Ryan's Money Rules: October 2013

There is a conventional wisdom these days that says "Buy a house in the suburbs of a city because you get more house, sometimes more yard, and the taxes are lower. The nice neighbourhoods in the inner city tend to be more expensive and people practically live on top of each other." When it came time for us to buy a house, we only looked in the inner city with the main (but not only) reason being...

I hate paying for parking.

I also generally don't like driving at all if I can get about by some other means. When we lived in Calgary, I asked one of my work colleagues how much they paid for parking. At that time, she was paying about $425 per month for a personal, reserved parking spot. I couldn't believe people would pay that much for parking, but people love their cars I guess. She lived in McKenzie Towne, which is a suburb of the city, and is about a 20 minute drive, if there is no traffic, from downtown Calgary. During rush hour it can easily take twice that time to commute that distance. I can't imagine spending 45 minutes commuting to work by car one way, only to then have to go through the hassle of either finding a parking spot or paying hundreds of dollars to reserve one. Add in the cost of gas, car wear and tear, road rage, not be able to go for a few beers after work etc and all those negatives look pretty bad in my mind. No thanks. The cost must be in the 5-figures annually. Pretty expensive no matter what your paycheque is.

Since I've been a driver, I've never been a fan of long driving commutes. It started in University where I lived within a few blocks of classes and could walk to everything such as pubs, groceries and other friends places. For about 9 of my adult years, I either couldn't afford or chose not to own a car, so living close to where I worked, shopped and played was pretty important.. As time passed and I began to make more money, I continued to live inner city and not relocate to the 'burbs, choosing a bike as my main mode of transport. It is a lifestyle choice that is not without sacrifice. We pay more in property taxes, have a smaller home and yard, and live pretty close to our neighbours, but none of these have been dealbreakers for us. We enjoy meeting a socializing with other people so the more opportunity to meet people the better.

The financial and social benefits of living inner city have been significant. We both work downtown, so we can both walk to work. We have significantly more time than our friends and most likely less stress. On the walk/bike home, we are able to stop off at the pub to meet with friends or pick up dinner ingredients at the local grocer. We are close enough to one of the shopping districts that we rarely need to get in the car to go shopping. What we have noticed is that this way of living can save you lots and lots of money. We've only ever had one car which we barely drive in the city. We pay nothing for parking other than what we paid for our house driveway. If we ever fell on hard times and had to get rid of our car altogether, it would be no problemo because our lifestyle doesn't require or rely on personal motorized transport. Public transit is always way better in the inner city and there is usually more to do there. Walking to work gives me a half hour walk in the morning and another in the afternoon. When does anybody make time to go on two half hour walks per day these days?

When it came time to sell our first house, it had appreciated quite a bit because it was in a desirable walkable neighbourhood. As energy prices go up, people who live in the suburbs further and further away from where they work, shop and play will pay more and more for car costs that will leave less and less for saving and investing. Not exactly a road to riches.

What we have done is chosen a lifestyle that on the surface looks more expensive because of higher housing costs (taxes, more upkeep for older housing, higher mortgage), but makes up for it in savings on the transportation costs.... and I have found people tend to underestimate how much transportation actually costs. I would estimate that we save at least $10k per year and have a less stressful lifestyle but choosing to live inner city where we can walk to everything that we need. While not for everyone, this lifestyle choice has allowed us to cheaply maintain our existing car and avoid buying a second vehicle, and the savings we've experienced has allowed us to save and invest significantly more that other families in our age and income cohort.

Ryan's Money Rules

Thursday, October 3, 2013

Let's Review... Ryan's First 30 Money Rules

Rule #30 Live where you Work, Shop and Play