Most people understand appreciate that Time = Money. I’m writing this post to definitively and publicly commit myself to live with the time-money tradeoff in mind. Sometimes, I need to smack myself for this… One of the most powerful simple questions posed by my Economics 020 (introductory Economics) textbook that demonstrates this concept was the following:
"Should Michael Jordan Mow His Own Lawn?"
One of my biggest mistakes is not treating my time at it’s fair value. I do stupid money saving tactics…
I HATE THE EXPRESSION:
"A penny saved is a penny earned" I disagree with the end meaning of this phrase 95% of the time due to the context in which it is being used. Most people who say this have spent too much time, in my opinion, to come up with their savings.
Let’s Break it down…
Give your time a value and don’t use your CURRENT TIME VALUE. Give yourself an ESTIMATED LIFETIME VALUE/HOUR. For example, I’ll use $500/hour based on an estimated annual earnings of $5,000,00/year.
As a result:
If the penny saved is worth more than $500/hour then you should do it. Thus, if it takes you 1 hour to find a $100 off coupon for your next flight by browsing the Internet — then you have lost $400 in that hour.
This Seems Like A Simple Concept — But, I Still Finding Myself Taking 1 Hour to Research Whether or Not to Buy a $500 Piece of Software? I Will Just Buy It From Now On…as long as I get still afford it with a stretched short-term budget, which consists of savings and loans.
There are many factors in this equation that need to be taken into consideration besides money such as the decision’s affect on:
– non-monetary reasons (eg. helping family): Suze Orman, a personal finance advisor with a TV show, has a great quote that goes something like, "People, then money, then things." I think that’s a great philsophy.
– short-term budget: Of course, there is the obvious assumption that you won’t BREAK YOUR SHORT-TERM budget. For instance, you don’t want to live like a rockstar now because you’re worth $500/hour if you’ll go bankrupt. However, you SHOULD STRETCH YOUR BUDGET AS FAR AS POSSIBLE.
Take out loans. I took out a student loan with 6.75% that I took out for fun. I don’t REALLLLLLLY need it, but it allows me to invest.
I took an investment of $23.50 in 1 day and made $644 a few days ago. That’s a whopping 2,740% ROI. Yes, I’m kind of saying it to brag. This was my 2nd highest day in terms of earning in my life next to my $755 day I made in sales when I was 18.
Great Takeaways from Tim Ferris’ The Four Hour Work Week
Some great takeways:
– Don’t Live the "Deferred Life Plan"
– Outsource non-core areas of your life — haha, maybe you want to hold off the outsourced dating part
– Allot time to do important tasks and ask yourself, "If I had only 2 hours in a day–what do I really need to do?"