Remember to Value Your Time
Published on - October 7th, 2011 (Modified on - December 1st, 2011) (by J.D. Roth) I can’t believe that Get Rich Slowly is going to link to two different xkcd comics within a single month, but it’s true. Genevieve dropped a line to point out this recent gem about one of the problems with penny pinching: Sometimes people forget to value their time.
“This made me think a bit about my deal-hunting habits and what I’m really spending and saving,” Genevieve wrote. But I think this concept applies to more than just shopping. It’s taken me a long time to realize this, but as the income I earn from writing has increased, the more it makes sense for me to outsource routine chores.
It was you folks, for instance, who finally convinced me that I should pay to have somebody else do yardwork. I can more than break even by using my time on business-related activities. It still seems wrong on some fundamental level, but the truth is I have more free time to get the work done, and that makes me more money. (If I were paying somebody to do the yardwork but wasting my time by playing World of Warcraft, that’d be a different story. That’d be foolish.)
Frugality is an important part of personal finance, but it’s not the only part. Cut your costs whenever you can try and get your free credit report handy.But don’t forget to make more money — and remember to value your time!
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it really depends on who you are. For you, you should definitely put more effort into your blog and other paid interests than spending hours to save a few bucks. But, if you are, for instance, a very poor SAHM, it might be worth it to spend an hour to save $2.
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I have no idea what’s a SAHM, but if you have no other income, “working for the minimum wage” is better than no work at all.
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SAHM = Stay At Home Mom
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LOL YADA, THX, TAFN (SCNR)
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Even if you just have time on your hand you’d otherwise spend watching TV or eating snacks, and say it’s a pretty drive to the cheaper station – ha ha! It can be worth earning minimum wage!
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There have been times in my life where working for minimum wage was worse than not working. After I lost my job I considered some part time work at minimum wage. I decided not to work at the minimum wage for not only would I loose my unemployment benefit but the impact to my high paying job searching/networking/interview time job would be significant. It would likely extend my overall time unemployed.
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Usually money save per hour is much less than money earn per hour. If there’s a competition on my time I will try to earn. But, in the context of the cartoon, if the cheaper gas station is on my way then I would fill it up there.
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You know, why would it be a waste simply because you might play WOW? In my creative field, we often talk about the law of diminishing returns. If you are working long hours with no downtime, the quality of your output goes down. Just getting a few hours to play a game or read a book or zone out can do wonders for resetting your creativity. If paying extra money frees up your schedule and your brain, it actually can have a huge positive impact on your normal working productivity.
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Agreed. Dont underestimate the value of downtime, and the positive impact it has on your work. I’ve outsourced mundane tasks in the interest of doing nothing (reading and lounging really). I knew if I spent what time I had available rushing around to be productive, I’d go back to work on Monday, not refreshed and not able to function at my fullest.
These days everyone is busy. Downtime has to be a priority too.
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If none of us took any downtime, J.D. would not have any blog readers.
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Second that!
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Ha! Good point, Amber. And I’m not down on World of Warcraft for the sake of WoW. I just meant it as an example in my own life. I can’t do WoW because it’s a waste of my time. For you, reading comics might be a similar waste. It’s not for me.
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Yes JD whatever rejuvenates your mind you should invest your time and resources on that. Its a money investment. If filling up for cheap boost your morale, go fill it from a station 5 mins away.
Personal finance is often a representation of personal psychology.
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third-ed. i often wonder at the end of the day if i should be working on a painting or a mailing list instead of playing video games before bed- but then what do i look forward to all day? more work then sleep? not as encouraging to get the job done.
that ps3 isn’t gonna play itself
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Great comic and post. It highlights the importance of not merely focusing on cutting costs, but increasing income. You need both to be successful at managing your finances.
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Paying someone to do yardwork so you can play WoW is not foolish.
Would you say I’m foolish if after a week of working long hours I decide to pay someone to mow my lawn so I can spend 3 extra hours with my kids?
It just means that WoW is a hobby that you enjoy enough to pay a little extra to make time for.
Love the site, hate that example.
