Category Archives: Value of Time

Retirement Advice from an Expert (NOT Me)

I read an article today that rocked my world and I want to share it with my vast audience of literally TENS of readers. 

If you’re like me, you want to retire as early as possible.  It doesn’t matter how much I enjoy my job; there will always be a long list of other things I’d rather be doing.  Planning for retirement is intimidating, and I always feel like I’m not as far along as I should be.  My goal, and it’s a bit of a stretch, is to semi-retire at 55.  By “semi-retire”, I mean I would be perfectly content to work for, say, ten years in a low paying, low stress, part time job that helps supplement my income.  Then, at around age 65, I’d like to embrace full retirement, devoting 100% of my time to my worthy hobbies, which include traveling, drinking wine, and napping, among other things. 

*Side note:  In a perfect world, I would embrace full retirement at age 55 and earn supplemental income from passive sources like rental properties.  We’ll see how that plays out.  Thinking about how to create passive income streams is an intimidating and confusing topic for another day.

Retirement planning seems a bit simpler today after reading an interview with investment advisor William Bernstein on the CNNMoney blog.  Mr. Bernstein has managed to make retirement planning seem a lot less like rocket science and a lot more like common sense.  I’m not even going to try to summarize the main points here because I don’t think I could possibly be as clear and concise as Mr. Bernstein is in his own words.  Just click through and read the interview.

Viva la frugal!


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Filed under Savings & Retirement, Value of Time

The Cost of Commuting

I am definitely getting ahead of myself, but I recently applied for a job that would entail a commute of 63 miles each way.  Considering that I submitted my resume less than 24 hours ago and I have not yet been contacted for an interview (Btw, what is taking them so long?  I mean, why did they not read my resume, immediately drop everything, and call me to schedule an interview??), I don’t actually need to worry about the commute just yet.  But it is my nature to get ahead of myself, so I’m already considering the cost and stress that would be associated with commuting over two hours per day to work.

There is a real cost associated with a long commute.  The federal government conducts an annual study to determine the fixed and variable costs of operating a vehicle on a per mile basis.  The current rate for variable costs is $0.165 per mile (it is $0.50 per mile for both fixed and variable costs).  Fixed costs are things like insurance and registration that do not change regardless of how much or how little you drive.  Variable costs like fuel will increase the more you drive your car. 

So what would a commute of 63 miles each way cost?  Let’s crunch the numbers:

There are 52 weeks in a year, but I have three weeks of vacation, eight paid holidays, and usually need to use a sick day or two.  That means I drive to work 47 weeks per year.

47 weeks X 5 days X 63 miles X 2 ways X $0.165 = $4,886

The annual variable cost of my current eighteen mile commute is only $1,396, a difference of $3,490. 

Let’s just say that the new job pays a salary that is $8,000 per year more than I currently make.  This might be high or low, but let’s run with it.

Additional salary (per year):                                                 $8,000
Additional salary after taxes (approximate):                $5,200
Increase in annual commuting costs:                               $3,490
Net increase in annual spending money:                         $1,710


If I was drinking water right now, I’d be spitting it out in dramatic sitcom fashion due to the shock of that final number.  That $8,000 raise is really an increase of only $1,710 in “extra” take home pay per year.  That is a whole lot less than I would have expected before running through all those numbers.  

It is so important to consider the cost of commuting when weighing employment options.  Many people add a tremendous amount of stress and unhappiness to their lives by enduring long commutes to earn higher salaries.  The salaries may indeed be significantly higher, but how much money is actually added to their bank accounts each year?  And is it worth it?

Under normal circumstances, I would not accept a new job that added an hour and 20 minutes to my daily commute for only $1,710 more per year.  My time is very valuable to me.  The new commute would mean spending an additional 313 hours per year sitting in the car.  That’s equivalent to thirteen full days.  Holy cow.

But in this instance, I would jump on the job and take it in a heartbeat.  The company is fantastic and the job is a perfect next step in my career.  The job also happens to be located 63 miles from downtown Savannah, GA.  My heart belongs to Savannah… So much so that I’m willing to sacrifice 13 days of my life each year to commuting just so I can live there.

Here’s hoping for a long commute…  Wish me luck!


Filed under Value of Time

My Time is Worth WHAT?!

