You are traffic

traffic

This is a long post, because it’s a topic I feel passionately about. Don’t say you weren’t warned.

One of the easiest and simplest choices that will affect your ability to save money is the choice of where to live. This will impact how much time you spend in your car, which will impact how much money you need to spend on your car, or if you even need a car in the first place. This doesn’t include costs like property taxes and school levies, but those are things to think about if you plan to own a home someday.

One thing I always wanted as a kid was to be able to walk to school. I had cousins who were able to do this, because they lived within a few blocks of their elementary school and only had a couple of 4-way stops to cross in order to get there. I lived too far from school, with too many busy intersections with stoplights, and thus, by the time I reached high school, had to spend over 45 minutes on the bus twice a day. That was 90 minutes of wasted time, in my mind. Sure, I spent the time reading or talking with friends or listening to music on my Walkman or playing handheld Paper Boy, but mostly, sitting on a bus for 45 minutes really sucks.

When my husband and I were dating, we took a vacation to San Francisco. Since we were still in school and generally trying to take a holiday on the cheap, we sought a destination where we wouldn’t need a car. We walked around a lot on that trip, and it was amazing. We also took the bus when needed, and this worked out really well. We later took another trip to Chicago, which was similar–a car would have been a hindrance, not a convenience.

So when it came time to look for an apartment with my then-fiancĂ© about a couple months before our wedding, we talked about where we wanted to live. We decided it was important to live within walking distance of the university that he was attending (mine was a 1.5 hour drive) and be close to my job (I hated even the 20 minute commute from my parents, and paying for parking). We had two older vehicles (a 1987 Buick and a 1999 Saturn), and didn’t like having to rely on them, especially in cold weather. Since the university and my job were within a couple miles of each other, we looked for apartments in between, and found one that we were both happy with, a basic one bedroom with some nice closet space.

When we finished school and got jobs (I got promoted and husband got a job less than a mile away from our apartment), did we go out and get a nice mortgage? No, we decided to pay off our student loan debt, and so we stayed in the apartment. It’s been over five years, and we’re still there.

There’s no laundry in-unit, no dishwasher, and our garage is nearly a block away from our unit, but our building is near a busy intersection which makes getting anywhere quite convenient, and our unit faces a mostly-quiet and peaceful courtyard so we experience very little traffic noise. Our only utility cost is electricity, which is about $35 Sept.-May, and $55 June-August. We are within walking or biking distance of our jobs, a grocery store, a gas station, some good fast food options, and it’s about a 10 minute drive to our gym or either or our parents’ houses.

This wasn’t some fluke that we didn’t plan. We didn’t shop for the nicest apartment our budget could withstand. We looked for the cheapest place that was close to the places we needed to go every day, and we got a little lucky that my husband later got a job nearby.

This has allowed us to walk or bike to work, and save a huge amount on cars. We literally fill each car with gas once a month. One car gets filled twice if we go on an adventure to the Twin Cities or I have to use my car for work (and get reimbursed for the gas). Our car insurance on a 2005 Ford and a 2001 Acura is quite inexpensive. Both cars have been very reliable, with no major emergency repairs required, because we selected reliable cars based on a lot of research.

And then there’s the time factor. Even when we drive to work when the weather is dismal, it’s a five minute commute. I barely have time to listen to one full song on my way to work. This means our time is free to do what we want, instead of take time to get somewhere to do what we want.

I can’t stress this enough: where you choose to live hugely affects your ability to save money. You have a huge amount of control and choice in this situation. You may not decide where your job is, but you can decide where to live.

A possibly shocking post

One of my favorite posts on my newest favorite blog, Mr. Money Mustache (MMM), is about the Shockingly Simple Math Behind Early Retirement. MMM explains the relationship between what you spend and what you earn in incredibly simple terms, and demonstrates how quickly you can achieve freedom from your job. I like my career, but I really like the idea of not needing a job.

I had always planned on retiring before age 60, ideally by 55, but my math was much more convoluted and complicated before reading his blog post. I already track our income and expenses closely using Mint.com and my stack of spreadsheets, so it was easy to sit down and do my own simple math.

While we were aggressively paying off debt, we made rather large payments every month. Sometimes it was $500, sometimes (like in an extra paycheck month), it was over $3,000. Note that this was on less than two ‘teacher incomes‘–and I have a salary and my husband is an hourly earner. Now those huge payments are getting paid to… us. We have no car payments, and no mortgage. We pay off our credit cards every month and use up our rewards points on things we need (like Amazon.com points for textbooks and gifts or Old Navy points for clothing). This isn’t complicated financial planning, it isn’t anything ‘special,’ nor do we have a magically amazing income. We just spend significantly less than we earn, by making choices about where we live and how we live.

Between what we have been throwing at debt every month, what we put into 401ks, what automatically gets taken from my paycheck and put into a retirement account with PERA, and what we plan to put into our IRAs, we are easily at a 50% rate of savings. And that doesn’t even include what we are currently paying for my husband’s tuition, a temporary cost which will eventually lead to a higher income. All of this math was extremely exciting.

So now this blog takes a new focus: the goal of early retirement. How early? Hard to say right now, but I’ll be tracking our progress and offering more money musings on our way. Stay tuned.