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 Post subject: Save money by remembering time does not equal money
PostPosted: Tue Jan 24, 2012 12:29 pm 

Joined: Tue Jan 17, 2012 8:30 am
Posts: 10
Location: Austin, TX
I live about 20 miles from my office, I take public roads to and from work which takes 30-45 minutes each way. Often at work I am asked why I don't use the Toll ways to get to and from work. When i tell people they cost too much I always hear the same excuse. "My time is worth more." That is fine and dandy in a self important world but really think about it. For most people, time does not equal money. There are notable exceptions but if you are a salary worker or an hourly worker and your commute does not detract from your eligable earnings, your time is worth squat when you aren't at work. Saving 15 minutes on my commute will not put any more money in my pocket, it acctually cost me about $2.50 (the toll cost one way for me)

I tried working out the numbers thinking maybe the decreased commute time would give me a boost to fuel economy to make up the difference but alas no, I could not make up the $100 a month it would cost me on average to use the toll. instead I use this time better, enjoying audiobooks and wind up up for the day or wind down for the evening so as soon as I get home I can enjoy my family, and enjoy putting $1200 a year towards better things.


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 Post subject: Re: Save money by remembering time does not equal money
PostPosted: Tue Jan 24, 2012 1:35 pm 

Joined: Sun Jan 01, 2012 9:50 am
Posts: 98
I don't agree.

Time might not be money, but time is a precious resource, that can be exchanged for money or other things. And I'd rather spent my precious time doing fun things with my friends than saving 2.50.

But ofcourse, this really depends on how much you need the money.


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 Post subject: Re: Save money by remembering time does not equal money
PostPosted: Tue Jan 24, 2012 8:24 pm 

Joined: Tue Jan 17, 2012 8:30 am
Posts: 10
Location: Austin, TX
$2.50 does seem like very little money, but like most small expenses it is quatity that gets to you. For me that is 2.50 one way. So lets say that I work 20 days a month for one year. That is 240 days of work, at $5 a pop. $1200 over the course of a year. As a 31 year old I have approx. 34 years until retirement, if I take that $1200 and invest it with a 7% expected return then that becomes 11,973.74 by retirement just to spend an extra 30 minutes a day in traffic. For me the math works out best to leave the house a bit early and arrive home a few minutes later.

This is the same logic that says to make your own coffee instead of getting starbucks, but for some people sitting in the car for a few minutes is akin to dental surgery for some reason.


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 Post subject: Re: Save money by remembering time does not equal money
PostPosted: Tue Jan 24, 2012 8:28 pm 

Joined: Tue Jan 17, 2012 8:30 am
Posts: 10
Location: Austin, TX
Also if time was truely precious to the majority of people, Facebook would fail as a business.


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 Post subject: Re: Save money by remembering time does not equal money
PostPosted: Wed Jan 25, 2012 1:13 am 

Joined: Sun Jan 01, 2012 9:50 am
Posts: 98
That's the exact reason why time is money ;)

Your free time also has a value. Would you still not take the tollway if it would saves you 3 hours per day? Or if the cost would only be 25 cents per day?

You just value your free time lower than 2.50 for half an hour.


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 Post subject: Re: Save money by remembering time does not equal money
PostPosted: Wed Jan 25, 2012 7:06 am 

Joined: Tue Jan 17, 2012 8:30 am
Posts: 10
Location: Austin, TX
You can always force your way into thinking that your time is money. The problem is most of the time people overvalue their time as a justification for spending money. By putting yourself into the mindset that time does not equal money you will find yourself spending less in more areas of your life. Most budgeting techniques are more overcoming mental justifications for spending money.


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 Post subject: Re: Save money by remembering time does not equal money
PostPosted: Wed Jan 25, 2012 7:14 am 

Joined: Fri Jul 11, 2008 3:29 pm
Posts: 167
Another thing to consider is how much extra money in fuel you are spending for and extra 30 minutes of traffic a day. If your car is not that fuel efficient, all or most of the toll savings could be eaten away by fuel costs. Just something to consider.


