Less Car, More Money

While the federal government tries to move heaven and earth to put a few bucks in our pockets and help us afford more house, I have a piece of advice if you want to take matters into your own hands: move to a place where you're not completely reliant on cars to get around.

You know the places where cars are a necessity: the streets are spaghettis, the interstate is within shouting distance, and you can't walk to anything - not a park or a church or a convenience store or a restaurant. So it wouldn't be unusual for a couple with two kids to have to own two cars and drive them each 12,500 miles, when you factor in all the shuttling to work and play and church.

Contrast that with a neighborhood that has transit options to get you to employment and entertainment hubs, where you can walk the kids to school and to playgrounds, and where Thai food or a triple mocha cappuccino is a leisurely stroll away. If you're bold, you get rid of both your cars and rely on buses and on car share programs; but let's not go so far, and instead say you keep one car, put 7,500 miles on it, and burn through about 100 bucks a month on tokens.

At 50 cents a mile in gas, insurance, and maintenance, you're talking about $12,500 a year in transportation costs for Scenario A and $4,950 a year for Scenario B. Aw heck, let's round up Scenario B to an even $5,500, and chalk that up to a couple nice pairs of sneakers and a couple of fleece pullovers for you and the missus for all the extra walking you get to do.

So that's a $7,000 a year savings, or almost $600 a month more in your pocket. And remember, that's cash; it would be the equivalent of getting a $10,000 raise in your paycheck. Last I checked, employers weren't giving out $10,000 raises and Uncle Sam wasn't proposing a $7,000 rebate.

Or let's express that savings in another way. Suppose that instead of having extra money in your pocket, you want to buy more house. According to my PITI calculator, having an extra $7,000 a year to put towards a mortgage means you can buy well over $100,000 more house than you could have before. Meanwhile, I'm not holding my breath that Congress can figure out a good way to get people $100,000 more house.

I'll save the other, non-financial benefits of living in a less auto-oriented neighborhood for some other day. Just remember that in dollar terms, you're talking about $10,000 more salary or $100,000 more house.

So the next time you hear about a friend or family member moving from the suburbs to the city, remember that it might not be out of a desire to nobly trade down ("what a selfless urban pioneer you are") or trendily trade up ("Sex and the City, here you come!"). Instead, it might just be they've decided not wait for the government to give them the stimulus package they were able to go and get themselves.