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I actually like the WoW example. Having a husband who plays a lot, it’s not one of those things that can easily be put down once you log in. It sucks you in…for hours at a time…maybe even longer than it took to mow.
I stay away from potato chips because it’s easy for me to eat a big bag of them in one sitting. WoW is JD’s potato chip.
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This is a common frugality error that I have had the good fortune of making in the past. Not just value of time, but also value of your energy and your peace of mind need to be computed into what you are ultimately getting back in terms of savings or earnings. However, in our rapidly evolving world, with emerging needs for new skills and adaptability, a lot of value is built into tasks that might by low in terms of return on time invested, but high on long term gain from learning new things, or going from novice to expert at them.
Also, one must look at intangible value that is embedded in the task of building a network, goodwill and reputation while measuring the value of time.
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While I agree with the basic idea here, the specific example used in the comic grates on me–as much as I love xkcd. If I and my neighbors make a point to support the companies that offer cheaper prices, other companies will be forced to lower their prices to that sweet spot that capitalism is meant to attain. I think it is especially important to keep this in mind for items of repeat consumption.
Yes, there are times when I need to stop at the most convenient gas station, whatever the cost. But, as a rule, I always try to patronize the stations which offer the cheaper gas, because I believe if we all do, prices will be cheaper in the long run for all of us.
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Let’s follow that rule to its logical conclusion:
If you always favor cheaper, but less convenient, places of business then businesses will adapt to your demands: they will begin to locate themselves in inexpensive and less convenient locations. Think: one giant super-walmart on the edge of town vs. many smaller local grocers that are within walking distance of residential neighborhoods.
I’m not saying you should always pay for convenience, but the thinking that somehow if you patronize cheaper businesses it will *only* result in cheaper prices with no other consequences is flawed.
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Except that the rule isn’t absolute, even for the OP. Otherwise they’d likely be going cross country to the cheapest gas station to fill up each time.
Rather, the real rule they’re following is to choose the more inconvenient option if the price is less than by how much they value the convenience (like say the cost of the gas to get there). Which means that all more convenient locations need to do is have a price increase under this threshold to attract business to them.
Plus how much someone values convenience is subjective, and even changes depending on external factors as the OP admits. Thus the more convenient but expensive shops will still be there to capture that increased demand from those consumers.
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Of course, you also have to be realistic about how effectively you spend your time otherwise. Sure, if you’re on your way to a meeting or late for work, it makes more sense to pay an extra $.10 a gallon than drive an extra ten minutes. But if you’re just out running some errands (and depending on whether “five minutes” is a mile or five, how much gas you’re getting, your car’s fuel economy), why not? If you’re not going to spend that extra ten minutes doing something that makes you money, then saving a dollar is the smart choice. You can say “I could be doing something more useful with my time!” But be honest with yourself when you answer the question, “Ah, but would you?”
And like someone else suggested, I’m currently in college and without a job, and while I don’t particularly like mowing the lawn, it’s not like my time spent browsing the web is somehow so valuable that I need to pay someone else to do it.
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This is interesting. I’ve taken the “make more money” mantra to heart lately, using my assets (a pickup truck and writing abilities) to make a little extra money on the side. The extra writing assignments don’t pay well at all, less than minimum wage, because I spend too much time researching and editing. Hopefully that will change, BUT even the low extra pay is better than no extra pay. I’m spending the time doing something productive rather than consuming, and it’s helping to smooth out some monthly budget shortfalls.
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i struggle with this issue myself- if low pay is better than no pay. i’m a freelancer between jobs (eternally, it seems like). the few times i’ve picked up an extra job- always low paying- i spend all my time commuting to and from and resting after the commute and stressing about what happened at work and is it really worth the x/hr, when i could have stayed home all day, uninterrupted, working on things that would bring well-paid work in.
tough call, i waffle back and forth on it. it sucks to have your time interrupted all the time, but it’s nice to pay for groceries without wincing.
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By driving ten minutes out of your way to the cheaper gas station, you are also using extra gas, thus lowering the return. That extra gas your burning will eat away at your “savings” and could actually make you lose money by going to the cheaper gas station.
