***Photo of my old GT4 outside my old condo… I miss that car***
I am sure you’re wondering how in the world I managed to do that. Well the answer is fairly simple. I moved. More specifically I moved closer to my office. You’re probably thinking that I lived super far away. Nope, just 12 miles to be exact.
Living 12 miles from work was costing me over $6682 a year! That just wouldn’t do for someone looking to hit financial independence ASAP. I would have wasted over 30 THOUSAND dollars just getting to and from work in 5 years!!! How did I calculate how much money I was wasting every year, being stuck in traffic, driving to the office? Good question. Keep reading.
First I had to estimate how much I was wasting on fuel, maintenance, and depreciation on my vehicle. This could be tedious and a major pain. Luckily the IRS has a mileage rate (for tax purposes) which accounts for just those items. That rate (for 2017) is $0.535 a mile. This is probably a conservative estimate considering the number comes from good old Uncle Sam. Either way it provides a good starting point. Here is the break down.
- 12 miles one way turns into 24 miles round trip
- Working 5 days a week adds up to 120 miles weekly
- That’s 5760 miles a year assuming you work 48 weeks
- So 5760 * $.535 = $3082 a year in fuel, maintenance, and depreciation
Wait a minute, $3082 does not equal $6682!!! You’re right, it doesn’t. However, it will after you account for the time I was wasting everyday stuck in mind numbing traffic.
- I was spending nearly an hour a day getting to and from the office
- That equals 5 hours a week
- Which is 240 hours a year (or 30, 8 hour days in the office!!!)
This time has value and that lost value needs to accounted for! I chose a extremely conservative $15 and hour. I honestly value my time way more than this but it illustrates the point none the less. So 240 hours, multiplied by 15 dollars an hour, comes out to $3600 a year!!! Add $3600 to $3082 and you get the magic $6682 seen in the title. You could say that every mile I traveled to work was costing me $278 a year. Remember this is me being conservative. The actual amount is probably much higher.
So what did I do about it? Well as you already know, I moved. I was able to snag up a condo literally a few blocks from my office. That dropped my commute to about 1 minute via bike. The condo was essentially the same costs as my house in the burbs. So that ended up being a wash. Not to mention I turned the house into a rental property that generates nearly $500 a month in positive cash flow. Who knew moving could be so profitable?!?
My advice is take some time and crunch your own numbers. You may be surprised how much you can save by simply moving!