If you make "only" $90,000 a year, can you afford to hire someone to stain the deck?

[eileen1]

This is the story of the upward creep of expenses that comes with settling into a larger income. It is also the story of assessing real income.

Let's say a woman makes $90,000 a year. That's in the top quintile (fifth) of earners according to the 2007 Census Bureau ($91,705 to be exact). Her deck hasn't been stained in years as she is busy at work and she gets an estimate that comes in at $750, stain included.

She's mighty tempted to just hire out the job. But she recently read an amazing book called Your Money or Your Life by Joe Dominguez and Vicki Robin. She's learned that money equals life energy. She has only so many hours on this planet and she must trade some of those to make money.

Realizing that she's really trading her own life's hours when she earns and buys, she wants to know exactly what she's trading them for. So, she sits down with a calculator to make her final decision.

First, she wants to know exactly what she clears an hour from her job. For every hour of her life she gives to the company, what does she get? She works around 50 hours a week, not unusual for salaried professionals who are exempt from overtime.

Let's assume roughly one third goes to taxes, including federal and state. So her income is around $63,000, or $5250 a month, $1211 a week, $24 per hour. Looks pretty good so far.

But the book has her realizing there are many other expenses associated with her employment and maybe she's not getting quite that much for her life's energy.

First there's the commute. She drives 20 minutes each way to work, for a 30 mile round trip commute. That means she needs to add three hours a week to the work column, and subtract $75 a week from her earnings. The AAA figure per mile for 2007 is 52.2 cents when all costs of car ownership are figured in. To keep it easier, let's round down to 50 cents a mile and her 150 mile weekly commute costs $75.

Next there's what the book calls "costuming" or suits you need for work that you wouldn't even buy if you didn't work. Have you ever seen anyone wearing a tie on a Saturday at home? Let's assume she buys four suits a year, at an average cost of $300 per suit. That's $1200 a year ($23 a week). We'll put dry cleaning at $15 a week (which is likely low). Also, she must do a fair amount of grooming to look professional from her nails, hair, makeup, etc. And let's say that takes an extra fifteen minutes a day (that she wouldn't spend if she wasn't working). That's one and a quarter hours a week.

Meals are the next category. She's often working through lunch and just runs to Quiznos. Some mornings and afternoons when her energy is flagging, she heads to Starbucks. Quiznos is about $8 a meal, so three times a week is $24 and Starbucks is $3 a stop, so let's say $9.

Daily Decompression is a real need for many. The book asks if you come home from your job zestful and full of life or tired and drained. Let's assume our person needs to decompress at least an hour each night - just sitting in from the television. This we'll put at five hours a week.

Then there's escape entertainment. The feeling you're working so hard you deserve and need to take a break - whether it's Friday night drinks or Saturday night dinners and a movie. Let's put this at $30 a week and one hour.

The book offers additional categories, but you get the idea.

So let's revisit her numbers.

50 hours at the job
3 hours commute
1.25 hours costuming
5 hours decompressing
1 hour escape entertainment.
__________________________
60.25 hours new total.

And let's look at her weekly totals.

$1211 week
Less $ 75 commute
$ 23 suits
$ 15 dry cleaning
$ 24 lunches
$ 9 Starbucks
$ 30 Escape Entertainment.
___________________________
$1035 per week new total

So she actually "clears" $17.18 an hour - $17 for purposes of ease.

The deck estimate came in at $750. She would have to work 44 hours at her job to pay for this!

And unless she's going to take on extra hours, she's likely already allocated a certain amount of those hours to pay her mortgage, car payment, heating, electric, insurance, dentist, vetrinarian, phone, groceries, real estate taxes, shampoo......

After running the numbers, our woman picks up the phone and calls her good friend Kathy and says, "If you'll spend a Saturday helping me stain my deck, I'll spend a Saturday helping you paint your daughter's bedroom." Deal!

The Frugal Millionairess

[PetMom]

Good post and love your blog.

The book is great for people to figure out their true costs of everything purchased.

I am referring to the original book, they may have different advice now.

Their big investment vehicle of govt. bonds (did not like the stock market) may not have kept up with inflation.

The segment they had on inflation had some flaws:
the cost of health insurance going up so drastically
the cost of deregulated anything (eg electricity)
buying and keeping appliances that may end up using more electricity to run (and cost more)
the ridiculously high cost of food
the high cost of child care now
the high cost of vets
the soaring costs of a college education
the cost of gasoline
HOA's taking over neighborhoods and charging high fees

it is true that a bike, clothing, furniture, public transportation, and some entertainment items have not gone up much

[markusk]

Interesting post. Never thought of it that way. I understand the point of the post is to consider one's real income when factoring in the expenses associated with employment.

However the true "cost of working" to earn that 90K is, I think, more complicated, simply because there is a cost to everything, including "just living" or "doing nothing." Or there are certain intangibles so the cost is unknown. What about factoring in the health/dental/401K contribution from work?