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The whole subject of time and free comes up in education as well. As I discussed in on my blog in When Free Isn’t and Paying Makes Much More Sense, it’s great to be able to get so much information on the web at now monetary cost, but the time element has to be considered. How much time do you invest looking for information and trying to figure out if it’s reliable? You may be much better off spending a little money. Books, for example, are extremely reasonably priced (in most cases) in terms of the amount of time they can save you in doing your own research.
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You can spend the time making more money, or you can spend the time on a more frugal activity. Ten minutes to save a buck on gas? I don’t do it. Twenty minutes to make a quick, healthy dinner? I easily save $20 over take-out or a restaurant.
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Absolutely right! When you don’t evaluate your money saving habits, sometimes you find you are wasting time on trivial stuff or you are spending a dollar to save 50 cents. Being smart with your money means means just that…Be Smart.
I wrote a recent post about this on my Celebrating Financial Freedom blog entitled “Don’t Eat the Goldfish”. You can find it here http://bit.ly/n3yhgW
“When you help me with money, you help the world prosper”- J.M. Dumont
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Oh, I missed that comic! It makes a good point. Thanks for sharing. I wonder how much of our deal hunting has to do with they principle of it all? I mean, why pay more for gas than we have to?
I find it easier to deal with habits rather than worrying about the cost of every little thing. For instance, I shop at a grocery store that has lower prices overall rather than running all over town. (It takes a really good sale to get my attention.)
I also drive a fuel efficient car and walk whenever I can — much easier than worrying about the cost of gas on a particular day at a particular place.
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You had me until “(If I were paying somebody to do the yardwork but wasting my time by playing World of Warcraft, that’d be a different story. That’d be foolish.)”
Honestly, I don’t like WoW or MMORPGs as I think they can be too addictive and destructive to relationships and work habits for some people (me included!).
BUT — if I pay a cleaner to do 4 hours of cleaning once a month and use that 4 hours to relax or read a book or chat with my family/friends or what have you I don’t think that is “foolish” since the cleaner does a better job at scrubbing the tile than I do and I hate doing it.
It’s foolish to pay someone to do something you can do for yourself if you are spending more than you earn and/or not saving enough.
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I agree with Adam in part but disagree with the universal valuations implied here and in the original post. It’s not about life vs. games vs. books; it’s about what value you assign to things in your own particular circumstance
The distinction between good clean fun and harmful vice can be very arbitrary.
Games are a common object of condemnation, but they can be a perfectly good (and frugal) way to spend some time relaxing. At the same time, book addicts can run away from life with their face buried in books–if you’ve read Don Quijote, you know Cervantes was making fun of “those” (cough, cough) people. Chess has also been at times considered a slacker plague, yet now it’s almost an Olympic sport and good for your brain and sponsored by schools what not.
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Sorry didn’t mean to imply that reading a book is a better use of everyone’s time than playing a video game, to each his own. My own view is that WoW is destructive for me, so I don’t play it anymore. But others do and are fine with it!
My big takeaway is that whether “paying someone else to do something for you that you could do yourself” is foolish or not should not be based on what you do with the time it frees up (playing games or what have you).
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Oh, I see. Sorry if I misconstrued your argument. I do think however that the decision *should* be based on the value of the tradeoff–except that the value of the tradeoff is up to you. The question to ask is “Is this worth it *to me*?”
Clearly everyone values things they buy or pay for, otherwise they wouldn’t buy them, but the real issue is to evaluate if you’re getting a good return for your money.
Just the other day I was watching “Raising Hope”, which is a hilarious TV show. The Chances are dead broke and they order delivery pizza and have to pay for it with coins from the couch and ponder using money from their savings jar (they’ve been saving to buy a new toilet, because the old one is broken). They even negotiate the price down by letting the delivery guy pick off the sausage, and eventually get their delivery.
There’s lots more to that scene than that, but many of us have our absurd delivery pizzas to contend with, even though in some cases (working late to beat a deadline) a delivery pizza is the way to go.
Oh, and this blog should do some reviews of that show– it’s a goldmine for personal finance talking points.
