Should I stay or should I go now?
Should I consider moving for the sole purpose of saving a good chunk of that rent money? Lower overhead would make it easier to pay down debt, but it would undoubtedly mean a longer commute or less square footage. When shopping for a new place, my girlfriend assures me she won't accept less square footage. So the only thing we are flexible on is the location. Alas, I found an apartment that is available, has the same square footage and costs $551 fewer per month.
Comparison between current and proposed living situation
|Current Situation||Proposed Situation|
|Rent: $1,850||Rent: $1,299|
|Square footage: 810||Square footage: 810|
|Bedrooms: 1||Bedrooms: 1|
|Bathrooms: 1||Bathrooms: 1|
|Commute Distance/Time: 22-26 miles/45-85 minutes||Commute Distance/Time: 31-38 miles/55-110 minutes|
Running the numbers: Move to cheaper, more remote pad
The proposed solution increases my commute overall, but is that worth the reduced rent? Also, lets take into consideration the expenses necessary for moving my life to a new apartment.
So I've chosen to move to the cheaper apartment that is a little less than ideal to my commute in order to pinch my rent pennies. In the first year I will save $6,612 in rent ($551 x 12 months). Done deal, right? Not quite, because I never leave anything to chance if I can help it. I'll also need to consider the additional cost of commute. Assuming the average commute for both living situations, my commute will increase by 10.5 miles each way. If I commute 182 times per calendar year, I will travel an additional 3,822 miles based on my new location. At 53.5¢ per mile, this is an increase cost of $2,045.
Finally, I told my girlfriend we would be contracting out the moving process (she has an inordinate amount of furniture crammed inside of our one bedroom apartment. I've never hired movers but based on a quick glance online it runs about $100 per hour. Assuming they have a five hour minimum, lets rate the moving process at $500. There is no dollar amount I can put on the mental stress that we will be subjecting ourselves to packing our stuff up, but that is life I guess.
Barring any other expenses, it looks like I will save $6,612 in rent, spend an additional $2,045 commuting, and spend around $500 to move our wordly possessions. This means that in total I will be freeing up about $4,067 in the first year to put toward debt and retirement.
Omissions from the calculus
I did not take into consideration the additional time lost sitting in a car commuting. Averaging out each commute estimate, I would be in my car an additional 19.5 minutes each way. Commuting 182 calendar days, this adds up to 7,098 minutes, 118.3 hours, or just shy of 5 days additional to my existing commute that I would be sitting behind the wheel. There's no real lost earning capacity here; I just get off of my couch 20 minutes earlier and get back home 20 minutes later. If I had to assign a dollar amount and say I lost $10 per hour, this cost would be around $1,183. Still, this is less than the amount I expect to save from the lower rent.
It's also important to note that the savings is only half mine, considering my girlfriend splits bills with me. Still, an additional $2,000 per year is nothing to sneeze at.
Based on the numbers, this is a sound plan to save money. The only reservations I still hold are the fact that my current landlord needs ample notice (a few months) prior to me moving, but I don't know what will be available in January when my lease is up if I tell them now I don't want to renew. How is that handled? Hmm. More research needed.