Have you ever asked yourself the question, “Should I try to do this myself? Or should I just hire a professional to get the job done right?” I have been asking myself this question many times lately as my lawn needs cutting, my windows need replacing, and the exterior of my house needs to be painted! Should I do all the work myself and forgo a hundred hours of my life? Or should I sit back and watch the professionals do the work (with an empty wallet)? The decisions weren’t easy, but I want to let you in on my thought process so you can make these decisions yourself as well.
The Opportunity Cost
The opportunity cost is a fancy economics term that means when you choose something, you’re ultimately forgoing something else. In other words, if you have $1 and have a choice between a Snickers bar and M&Ms (that each cost a dollar) and you choose the Snickers bar, your opportunity cost was the M&Ms. You decided to sacrifice those tasty M&Ms for the even tastier Snickers bar.
In real life, your opportunity costs are often between a particular service and money. In other words, you either hire a service to do a project, or you save your money and do the work yourself. By choosing the service, your opportunity cost is anything else that you would have done with that money: future retirement, a flat screen TV, a vacation, or all of the above.
How Much is Your Time Worth?
Let’s say that your day is split into thirds: you have 8 hours of work, 8 hours of sleep, and 8 hours of free time. While you are at work, you earn $18 an hour, so when you’re there, I’d say that your time is worth exactly that: $18 an hour. The tough part is when you leave work and enter your free time – what is your time worth then?
If you typically do nothing that earns any money (ie. you play softball or watch TV – something that’s earning you nothing), then I have to say that your time is worth $0.00 an hour and you should, in theory, do every job you are capable of doing around the house. Your time is better spent saving money.
If, however, you often earn money in your spare time, then your calculation could be a bit different. Let’s say that after your $18 an hour job, you often enjoy making crafts that you sell at the local flea market. Two hours out of your eight free time hours each day are spent crafting. At each monthly sale, you figure that you turn a profit of $400. With roughly 60 hours of work put into your crafting in a given month, this means that your time is worth approximately $6.67 an hour – not a ton, but it’s something. So what we want to know is, if there is a project that needs to be done around your house, would your time be better spent crafting or working on that project?
So let’s say the lawn needs to be mowed once a week. It would normally take you an hour to mow, but the neighbor boy, Jimmy, is willing to mow it for you for $6 a week. On a purely cost level (we’re not currently valuing the benefits for both Jimmy’s wallet and his character), should you allow Jimmy to mow your yard?
For many years, I would have looked at the numbers and said, “Yes, of course! You could earn more money crafting while Jimmy is mowing.” Today though, my answer is, “Absolutely not.”
Since you have 8 hours free, and only spend 2 hours crafting, that means that you still have 6 free hours to do what you please! Get off your butt and mow the lawn! Now, if your scenario left you with absolutely no free time, and mowing the lawn would impair you from earning your additional income, then certainly, hire Jimmy to mow the lawn. Don’t be a lazy person that’s just trying to justify hiring a service so you don’t have to lift a finger. If you are truly concerned about finding time in your busy schedule, then maybe it’s right for you, but if you just want to watch your TV series, then you should probably just turn off the TV and do it yourself.
Don’t Forget to Barter
Bartering is a bit of a lost art form these days, and people often forget that it’s even an option when hiring out work for their homes. It certainly isn’t conventional and it sometimes can be tricky, but it’s often quite beneficial for both parties when you can make it work.
Let me illustrate a successful barter with the example of crafting and lawn mowing once again. Let’s say that you made a blanket a few months ago that you just haven’t been able to sell at the local flea market. At this point, instead of lugging it around with you all over the place, you’d really rather just donate it to the local mission and write off your expense.
As it turns out though, Jimmy really likes the blanket, and wants to get it for his mom for her birthday. Instead of paying Jimmy $6 per mow to cut your grass and asking for the original price of $36 for the blanket, you two could work out an arrangement that would benefit you both. Since you were going to bring the blanket to the mission anyway, your “earnings” would have only been $9 (in tax deductions). By agreeing to have Jimmy mow your yard three times, you will essentially be earnings twice as much for your blanket ($6 per mow x 3 mows = $18), and he will be able to buy it for half of the retail cost! Boom, that’s a win-win all around!
When you are considering hiring out a service for a job, first decide if you can do it yourself, then if it’s worth doing it yourself, and if not, if it’s worth coming up with a barter to get it done more cost effectively.
Do you more often opt for saving time or saving money?