Free Money Finance

The Cost of Commuting -- Balancing Time Versus Money

Here's a piece from Business Week that says in 15 top U.S. cities, the more you make, the more time you probably spend commuting to work. In other words, the high earners generally don't live in an urban area, they live in the suburbs and need to take a car, train or some other form of transportation to get into work each day. Here's a summary of the situation:

The study also suggests that there is a link between salaries and the time people spend in a car, bus, or train each morning. The poorest people in these urban metro areas have the shortest commutes. In the Boston metro area, for example, people earning less than $20,000 a year commute typically commute 17.3 minutes each way compared with people earning $50,000 to $60,000, who commute 30.8 minutes. Commute times in the city of Boston don't rise much for people earning more than $60,000. Similarly, in New York City commute times climb steadily as annual salaries rise before peaking for employees earning $110,000 a year. The commute time peak in Los Angeles is $60,000; it's $70,000 in Detroit; and it's $30,000 in the vast Dallas-Fort Worth-Arlington metro area, where the typical commute time for wealthy workers is just 26.4 minutes.

This obviously brings up an interesting time-for-money sort of discussion (not to mention the "quality of life by living outside the city" discussion, but we'll table that one for now. For illustration purposes, here are a couple personal stories -- one from a friend and one from me:

• A friend of mine used to live in New Jersey and had a job in New York City. He would commute two hours each way into work and then back home for five days a week. Yep, you read that right -- four hours a day commuting (or 20 hours a week.) He got up at 4 am so he could leave home at 5 am (to "minimize" traffic), getting to work at 7 am. He then left at 6:30 pm (again trying to limit the traffic he had to fight) and got home each night at 8:30 pm. In other words, he was gone each day from 5 am through 8:30 pm. His family life was almost non-existent. He slept much of the weekends because he was exhausted. His health was a mess. Sure, his family had a nice home and he made $150,000 a year, but he didn't really have a life. He moved to a smaller city a few years ago and had a 15-minute commute, a bigger house in the suburbs, still made close to the same amount, and his quality of life went way up (BTW, his finances probably improved dramatically because his living costs likely dropped big-time.)

• You all have seen the cities I've lived in, so you know that I've never had a huge commute. My worst was actually in Pittsburgh where I had a 30-minute one-way commute -- much worse when the weather was bad. Even in DC I took the metro and made it to work in under 20 minutes (of course I was a student then, and probably would not have lived where I did if I'd had a family.) My commute now is under 15 minutes in good weather but can be as much as 30 minutes if we get hammered with snow and ice the night before. In other words, it's a GREAT commute for the most part -- not much time at all.

We've talked about the fact that some people want to be paid more if they have a long commute, and I can see where they're coming from. If I had to switch to a longer commute (let's say 30 minutes each way), there would certainly need to be a compelling reason (like much more money, better job satisfaction, etc.) before I would move. My time is just too valuable to give up for a few thousand dollars more a year.

How about you? How do you balance the time/money issue?

Financial Time Perspective

The following is a guest post from Marotta Asset Management.

I was back at Stanford University recently and heard famed psychologist Philip Zimbardo lecture on his latest book, "The Time Paradox." His work suggests that understanding your own time perspective may help you unlock the secrets of financial freedom. In other words, how we think determines who we are and what we do.

Zimbardo's book focuses on how we perceive the effects of time on every aspect of our lives and our decision making. His Time Perspective Inventory scores individuals in six different time perspectives. Each perspective comes with strengths and weaknesses, and some are better at handling modern life and wealth management.

Within Zimbardo's categories are two past, two present, and two future perspectives. Both the past and future perspectives are abstractions. In a very real sense, we only experience the present. The past is an abstraction of gratitude and regrets. Similarly, the future is an abstraction of possible fears and longings.

Although present thinking may have been critical in simpler times of survival, it isn't necessarily the best perspective today when wealth itself is also the abstractions of shares in a company or zeros in a bank account.

People who live in the future are by far the most successful. Western civilization rose and prospered because of our future-oriented culture. Unlike present hedonists who live in their bodies, Zimbardo writes, "Futures live in their minds, envisioning other selves, scenarios, rewards, and successes."

He explains that you can test for future thinking as early as age four by giving children one marshmallow and telling them if they wait until you get back to eat the marshmallow, you will give them another one. Interestingly, children who have learned to delay gratification at age four score an average of 250 points higher on their Scholastic Aptitude Test (SAT) 14 years later. It isn't that time orientation is determined by age four. In fact, Zimbardo argues we are all born as present hedonists, seeking pleasure and sustenance while avoiding pain and bitter tastes. But by age four it is already apparent that some children live in an environment that encourages a future orientation.

Futures make money. They earn more. They get more education. They get better jobs. But most importantly, they save more and spend less. They discuss finances with their children and model future-oriented choices every day for the next generation.

Much of the advice in this column could be summarized as acting in a prudent future-oriented way in your investments.