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“Hello, my name is Carol, and I hate to clean.”
I can think of a million other ways to spend my time, enjoy it more. And then I can appreciate my clean house. I used to think I shouldn’t have a cleaning person. Then I came to the realization that I value the end result, and that I’m not a bad person to not like cleaning. No, it’s not therapy for me. I also don’t like to shop. But I do like to read, do needlepoint, spend time outside, go to the gym, cook, hang out at the coffee shop, etc. etc. So I’m getting someone in to clean, and I won’t carry any guilt about it.
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I have no problem with you or anyone else having a cleaning person come into their home. But who actually likes cleaning? I don’t like cleaning, but I sure like the results. I guess I don’t see how hating something necessarily means that you should outsource it. I guess you pick your poison. You can’t outsource everything – well, most of us can’t. So you outsource what bothers you the most, and in your case that appears to be cleaning.
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I actually like cleaning! At the end of the day, I can see results, first-hand, and experience the benefits of the effort myself. In a career-job (chef) where at the end of the day it can be tough to see if you even accomplished anything, and a self-employment where effort does not always coincide with income? Doing a task, seeing it completed and reaping the benefits for days to weeks on end is a very rewarding feeling. It brings a lot of peace and order to my world that paying someone doesn’t really accomplish.
OTOH, when I was working my first career job and putting in 90 hours a week on salary–no overtime–I had no problem with chipping in for a housekeeper and asking my mom to go to my house and do my laundry. I knew even then that I was literally paying for the experience that would have unquantifiable monetary returns later in life. But you bet when I got home from a long day and was angry at one thing or another, that bathroom sparkled.
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I couldn’t agree more with that cartoon. Everyone just needs to remember that we all have different thresholds for how much our time is worth. I make ~$40 an hour at my job, but am willing to spend an hour to save $20.
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While I agree that one should value your time, I dont think frugality is overrated. For many people (including myself) it generally makes more sense to concentrate on frugality. I would suggest that being frugal eliminates or lessesn most of the time, the need to earn more money, for one. Secondly I would argue that earning money usually takes more time, as most frugal tasks are not done one at a time.
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I try to get twice the bang for the buck by concentrating on frugal tasks that give me pleasure. Yes, my time is worth something so maybe I could earn more by working instead of gardening. But I like gardening. So it’s a frugal way of supporting us and also entertainment.
I also enjoy clipping coupons and planning my grocery shopping. I don’t go whole hog because I’m not willing to live on rice a roni and the other junkie crap that many coupon divas are willing to eat. But I enjoy saving 20% or more on my bill by planning my menus around sales and coupons.
Driving across town to save a few cents on gas doesn’t sound like much fun to me so I probably wouldn’t do that either. Of course, if I can plan to buy cheap gas while I’m already doing something else, that makes sense.
That comes down to mindfulness which is always a good discipline.
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Time value is a HUGE consideration that most people ignore. You need to calculate how much that discount is really saving you compared to how much time you’re spending obtaining it. Time is one of the few resources, if not the only, that cannot be renewed. Figure out what your time is worth to you and act accordingly.
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Even if you sell your time for your living, making these kinds of calculation is hard.
You pay a gardener, mechanic, whatever in after-tax dollars. Most of what you earn is before-tax dollars.
If you run your own business, you should have good books. Try this experiment:
1) It’s probably pretty easy to determine your total revenues; you already pay close attention.
2) Now add up all the money that leaves the business because of government. All the tax witholding, the FICA matching, the taxes on phone bills, the rent surcharge for property tax, the cost of a CPA (you only need a CPA to keep track of the tax laws), the cost to maintain a pension plan (you only need that because the gov takes less if you set up a plan), sales taxes on supplies and equipment. Taxes on airplane tickets, car rentals, food, hotels. Look at every single expense and determine how much goes to or is mandated by government.
This will consume a Saturday, but it’s worth it. Add it all up, and divide it by your revenues.
The results will shock you if you haven’t done this before. Many small businesses pay over 50% of revenues in taxes and government-mandated fees.