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 Post subject: Re: Save money by remembering time does not equal money
PostPosted: Wed Jan 25, 2012 8:57 am 

Joined: Sun Jan 01, 2012 9:50 am
Posts: 98
Lancer, I agree that you can save money by spending time. Ie, the cost for saving money is time. The cost for gaining money is (for most people) also time.

We have a housekeeper. I could easily save 20 euros a week, costing me 2 hours. I decide to buy free time. I could also decide to get an extra jobs earning more money.

The real question is how much you value your free time. Like I said, would you still avoid the toll way if it means a 3 hours extra drive? If time cost isn't part of the equasion of how much you want to pay for something then you should still take the detour as it saves you money. (assuming other costs (ie fuel) stay the same)

The trick is to figure out how much your free time is worth to you. Apparently less than you get paid for your work, as you wouldn't go otherwise. Compare it to this. Say you needed to go to a carshop. You would need to sit and wait in a waiting room with nothing else to do for 10 hours before being helped. How much would you be willing to pay to get help 1 hour sooner? 5 hours sooner or immediately. There is a money equivalent to your time.

That doesn't mean to say you should always just spend money to save time. It just means looking at your goals. If your goal is to save money, that means it'll cost you more time. Time looking into coupons, keeping a budget, going to various sales and shops to find the best deal. All ways to convert your time into money. If you're looking to gain time you'll need to convert money into time. Either by working parttime (ie less money, more time) or by spending less time on finding good deals.

The trick is to find an equilibrium that works for you. And you do that by assigning a value to your time. Say my time is worth $10 an hour to me. In this case I'd be mad to take the long way. But if I value my time at $1 an hour (because I hardly have any money, or a lot of debt to pay, or just want to save as much as possible) I should take the long way.

[quote=lancer]The problem is most of the time people overvalue their time as a justification for spending money.[/quote]

As you say, the problem is finding the right value for your time. By just saying money does not equal time, your solving the wrong part of the puzzle. You should instead give a correct way to determine the value of your time, rather than denying there is such a value.


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 Post subject: Re: Save money by remembering time does not equal money
PostPosted: Wed Jan 25, 2012 10:14 am 
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Joined: Wed Sep 23, 2009 9:01 am
Posts: 5303
I think you have a point lancer. I'd probably avoid using toll roads if I could. But that's more philosophical than anything. Fortunately there are no toll roads where I live.

But I'd argue that YOUR time might not be worth much. Others value their time more. I personally stay very busy. I'm industrious. When I am not at work I am researching things, working on the house or yard, studying, managing finances, cooking, training/exercising, etc. If I spent an extra 20-30 minutes a day commuting then that time would have to come from somewhere. Of course I engage in leisure activities that I could cut out but those things are worth far more to me than any potential savings. And much of that includes exercise which is important to health. So I would pay a health price by cutting it out.

By avoiding toll roads and spending an extra half hour per day driving you are essentially paying yourself $2.50 an hour. That's far below minimum wage. If you spent that extra money, even if it were $1200 a year, you'd be spending it to spend more time with your family. Are you saying that spending extra time with your family is worth less than minimum wage? Would contributing that time to help your wife with house chores be worth less than minimum wage? Because that would be a sad comment on how much you value what she does!

But I'm not trying to chastise you. The way you value your time is your business. But I think your view is extreme and is not a good argument that time does not equal money. Most of us would probably gladly give up a little money for more free time!


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 Post subject: Re: Save money by remembering time does not equal money
PostPosted: Wed Jan 25, 2012 10:55 am 

Joined: Tue Jan 17, 2012 8:30 am
Posts: 10
Location: Austin, TX
You fixated on Sanja's $2.50 figure which wasn't correct. For me it is $2.50 one way and a savings of 15 minutes in commute. Which considering I have a two way commute it is $5.00 a day and 30 minutes spent. $10 an hour basicly. While not what I make in my regular job, it is about on par with earnings from a part time side job. The toll roads is my example of where I decide to spend time instead of money. the point is for others to look at where they over value their time and make their adjustments.


