The Long Commute

| August 27, 2021

We frequently encounter people who decide to buy a house that is far from where they work. Typically, a larger and more beautiful home, probably with a pool, can be purchased where land costs are a small part of the price. Often, a couple will do a test drive on Sunday and find that “the drive really isn’t so bad.” Then a nice brunch, with a decent chardonnay, and happy conversations that weave a dream of how great life will be in this beautiful new home. If we take a bigger mortgage, we can really get our dream house. Then, we do the actual commute during rush hour. Maybe we have used the savings to buy a sports car, which we can’t really drive because we are in bumper-to-bumper traffic. Gas prices go up, so a big part of the savings is lost. The kids get sick, but since it might take an hour or two to get home, we need someone who will pick them up for us. Fights happen over who’s job is more important.

This is the classic example that happiness researchers use to illustrate opportunity cost and how spending decisions can derail our plans. If we spend an extra two hours a day in the car, we now have two hours a day that we cannot spend with the people we care about. The extra mortgage and the sports car may mean that we cannot retire on the date we planned. We regularly speak to people who are locked in jobs that they planned to retire from, but now they cannot. Sometimes, exhausted people make these decisions rashly in the belief that somehow it will make them happier, or that the job they find a grind will somehow be more endurable. Yet, if you are already exhausted, you will be more stressed on the nights that it takes three hours to get home. Softball games, soccer matches, recitals, romantic dinners, movie night, all out the window. Many people have traded these valuable things for almost 21 days (10 hours/week x 50 weeks ÷ 24 hours) every year sitting in a car. Often, this is more time than they spend on vacation. When they do ultimately retire, they may have drifted away from their families.

We are not against people owning nice cars or beautiful homes. A good place to live is a primary objective that comes before discretionary things. A home is also one of the most important means by which to accumulate wealth. What we are for is the careful consideration of the opportunity costs associated with all financial decisions. Houses, cars, and boats are the largest purchases most of us make and the ones most likely to be bought with credit. Thus, they are the items most likely to derail a plan. We believe that “great lives don’t happen by accident.” Planning makes the difference.