Million Dollar Commute

You already have plenty of reasons why you want to move closer to your job. The lost time, the traffic, the gas prices, and the uncomfortable mix of stress and laziness it brings to both ends of your day by sitting behind the wheel for 30-45 minutes – or more. Well, here is another reason to move; it might just be worth a million bucks. We’ve been crunching some numbers at Milhaus this past week after David highlighted his productivity and cost savings while riding the bus. I generally walk to work each day, so how much can you save by walking to work instead of driving 30 minutes from the suburbs?

Let’s consider an hourly value of time at $50. Of course, most architects, attorneys and doctors charge far more than that; and there are many others that earn much less. We’ll use it for our example as somewhere in the middle. At 60 minutes per work day in the car for 50 weeks, it yields 250 additional hours or $12,500 per year.

The federal mileage rate is about $0.50/mile (accounting for gas, insurance and wear and tear on your vehicle). If your trip is 20 miles to work each way, you are spending $20 per work day or $5,000 per year to drive your car to work. Parking your car in a downtown area is approximately $100/month, so we’ll add another $1,200 to our total. We now have $18,700 in annual expenses for driving to work.

Choosing to live and work in a neighborhood that also has access to a grocery store, hardware store, coffee shop, dry cleaner and everything else you need can change your financial future. If you move closer to everything and invest this money every year at 5% over 30 years, you will have added $1,242,406 to your retirement account. Not bad for just walking to work.