So if the government is taking half, you need to earn at least $40 an hour to justify paying a gardener $20 an hour.
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Absolutely JD – we must best endeavour by channeling our expertise into the most profitable duties and allow others to support us accordingly. When I set up my blog I spent/wasted a few weeks to find a good designer saving a few hundred pounds until a friend pointed out my living costs where much higher over the same period. The first designer I discarded would have done a great job and saved me cash in the end. Mistake! Make the choice, save yourself time, which equals money, and be proactive and be a specialist in your own life and business.
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I love the WoW example. For some people, an hour of playing a video game is not worth the $20 they would earn in that hour. But others would gladly give up the $20 they would earn in that hour to play a game, or spend time with a family member, or _________.
The point is to simply recognize that one chooses to spend their free hours (or all their hours) in a certain way. Be intentional with your time, and you’ll never waste it.
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I agree with the concept here but struggle with it on certain issues. I drive a Kia Rio that gives roughly 36 mpg. I will frequently pay more for gas to save waiting in line at the Kroger pump. My car holds 10 gallons when I am completly empty so I would at most save 30 cents.
On the other hand I scrap metal from the junkyard that I call my grandparents home. My grandad has 50 years of trash and metal behind his house from being a body man and I scrap what I can. I come across wire from time to time and I always take the time to strip it down to bare copper. This takes me along time and it makes what I make per hour from scraping go down significantly. However, there is a limited supply of metal in the junkyard that is no longer being added to. I want to make the most amount of money I can from this work because it is not always going to be available to me. The return I get on copper is higher than cord, so I spend extra time to increase my total return even though I am losing in my return per hours worked.
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I am a little concerned about grand dad…..is he still alive and getting anything out of this?
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bwaaaa haaa haaa! I love the comic you linked! Who knew xkcd knew so much about money! I try to balance being frugal and the time it requires. Every penny saved is a tax-free penny but I think I do better (even as a SAHM) to go after saving dollars. I’m shopping for a laptop right now and it’s going to be well worth my time to save a few hundred dollars on a well thought purchase during my regularly scheduled surf time!
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So $1/9min = $6.67/hr, below minimum wage sure, but that’s post tax money. Assume a marginal tax rate for that dollar was 25%, now it would’ve taken $8.89/hr to make that dollar. So that’s over (federal) minimum wage, ha. /nerd
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Does anyone else like cleaning? i mean not all of it, but some of it i really do. it makes me feel like i’m getting my life/home in order and i get satisfaction from that. I actually feel guilty that I don’t pay someone else to do the mundane chores and that i’m not doing something more work-related or productive when i am cleaning, doing laundry, cooking.
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I do! I’m actually thinking of starting a little side business doing cleaning for other students in my neighborhood.
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For me it depends on the purchase/activity involved. For example I might only save $5 spending an hour cooking from scratch but I quite enjoy that activity and it is in the comfort of my own home. Similarly I might drive ten minutes or so on a nice warm day (listening to the radio)to save a dollar or two on petrol. Driving in the rain/snow or at night would have less appeal and I would not spend the time.
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I see geeks make that argument all the time– I lived with one who wouldn’t do things that were ‘below his pay grade’ around the house– but the truth is, if you’re on salary, and you don’t have an extra hourly job, what you save/pay outside of work doesn’t translate into money.
So, yeah, if you can use that time to make more money at a higher pay grade, great. If, however, you’re on salary and you are running into the expensive grocery near your work to pick up your groceries because it’s convenient and everything is ‘right there’, rather than taking the time to visit 3 discount places, you may be losing money big time, even if you factor in the time.
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Not only does the comic ignore the utility of money but it doesn’t consider that saving money is actually a rewarding pastime for some people! I think the implied advice of this comic is a little too naive to be taken seriously.
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It’s also significant to consider that a penny saved can actually be much _more_ than a penny earned. There are costs associated with earning marginal income that XKCD doesn’t take into account. If your current job is salaried, you’d have to get a new one (which is enormously costly in terms of time); working a second, minimum wage job has social indemnities not associated with saving money; there are costs of getting to/from a new job that are not directly reimbursed; depending on your tax bracket, you might have to make as much as 100% more than any given amount to have that amount in the bank.
