Your money or your time
How much of your life is each dollar your spend worth? How many years? How many months? How many days? Very few people ask themselves these questions when they whip out their credit card. But they are critically important because they largely determine if you’ll find freedom and security or continue down the path you’re on today.
The title of this post pays homage to a founding work of the Financial Independence Movement: Your Money or Your Life, by Joe Dominguez and Vicki Robin. The book charted a new path through a crazy consumerist world: one of sustainability, savings, thrift, and freedom. It advocated a different way of thinking about money – you should think about every purchase in terms of the number of hours and years of life it would cost rather than just $.
We couldn’t agree more. When we started on our path to financial independence and retirement by our daughter’s 3rd birthday, we built a simple little spreadsheet. For every purchase, we calculated how much time it added to our path to retiring from our jobs. It became a fundamental component of The Plan. We used this simple little calculator to give us a sense of how much of our lives each purchase was costing us:
Anytime anyone tells you that a few dollars here or there don’t make a difference just whip this out. Even small purchases can make a substantial difference to your life. The numbers I’ll highlight below are for a household making around the median of $50k in the US and spending around $36k per year with a $100k in net worth already.
Daily $5 Latte at Starbucks – retirement and financial independence delayed by one year for a jolt of caffeine
One Ford F-150 King Ranch – three years added to your working life
$100 extra in groceries each month for ‘fancy stuff’ – one year of your life
Monthly $50 manicures – 0.5 years for shiny nails instead of time to spend with each other
$100 monthly cable bill – a full year of time for a couple thousand channels you never watch
Just those five add up to seven years of life. Are you willing to trade almost a 10th of your life for this list? We weren’t.