This post originally appeared on Orphan Road.

Erica Barnett provides some much-needed additional context to the Everett Herald’s comparison of Everett-Seattle transportation costs, noting that the Herald’s $4.39 estimate for a one-way commute “excludes the many other costs associated with owning a car, including maintenance, insurance, the cost to own and maintain or rent parking, and the risk of accidents, to name a few.”  Indeed, the Herald strictly counts the cost of gas, estimated at $3.75/gallon.

Fortunately, we can calculate these costs pretty easily.  AAA calculates (PDF) the cost of driving at $0.58* per mile if you drive 15,000 miles per year, including maintenance, depreciation, financing, insurance, etc.  The official IRS reimbursement rate is $0.51 per mile for the year 2011.

Using the lower IRS rate yields a cost of $14.79 for a one-way 29-mile commute.  Use the AAA method and that rises to $16.82.  Assuming 250 days of commuting per year yields $7,395.00 in additional annual expenses (IRS rate), assuming that you have access to free parking in downtown Seattle.  Compare that against $1,500.00 per year for a bus pass (assuming $3/trip and that your employer won’t subsidize it).

[I’m glad the Herald did the study.  Helping people understand these things is exactly what newspapers should be doing.  And obviously, one can insert all sorts of weird variables (what if your employer pays for your bus pass? what about the costs of maintaining I-5? what about the bus driver’s pension? Etc., etc.), so I think the Herald was right to focus on the end costs to the consumer rather than start to make shaky assumptions about externalities.  Still, it would have been better to include total costs of ownership. ]

All that said, $7,395/year puts the cost of housing into question. For that much– or just over $600/month — you can afford substantially more house.  With mortgage rates at 5%, that’s roughly the difference between a $300,000 house and a $400,000 house in terms of your monthly payment  If you prefer to rent, it could be the difference between a 2-bedroom and a 3-bedroom rental.  Suddenly in-city living doesn’t look quite as expensive.

To be sure, there are plenty of other reasons to prefer suburban living, such as school quality or larger yards or what have you.  But it’s worth putting the total cost of ownership in perspective.

*One of Erica’s commenters tries to use AAA’s $0.17/mile cost for operating expenses only, which assumes that someone’s given you a car for free and continues to pay the license and insurance bills for you indefinitely.  Needless to say, I find this unpersuasive.

One Reply to “Total Cost of Ownership”

  1. It would have been great if they posted real numbers like this in a widely read newspaper. How many people with a 29 mile commute do you think realize they’re paying $30 a day round trip? That’s serious money.

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