Present hedonists use their money for fun and exciting experiences. They are the most likely to pile up credit card debt or experience home foreclosure. Their journey from rags to riches, if it happens, is often a round-trip ticket. They consider savings a token expense and a low priority. Impatience may cause them to chase returns.

To present fatalists, money just doesn't matter. They don't designate their money for present or for future enjoyment but simply spend it because it's there. Thus their spending and investments are random, and they are unlikely to reach their long-term goals.

Past-oriented people are rare in the United States. They generally do not take risks, and they invest conservatively. Past-positives focus on their achievement of earning and saving and do not want to risk losing money. Past-negatives remember only investment downturns and don't want to be burned again. Neither the past nor the present-time perspectives prove to be as successful as the future perspectives at managing their wealth.

We can view our present market turmoil through each of these time grids. Past-positives are thankful for longer term gains over the last few decades, whereas past-negatives only measure their losses from the recent high watermark. Present hedonists use market losses as an excuse to enjoy rather than invest; present fatalists don't believe what they do matters because global forces are completely out of their control. Only future goal-oriented investors recognize that the stock market has gone on sale, and today is an even better day to invest in a balanced portfolio.

Zimbardo also points out that "smarter people have higher annual incomes but are no wealthier than average people are." Given that every 10 IQ points correlates to $4,250 a year more in annual income, smart people should be richer. Alas, they are not. Smart people make more, but they also spend more, sometimes a lot more. Zimbardo concludes with this simple moral: "To become wealthy you cannot spend more money than you make, and you must invest wisely." Sage advice.

Some researchers suggest that the present orientation of the poor is pathological. But Zimbardo is more optimistic. He believes we can learn to be sufficiently motivated and to change our attitudes and the behaviors associated with them.

Zimbardo offers the following five simple steps toward achieving financial freedom and using time to work for you: (1) The present is the best time to start investing. (2) Time in the market is more important than timing the market. (3) Know when your time will be up; those with a long time ahead of them can afford more risky investments. (4) You can't time the markets. (5) A hedonistic time perspective is an expensive habit few can afford.

I asked Professor Zimbardo what he thought was the ideal time perspective for Americans today. He replied, "It is vital to develop an optimal blend of several time zones, so that you are able to flexibly shift mentally from one to the other depending on the situation. When there is work to get done, call up your future focus--but not excessively so (that can lead to sacrificing family, friends, fun and sleep). When you complete a task, take a time-out to reward yourself, indulge the present hedonist in you (get a massage, manicure, hot tub, see a movie, read a good book, meet a friend at a coffeehouse) but only moderately so. And always make time to engage with your positive past, your family, your own identity over time, with your legacy and cultural foundation. The past gives you roots; the present hedonism supplies the energy to take chances, to improvise, to take risks; the future gives you wings to soar to new destinations, to imagine new visions. You can have it all if you work at creating this balanced time perspective."

Perhaps a future study could find the correlation between your Zimbardo Time Perspective Inventory Score, your credit score and the size of your investment portfolio. To see how you score, visit www.thetimeparadox.com; take the test and score it.

Money Versus Time

Here's an interesting piece from Jean Chatzky where she discusses the trade-off between time and money -- in particular, the time we all spend looking for a bargain versus the amount that we actually save. Here's what made this issue hit home with her:

It's easy enough to measure how much money you can save by shopping around or by taking on an unpleasant chore, but most of us don't run the numbers on our time.

It began to dawn on me that I had spent the equivalent of a full workweek searching for a bargain that might save me a few hundred bucks. Crazy, no?

Assuming that she could have saved much of that with only a few hours of work, then it probably was crazy.

The piece also goes on to list other ways we all waste time, such as:

• The typical worker wastes two hours in an eight-hour day.
• The average American spends 150 hours a year looking for misplaced items and information.
• The average American spends 1.2 hours per day shopping.

How do they get these numbers? Especially the second one. Does someone actually track this?

Anyway, the article gives a simple rule-of-thumb for making the time/money trade-off:

Say you make $100,000 a year. Remove the last three zeros ($100), divide the number in half and you get your approximate hourly rate, in this case $50. Unless you're "making" that much by shopping for your TV or constantly combing the Internet for slightly higher CD yields (or whatever your time-suck happens to be), you're losing money.

This is where I want to throw it open for discussion. What do you think of this rule? My initial take is that it ends up with a number that's too high -- that I really don't need to make/save that much to make it worth getting a bargain -- but what do you think?

Is Clutter Costing You Time, Money, and Your Career?

Crown Financial Ministries has some thoughts on the high cost of clutter. Some highlights:

National studies have shown that the typical executive spends four and one-half hours a week looking for lost papers. At a salary of $30,000, the cost of searching for important papers, measured in lost time, is $3,376 per year. At $60,000, the cost is $6,752 per year. At $100,000, the annual cost jumps to $11,250.

