Not too long ago, I read the absolutely excellent Mr Money Mustache (MMM) article “The True cost of Commuting“. Because I agree with so much of what is said and would have written about it at some point, I wanted to take the time to give the article an Australian focused spin and add my thoughts to the matter. Furthermore, not only is that article 6 years old now, but MMM freely admits that car ownership costs are cheaper in the US than anywhere else in the world. So it makes sense to show those Americans who the most “self-destructive” car commuters really are!
I’ve come to believe that there is insanity in every workplace. No I don’t mean the bureaucracy or the internal politics. I’m talking about your humble co-workers. Everywhere I have ever worked has them, I like to call them the long commuters. Every day they are commuting from outside the city to earn a living and drive right back out in nauseatingly bad traffic after work is done.
When I got my first ‘real’ job located in an area close to Parramatta, I had a colleague living in Bulli and another living in Somersby, both approximate 1 hr 20m commutes. When I learned where they lived and that they commuted daily my jaw dropped. So absurd was this concept to me, I stupidly asked “really!?” several times with a dumbfounded look on my face. These two colleagues were only my first introduction to the ‘long commuters’.
In subsequent jobs I kept meeting more and more long commuters. One of my colleagues right now travels from Wollongong daily, another 1 hr 20m commute. I have finally come to accept that this is not all that uncommon. That living close to work actually makes me the weird and abnormal one!
These places are not even a part of what I consider ‘Sydney’. Being about 85km away and needing to get on a highway just to get to work seems quite insane to me. In fact when I travel up to the Central Coast or down to Wollongong, it is usually for a holiday or weekend away from the city! You know, it’s somewhere I actually sleep for the night because driving that distance and back in one day would be too draining for me.
When talking to those long commuters, they don’t seem to mind the 1.5 hr plus commutes each way. Effectively sucking 3 hours per day from their lives. If the traffic was not cooperative (which it often isn’t) it could easily suck much more than that.
…3 hours a day behind the wheel. That would feel like a prison cell to me.
When I ask about it, I get answers like:
- “It’s OK, you get used to it.”
- “I love Wollongong and don’t want to live in Sydney.”
- “Real estate is too expensive in Sydney.”
Why would anyone want to get used to something so destructive of your free productive time and happiness, not to mention your back pocket? I love Wollongong too and real estate is too expensive in Sydney…but there are better options available that don’t include flushing your free time and money down the toilet.
Their motivation is clear, if a little ill considered. The real estate in Sydney is insane and the lifestyle not everyone’s cup of tea, but the jobs are here, so they decide to work in Sydney while buying a cheaper larger house in a more desirable location, win -win right?
The important question to ask is how much do my “self destructive” colleagues spend on their commutes?
Commuting Costs exposed
Based on the 66c per kilometre value that the Australian Tax Office (ATO) utilises for tax deduction purposes, you could say my colleagues are paying over $100 to commute per day. This is a bit extreme and I think this calculation breaks down at very large yearly kilometres, which is why the ATO limits it to 5,000km per year.
Instead, I will use the RACQ Car Running Costs guide as a basis for my calculations. However RACQ calculate their averages on an estimated yearly travel of 15,000 km, whereas my colleagues in the scenarios above travel more like 45,000 km per year. So to be fair I will adjust the c/km figure down to spread the fixed costs across 45,000 km instead of only 15,000 km.
Using Australia’s most popular car from 2013-2015 the Toyota Corolla, I get the figure of 27.69c/km, and Australia’s most popular car in 2016 the Toyota Hilux, we get 42.41c/km. These are for cars bought new and on credit, which is the case for all of the colleagues I mentioned above.
Driving a Toyota Corolla, my self-destructive colleagues are spending $221.50 per week driving to and from work. Driving a Toyota Hilux, they are spending $339.3 per week! To put that into perspective, every day they are spending 1.5 – 2 hours of their work day, earning money just to pay for the car which they own primarily for the purpose of getting them to work! In fact as a little aside, I would like to point out that a lot of your colleagues are working for over half their work day before they are actually gaining a net positive financial result for the day!
After 10 years of keeping this up, my Toyota Corolla driving colleague will be over $165,000 poorer. My Hilux driving colleague will be over $250,000 poorer.*
Let that sink in for a moment….a quarter of a million dollars for the privilege of being stuck in a particularly fancy steel box for 3 hours a day.
Truth be told most have a commute better than this, but I consider even a 40 min commute to be extreme. Even at more ‘reasonable’ commuting distances the numbers aren’t much better. For example, if we take the RACQ estimate of 15,000km per year average, our Corolla owner is $113,000 poorer and our Hilux owner is $180,000 poorer over a 10 year period. Over a lifetime, we are talking millions of dollars for fancy bits of steel and plastic.
Our measuring stick is completely broken when a 40 min commute is considered OK. Something around 15 or 20 minutes max is when I start thinking this is becoming too much.
How to get out of the commuting rut
By far the best way to avoid car costs is to not own a car. Walking and biking to work are the best options. The beauty of these options is that they double as exercise, so it is not wasted time at all!
However, I think most people will choose to own a car regardless, so it is available for those longer trips and family vacations. So the following effective car optimisation measures are the next best thing to greatly reduce these costs:
- Buy a $5,000 car or less, (Like I did!)
- Never use borrowed money to buy a car.
- Choose the smallest, most fuel-efficient car possible for your needs. (This is most probably a Yaris or something similar**)
- Optimise your life so you do not need to drive to work. Change either where you work or where you live to put yourself within biking distance.
- Save the car for emergencies, long road trips etc
Owning a car, as described above, could potentially only cost you $20,000 – $25,000 over a 10 year period. Imagine handily putting $100,000 or even $200,000 back in your pocket, which can compound to millions over a lifetime.
There is also the real human time value that could be saved. This is actually where the real magic happens. What would you do with an extra 2 or even 3 hours every single day?
You could work an extra 1 or 2 hours per day, impress your boss to earn a raise or promotion and still have more free time than your colleagues. If that doesn’t float your boat, you could:
- spend more time with your children
- exercise more
- be creative, learn something new
- cook more elaborate and fancy meals
- create income in other ways
- indulge in your hobbies.
I think this also comes down to how much is your time really worth. I know what my time is worth, and shaving years off of my working career while helping me increase my health sounds like an obvious no-brainer for me.
Shuffling commute options.
Pat the Shuffler
*If that weekly saving were invested instead, earning roughly 6% pa
**I was previously told that you could not put a baby seat in a Yaris. At the time took it at face value. It turns out this is false, link here. Not yet certain if I was being purposefully misled by an extreme ‘self-rationaliser’ or there was some other misunderstanding. Please feel free to contact me and clear it up if you like.