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 Post subject: Re: Save money by remembering time does not equal money
PostPosted: Wed Jan 25, 2012 11:34 am 

Joined: Sun Jan 01, 2012 9:50 am
Posts: 98
Lancer, the point is not whether $5 is worth spending half an hour communiting every day, or that $2.50 per half hour is worth it. The point is, that there is a certain amount of money that makes it worth traveling that half an hour more, and there's a certain amount of money where it would not make sense to spend 30 minutes extra on a commute. ie, money=time is a valid statement. It's just a question of how much time is money worth.


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 Post subject: Re: Save money by remembering time does not equal money
PostPosted: Wed Jan 25, 2012 12:15 pm 
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Joined: Wed Sep 23, 2009 9:01 am
Posts: 5303
Sonja wrote:
money=time is a valid statement. It's just a question of how much time is money worth.


And that was my point too.

We do our own yard work. We could easily pay someone to do it for $10/hr, probably a lot less. So when we are doing that we are valuing our time at $10 an hour or less.

But when I consult in the area that I have expertise in I charge well over $100 an hour, ten times that because I know my expertise and experience is worth that. Most people don't want to pay that though and I don't really want to lower my prices to get more gigs because I don't need the hassle. If I charged $75 and hour I'd probably be as busy as I wanted to be.

I forego $75-$150+ an hour to have free time. Does that mean I'm paying that much for my free time? Why would I thin spend any time at all doing yardwork when I could pay someone else?

Time is just like any other commodity. Each person decides for themselves what it is worth and behaves accordingly. If you want to avoid toll roads that's your choice.


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 Post subject: Re: Save money by remembering time does not equal money
PostPosted: Wed Jan 25, 2012 2:05 pm 

Joined: Wed Jan 25, 2012 2:01 pm
Posts: 10
Completely false statement, it violates the rule that states "everything has a price" including time.


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 Post subject: Re: Save money by remembering time does not equal money
PostPosted: Thu Jan 26, 2012 10:22 am 

Joined: Tue Jan 17, 2012 8:30 am
Posts: 10
Location: Austin, TX
The idea is more to make people change the way they think about spending their money to free up time. Again, you can always put a value on anything. Since everyone wants to fixate on that fact then let's change the statement. Your time is not worth anywhere near what you are paying for it. The true cost of such activities is astronomically higher than most people think.

The true problem is people evaluate cost at face value or immediate cost, but unless their activity generate income any time you spend money to save time you are creating a drag on your net worth or potential net worth. Unfortunately the site will not allow me to attach the calculator I made but here is a screen shot of this trip.

Image

This sheet assumes all savings would be invested until retirement time. This is assuming that the money is invested after tax, but really there are enough tax sheltered savings available that you should be able to put it into a tax sheltered account and increase your savings even more. I will upload the file later to a file sharing site if you would like to grab the sheet and play around with it for yourself. It will do all of the calculations for you. It is a simple calculation though and does not take into account inflation's effects on gas prices or toll cost. It also assumes the fuel milage of your car will stay the same until retirement, but it is still a better picture than looking at immediate cost.


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 Post subject: Re: Save money by remembering time does not equal money
PostPosted: Thu Jan 26, 2012 3:20 pm 

Joined: Wed Jan 25, 2012 2:01 pm
Posts: 10
You're right but that is very different from your original point and your example is not very good. Many things are overpriced for the amount of convenience they provide.

But there are plenty of people who would pay, say, $5 to buy an extra hour of free time each day (2.50 toll both ways, saving 30 mins each, ignoring small amount of mpg gain). If you only get 5 hours a day to spend with your family you could increase that by 20% for the small price of $5, that's incredibe value for many people.

It's all about individual values and priorities, it's not always about your net worth 30 years from now because your time may not be nearly as valuable at that point.


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