As staggering as these costs are, the majority of managers and business owners with whom I've worked report that they lose even more. I have found that the cost often jumps to 15 percent of their yearly income.

Just think—at this rate, nearly two years of each life is lost looking through clutter.

Oh no, I think she's talking to me.

My desk is always a mess at work, though I don't spend a lot of time looking for lost papers (or at least I don't think I do.) I have a fairly firm grasp on what's under each pile. ;-)

That said, I'm sure I do lose some time because I have a messy desk. And lost time means lost productivity -- which can lead to a lower job performance, income, etc. In fact, Penelope Trunk thinks that simply having a messy desk alone can undermine your career.

What are your thoughts on the issue? Is a messy desk costing you? Or maybe it's at-home clutter?

Perhaps we all should make some extra money by selling our old stuff and de-cluttering our lives!

The Value of Time in Your Finances

I recently read a piece from Suze Orman about the value of time in your personal finances. The piece details how time can work for you or against you (it's your choice) and she gives examples dealing with mortgages, retirement and credit cards. Here summary of the article is as follows:

The crucial lesson of this quiz is that instant gratification isn't the key to financial success. Easy isn't necessarily right. Investing on the basis of what you hear the gang talking about at work or at a dinner party is easy. Investing on the basis of doing your own research so that you know what you're doing with your money is right.

It's equally foolhardy to assume that small amounts don't matter. We find it so easy to throw away "small" amounts of money on things we don't need, because we don't value a few dollars here or there. But I bet if you add up all the small ways you spend money you'll see that you're throwing away $50 a month (and probably a whole lot more). If you managed to save that $50 a month for 20 years, you'd have nearly $30,000 saved up.

Acting impulsively with money ends up being doubly costly. It often means you don't give your money the time it needs to work for you, and there's no more important investing rule than using the power of compounding -- putting money away and letting it grow over many years -- to help you reach your financial goals. The impulsive urge to go for the quick solution -- jumping at $1,000 a day, for instance, rather than the doubling penny -- undercuts you in the long term.

Financial success requires taking the time to weigh your options. And whether it's your IRA or your mortgage, it pays to make sure that time is always working for you, not against you.

Here's my summary of the issue: Either time can work for you or against you. It works for you when you save early and often, over the course of years and decades, and let the power of compounding and the power of time make you wealthy. It works against you when you prolong your debt payments, like when you take out an evil home loan or pay the minimum balance on your credit card. In these cases, the power of compounding works in favor of the bank/credit card company and put you in a worse-off financial situation as a result.

Being a Steward of Your Time

I've written before that time is more valuable than money. Why? Money can be replaced, but once time is gone, it's gone for good.

Just as Christians need to consider how to be good stewards of the money God has given them, we also need to be good stewards of the time God gives us. I found a piece where a reader at Eternal Perspectives asks how he could be a better steward of the time God has given him. Here's part of the answer that I wanted to share with you today:

When we keep track of how we spend our time it makes us better stewards because we become aware of what we otherwise don't really know. For example, people normally watch far more TV than they think. Becoming aware is the first step of stewardship, which puts us in a position to decide "I want to spend more time reading some great books and talking with my wife and reading to my kids, and to steward this time I can reduce my television watching by 10 hours each week." Again, we won't do this without a clear picture of how we're currently spending our time.

To me, this seems to be a good, practical outlook on the stewardship of time. I must admit that I haven't done it yet (kept a detailed record of how I've spent my time), though I think I will. I'm sure it will turn up some interesting bits of information.

Why I Pay More to go to a Car Dealer for Service Work

Yesterday in my post titled What My Second Credit Card Does for Me, I promised to tell you why I plan to go to my dealership to get my car serviced even though it costs more than other options. But before we do this, let's look at the facts:

• Servicing items: Oil change, grease, tire rotation
• Price at my "old" place: $14.95
• Price at dealership: $34.95

Ok, so my dealership is $20 more. And while $20 is not a fortune, there's no need to pay extra for something like this, is there?

Well, here's what my brand new dealership offers that the old place doesn't:

• Individual work cubicles with internet hook-up
• Free flavored coffee and treats (muffins, doughnuts)
• Clean, spacious, conveniently located rest rooms
• Lounge with big screen TV (in case I wanted to watch TV while pounding on my laptop and drinking my free coffee)

Now while all these add up to make for a pretty enjoyable "wait" at the dealership, it's the first one that really convinced me it was worth the money. Why? Because I can work/do something productive in comfort for the hour or so it takes to finish my car. The "old" place has a few chairs, an old TV (that you can't get away from if you want to think), no desk, no internet connection, etc. The dealership makes the hour I wait much, much more productive. And is my time worth more than $20 an hour? You bet!

As I've posted before, time is the most important asset in the world and it's easily worth more than money. So I'm willing to pay $20 more to get an hour's worth of productive time. Besides, it doesn't really cost me $20 more since my "cost" of that $20 is really only $11.20 because of the way I use my credit card rebates.