Inevitably, a New Year leads to time spent reflecting on one’s goals and happiness with life.  Many people make New Year’s resolutions that are related to money, often because their financial situation is a source of great unhappiness.  I’m not exactly thrilled with my financial situation, but I had already gone through the process of establishing my financial goals last summer.  That was when I graduated from a full-time MBA program with zero savings and about $28,000 in debt in the form of a home equity line of credit.  I was lucky enough to have a full scholarship that covered the actual cost of my education, but the HELOC was necessary for ordinary living expenses.  And because I was not yet as disciplined in my spending as I am now, the HELOC was also spent on some less than necessary expenses. 

After graduating in a completely lousy economy, I took a good hard look at my financial situation and was none too pleased with what I saw.  I established two financial goals for myself to achieve over two years:

  1. Build up an 8-month emergency savings of $24,000
  2. Pay off the $28,000 in HELOC debt I accumulated while in school

These goals are so basic that I really have no need (or means) to pursue other financial goals at this time.  So for me, the dawn of 2010 was not a time for new money-related resolutions.  Instead, I decided to get a better understanding of the value of my time. 

I’ve heard people refer to money as something you trade your life energy for.  I think this is a really great concept.  I enjoy my work, but there are about a million things I’d rather be doing than working.  I am not one of those people who will one day delay retirement because I don’t know what I would do to fill my time.  As far as I’m concerned, retirement can’t come soon enough.

This made me curious about how much I had to work to have extra spending money for non-essential items I like to buy.  In other words, after savings and necessities are covered, what is left and how much of this discretionary money do I earn per hour worked?

What did I discover?  My time isn’t worth nearly as much as I thought, and the things I buy for fun, vanity, or entertainment cost me a LOT of time at work.

Here’s how I calculated the hourly rate I earn to spend on non-necessities:

  1. I started with my take home pay.  This is the amount left after taxes, contributions to my 401(k) and regular savings, deposit to my Health Savings Account (HSA), and health insurance premium payment.  If you do this calculation for yourself and don’t have an automatic direct deposit to savings, be sure to subtract the amount you contribute to savings from your take home pay.
  2. I then subtracted my fixed monthly payments.  These are things like rent, phone service, and my monthly payment to the infamous HELOC.
  3. Next, I subtracted my average monthly expenditure on necessities.  Necessities include items like groceries, gas for the car, and utilities.
  4. I took what was left and divided it by the average number of hours I work in a month.  I’ve been good about working 40 hours per week and not putting in much extra time, so I calculated that a typical month for me has 176 hours (I erred on the high side).  If you are someone who works more or less hours, you should take this into consideration when doing this calculation.

This calculation will tell you how much “spending money” you have each month to spend on non-essential items.  It will also tell you how much spending money you earn for each hour you work. 

In my case, I earn $6.45 of spending money for every hour worked.  Considering that I am currently saving fully one third of my income (see goal #1 above), this is actually not bad.  I have a low cost of living and no car payment.  Even so, I was surprised that the “extra” money I have per hour worked is only $6.45.

What does this mean in terms of the cost of things I buy?  Below are some examples of how many hours I have to work to afford the non-essential items I enjoy consuming:

  Cost Hours Worked
Dinner at my local sushi place $20 3.1
New pair of shoes $120 18.6
Haircut and color $150 23.3
Movie ticket, popcorn, and soda $17 2.6
E-Book for my Kindle $10 1.6
A domestic vacation of 4 – 5 days $700 108.6
Christmas presents for friends & family $500 77.6
Monthly gym membership $37 5.7


This exercise gave me a new perspective on some things.  First of all, it made me feel very fortunate to have a fairly well paying job in a terrible economy when so many people are unemployed or underemployed.  A lot of people have jobs that pay them a gross income of little more than $6.45 per hour, and this money has to cover not just “extras” like I’ve listed above, but all of their necessities as well.  I am very lucky to have the option of spending some of my money on pricey haircuts and dinners in restaurants.

Secondly, this exercise made me appreciate how much of my time I have to sacrifice to buy the things I enjoy.  In some cases, I think it’s well worth it.  A $10 e-book that I can “earn” in just over an hour and a half of work will bring me dozens of hours of entertainment.  On the other hand, I’m not sure that the fabulous pair of shoes that goes with exactly one outfit in my closet is worth the 18+ hours (more than two days!) I would need to work to afford them. 

In 2010, I am going to focus on the number 6.45.  Whenever I’m debating whether or not to buy something I want (but don’t really need), I’m going to divide the cost by $6.45 and think of the purchase in terms of hours worked.  I suspect that I will often find that it is much easier to put the shoes down and walk away when I think of them as time spent at work.


Filed under Value of Time