Everyone is different, but I notice that on days I work, I don't spend any money because I don't buy anything. I "brown bag" lunch and often bike to work. On the days I don't work, I more often end up buying "stuff" or eating out. "Daily decompression is a real need for many" including on days I don't work. This is because I actually find my work interesting and would be bored at home and would need to do something during the day.

In spite of the limitations, I think it is still a useful tool to help try to figure out the "true costs" of everything purchased.

[eileen1]

PetMom, Thanks for the kind words about my blog - the dream is one day to write a book and the blog is good practice. I agree about concern with bonds keeping up with inflation. I was delighted to see one of the authors of Your Money or Your Life, Vicki Robin, interviewed at The Simple Dollar. Though she doesn't directly talk to the bond issue, she did say she has multiple streams of income.

Her quote: "Finally, you do need to invest in financial instruments that give you a return on investment – the classic form of financial independence. You might own bonds or stocks or mutual funds or real estate.

My financial independence is based on all these “income streams”. I do have a small but steady fixed income from several sources: bonds, a rental house I own and soon Social Security. I do have a little side income from selling a few hours a month of my expertise (conducting tele-classes, facilitation, coaching, meeting planning, running workshops). I am frugal to a fault and if I were to tally up how much under retail I pay for all my purchases I’d likely find I live on half what others do for the same set of things. Having lived with other people for most of my adult life I know how to share, which means I know how to negotiate, to ask for what I need and take no for an answer, to be direct and not underhanded, to return things in better shape than I found them, to understand where I can be generous and when I just can’t give an inch.

In these tough financial times, which may last far into the future and become the new norm, the smart money is on people who know how to manage these multiple streams of income so that their core well being does not depend on any one of them. This is truly diversifying your “portfolio” for financial security."
From: The Simple Dollar » Search for 'vicki robin'

And Mark, I do know what you're saying about "work" having extra value and not just costs that may not show up in the paycheck - networking, friends, and being too busy to shop;-). I guess a really exact analysis should include these things as well, I may get out my calculator over pizza tonight....

[investingnoob]

"ONLY" 90k/yr, wow that must be nice to make that much and consider it not much...

[eileen1]

Investingnoob, Just to clarify, I make far less than 90k a year teaching part-time. I chose the number as an upper-middle class salary just to show people can sometimes think they make more than they do and that having a sense of one's "real" income is helpful in analyzing spending habits.

[Hooah]

Thanks for sharing. I agree with the main object of the point. Some of your math might need to take into account some of the basic essentials that are needed even when not working and account for them in your "hourly wage" to achieve a more accurate number.

I believe the OP should stress that you should love/enjoy your job. If not, change your career to what you want to do. Also, there is no accounting for what work (money) gives us; retirement, vacations, conveniences, etc.

Thanks again for sharing.

[MonkeyMama]

Originally Posted by Hooah

I believe the OP should stress that you should love/enjoy your job. If not, change your career to what you want to do.

Thanks again for sharing.

Agree. It is interesting.

The argument above is not relative to me. I have a high paying, low taxed, low expense job. I make closer to $75k than $90k. More importantly, I enjoy my job and have plenty of opportunity to work overtime. Yeah, I would rather work a weekend than spend that time staining a deck.

The underlying assumption above, is one hates one job. What a sad way to spend most of one's life!

On the flip side, I agree on a large level. My spouse does not work because a second wage would be so highly taxed and cost prohibitive (daycare) that we don't really see the point. This does free a lot of time to save money in other areas, too. BUT, my spouse was in a job he didn't like. If he loved his job, this decision wouldn't have been so "simple."

[Seeker]

Interesting post....

Just another thought.... if she does not have her deck completed outside at a cost of 44 hours to pay that 750, how many more hours (which translates to cost) and materials, will it take her to complete the deck herself? Or with her friend? And how much more to help her friend paint the bedroom?

Yes there's a cost to absolutely everything. But much is left out of the logical calculations when it comes to doing certain jobs.

Some of us might love to stain and paint... so "working" that job may not "equate" to "working" a paying job. How does one "value" that?

[ActYourWage]

deleted. duplicated content. sorry.

[KTP]

While she is spending those two saturdays staining and painting, a coworker friend of hers networks with their boss at a social function she passed up (to work on the deck). The boss is much more approachable at this event and also seems to be impressed the friend decided to attend. They have a conversation where the friend presents several ideas that she feels would increase revenue for the company severalfold. Later that month she is promoted from her 90,000 / year job to a higher management position paying $125,000 / year.

So staying home to stain that deck actually cost the lady $23,100 (assuming the 33% tax bracket).

[Seeker]

Originally Posted by KTP

While she is spending those two saturdays staining and painting, a coworker friend of hers networks with their boss at a social function she passed up (to work on the deck). The boss is much more approachable at this event and also seems to be impressed the friend decided to attend. They have a conversation where the friend presents several ideas that she feels would increase revenue for the company severalfold. Later that month she is promoted from her 90,000 / year job to a higher management position paying $125,000 / year.

