An avid reader of the famous Mr. Money Mustache (MMM), I’ve decided to analyze an old 2011 post of his titled “The True Cost of Commuting.” Now, I want to make it clear that I agree with the vast majority of MMM’s principles of frugality and admire his money savvy, but it’s fun to attempt a bite out of his mostly flawless logic.
If you didn’t already know, MMM and his wife retired at age 30 with an $800,000 net worth. The two have been enjoying amazing and productive lives ever since. By constantly exercising their “frugality muscles,” the couple has eliminated unnecessary spending and live comfortably with their son on just $25,000 a year. Even considering the low cost of living in their home city of Boulder, Colorado, this is an incredible feat.
One of the areas where the MMM family particularly shines is the elimination of waste from commuting. As discussed in MMM’s post, a 19 mile commute to work each day for ten years can cost a couple up to $125,000 plus 1.3 working years worth of time:
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.
He goes on to say that if people are unwilling to live near work, they could find work near home. By making this “easy choice,” a person will get the single greatest boost that will take him or her “from poverty to financial independence over a reasonable period of time.”
First off, this post has immense value in educating readers on the importance of reducing ongoing costs. Commuting can be a big one, and there are many more like eating out, buying coffee, gym memberships and cable TV subscriptions. Reducing (or eliminating altogether) any of these expenses will make a much larger difference than stopping yourself from that one-time splurge.
Second, this post reminds us of the value of our time. The couple in MMM’s example loses 1.3 years just by commuting 19 miles to work everyday for 10 years. Without the commute, they could easily enjoy those extra 80 minutes a day with their kids or with each other. And if they choose to take care of chores around the house, they could avoid the cost of hiring a maid.
But if I had to nitpick, I’d point out that working near home is unfortunately not an easy choice for many career-oriented people. MMM makes the assumption that everyone will value the financial and time-saving aspects of having a shorter commute over the desire to live in a certain area (and perhaps rightly so, since most of his readers are seeking financial independence). This assumption is best captured in the following equation:
Savings from Shorter Commute > Benefits of Dream Neighborhood
But what if you wanted a particular job that’s only available in a particular city? And what if you hated that city? Ideally, you could adapt but that’s not an easy choice.* In my own circle of financially conscious friends, many will choose a longer commute to live in a quieter location or near aging family members. So their equation looks more like this:
Savings from Shorter Commute < Benefits of Dream Neighborhood + Benefits of Dream Job**
In other words, when you want a particular job, it may not be an easy choice to give up that job and find work closer to home. And if that job happens to be in an undesirable location, it might be worth it to commute from somewhere more ideal.
As for myself, I tend to be less career and more family-oriented, so MMM’s post speaks volumes to me. Like MMM, I value flexibility when it comes to work and as a result, my equation looks a lot more like the first one. But not everyone operates by that equation. And if you’re just starting your career, you may care much more about where you work and live than someone who is closer to financial independence and ready to quit.
*Thanks to my brilliant girlfriend for pointing this out. Without her insight, I could’ve just taken MMM’s word as gospel.
**To be fair, I don’t think MMM forgot about this additional “Benefits of Dream Job” factor in my equation. His post just assumes that this factor is either zero or very low, which is why he casually suggests finding work near home if you’d rather not live near work (i.e. the job itself doesn’t matter).