How about you? Is there anything you pay more for in order to save yourself time?

FMF recommends Emigrant Direct.

Young Workers are Passing Up Free Money, Jeopardizing Retirement

If you've read Free Money Finance for more than 30 seconds, you know how much I love the 401k. And I especially love it when an employer adds to it when an employees does. Who doesn't like free money??!!

Well, it turns out that many young workers don't like free money. Here are some stats from USA Today that tell how younger workers are passing up free money in their 401ks:

A new survey by Hewitt Associates found that only 31% of workers ages 18 to 25 who are eligible for a 401(k) participate in their company's plan. Companies typically require workers to save at least 6% to earn a full company match, so a lot of young workers are leaving money on the table.

So why is this happening? Well, there are some good reasons:

To be fair, young workers have a lot of competing demands on their paychecks. The average indebted college graduate has more than $17,000 in student loans, according to an analysis by the Center for Economic and Policy Research. Many are also paying off credit card debts and car loans.

But, in the end, it's the same old story -- they can't control their spending and spend less than they earn:

But 61% of young workers also cited "lifestyle purchases" as an impediment to saving. Those purchases include "the iPod, the big-screen TV — things that aren't required for day-to-day living but allow people to keep up with the Joneses," Lucas says.

This is really a missed opportunity for these young people. By not contributing today, they are giving up one of their best investment weapons: time. This minimizes the power of compounding on their investments -- significantly lowering their total return. That's why not getting the full 401k match is one of the 12 biggest money mistakes you can make.

If you are a younger worker or know one and he/she isn't contributing enough to get the full employer 401k match, please read the following links for futher information on this important topic:

• Getting Rich is Simpler than You Think
• Save Now, Retire Rich
• How Much Goes in the 401k?
• Why Many Aren't Securing Their Financial Future

The Dot-Com Billionaire: Mark Cuban on the Value of Time

We've talked before how time is more important than money and the point was reinforced to me today when I saw this quote from billionaire Mark Cuban on the value of time:

To me, money is...a way to buy the most valuable asset in the world: time.

Easy for him to say, huh? ;-)

Seriously, though, time is more valuable. You can always get more money, but once time goes by, it's gone forever.

Simplifying Your (Investing) Life

Here's a piece on how to simplify your investments from Christine Benz, Author of "Morningstar Guide to Mutual Funds: 5-Star Strategies for Success", and courtesy of ARA Content:

Bill Miller and most other top portfolio managers will tell you that there's a lot of day-to-day "noise" in the market, most of which has little to no bearing on the actual value of their holdings. Individual investors would do well to adopt a similar mind-set when building their own portfolios.

True, it's hard to open the business section without seeing an article about spiking oil prices or China's growth. But should you run out and buy an investment that's specifically designed to focus on one of those trends, such as a sector or regional fund? Probably not. Any such offerings tend to be expensive and exceptionally volatile, and individual investors have a record of buying them high and selling them low.

A better strategy, particularly if you're aiming to build a high-quality, low maintenance portfolio, is to focus on finding great core mutual funds -- broadly diversified offerings with reasonable costs, seasoned management teams, and solid long-term risk/reward profiles. If you've done that, you can pretty much tune out the day-to-day noise and let your fund manager decide whether the next big thing is worth investing in.

Taking the Best and Leaving the Rest

Simplifying your investment life isn't terribly complicated if you're managing a single retirement portfolio for yourself. But life is messy, with most investors juggling multiple portfolios and multiple goals at once. In addition to your own 401(k) retirement plan, for example, you might also be overseeing an IRA for yourself and your spouse, a child's college-savings plan, and your household's taxable assets.

If you're like many investors, you're running each of these various accounts as well-diversified portfolios unto themselves. That's not unreasonable. But to help counteract portfolio sprawl, consider managing all of your accounts that share the same time horizon as a single portfolio, a unified whole. In so doing, you'll be able cut down on the number of stock or bond holdings you have to monitor, and you'll also be able to ensure that each of your picks is truly best of breed.

For example, say your spouse's retirement plan lacks worthwhile bond holdings but has a few terrific core stock-fund choices; yours has several solid bond picks. If that's the case, you may want to stash all of your spouse's assets in the stock funds while allocating a large percentage of your own 401(k) plan to bond funds.

The key to making this strategy work is to use tools such as Morningstar.com's Portfolio Manager and Instant X-Ray, which let you look at all of your accounts together, as a single portfolio. That way, you can see if your overall portfolio's asset allocation is in line with your target, and you can also determine whether you're adequately diversified across investment styles and sectors.

Consolidating Your Investments with a Single Firm or Supermarket

By investing with only one fund supermarket or fund family, you eliminate excess complexity, cutting back on paperwork and filing. And the consolidated statements you'll receive can make tax time much easier, too. Instead of pulling together taxable distributions and gains from different statements, you'll have them all in one place.

