Monday, July 28, 2008

The Value of Your Time: Part 2

Based on Part 1 of this post, I showed that making your own sandwiches at home beats buying the premade version. However, I did not really include the monetary value of the time it takes to make the sandwiches yourself.

I've thought alot about this and you can look at things in the traditional sense of calculating your true hourly wage and determine how much money you are losing by doing things yourself. For example, if my true hourly wage is $6.50 per hour then making 4 sandwiches costs me $2.82-$3.79 at a total time cost of 26-35 minutes. This increases the cost of the homemade sandwiches to between $12.04 and $13.01. This is still cheaper than the premade version, but that's not really the point of part 2.

The point is I don't think it makes sense to include that time-money component unless you were going to do something during that time that would make you money.

For example, had I chosen the premade option, I would have used the 8-10 minutes I really spent making my sandwiches by eating it in the lunchroom at work while watching TV or reading the newspaper. In essence, this time would be wasted. I would much rather spend the time doing something I feel is productive and/or gives me a positive feeling about making good choices. Unless you are using the time you save by going the convenience route productively, then the time spent doing it yourself and the time wasted from TV, etc... cancel out and should not really be considered in cost calculations.

Trent at The Simple Dollar recently discussed the dollars we assign to our time.

Thursday, July 24, 2008

The Great June Experiment

As mentioned a post or two back, during the month of June, I challenged myself to not spend money on eating out or on "junk food." Also during this month, I wanted to do some sort of physical activity every day above and beyond my normal routine. Below is a picture of the calendar I used to keep track. The X's are the days I did physical activity and the check marks are for the days that I made no extra food purchases.

As you can see, the exercise days are a bit spotty, but the "no-spend" days were very consistent. There were only four occasions where money was spend needlessly on dining out/snack food that wasn't part of a normal grocery run. I think I was so successful with this endeavour because I kept track of it on a consistent basis. However, it wasn't a complete success since there were those four times where money leaked out of my pocket. Thus, what follows is an explanation of the meals/snacks that I bought and what I learned from them.

Day 1: I ate a southwest chicken combo at the MacDonalds at Wal-mart. This came from poor planning on my part. I had to take the car in to Midas since we has some issues with the braking system. Once the diagnosis came in, we decided to have the repair done then rather than wait. The reapir, unfortunately, took place over lunch time. So I was pretty hungry and I didn't care to wait until the repair was done so I hoofed it over to the Wal-mart and ate there.

Lesson Learned: When knowingly entering a situation that has an unknown time frame to resolution, bring a snack to hold you over until you can get home for a meal.

Days 2 and 4: I drank a pop and a few handfuls of candy. Where I work is a virtual cornucopia of junk food temptations. From vending and pop machines to those 25 cents-a-pop candy dispensers, if I have change on me, I usually succumb to their sugary goodness.

Lesson Learned: Stop carrying small amounts of change/cash on me when I go to work until I determine that I can withstand the neon glow of vending machines.

Day 3: My fiance and I ate lunch at Wendy's. We will always have a place in our hearts for Wendy's as this is where we initially met. It is by far our favourite fast food place, or Quick Service Restaurant to use the new lingo, and we hadn't eaten there in a while. We ran some errands and chose to eat there for supper.

Lesson Learned: Making dining out a rarity makes you enjoy it more. Even though it was only Wendy's, it was a satisfying meal that we could savour since we hadn't been there in a while and likely wouldn't go again for at least another few weeks. By going much more frequently, you end up wasting more money for what, at this point, is just a regular meal. You are much better off financially cooking and eating at home for the majority of your meals and by treating eating out as a rare event to be enjoyed.

Where to go from here?
I'd like to keep up this mentality and behaviour for July, but I've already gotten up to five days of eating/out snacking during the month. One occurance was justified as we celebrated my fiance's new position within her organization by eating supper at East Side Mario's. While there, we shared an entree which helped cut the costs. Another day was again poor planning on my part and went to Subway for supper. Some snacks at work grabbed hold of me for third and fourth offenses and we treated s neighbour to lunch at Wendy's for the loan of his car. While not terrible compared to some people's routines, there is room for improvement on our part and I will try to make the rest of July spend-free. on the flip side, my exercise routine is much more consistent now that we have some good biking weather.

Monday, July 21, 2008

Conundrum Resolution!

