What is your ERE housing score?

How to avoid signing your life over to a mortgage
Fish
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What is your ERE housing score?

Post by Fish »

In the 21 day makeover, Jacob writes:
There are three things that matter [when considering where to live].
  • Location relative to your work.
  • Location relative to your grocery outlet.
  • Cost.
So, the real estate motto is 2/3 true: It’s location-location-cost.
Based on this, I propose the following formula for ERE housing score:

Score = (Distance to work in miles) + (Distance to grocery in miles) + (Monthly cost of housing in USD /100)

For those who live in a part of the world that measures distance in kilometers, the conversion factor is 1 km = 0.621 mi. Obviously, a lower score is better. Because various modes of transportation differ in resilience, I suggest the following adjustments based on the primary mode of transportation that is actually used in daily life. This will prevent the ERE housing score from being a static measure, and encourage better behavior.

If you typically ______ to work/grocery, multiply distance by ______.
Walk: 0
Bike: 0.3 (if less than 3 mi, use 0 instead)
Public transit: 0.7
Car: 1.0

Some clarifications:
  • If you are financially independent, work from home, or are currently not working, your distance to work is zero.
  • Calculate distance to the grocery store where you get the majority of your food. If you grow more than 50% of your food, or have your groceries delivered, your distance to grocery store is zero.
  • Housing is per adult(*). If you own your house in full, use (purchase price)*(0.03/12) + monthly property tax. If the bank owns you(r house), use (down payment)/400 + monthly mortgage payment (PITI)(**). Subtract payments from roommates (if any) from your cost.
  • For vandwellers, calculate the housing cost as monthly operating expenses + total capital outlay for the vehicle spread out over the larger of 60 months (the IRS depreciation schedule) or however long you've actually lived in your current vehicle.
(*)Similar to the Wheaton Eco-Test, which suggests that children should live within their parents' footprint. But adjust accordingly if your children work and contribute to rent.

(**)PITI = principal, interest, taxes, and insurance.

Keep in mind that this is just for fun... there are other things that matter besides proximity and cost, like energy and water usage. But this is supposed to be quick and easy.

Fish's life in suburbia: bus to work, drive for groceries.
(0.7*12.9)+(1.0*2.8)+((1660/2)/100) = 9.0 + 2.8 + 8.3 = 20.1

Rating scale
Under 5: Highly optimized (A+)
5-10: Efficient (A)
10-15: Very good (B)
15-20: Acceptable (C)
20-30: Needs improvement (D)
30+: Wasteful (F)

Edit: Moved the divide-by-100 inside the last set of parentheses in the formula so that the order of operations is no longer ambiguous.
Last edited by Fish on Mon Nov 06, 2017 7:22 pm, edited 1 time in total.

wolf
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Location: Germany

Re: What is your ERE housing score?

Post by wolf »

MDFIRE2024's life in suburbia: Bicycle to Work and Groceries
Housing includes electricity, heating, real estate tax, utilities

Score = (9.315 * 2 * 0.3) + 0 + 242/100 = 5.59 + 2.42 = 8.01 --> Efficient (A) :D

Thank you fish for this idea about scoring ERE housing!

slowtraveler
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Re: What is your ERE housing score?

Post by slowtraveler »

Work from computer so 0
Walk to local restaurants that are cheaper than cooking back in states for me so 0
Housing is 330/month so 3.3 but housing will likely decrease.

stayhigh
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Re: What is your ERE housing score?

Post by stayhigh »

3.5 yey

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Bankai
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Re: What is your ERE housing score?

Post by Bankai »

Walk to work = 0
Walk to grocery store = 0
Rent + council tax + electricity = £747 = $1003
1003 : 2 : 100 = 5.015

FRx
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Location: Portland Or

Re: What is your ERE housing score?

Post by FRx »

Haha, this is awesome - %#@^ nerd! (said with lots of love)

rarely work/work from home = 0
walk to grocery store 4 blocks away = 0
own home + tax = $519 (I have HOA as well but didn't factor it in based on your equation)

= 5.19

Kriegsspiel
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Re: What is your ERE housing score?

Post by Kriegsspiel »

7.3 in Detroit (walk + bike)
4.9 in Texas (bike + drive)

7Wannabe5
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Re: What is your ERE housing score?

Post by 7Wannabe5 »

City bus to part-time work at different locations: 5(.7) = 3.5 approximately
Walk to groceries= 0
Trade service/skills for shelter= 0

Total = 3.5
If/when I fix my broken bike, I could go down to 1.5

However, I feel like my score is a bit of a cheat, because I haven't established my zero-cost-shelter as fully resilient (5 solid independent options), and I am trading some labor. OTOH, I am occupying space(s) that would otherwise likely be empty or redundant, so reducing waste stream in comparison to any solo living solution.

wolf
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Re: What is your ERE housing score?

Post by wolf »

Wow! I am impressed! Many A+
It feels great to be a member of the ERE housing gilde. If others would know... :-) But hey, first rule of ERE: Don't talk about ERE...

liberty
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Re: What is your ERE housing score?

Post by liberty »

0 + 0 + 8.8 = 8.8.

jacob
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Re: What is your ERE housing score?

