I thought about changing my own oil the other day, but I then realized that it is not worth my time. After many years and several mistakes later, I now understand where my strengths lie. I’m no auto mechanic. I am not good at carpentry or electrical work either, and if a plumbing job around my house requires more than a quick jiggle of the toilet handle, I’m lost there as well. There are many times though when I am tempted to try my hand at what is supposed to be a simple task like changing my own oil in my car, but then I run a quick cost benefit analysis in my head. It’s just not worth my time.
I make approximately $71,100 per year before taxes or $62,400 after taxes (a lot of my income is not taxable because I work for the government). That equals $5,200 a month, $1,300 a week, or $185 every day. Let’s just pretend that I work a 40 hour work week even though that’s not true for most of us, including me most weeks. But, for the ease of calculations, let’s just pretend that I work 40 hours per week. That means that I make about $23 an hour.
It costs $19.95 to get my oil changed at my local quick lube shop, and it takes them about 15 minutes. They even have big signs out front touting how fast they can get the job done. I, on the other hand, know nothing about cars. I can probably change a flat tire if I was really desperate, but I absolutely do not and cannot change my own oil and oil filter. My best friend and I tried to change the oil on my 1990 Oldsmobile once when we were teenagers, but after two hours of monkeying around and a quart of oil spilled on his parents’ driveway, our days of being automobile mechanics was over. His parents were so mad at us, but we had a great time. We thought that we were slick driving my hand-me-down car up onto the wheel ramps that I borrowed from my dad. I ended up driving too far, too fast and almost crashed my car into my friend’s garage.
Because it took me and my best friend two hours to finish the job, you could calculate that it cost us $46 worth of our time and that is only counting my salary. It cost us a lot more in time if you add my friend’s salary with mine. We saved $10 in parts, but it cost us $46 in our own labor. I know that this example is fairly simple and set in the past, but the same would have been true had we done the work yesterday as well. It still would have taken us hours to finish the job.
There is an opportunity cost in completing any task. The amount of money that you spend on any undertaking is money that cannot be put to work in a more productive fashion. Are you getting your money’s worth from your time? If you work for a set hourly wage, you know how much your time is worth. But, have you ever calculated how much your time is worth if you are on salary like I am? It could be well worth your time to know your break even opportunity cost for doing any menial task. If you could better spend your time, money, and energy making money, maybe you should outsource some of these tasks. Another example might be a real estate investor who spends his time fixing up his rental property instead of hiring a property manager. Sure a manager eats into your profits, but wouldn’t it be a better use of your time looking for new real estate deals that could earn you tens of thousands of dollars instead of fixing a clogged drain? Do yourself a favor and do not waste your time being inefficient. It is counterproductive to save pennies when you spend several dollars for the right to save those few cents.