A few weeks ago I made my concerns known to the world about my receiver/subwoofer/surround sound system. Today I am pleased to report that I have the unit back and in operational order. Let's crunch the numbers to see how much it was to repair the unit.

This particular electronics shop charges a $20 fee + tax to look at whatever you bring in. Then if the repairs will cost under $100, they will go ahead and fix it, whereas over $100 gets you an estimate and the option to repair. In either case, the $20 is spent.
Deposit cost w/ tax: $23.10.

I brought the unit in to the repair place on July 8th and picked it up today, July 21. During this time I racked up $7.95 in parts and another $60 in labour.
Repair costs w/ tax and deposit deducted: $78.49.

As Schaef mentioned in the previous post, time as well as gas is a factor, especially since it was up west. When I dropped it off, I had to go down to Summerside for a dentist appointment anyways, so for that leg of the trip, I'm only counting kilometers and time from my parent's place to the repair shop and back. However, picking it up required a special trip.
Total km for drop off and pickup: 166.5 km. Based on out average 10.864 L/100 km that works out to 18.09 L of gas. At average prices for the time period of repair, total fuel costs are: $24.70.

Total Monetary Cost: $126.29.

Total Time cost: 186 minutes which includes driving, explaining the problem, and testing the device before paying.

Was it worth it? I think it was, since I have my system back with no worries about receiver compatibility with the speakers, and I'm not contributing to the cycle of consumer waste. When will I replace it? Likely when the cost to repair is more than replacing the unit with a completely new system, including speakers.

Monday, July 14, 2008

The Value of Your Time: Part 1

The Value of Your Time: Part 1

Based on Scholarly Warrior's comment found here, I've been thinking more about the cost of my time and how it should/shouldn't be applied when making your own food, doing your own repair, etc...

This post will focus on the time taken for the home made sandwich case versus the "convenient" case of buying premade food at a grocery store.

Case 1: DiY Sandwich Making
The total, upfront cost at the register would have been $9.22. From the time to enter the store, roam the aisles picking up bread, tomato, pickles, mustard, meat, standing in line and leaving, I think I spent 10-15 minutes. Assembly for two sandwiches, as I said in the previous post, took about 8-10 minutes. This gives a total time investment of 18-25 minutes.

Case 2: Convenience Food
The total, upfront cost at the register would have been $7.49. I estimate that from entering the store, grabbing the premade item(s), paying for them and exiting to be approximately 6-8 minutes depending on line-ups. This estimate seems reasonable.

The time investment in this Case 2 is clearly less than buying individual food items and assembling a sandwich on your own. However, things get interesting when we compare long term, repeated behaviours of eating convenience items to doing it yourself.

With the goods I purchased, I had an abundant of leftovers to make an additional two sandwiches. If I were to make those two additional sandwiches, the only time sink is construction, and, if made at the same time, would cost another 8-10 minutes. Thus total time for creation of 4 sandwiches, made two at a time would be 26-35 minutes. Total monetary cost is still $9.22. This gives a unit cost of 26.3-35.5 cents per minute. Note this does not include the value of my time (see part 2).

If I was at home and wanted to have a quick bite and decided I wanted a convenience food item, I have to pay the total cost in dollars and time of Case #2 every, single time. Thus if I did this four times, I would have to drive to the store and back (round trip time 12 minutes) and pay $7.49 along with 6-8 minutes in the store. Thus total monetary cost is $29.96 (excluding gas costs) and total time investment is [12 minutes*3 round trips] + [6-8 minutes*4 stops at the store] = 60-72 minutes. This gives a unit cost of 41.6-49.9 cents per minute.

In closing for Part 1, each individual case of the "convenience" items seems cheaper and more time effective, but if we look at the long term effects of going this route, it turns out to be more expensive.

Monday, July 7, 2008

To Eat or Heat

Gas and oil prices are high. This is not news. What is news though, at least on PEI, is that people are complaining about how prices of home heating oil are so high that they can't afford to buy food. Say what?

Granted food prices are increasing as well, but what annoys me is that people are clamouring for government to help them out rather than looking at their own spending. The people that are complaining would likely be up in arms at the mere suggestion that they don't need cable television, a 3000 square foot home, or 3 vehicles.

