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Episode 63: Valuing your time

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This week we were examining a simple question that has big implications: what is your time worth?


 


As investors we spend a lot of time obsessing about how much money we can afford to put into a deal, but we neglect the only truly limited commodity we have - time. Really, we should be factoring the costs of our time into our overall ROI calculations.


 


But how do you know how much your time is worth? We used a calculation which Tim Ferriss shared in an interview...


 


Check out the episode to hear how to figure out your hourly rate, and for great ways to leverage it!


 


Listen to the episode now: http://thepropertyhub.net/time


 


  • Do you have any tips for tasks you can outsource to free up time for more productive things?

  • Do you factor the value of your time into your calculations?

 


Join in the discussion below!


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I have mixed feelings about this topic.  I agree with the spirit of it - which is essentially financial efficiency.

 

I used to calculate the value of my own time in a very similar way, and use this as way of justifying living closer to work, for example.  i.e. I applied my 'rate' to my commute, which (until discovering podcasts) were largely unproductive.  This allowed me to justify paying extra money on rent on the basis that I would save time, and therefore money, but cutting down the commute.  I still think this is a valid argument.

 

But, I have since changed my mind in some ways.  I am now extremely frugal / tight, which I base on the following rule - money is hard to get into your bank, so once it's there, don't let it go so easily.  And so far, it's working well for me!  But, this is because I don't have, at the minute, ways of earning money in the extra time I could potentially free up by outsourcing.

 

So, my conclusion is, work all the hours in which you can earn money.  Prioritise the jobs which pay the most, and then fill any other hours with other earning jobs.  And if you have time free afterwards in which you could be doing the other jobs which could be outsourced, then why take money out of your bank account, for the sake of saving a bit of time that you couldn't spend earning anyway?

 

I suppose it depends where you are in your life, and what you need your free time for.  I personally would rather save as much now to harness compounding, than have a little more free time.  There'll be plenty of time for that when my investments are doing the work for me!

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I like your take on things David. You're right that outsourcing only works if you use the extra time to either produce more income, or do a leisure activity that you value more than the money. In other words, if you're too busy cleaning your car to research potential investments, that's a poor use of your time. But if you get the car washed so you can slump in front of the TV, so is that!

 

And of course it can go too far: if you earn enough it might work out economically better to outsource all your childcare instead of putting the kids to bed yourself, but not everything can be captured by the time/money equation.

 

I'm naturally frugal too, but in business I've got a lot of benefits from learning to focus on what I do best and let go of the rest. Strategically applied laziness, I suppose!

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Whenever I look at doing a task I always calculate what it would cost in terms of time at the hourly rate I would otherwise charge on a case.

 

If painting a house would take a couple of days, hiring a painter and decorator would always work out cheaper. If that is a task I would have to carry out during working hours then it is a no brainer. During my spare time it becomes a 'quality of life' consideration. How much is my recreational time worth? Personally, I think this is often undervalued, particularly in this country where there is an almost constant pressure to be doing something. With the amount of hours I work and the intensity of my day job I need that time out to recharge the batteries in order to keep going and to enjoy the family I do it all for in the first place. I therefore see expenditure as an investment in myself.

 

Same applies with managing a property. If the time spent managing a property exceeds the revenue I could otherwise earn doing something different then getting a letting agent to do the work is equally attractive.

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I think I may be one of the few that have a very different point of view to Andy and you guys.  

While I totally see your viewpoint of time vs money vs effort vs reward, I personally see many rewards outside the financial gain.

 

I've just written a similar post to Andy's which will go live on Saturday on my own site, so if you are interested, check it out here:  http://diytopropertyinvestor.co.uk/

 

I do like your point Rob, no point outsourcing so that you can sit in front of the TV ... unless of course that is the only time during the week that you might have some down time, in which case it might be worth it.

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