Plenty of people making $5000 a week cut coupons, and I don’t think they’re wrong to do it. The psychology of frugality is just as important, in my mind, as the economics.
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This is a fantastic way to look at deal hunting! Too many times we look at the sticker price and never factor in the time effort required… often this dilutes or completely erases any planned savings. Calculating a return on investment looking at both money and time is crucial. I would love to hear more from folks on how they calculate their savings and what the biggest savings were for you!
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Why do you think that it’s wrong to outsource your yard work? I don’t think that it’s wrong at all. My mom used to hire people to work on the pool and to clean the shrubs at our old house.
I don’t think it’s “evil” or “ethically wrong” to pay people for a job you don’t want to do. It’s not like you’re asking them to do anything illegal. And anyway both of you benefit, the other person gets money and you get more writing time.
It’s so win-win.
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Time vs. cost presumes that you will spend the time better. Most do not! The majority of people pay other people to do the work they do not want to do vs. making themselves more efficient. For example, it is easier to have your car washed than fo ryou to wash your car.
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It’s even easier to just not wash the car – that’s not true for everything (yardwork sure doesn’t go away if you ignore it) but there is a lot of frugality that is *not* doing things, instead of doing things.
Like another commenter already said – mindfulness is the key. Not just doing things out of habit, but looking at their actual value (emotional, status, financial) vs. all the costs, including opportunity cost.
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I love this article because it reminds me that I too am prone to spend a penny to save less sometimes. Especially, as it happens to reduce fuel costs for my car. (I have purposely avoided saying ‘petrol’ as we do here in England but couldn’t bring myself to say ‘gas’ either since, to me that is a state of matter that is neither liquid not solid!) Sorry; couldn’t help myself. Anyway I too have a blog at http://retirementagemyass.blogspot.com where you’d be very welcome
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Wow .. I wish I had a second job even paid at minimum (US) wage
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5$/hour per day ~ 150 $ per month.
Where I live this is exactly the minimum wage.
I would not be too frugal if I had 2 jobs but I work 12h at my first (and a well paid one) and doing more of the same work(programming) is not very pleasant.
So I get on my bicycle and I do another 2 km (0 fuel consumption more exercise) to save some 10% of my grocery bill.
For 6 minutes more I would say getting 2$ is good enough.
Sorry to say so but this kind of thinking (my time is too precious) got many people in debt over time.
Sounds like the old JD.
Of course the new JD does the math and comes ahead but I hope he will do it always even when the money from blogging/writing won’t be pouring in
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That’s the thing. JD and many other people here (maybe most) are gainfully employed or have lucrative businesses. While they are maxing their retirement accounts, paying off their mortgages sooner, making the most out of their vacations, etc., some of us are just scraping to live day-to-day.
This article is not for the latter.
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Yes, articles like this aways presuppose that you CAN get more hours (increase income….insert what you want here). For many of us major increases in income are not possible, and so we emphasize on frugality.
And also for many, the idea of spending more time on money making pursuits leaves us cold.
Although Im not saying JD says this (or even means this) this arises a great deal I am sure, from the old puritan……….youre only valuable earning money unless youre at home raising kids philosophy. I stpeak as a woman who made a conscious decision not to work even when she had no kids in the house and loved it……….
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“Sorry to say so but this kind of thinking (my time is too precious) got many people in debt over time.”
Time versus savings: It’s an ever-changing position on a sliding scale.
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It’s more then minimum wage, I did the math.. 10 cents a gallon adds up to $1.60 when you have a 16 gallon tank (which I have), and the 10 minutes at minimum wage is $1.33 so yeah.. plus I get gas when I’m not working, so I’m trying to save money to pay more for no reason.. I don’t get why people say that it wouldn’t add up to minimum wage, so what?! are you working at that exact moment? No, and you probably wouldn’t be doing anything anymore important with your time. Plus, taxes get taken out when you work minimum wage, so it’s not even $1.33!
