Your time is not free

[rjkobbeman]

Uh oh!! I try to look for teachable moments when it comes to economics. Here we are mixing costs (sunk versus prospective, fixed versus variable) and ignoring how those different costs should affect decisions.

Given my apparent lack of success in trying to explain the concept of "opportunity cost," I will take a powder on this one. There is no need for you to express your thanks.

Steve

Opportunity costs may look good on paper, but if it doesn't put money in your bank account it is worthless for this discussion.

If paying someone else to do a project costs $500 materials and $500 labor, you will have to pay the person you hired $1000 to do your project.

If you do it yourself, it costs $500 in materials. You can try to rationalize how much $$ your time is worth, however if all you have in your bank account is $500, you will be able to do this project yourself but not hire someone else to do it for you. So you say your time was worth $1000, so the project "really" cost $1,500? Funny, only $500 was taken out of the bank.

That is what we are talking about here. Reality. Real money.

Now, if you could actually earn $1000 by spending your time somehwere else, that is totally different. That has been explainied ad-nauseam, but I think we all know that already don't we?

 

[GT2]

At the risk of being flamed on this, as an economist (actually an agricultural economist) I have to disagree. "Opportunity cost" is an important concept in economics (one that too often managed to elude my former students) and need not be restricted to monetary terms. Accountants don't consider opportunity costs, economists do.

The time you devote to an activity (say, building a pond aerator) is time that you could have spent on another activity (e.g., working for pay, time with your family, fishing, whatever). The opportunity cost of that time is the benefit that you forgo in the next-best use of that time.

Steve

Sorry I'm not not an economist, but is that not the same as what I said?

 

[SPYDERLK]

What is the value of satisfaction achieved when you do a custom job to your specs? What is the value of capability and convenience these attributes continually contribute to all future endeavors?
larry

 

[beppington]

What is the value of satisfaction achieved when you do a custom job to your specs?

$90 an hour.

 

[jonyyuma]

$90 an hour.

I agree, Time can be worth a lot more, or even less. It all depends on how you spend it. Some of it is priceless, after all how much extra time can you buy in your lifetime???. Projects , yes, I love them. Jy.

 

[Bison]

I see things a little different.

I learned to fix and build things at a young age,partly because i liked tinkering and partly cause i could not afford new stuff.
As a result, today i own and use only well used equipment and vehicles bought for 10c on the dollar or less,and i can stay on the farm and do what i want when i want and how i want,cause i can do all repairs myself.

I dont have to have an off farm job i would not like anyway and work my *** off to pay others 2 or 3 times as much as i would be making an hr for fixing or building what i need done.The ends just would not meet.

For example,if i buy a used tractor for $5000 and spend another 2 grand to fix it up,it will do the same thing a brandnew $100.000 tractor would(mebby not as fast or efficient but who cares).The diff is $93.000 + interest i don't have to make some where else.

I got 4 tractors 80 to 105 hp,1 big wheelloader,1 compact loader,1 tracksteer loader + a whole pile of implements and attachments.
All of it together bought for the price of maybe 1 new hundred grand tractor.

Granted,repairs are more frequent but for 90 grand saved on the one tractor alone i can do many yrs of fixing on all the others,and i'm never stuck with a broke down piece of equipment cause i can always grab an other one.

And you're telling me DIY don't pay!!

 

[crazyal]

So how many members have read this thread? How many hours spent? What about all the other threads. I wonder if it's broke the million dollar mark yet?

 

[smstonypoint]

Opportunity costs may look good on paper, but if it doesn't put money in your bank account it is worthless for this discussion.


<snip>


That is what we are talking about here. Reality. Real money.

Let me try this one more time. Opportunity costs can be measured in monetary terms but are more general -- they are the benefits you forgo by choosing an alternative over the next-best mutually-exclusive alternative. As other posters have mentioned, there is more to life than money.

Back to the OP, if the poster can earn $90/hour and he considers that to be his next-best alternative to working on his aerator, his opportunity costs are $90/hour if he chooses to work on the aerator.

Now suppose that the poster considers boating to be his next-best alternative to working on the aerator. His opportunity cost of working on the aerator is the benefit (enjoyment) he forgoes by not boating.

Opportunity costs are unique to each individual. But regardless of that fact, your time is not free. If you have mutually-exclusive beneficial alternative uses for your time, choosing one alternative over the next-best alternative has a cost, the benefits (monetary or otherwise) you miss by not undertaking the next-best alternative.