"But we work hard and deserve those things" the masses might say. Listen up folks: beyond the needs of food, shelter, and clothing, anything else is a luxury item. You might not like to hear that, but that does not make it any less true. Thus, do not look to government to bail you out, but rather see what you can do to help yourself. Let's see if we can get an extra tank of oil per year by trimming some spending from the average household's expenditures. For the purposes of this calculation, I am using the average household size from the 2006 Census of 2.5 persons per household.

From this page, we'll assume the average tank of oil holds 300 gallons or 1137 L. Based on current home heating oil prices in PEI of 125.5 cents per litre, a tank of oil will cost $1427.

According to the 2006 Census, the average expenditures per 2.5 person household includes $1714 for tobacco products and alcoholic beverages. Hey! Look at that! There's our tank of oil right there!

Well, a lot of household might not have smokers and/or drinkers so what can the more health conscious household do?

Cut your cable. Chances are that on PEI, it is through Eastlink whose prices range from $24.72 to $54.95 for basic and full-tier cable respectively. What to go digital? Try $57.95-$85.85 per month. Eliminate this bill and save $296.64-$1030.20 per year.

Switch your lightbulbs to CFLs. Trent from The Simple Dollar shows that you can save about $100 per year by changing over to these more efficient bulbs. Due to the recent increase in energy prices in PEI, the savings would be about $138 per year based on $0.14/kWh.

What else could you do?
Stop eating out and make your meals at home. I spent upwards of $100 on dining out a few months ago and am now making most meals at home. As well, there is only about a $10 difference in grocery bills plus I am eating healthier. Yes, eating at home saves that much money. The Defense of Food sites that half of American spending on food is for dining out, but just using myself as an example, if you spend $100 on eating out and change to cooking at home, the net savings each month would be $60 since you spend an additional $10 each week on groceries. Annual savings: $720.

Avoid the coffee shop. Rather than spending $1.50 each morning on the way to work, why not drink some water and perform a few light aerobic exercises to get the same wake-up effect. Annual savings: $390.

Tallying these savings up we get an annual savings between $1544.64-$2278.20, more than enough for a tank of oil. These are only some of the options available to you to save money for heating oil. Here are some others:

- install a programable thermostat
- drive less, using gas savings for oil
- energy seal your home
- move to a smaller home, which would cost less to heat
- sell a vehicle if you have more than 1
- get a roomate to share energy bills
- make more money
- move into an apartment that pays for the heat

In closing, I think the assumptions made in this article are reasonable for the typical PEI household. I expect, there would be more challenges for people with very low or fixed incomes, but many of these strategies can be applied there as well.

Moral of the story: Suck it up and be personally responsible for your situation. Stop whining to the government for help when you can easily make small adjustments to your lifestyle in order to get the result you want.

Wednesday, July 2, 2008

The Debt-inator

In my last net worth update, I mentioned that my debt was completely wiped out. So how does one kill nearly $4000 worth of student loan debt in one fell swoop? The answer my friends is punctuality and the Canadian Millenium Scholarship Foundation.

During my tenure as a substitute teacher between January-June 2007, I was made aware of the scholarship by two pre-service teachers that were on their practicum at Kinkora Regional High School. They told me that you have to submit the application with some other information on the first day of your classes and that it was basically first come, first serve.

That day came and I marched myself to Student Financial Services located in the Sullivan building in downtown Charlottetown. I dropped off the submission form and proceeded to forget about the entire thing for seven months.

Therefore it was a complete surprise when I opened the mailbox to see that I was the recipient of a $4000 scholarship that would be applied to my student loan! How awesome is that?

I'm not trying to toot my own horn on this, but it was very comforting to know that I would essentially only be paying about one and a bit years worth of tuition for my education degree. This makes my repayment of the remaining debt (to be accrued in September 2008 and January 2009) a much easier task.

Speaking of which, I still plan on continuing to put $100 away each month as a bit of a head start to repaying the loan. I have all my remaining student loan money in the intrest-plus savings account through PC Financial and although I could likely make more money faster by investing that $100, I'm still not at an investing stage yet. As well, this method is very low risk and will give me the peace of mind of being able to pay off the debt in a reasonable time-frame.

Thus, my net worth updates might look a bit weird in the upcoming months since I now have negative debt. I'll figure out a way to meaningfully represent this somehow and discuss it more in the next update.