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What’s great about that comic is I actually do that quite often. There is a gas station about 8 minutes away that I get a ten cent discount at and a gas station right off the freeway that is way more convenient.
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I found that at least where I live for gas it is very relevant to check the quality i.e. for 5% more you get 20% better gas.
I am using diesel (eastern Europe) and it does matter.
So I even decided to buy more expensive gas and drive less/slower.
The answer is indeed : It depends …
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A picture is worth 1000 words they say so it explains a lot. Thanks for the second cartoon. Yes Time is money and all said and done there are just 24 hours in a day so we need to focus on what is important and makes us happy.
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I am retired but still need to hustle to get some travel money. My old company asked if I could do a small temp job for them at $25 an hour. It sounded like good money and I need it. Howevever I find the job is such an effort to do and I would rather be out working in my garden or even going for a walk and picking up cans and bottles on the way for recycling. The walk may only pay me $1 an hour but so much more enjoyment than the $25 an hour job. mmmmmm
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No… I won’t spend $3 in gas to save $1 in gas across town.
Now that’s just good cents.
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The issue of finite income gathering resources has not been mentioned.
. Or go to the cheaper store.Or buy some bread and cheese instead of a McDonalds,KFC(insert your fast food restaurant here).
Sometimes you can no longer work. I can only focus on coding for 12h/day. I tried to do some projects at home but usually I am way too tired.
So no increase of income here
But I can ALWAYS bike another 2km
Being frugal does not drain your income resources.
Why I say this ? The next day I am supposed to go to work and be in top condition. Working till 2AM on another project is not a solution.
But doing the laundry/dish washing or other housing chore is acceptable as it does not require focus/concentration and is not critical.
So while I work 8 to 8 usually I will focus on getting more income generated .. afterwards .. being frugal.
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J.D.
Check out this video on a spend every penny budget.
Jeff
http://www.debtfreesquad.com/spend-every-penny-budget-1-1/
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I’ve had this philosophy for a while. Time is money, so I balance my expenditure vs. the amount of time that I’m spending/wasting on something. If it doesn’t seem to make sense to me then my decisions tend to lean towards saving time.
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I tend to be very busy during the summer months with my job, and I tend to take a few ‘frugal shortcuts’ from time to time.
During these times, I’m guilty of things like buying coffee at a drive-thru rather than brewing it at home, not being prepared with coupons when picking up a few items at the grocery store, and outsourcing small renovation tasks around the house.
It’s the time where I make most of my money and often, some of my frugal priorities get put to the sidelines.
With that being said, I think the danger with the individual in the cartoon is that people can end up justifying these habits in many aspects of their lives and can affect their long-term ability to save more of their hard-earned dollars.
Making more money is important but so is minimizing cash outflows. In my view, trying to optimize this balance is key.
Nice post!
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A corollary to this concerns the value of your time when you’re retired. I hear people say “Oh I’m retired so my time isn’t worth anything” Excuse me! Now that I can do whatever I want my time is worth WAY nire than it was when I was working at jobs I always enjoyed – but not as much as what I do now – by a long shot! Also there’s the factor of supply. Now that I’m in my 70s, the supply of time is getting noticeably smaller so the value is going WAY up.
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I think people tend to over-value their time to justify outsourcing tasks they don’t want to do. If you make $20/hour and can outsource your landscaping for $10/hour, it is tempting to think that you’re saving $10/hour, but that’s probably not the case. First, after taxes, you’re not really making $20/hour. Secondly, most people have a limited number of hours they can work. I can’t just show up at my job whenever I have spare time and get paid my hourly rate. Even if you really can spend every spare hour making more money, you probably aren’t going to — you’ll probably spend some of that extra time doing leisure activities that don’t earn any extra money. I’m not saying there’s anything wrong with outsourcing tasks you don’t want to do, but it’s better to consider if it’s worth the money you’re spending, rather than fool yourself into thinking you’re actually saving money.
As far as buying gas goes, it is usually stupid to go out of your way to get to a slightly cheaper gas station because you’re using extra gas to get there. If, however, you pass several gas stations on the way to where you’re going, it makes a lot of sense to stop at the cheapest one, and it doesn’t even take any extra time.
