For those that are familiar with living below their means and being frugal, one of the areas that people often recommend as an opportunity to save money is to live in close proximity to your employer.
By living close to work, you will spend less on gas and maintenance of your vehicle–and possibly even reduce the need for an extra vehicle completely. There are additional benefits as well and one of the most important may be more time to spend with family and friends, or pursuing hobbies (like starting a blog).
Until earlier this year, I was the antithesis of this frugality as I had a 100+ mile round-trip commute to work.
On average I spent a minimum of 2-3 hours just commuting every day.
Fortunately I have a fairly fuel-efficient vehicle and honestly found the drive time to be mostly enjoyable, as it allowed me to either be lost in my thoughts or listen to podcasts. However, it still took a toll both personally and financially.
Now that I have changed employers and am fortunate to work from home on a full-time basis, I thought it would be interesting to take a look and see just how much that change has meant to our family finances.
Fueling the FIRE, or Maybe Not
With a commute in excess of 100 miles per day, even with a fuel-efficient vehicle, it should come as no surprise that fuel costs were the most expensive part of commuting.
Looking back at my spreadsheets (most of which go back 15+ years) I can see that I was averaging approximately $3,200 annually in fuel costs.
To be fair, I know that not all of that was fuel nor was all of the fuel consumed only in commuting to work.
It was rather common that I would run into the gas station to grab a Diet Coke as well, and an occasional doughnut was not out of the question if I ran out of the house without having breakfast.
Now that I work from home, I have spent $27.50 for gas…in 4.5 months!
On an annual basis, this equates to about $75 for fuel. Let’s round up to $100.
I am now saving approximately $3,100 annually in fuel costs alone.
To put that into terms that we can all relate to as dividend growth investors, if I invest that savings (which I am) into dividend stocks at the average yield of my current portfolio, I would add $85.56 in forward dividend income.
It is much nicer to have that money fueling our pursuit of FIRE, as opposed to just being burned up commuting.
Pay the Toll
Driving 100+ miles to and from work resulted in a lot of interstate driving. For me, that also meant paying tolls for that privilege of using said interstate.
Three separate tolls each way.
Again, referencing my historical expense tracking, these tolls cost me an average of $65.00 per month or $780 annually.
Given that my commute is now 0.0 miles, and as demonstrated above my car barely leaves the driveway, this cost has been entirely eliminated.
Investing this money into my DGI portfolio would equate to an additional $21.53 in forward dividend income.
Maintaining the Machine
The last category that I will evaluate here is auto maintenance–and that primarily means oil changes. While there are certainly costs such as new tires, brakes, etc. I have not accounted for that here so this is quite conservative.
The typical week would log approximately 600 miles on the odometer.
If we estimate 50 working weeks, as even though I had four weeks of vacation I typically would take two and carry-over two, that comes out to 30,000 miles annually.
Assuming we are diligent and get our oil changed every 5,000 miles, there would be 6 oil changes per year. In our area, the average cost of an oil change with synthetic oil is about $50 give or take a few.
The $300 for oil changes can now produce $8.28 in forward dividend income.
As mentioned, I believe this is a conservative number for auto maintenance because I have not included additional “wear and tear” costs such as tires, brakes, and fluids. However, to offset that conservative approach, I also typically did maintenance myself so my total costs were lower than if I took my car to a mechanic.
The costs above are all directly related to the cost of commuting to work, but there are quite a few additional costs that could easily be included here that have been reduced or eliminated now that I work from home.
Lunch out with colleagues.
Drinks after work.
Having the flexibility to work from home means that I can wear whatever I want. And despite what some might think, I do still actually get dressed every day (eventually).
My wife and I will occasionally meet for lunch, but otherwise lunch is now made in my kitchen. There is no excuse not to have breakfast now, so those doughnuts at the gas station are a thing of the past as well. The lack of driving has significantly reduced the odds of getting a speeding ticket as well.
This has not been an exhaustive look at the financial benefits of working from home, but clearly the lack of a commute has reduced or eliminated multiple key expenses.
Based on my habits from these first few months of working from home, we could consider eliminating one of our vehicles. However, I don’t think we will pursue that any time soon as our cars are all paid for and I like the flexibility that having two cars provides. I am comfortable with the trade-off to have that luxury.
Even if the salary between my old employer and new employer were equivalent, working from home would be saving me a minimum of $4,180 each and every year. As noted above, it is not unrealistic to see that number be closer to $5,000-6,000 when you account for expenses such as clothes and eating out.
Looking at this with my DGI lens, working from home is adding at least $115 in forward dividend income by investing that money instead of spending it on commuting to work.
Have you ever worked from home? What type of benefits did you see?