So staying home to stain that deck actually cost the lady $23,100 (assuming the 33% tax bracket).

But KTP, her spending the time to research how revenue may potentially be increased for their company, will actually cost more time and money.

If people are going to take this approach to putting a price on everything, life itself becomes a dilemma.

Everyone would be better off taking their daily salary and dividing by 24 hours in a day... and then computing costs/benefits. Yes, value varies during that 24 hour day (after all most people do sleep sometime), but we all are doing something each and every day.

We also need "enjoyment" in our lives, and thinking about numbers all the time does not cut-it for me.

---

For me, If I were earning that 90k, I'd happily spend the $750 to have the "professionals" to that job correctly, than for me to try to spend the time to properly clean, sand down the problems, and "stain" a deck, even assuming a "deck" can be completed properly in one Saturday by a neophyte such that I would be in trying to tackle such a job. Painting rooms, no problem; staining a deck, no thanks.

[cschin4]

I hire people all the time to do stuff that I don't want to do or can't do. I figure that I go to my work and do what I do and I will hire the expert to do what he does. There are tasks I take on for fun or because I enjoy it, but I also consider the time involved, the risk of hurting my back, the tools I will have to buy that I dont' have and whether it will really look any good after I am done. I am not a big DIY fan as I think that you are often much further ahead to pay someone to do it right the first time and one who has the tools, time and experience.

[snafu]

While I too am fortunate to love the work I do, I have always worked out my hourly rate and based purchasing decision like is it worth working 'X' hours to buy the particular item/service under consideration. Very effective to prevent impulse purchasing. Likewise helps explain finances to our teens

[rennigade]

Originally Posted by KTP

While she is spending those two saturdays staining and painting, a coworker friend of hers networks with their boss at a social function she passed up (to work on the deck). The boss is much more approachable at this event and also seems to be impressed the friend decided to attend. They have a conversation where the friend presents several ideas that she feels would increase revenue for the company severalfold. Later that month she is promoted from her 90,000 / year job to a higher management position paying $125,000 / year.

So staying home to stain that deck actually cost the lady $23,100 (assuming the 33% tax bracket).

Yeah...and have you ever heard of the chaos theory/buttefly effect? That one that says a flap of a butterflys wings can cause a tornado on the other side of the planet? This is what you're going for. A real stretch of the imagination.

People feel its necessary to analyze every little thing because they have nothing better going on in their lives. Its a shame.

[LivingAlmostLarge]

Depends. Salaried positions you don't get paid when on the weekend. Makes the argument eating out is cheaper because you could spend the time from cooking working, if you are hourly or own your own business.

DH and I make more and we still seal our own deck. Although we are going to pay someone to paint our hallway when we've painted pretty much every other room in the house.

Why pay $2k to paint a hallway? Well it's dangerous with the high ceilings, stairs, and ladders needed on our crazy stairs. I won't let my DH do it. And because it's dangerous, 3 stories, it costs more. So normally we'd do it ourselves, but stupidity and danger to our health is worth the money.

[segmond]

long winded post. the rule goes like this. if you can do it yourself and do it RIGHT and have the time to do it, do it!

Said woman, can she afford doing her plumbing to save $2000? well, what if she does it wrong and the pipe bursts and floods her house and destorys her belonging when she is gone? can you afford to fix your brakes when you don't know much about cars and risk getting into accident because you don't know how to bleed em?

gotta think about the cost of redoing it by a professional. it's common sense.

[wincrasher]

I think that's a pretty good way to look at things to determine if it's worth it to try to do the job yourself.

I've taken on a few projects and factored in "what if I totally screwed it up and have to do it over" and still came out ahead.

But some things you do simply for the enjoyment of it. I could easily hire out the lawn care at my house. But I like to do it, even though my time would be better spent working.

$750 to stain a deck seems like alot to me though. You can buy a pressure washer for $100 bucks, a few rollers and brushes for $25 and a few gallons of stain for $50.

[Radiance]

She could choose to do better though...

I spend about $300 and 20 hours a month in commuting....

However, I really don't spend much in clothing, I do work in Corporate America but I've managed to dress formal with 3 pairs of pants and 5 nice shirts. I have 4 jackets for especial days. Main colors are black, beige and white. I have one pair of black working shoes and one pair of beige working shoes. I buy easy care clothing so no dry cleaning. I don't use jewerly
I am not the best dressed or the most neat at work but I make up by being very good at what I do and very good social skills. I am offered as many opportunities as my better dressed peers.
I decompress a lot with meditation and journaling and praying and playing with my son.

Still the point remains, before you spend money, is there a better way..

[Snave]

I think several people have mentioned you have to know what you can handle and what you can't. If you can do the work and do it right and save yourself the money, by all means do it. I know I take this apporach. However, there are some things that I can't do or can do, but detest doing, that I will hire people for. I know staining the deck is an example, but I have done this and done it poorly thinking I could save money. I would have gladly paid someone to do it looking back. It looked horrible.