If you want to stick with just one fund family, consider one of the big ones, such as Fidelity, Vanguard, or T. Rowe Price. These no-load families are all relatively low cost, with Vanguard being the cheapskate champion, and each offers a diverse lineup of mutual funds. If you would rather pick and choose among fund families, then a mutual fund supermarket might be your best option. Fund supermarkets bring together funds from a variety of fund groups.

Putting Your Investments on Autopilot

You may pay your electric and water bills automatically -- why not invest the same way? You won't have to send a check out every month, every quarter, or every year. There's an added benefit to investing relatively small amounts on a regular basis (also called dollar-cost averaging). You may actually invest more than you would if you plunked down a lump sum, and at more opportune times. When you're dollar-cost averaging, you're putting dollars to work no matter what's going on in the market. You have effectively put on blinders against short-term market swings: Whether the market is going up or going down, $100 (or whatever amount you choose to invest) is going into your fund every month no matter what. That's discipline. Would you be able to write a check for $100 if your fund had lost 15 percent the previous month? Maybe not. But that would mean $100 less working for you when your investments rebounded.

Be careful about using a dollar-cost averaging program if you use a broker or advisor to buy and sell shares, however. If you're paying a front-end sales load, you'll pay that amount on each and every investment. Perhaps more important, by making smaller fund purchases you might not be eligible for sales charge discounts that are frequently available to those who are investing larger sums.

Investor's Checklist: How to Simplify Your Investment Life

• Avoid faddish funds designed to capitalize on short-term market trends.
• Instead, stick with core stock and bond funds that you don't need to babysit.
• Consider all-in-one funds, particularly target-maturity funds, which grow more conservative as you get close to your goal.
• Index funds make great choices for investors who don't want to spend a lot of time managing their portfolios.
• If you have several portfolios geared toward the same time horizon, manage them as a unified whole, emphasizing the best options available to you in each account.
• Whenever you make an investment, write down why you bought it. If it no longer fits your reasons for buying, it's probably a good candidate for selling.
• Consolidate your investments with a single fund family or fund supermarket.
• Simplify your life by setting up an automatic investment plan. Dollar-cost averaging takes the emotion out of investing and should produce better returns over time than buying and selling erratically.

The time you have available to invest should certainly be part of your investment decision. See Do You Have Enough Time to Invest Like You Want To? and Part-Time Investing for additional thoughts on this topic. In addition, if you want more information on investing, here are some posts I recommend:

• Getting Rich is Simpler than You Think
• Fund Indexers, Take (Another) Bow
• Expenses, Taxes and Size Matter in Choosing Bond Funds (And Stocks too!)
• Where the Pros Stash Their Own Dough
• The Case for Indexing
• Investment Advice from Someone Who Manages Billions

Free Money Finance recommends Emigrant Direct.

How to Get Your Blog to 100,000 Visitors and Beyond, Step 14; Post Frequently

Step 14 to getting to 100,000 visitors and beyond: Post frequently.

This is probably the best tip I'll give in this series. If not, it's certainly close to the top. The simple fact is:

The more you post, the more traffic you'll get.

Yes, there are exceptions to the rule, but in most cases as soon as you increase posting frequency, traffic will go up. Mine did. Dramatically.

I covered many of the reasons and benefits in posting often in FMF Speaks: Why I Post So Often. Check out the post if you want more details.

The main issue of posting more often for most bloggers is that is takes more time -- time that they don't have (or can't find). I have several ideas on how to post more in the same amount of time, but that's for a later post -- if anyone's interested, that is.

Click here to read part 15 of this series.

Free Money Finance recommends Emigrant Direct.

Making the Most of Your Time

In my opinion, one of the things more important than money is time, mostly because money is renewable (if you lose it you can get it -- or even more -- back). Once time has passed, it is gone.

That's why I wanted to share this piece from Yahoo.  It offers ideas on how to make the most of your time. Here are the highlights of the piece:

Have a personal mission statement and allocate time accordingly.

Work to the sweet spot of time-effectiveness. For example, if, in writing a column, I could do a good job in a half day, a very good job in a day and an excellent job in two days, I'll probably aim for getting it done in a day. Why wouldn't I shoot for excellence? Because I could write a whole other very good column in that second day, and I believe two very good columns do more for the world than one excellent one.

Work at home. Most people who live in the suburbs waste an hour or two of their day's best hours merely getting to and from work.

Be kind in a time-efficient way.

Advice I'd give my child: Young people tend to think money is more important than time. It's not.

My thoughts:

1. I'm in agreement with the essence of this piece.

2. I have a personal mission statement and annual goals (resolutions) I want to accomplish. It helps me make sure my life is moving in the right direction.

3. Many of us would like to work at home, but can't. However, commuting time doesn't have to be a wasted time. I listed to audio books in the car and can listen to a book in a fraction of the time it would take to read it. I listen when driving to work, when I'm out on errands (as long as I'm alone), and on business trips. I also listen to books while exercising.

