drive his car, that figure jumps to $279,851.

Dividing the $279,851 by the 22 miles he drives to work, he will be able to pay $12,720 more for each mile a house is located closer to work.

These figures are only for one person. For a couple with a similar commute, these numbers will be $25,440 per mile closer and $559,702 more. That pricey house in the city doesn’t seem that unaffordable now does it?

A study by the Center for Housing Policy found that for every dollar a family saves on housing, it spends $0.77 more on transportation. This seems like a good trade-off at first since it appears they are coming out ahead $0.13 cents for every dollar by living in a less expensive area. However, the study also found that once the commute exceeds 12 to 15 miles, the increase in transportation costs outweigh the savings from housing. In other words, by living farther away it is actually costing you money rather than saving you money.

With housing and transportation being the two largest expenses in a household’s budget, a longer commute has a direct effect at keeping people poor.

Now I know not everyone can get paid more for each extra hour spent at work. Maybe instead of spending two hours a day driving, you spend that time doing things that you like. Time is a limited resource. We only have 24 hours in a day and an average life expectancy of 78.6 years.

Someone who commutes two hours a day will spend 500 hours a year in their car. Someone who starts working coming out of college will spend 45 years of their lives working if they retire at 67. That comes out to 22,500 hours or over 2.5 years spent sitting in their car.

The time spent in your car can be used in other more fulfilling ways that increase our happiness rather than decreasing it. You can use it to spend more time with your kids and your family. You can get more sleep so you aren’t spending your weekends in bed catching up on lost sleep. You can find a side hustle or a new hobby. You can make healthier home-cooked meals instead of ordering takeout because you are too tired to cook when you get home. You can read more. Exercise more. Live more.

Studies have found that commuting has a negative effect on one’s health. Lengthy commutes are linked with increased rates of obesity, higher levels of cholesterol, high blood pressure, back and neck pain, depression, anxiety, increased stress, and heart disease. So not only is commuting by car keeping you from becoming rich, it is costing you your life.

Ditching your commute by telecommuting or living closer to work so that you can walk or ride a bike can greatly improve your happiness and health. Even switching to public transportation can be beneficial by letting someone else do the driving while you use the time to do more productive activities like catching up on email, phone calls, reading, or sleeping.

Closing $ense

Maybe I just think everyone else is crazy for sitting in their cars day after day for hours at a time since my morning commute for the past fifteen years was getting out of bed and walking a couple dozen feet to the home office.

When I lived in Lake Tahoe for a winter, I made sure to find an apartment within walking distance to the free shuttle stop for a ride to the ski resort. The walk to the bus stop and waiting for the bus was more convenient than clearing the snow off the windshield, trying to find parking, and then having to change into and out of my boots so I don’t mash both the gas and brake pedals simultaneously.

Almost every time I’ve gone out during rush hour, I’ve seen accidents or near accidents or people cutting other drivers off just to get ahead a few feet in line because they want to get home sooner. No wonder the car insurance rates in our state have increased by double digits in the past year.

Don’t get me wrong. I actually don’t mind driving. Road trips can be fun. Sitting on the highway breathing in the exhaust fumes from the car in front of me isn’t.

How long is your commute to work? Have you moved or changed jobs because the commute was too far?