Steve

 

[jgrreed]

What is the value of satisfaction achieved when you do a custom job to your specs?
larry

VERY HIGH!! That's one of the OP's points!!!

I have to respond to this.....

I always figure guys that don't like doing stuff themselves are either lazy, not very handy, yuppies, or somebody I'm gonna need to help out during the next hurricane season ... or all of the above.

Since PC'ness has been blown completely out the window on this thread, here you go.....

When the "well-off" say things like this about the "working class", they're class-less, gauche, etc, etc..... Here's some news, when the "working class" do the same to the "well-off", it's EXACTLY THE SAME. Your comment above is a gross generalization, and it's very rude.

I've stated where I grew up, how I grew up, how much money we had growing up, and what I do, here on TBN several times. Let me address your points one at a time, but slightly out of order.

"Yuppie" - what would the TBN response be if I started throwing out the terms "hick", "hillbilly", "redneck", "greasemonkey", etc?? Watch your words. I suppose in the 4.5 years since residency have made me a "Yuppie". Oh, wait, I'm actually a "Yrp-pie". Those of you that actually know that "yuppie" is actually "YUP-pie" will understand what I'm saying.

What makes a Yuppie to you, sir?? Is it the house they live in? The car they drive? The clothes? The jewellery? The color of tractor they own? I own some very nice things, the vast majority were purchased at a huge discount. I like nice, high quality things. I don't like when the vent zipper on my ski pants breaks in -30C, so I waited, and searched for some Arcteryx pants that where 60% off. I don't like Ryobi cordless tools, so I bought, on eBay, about 5k worth of 18V Dewalt tools for 1000$. I also own some very inexpensive things (ie from Princess Auto, Harbour Freight) that do what they need to do. A high price tag is not what's important to me, quality is.

I can tell you what makes someone "ignorant". It's a comment like your's above.


"Not very handy" - Maybe they're not. Why is that a problem? Maybe they are, but choose to make different use of their time, whether it be spending time with friends and family, going to church, doing another project, making cold hard cash at work, or perhaps volunteering (ie "donating" their time, therefore time has value) for a worthwhile charity or friend in need. You'd be wise to recognize that most successful people got there by multitasking, being respectful, and constantly learning new skills. Some skills involve programming computers, some rebuilding transmissions, some flying high-risk missions, some making ballsy trades on wall street, some building log homes. They're ALL handy in their own way. Paris Hilton is not on TBN, I don't think.


"Lazy" I'm pretty sure that the trophies in Mom's basement, the transcripts in my file, the Provincial (ie 'state') championship game ball with my, and my friends/teammates signatures on it, my MD, and my Fellowship Certificate from the Royal College are fairly solid proof that I am not "lazy". I haven't heard from any trust-fund kids on TBN, have you?? I'd state that anyone who owns a tractor is likely doing some degree of work on their yard, or business, therefore, NOT LAZY. My tractor is in the shop as I type this, having it's new circuits put on. At the same time I'm taking a course to teach GP's how to manage Trauma patients appropriately. That sure as **** doesn't make me lazy.


"somebody I'm gonna need to help out during the next hurricane season" - people's need for assistance during a state of disaster should not be a source of entertainment or be an ego-boost for you. Helping someone in need is part of being a good human being. Here's some news, YOU MIGHT NEED THEIR HELP. Watch what you say, and remember that what goes around comes around.

I word your sentiment slightly differently. I say "this is how we know who will survive the end-of-days". IMO, it's not whether you change your own oil, knit your own sweater, hand build your own backhoe, or drive a Maserati. It's how you act, and how you use the skill set that you have. If you have nothing to offer, you're screwed. If you have everything to offer, but don't allow the human in you to offer it, you're screwed. There are no members of the Jersey Shore cast on TBN, as far as I know.

Bill Gates' name is somewhere on this thread. He was "working class" at one time too.....

Mr. Quickfall taught me, in grade 5, that @ss-u-me is a bad word, for reasons that are obvious based on the dashes. Maybe you didn't have a Mr. Quickfall. You should find one.

-Jer.

 

[smstonypoint]

I always figure guys that don't like doing stuff themselves are either lazy, not very handy, yuppies, or somebody I'm gonna need to help out during the next hurricane season ... or all of the above.

I don't cut my own hair, perform my own dentistry, administer my own physical exams, etc. I don't think that makes me lazy, unhandy, a yuppie, or someone who who will need your help next hurricane season.

Steve