4. I have more money than time and as such I prefer to give rather than volunteer. This allows me to spend my most precious resource (time) with my top priority (my family) while also helping others. In addition, I'm helping those people who can't afford to give but have the time to volunteer by providing funds for their efforts.

5. Here are some more ideas on how to make the most of your time:

• Free Up More Time
• Simple Ways to Save Hours of Your Time
• What's Your Time Worth?

10 New Years Money Resolutions, Part 7

Here's part 7 of a series from Money magazine that lists their 10 New Years Money Resolutions:

Resolution 7: Free up more time

Making time for yourself and your family is the top goal for 2006, according to a MONEY poll. Lack of time is really two problems: You probably are too busy, and you aren't making the best use of the spare time you have. The action plan below will help you address both.

1. Outsource a task (or two or three).

2. Automate bill paying.

3. Take a vacation.

4. Relax, really.

My thoughts:

1. I've written a bit about the value of time. You can see these posts at the following links:

• Simple Ways to Save Hours of Your Time
• What's Your Time Worth?
• Comments: What's Your Time Worth?; An Opinion

2. We have four vacations built into our calendar every year: three visits to family around the U.S. and one visit from my parents. We've done this every year for several years, so it's a built-in time of "relaxation" (if you can call them that). ;-)

3. In addition, this year we want to take a special vacation with our kids. Since we live only a few hours from Chicago, we've thought about a vacation there to see all the museums, the aquarium, etc. My wife and I did that alone a few years ago and really enjoyed it. I think our kids would love it.

4. I also plan to ride in a few (2-3) centuries (100 miles on a bike) this year, so these will be mini-vacations for me.

Click here to read part 8 of this series.

Give Smart

Here's a unique perspective from Suze Orman on garage sales versus giving:

Financially speaking, I can't make any sense out of garage sales. You have to invest a lot of time to hold one, when you could simply take all your unwanted stuff down to the local charity (or even ask them to come cart it away for you) and claim the donation as a tax deduction. Do you really want to spend a weekend holding a garage sale-with no guarantee you will clear out everything you don't want-when you can spend an hour or two gathering up your stuff and making a donation whose tax value will likely exceed the value of your garage sale's proceeds?

She has a point. I do like garage sales but also realize that there's a value to your time and if you're not making much money for a big time commitment, that's not a good deal. (In fact, you could give away your items and "give away" the time you save as well).

Where's the balance? You'll need to do the math. What will you make in profit from the garage sale and what will it cost you in time versus what you make (in tax savings) by giving away the items and what time you'll save? The value of your time is subjective, so you won't get a clear answer, but this method should get you close.

Comments: What's Your Time Worth?; An Opinion

Here's a comment a reader who responded to my post on What's Your Time Worth?:

I've always been puzzled by articles that discuss the value of one's time. They all cite the same formula: if you make $20/hour at work, then it is worth it for you to hire someone else to do something for you if they can do it cheaper than your $20/hour cost.

But that really isn't right. Your $20/hour wage is based on 2080 work hours per year. But you're not paid for your free time, and there are 6680 of those in a year. So to truly represent your value per hour, you need to spread your earnings out over work AND personal time, not just work time.

Some might think that's not fair either - an hour spent mowing your lawn is an hour you aren't making money somewhere else. But how many people really use their personal time to earn more? For many of us who are salaried, we couldn't pick up additional hours (for pay) even if we wanted to.

In my mind, what it really comes down to is the value that you yourself place on your time. Hire a housekeeper if you want, but realize that the benefits you receive from it will likely be more psychic than financial.

Time continues to be a tough one to place a value on, but the second-to-the-last sentence here does a great job of getting close to my personal view.

Reminder: Free Money Finance is currently in Russia.

Simple Ways to Save Hours of Your Time, Part 4

Here's part 4 of an article on how to save hours and "add" time to your life. Today's tips are estimated to save you seven hours or more:

Computer time. Computers are like phones: When you use them it's easy to lose track of time. "Check e-mail twice a day and return messages all at once. You'll save an hour a day," suggests Breese.

TV viewing. "Establish one or two TV-free nights every week," says Judith Wright, author of There Must Be More Than This: Finding More Life, Love, and Meaning by Overcoming Your Soft Addictions. "Families can gain back eight hours a week this way since Americans, on average, watch four hours of TV a night."

If you have a service such as TiVO, program it to record your TV favorites without the commercials and watch it later. Many new home computers include digital entertainment options, with hardware that connects a TV cable to the computer and software that records your favorite shows directly to the hard drive. You could save as much as eight hours a week.

They are killing me!!! The computer and the TV are my biggest time offenders!! Most computer time is work or blog related (so I'll let this one pass). The only things I watch regularly on TV are football and AFV (with the family), but this probably adds up to several hours a week. If I only had ESPN, then all I'd need to do is watch the highlights. ;-)

Simple Ways to Save Hours of Your Time, Part 3

Here's part 3 of an article on how to save hours and "add" time to your life. Today's tips are estimated to save you at least three hours:

Errands. Map out your errands before you go. "You'll save time if you make a circular route of your stops, or try to group your purchases in one retail center," says Gold. You can also save time coordinating errands with your partner. "You'll shave off two hours a week if you tackle your list together," says Gold.