Post by jacob »

Fish wrote:
Thu Sep 28, 2017 5:15 am
If you own your house in full, use (purchase price)*(0.03/12)
I see why you did that. However, if the house is a cost it should be counted as "investment roi"-"house roi" which could be de facto 0. Ultimately it depends on what you're seeking to account for. Doing it this way presumes that the 3% are lost as outflows when they're not.

This all goes back to the old debate about imputed rent alternatively opportunity cost of having money in bricks.

George the original one
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Re: What is your ERE housing score?

Post by George the original one »

retired, 12 miles to grocery store with a car, owned house with spouse
0 + 12 + 3.5 = 15.5

We garden in a grand style, but it doesn't meet 50% of current diet. However, grocery store runs are only once per week with combined errands and if hard-pressed, we could cut to once per two weeks.
***
Car trips could also be modified by the car's fuel economy & number of people taking the trip, so, for example, carpooling with spouse to work should divide by 2 and commuting in a Chevy Suburban should be multiplying by 3.

bryan
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Re: What is your ERE housing score?

Post by bryan »

Dallas, car: 3*1 + 2*1 + 380/100 = 8.8
Dallas, bike: 3.5*.3 + 0 + 380/100 = 4.85
SF, wfh: 0+0+1400/100 = 14
SF, van wfh: 0+0+ (14000/60 + ~200)/100 = 4.33
Berkeley, no work: 0+0+850/100 = 8.5

Not really sure what to take from that.

7Wannabe5
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Re: What is your ERE housing score?

Post by 7Wannabe5 »

Here is what the IRS has to say on the topic of Food and Lodging provided for free by employer:
Meals and Lodging

You don't include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met.

The meals are:

Furnished on the business premises of your employer, and

Furnished for the convenience of your employer.

The lodging is:

Furnished on the business premises of your employer,

Furnished for the convenience of your employer, and

A condition of your employment. (You must accept it in order to be able to properly perform your duties.)
The nanny/elder-caregiver tax threshold is $2000. The gift tax threshold is $14,000. No limit on educational expenses covered as gift. That's why sugar-babies are often college students. The farm worker threshold is more complicated.

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Ego
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Re: What is your ERE housing score?

Post by Ego »

7Wannabe5 wrote:
Thu Sep 28, 2017 2:18 pm
Here is what the IRS has to say on the topic of Food and Lodging provided for free by employer:
In that case my score is negative. :geek:

7Wannabe5
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Re: What is your ERE housing score?

Post by 7Wannabe5 »

@Ego: How do you figure? Not doubting. Just curious. I might be negative too.

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Ego
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Re: What is your ERE housing score?

Post by Ego »

At this property we get paid a salary in addition to free rent/utilities/internet/phone/storage for living here. That said, there is some work involved in rolling out the trashcans, calling tradespeople, and dealing with tenants, so it is not really an apples-to-apples comparison.

Fish
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Re: What is your ERE housing score?

Post by Fish »

MDFIRE2024 wrote:
Thu Sep 28, 2017 5:42 am
Score = (9.315 * 2 * 0.3) + 0 + 242/100 = 5.59 + 2.42 = 8.01 --> Efficient (A) :D
Distance is intended to be one-way... so there's no need to double your 15km bike commute. Your score is really:
(9.315 * 0.3) + 0 + 242/100 = 2.79 + 2.42 = 5.21


@FRx - Good point. I went back and forth on HOA dues and ultimately left it to reader discretion for simplicity. Depending on your motives, you may only care about whether your house is appropriately sized for your situation (number of bedrooms). For that, purchase price and RE taxes suffice. If you're already living in something efficient and want to optimize the cash flows, then a lot of other things suddenly become relevant including HOA, maintenance, tax deductions, etc. Jacob's comment takes it another level by considering investment vs. house ROI. You could even figure in location-specific income and sales taxes. And so on...

The score is just an indicator of your housing situation. Not the actual housing situation itself. It is what it is for simplicity and to be interesting and relevant to a larger audience. Feel free to adjust the calculation to suit your focus.


@george - I think the gas bill is punishment enough for driving an SUV. :P Part of my reason for posting was to vet this mental model, so I appreciate all the feedback and ideas. Housing score is really "cost of housing" + "cost of transportation" which was covered in my latest post in the "ERE indicator" thread but as it turns out, no one (myself included) was really interested when it was presented that way.

I honestly anticipated some blowback for ending the rating scale at -1 Wheaton from my current position (I know a number of migratory professionals who do much worse), or that the indicator is somehow irrelevant or flawed because equating 1 mile in distance to $100/month was really arbitrary on my part.

bryan wrote:
Thu Sep 28, 2017 2:09 pm
Not really sure what to take from that.
If you're already living efficiently, your focus is best applied elsewhere. It surprised me that most people here walk the walk and post sub-10 scores. It could be the self-selecting sample of active forumites, but I was expecting more inefficient wannabes like myself. This has been a useful exercise to reexamine my housing situation. It makes me want to change the commute aspect of working. While I can easily cut my score in half by moving to a similar house closer to work, I could also do the same by working closer to home. Since I have a strong preference for my current location, I'll focus on changing (that aspect of) the job.

P_K
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Re: What is your ERE housing score?

Post by P_K »

0.3 * 4.5 + 0 * 0.25 + 292.5/100 = 4.275

thrifty++
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Re: What is your ERE housing score?

Post by thrifty++ »

0.1 + 0.1 + 562/100 = 5.82. Looks pretty good I guess. :)

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