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I fill up at $40 per stop. If gas prices are high, I buy less. If gas is low, I buy more. Dollar cost averaging.
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What I was trying to get at when I submitted the cartoon (though I think J.D. took it to the next level) is that lifestyle choices need to be balanced. I choose to live frugally and save money when and where I can; but it is easy to get sucked into a competitive mindset where I believe that I have to get “THE BEST DEAL ON ALL THE THINGS.” If the point of me living frugally is to enjoy my life by not being in debt and having a stable retirement income, then the “ALL THE THINGS” attitude is neither sustainable nor productive. I don’t have to “win” at frugal living. Saving $.10 on gas should not be a high-stress situation for me. If I decide to occasionally skip the better deal in favor of doing something more fulfilling, that does not make me a bad person. That makes me a balanced person. Sometimes I need a silly cartoon to remind me of that.
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Thanks J.D. Solid post.
Increase the payoff amount! Today a penny saved is almost a penny and a half earned.
I ran across an article by Paul Williams a few months ago that breaks down exactly how much saving a penny is actually worth if you had to earn it with income. (It turns out the major difference today vs. Ben Franklin’s day is that we now have significantly higher income and sales tax than he did.)
It’s worth checking out:
http://tinyurl.com/3mlbrs7
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We have way lower sales tax than in pre-revolutionary times, when the British government ran the colonies as a series of revenue streams, blocking imports directly from other colonies (all had to be routed back through British ports) and charging huge taxes on manufactured goods.
Doesn’t change the math in the article you linked, but we definitely don’t have higher sales tax now than in Franklin’s time.
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This is a great article in remembering the worth of your time. When updating my blog or conducting homework on my investment selections I can sometimes get carried away with just reading whatever tickles my fancy. Hours have passed and I may not have gotten done what I have intended. So often I visual what I need to do, the purchase to be made, the service to subscribe to, the article to write, etc. I make several mental notes of it until it is the first thing on my mind when I hop on the computer. This helps me get things done in a hierarchical sense.
As far as doing hours worth of work for saving a couple of bucks I believe it is more of a mental satisfaction where not necessarily the best financial outcome. However, as someone pointed out before me, this is all relative. The hours it takes to collect cans can be worth it for someone saving up to buy a dress shirt for that all important job interview.
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People who run businesses should think this way too. If you’re spending a week or two every year to do your own accounting or taxes, it would make way more sense to hire a professional. If you’re cleaning your house when you could be building your business, then it’s worth $20/hour for a house cleaner. For things in my business, I work out whether I can make more by subcontracting it out (including home management stuff) or by doing it myself. Usually, my business wins, since consulting pays a high hourly rate. But even if you earn less, it may well be worth the money (and improved quality of life).
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It isn’t just the time vs cost, but also point in time. If, for example, you bought gas on Tues-Th when the gas station nearest was a little bit less expensive, perhaps you could avoid gassing up due to running low. Then you’ll be checking gasbuddy on the way to a friend’s house and spending time to do it, when you might rather be meeting them for dinner. On time. You can overplan, too, of course http://xkcd.com/909/
When is a critical component. Often people will pay more because it is a last minute purchase for a current “need”. Sacrificing some hobby time to get time sensitive things done (like book airfare 21 days ahead on a Tues-Thurs instead of 1 week ahead on Sat. when prices are high) can be a great payoff for acting now vs later.
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There’s a cumulative effect to just about everything and somehow it “compounds” when it comes to your values and living purposefully with the aim of contentment.
I typically walk or use the bus to go to our downtown. Today I took my car, because it was more convenient, or so I thought. The convenience of not schlepping the few things I took along, on the bus, was quickly undermined by the driving around looking for a parking space and being irritated the entire time by it.
I’ve learned that convenience isn’t as satisfying as it makes itself out to be. It’s a perception we’ve bought into, one that usually comes with trade-offs of values and deeper meanings.
Not driving my car and taking the bus represents an important value for me.
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