Cut down on driving time altogether by using Web services. You can get photos printed through services such as shutterfly.com. Many pharmacy photo centers also offer a Web-based option. Instead of standing in line at the video store, look into services such as netflix.com and have the latest DVDs delivered to your mailbox. This can save you another hour a week, says Christine D'Amico, author of The Pregnant Woman's Companion.

Phone calls. If you tend to lose track of time on the phone, keep a small hourglass or egg timer nearby, and use it on those busy days when 40-minute chats are out of the question.

Vickie Hansen, creator of the Web site www.myorganizedlife.com, and a member of the National Association of Professional Organizers, recommends screening your calls with caller ID and your answering machine. "If you're on the go, take your call list and do it when you're waiting to pick up your kids from practice. You can save 30 minutes a day," she says.

My thoughts:

1. My wife is good about mapping out her errands and so am I. Not much opportunity for us here.

2. I love the egg timer idea. I'm getting one for my wife. I just hope she doesn't time me with it while I'm watching TV. ;-)

3. I use the answering machine all the time to screen calls. Somehow, my wife can't resist picking up the phone. And it always happens to be someone who wants to talk for two hours every time we're headed out the door!

Click here to read part 4 of this series.

Simple Ways to Save Hours of Your Time, Part 2

Here's part 2 of an article on how to save hours and "add" time to your life. Today's tips are estimated to save you at least two hours:

Cooking. Most of the time you devote to making meals is actually spent juggling all the interruptions. Cut back your prep time by waiting until the kids have gone to bed. "Prepare pancake batter the night before," says Carrico. It only takes about five minutes to make, put in the fridge, and set out the syrup, skillet, and spatula you'll need. Small tricks like this can shave up to 20 minutes the next morning.

"To save wasted steps, look at how you have your kitchen arranged," says Lamendola. "Simply storing your cooking utensils close to the stove will save you significant time over the course of a year." To shave more minutes, prepare meals such as chili and stews ahead of time and freeze them, he adds.

Cleaning and organizing. Clean your house one room at a time. Create a portable cleaning caddy with cleansers, paper towels, and sponges, and start in one corner. Work your way around the room one wall at a time. You'll stay focused and avoid running back and forth to the kitchen. "This approach saves typically 50 percent of cleaning time," says Lamendola.

To get your kids to help keep the house neat, Stack suggests a system she calls Jail n' Bail. "If they don't put their stuff away, it goes in the jail box, and they have to pay five cents to bail it out. It shows them time is money—and easily saves me 30 minutes a day," she says.

My thoughts:

1. My wife's biggest "time waster" while making a meal is the phone. I usually cover the kids (take them to the basement to play) while she cooks, so we're not a distraction, but then she gets on the phone and the whole process gets bogged down. (She says it doesn't slow her down, but I know differently.)

2. I LOVE the jail idea!! It not only saves time, but it's another source of revenue. ;-)

Click here to read part 3 of this series.

Simple Ways to Save Hours of Your Time, Part 1

I've posted in the past on What's Your Time Worth and it's a topic I want to cover more in the future. Money and time are closely related, though money is renewable while time is not. To me, this makes time more valuable.

Here's an article on how to save hours and "add" time to your life. I'll be posting on it over several days as the tips are broken up by how many hours they will save. Today's tips are estimated to save you at least one hour:

Grocery shopping. Many grocery stores are open 24 hours a day, so take advantage of that. Avoid shopping during the peak hours of 11 a.m. to 1 p.m. or 5 p.m. to 7 p.m. weekdays, and you'll cut your regular shopping time in half. That saves you about 45 minutes per trip.

Stockpile groceries in advance when deals are hot. And if you keep a supply of such products as paper goods, soaps, cereals, crackers, and canned soups, you'll save time by not running back to the store for that one necessary item you always forget to buy.

"Put your groceries through the checkout in categories and ask the courtesy clerk to bag them that way," says Teri Gault, who offers other resources to save shopping time. "Once you get home, you can put it away quickly because it's already sorted."

Laundry. Saving all your laundry for large loads on the weekend takes away an entire day that you could be enjoying with your family. "Do it daily, instead of wasting a Saturday," says Laura Stack, author of Leave the Office Earlier. "You'll have just one load, which only takes 30 minutes between washing, drying, and folding."

Bills. If you prefer paying your bills by check rather than online, keep a portable bill-paying file handy. Pull it out when you're waiting for an appointment at the doctor, dentist, or beauty shop, and "maximize those minutes," says Molly Gold, whose company, GoMom, Inc., creates mom-friendly products. "Keep a file stocked with stamps, envelopes, a calculator, your checkbook, and bills. I do 10 minutes of banking a day, five days a week," says Kristine Breese, author of Cereal for Dinner: Strategies, Shortcuts & Sanity for Moms Battling Illness.

Getting out the door. If you routinely misplace your keys, hang a set on a peg near the door or attach them to a "clapper" key chain to minimize search time. Depending on how many times you use your keys, this can save you an hour per week.

"Have kids help make their lunches and pick out their school clothes before going to bed the night before," suggests Lolita Carrico, founder of the Web site modernmom.com.

Time-management expert Mark Lamendola recommends putting everything you grab in the morning in one place before you go to bed at night. "Lunch bags, briefcase, purse, and anything else you'll need. You can save 20 minutes by investing five the night before," he says.

My thoughts:

1. We could benefit greatly by being a bit more organized when it comes to grocery shopping. Seems like we make 3-4 trips per week to the store.

2. We have the laundry and bill paying ideas down to a science. Not much opportunity in our household to improve here.

3. Getting out the door is our BIGGEST time waster. Anyone have any ideas on how to get kids to stay focused and hurry up???

4. I put all my stuff for work on the counter by the door every night. It makes it very easy to grab everything I need and be off the next morning.

Click here to read part 2 of this series.

What's Your Time Worth?

Here's a thought-provoking piece from Yahoo on the value of time. Unlike money, time is not renewable -- once it's gone, it's gone -- and in this fact makes it much more valuable than money. But how do you place a dollar figure on it? Here are the questions Yahoo poses:

What's your time worth? From an economic perspective, is it better to mow your own lawn or pay a service? Iron your own shirts or send them out? Cook or buy take out?

Here are a few examples of decisions we make where time and money are factors:

While you might not drive 30 minutes across town to get $5 off a $200 DVD player, you might make the trip to get $5 off a $15 DVD, because you think one-third off is a terrific bargain. But in absolute terms, $5 is still just $5.

You spend an hour contesting a $3 mistake on your cell phone bill.

You start a new job and drag your feet for two years before joining the 401(k) plan. In that case, you believe your time is literally worth hundreds -- even thousands -- of dollars an hour, because that's what you lost by procrastinating.

So this leads us to the big question -- what is your time worth? Here's Yahoo's take:

The most obvious way is to simply compare your hourly wage to the cost of the service. Thus if you earn $75,000 a year, your time is worth $39 an hour. If your yard service costs about $40 an hour, you've got a pretty sound economic reason to pull out the checkbook instead of that leaf blower.

But that's not the whole story. Unfortunately, a sizeable chunk of your hourly wage goes to Uncle Sam. In addition, your buck goes a good deal further in, say, Hope, Arkansas, than Manhattan. A few years ago, economist Ian Walker of England's Warwick University created a method to calculate the value of one's time based on wages -- adjusted for taxes and the cost of living. To apply his formula to your situation:

• Subtract your federal tax bracket from 100.
• Multiply your hourly wage by that figure.
• Divide the result by the average cost of living rating for your community available from this site produced by the American Chamber of Commerce Researchers Association, or ACCRA, a nonprofit group that compiles cost of living data.
• Then take that result and divide by 100.

What? I need an example of that:

Here's an example: You're a single person living in Las Vegas, Nevada, earning $75,000 a year (or $39 an hour). Your federal tax bracket is 25 percent. The cost of living index for Las Vegas is 1.139. Given these particulars, your real hourly wage using Walker's formula is $25.68.

Now hiring that guy to mow your lawn (or, in the case of Las Vegas, water your cactus) doesn't look as appealing.

The piece ends with the following conclusion:

Of course, few of us can afford to outsource every chore we despise. So prioritize, starting with the tasks that devour the most psychic energy and create the most strife in your relationships. See if you can make a few tradeoffs -- in exchange for hiring the lawn guy, eat out less frequently, get your books from the library rather than the bookstore, and trim your utility bills whenever possible. Then hire the lawn guy or the cleaning lady.

I like the question they're attempting to answer and I give them bonus points for being specific and taking a position on the issue (something many personal finance articles refuse to do), but I'm not sure I agree with their rationale. For instance, it's not like I'll make an extra hour's wage if I don't mow the lawn. What's actually happened is that I've lost/spent money for the privilege of doing something else. This may or may not be a useful tradeoff. I think everyone needs to make a judgment for themselves on what their (free) time is worth and take action accordingly.

For us, we do most of the house and yard work ourselves. Not only do we feel it's a good use of our funds and time, but some of it is enjoyable (working together to rake leaves), educational (teaching the kids the responsibility of chores), and healthy (mowing the lawn with our non-self-propelled mower is a great workout). For other things, those requiring special expertise like car work, plumbing, or electrical work, we hire out. We could learn how to do many of these things, but doing so would take a lot of time and potentially be disastrous (if we did it wrong). In these cases, we think it's best to hire out.

What about you? How do you place a value on your time?