Lirik Lagu Sinopsis Film Gaya Hidup
Blackberry LG Mobile Nokia Samsung Sony Ericsson
Klasemen L.Italia Klasemen L.Inggris Jadwal Liga Italia Jadwal Liga Inggris
Resto Enak di Jakarta Resto Romantis di Jkt Hokben Delivery Bakmi GM Delivery PHD - Pizza Hut
Minggu, 11 September 2011 | 01.31 | 0 Comments

The Simple Dollar: “Money Is Something We Choose To Trade Our Life Energy For” plus 1 more

The Simple Dollar: “Money Is Something We Choose To Trade Our Life Energy For” plus 1 more

Money Is Something We Choose To Trade Our Life Energy For

Posted: 10 Sep 2011 01:00 PM PDT

ymoylThe title of this post is a sentence that appears in bold on page 51 of Your Money or Your Life. In fact, it appears twice in bold on that page.

Money is something we choose to trade our life energy for.

This applies to virtually every financial transaction we make. When we work, we trade our life energy for the money we make. Even when we do things like receive an inheritance or win the lottery (a lottery ticket is a bad proposition, by the way), we still had to invest life energy or money to receive those things. Investments, for example, don’t require an input of life energy themselves, but they do require an input of money, which at some point we had to trade our life energy for.

Now, if you start digging into this, there are some interesting consequences.

First, if you earn $15 an hour at work, you’re not actually trading an hour of your life for that $15. This is a point I’ve discussed before. In truth, you’re not earning that $15. Some of it is going away to taxes. Some of it is going toward buying your work clothes. You’re also working some hours for free, including the commute time and so on. If you start calculating the numbers there, you quickly get down to a rate of $8 or $9 per hour (perhaps a little better, perhaps a little worse) that you actually earn from your job that you get to keep.

At my previous job, I had an on paper hourly rate of about $25 an hour. However, once I started figuring in the additional costs, such as child care and parking passes and good clothes for work, and adding in the additional time, such as time spent traveling and time spent working in the evenings for free and time spent commuting (an hour every day), it added up to a much more painful hourly rate.

Today, I can earn a lot less than $25 per hour and still end up with the same amount of money to keep because most of those expenses are gone. I don’t have a commute, I don’t pay for parking, I don’t have to buy work clothes, I have reduced child care expenses, I rarely (if ever) have to travel – these add up, both in terms of financial and time savings.

Second, once you start really realizing how much money you’re receiving for each hour of your life you’re trading, frugality is cast into a whole new light. Quite often, you find that the hourly return on your time while working on a particular frugality task is better than the hourly return on your time at work (or doing a work-related task).

For me, the magical rate is about $10 per hour. If it’s less than that (as gardening is), it needs to have some extra appeal for me beyond mere frugality. If it’s more than that (like turning off the lights before a trip or making our own bar soap), then it starts to become a priority to get it done.

Third, investing also has hourly returns. When you invest, you have to invest some time setting up and following the investments. Thus, investing has an hourly rate of return as well. Sometimes it can even be a negative hourly rate of return over a certain period of time.

Ideally, if you’re investing a significant amount of money and are using passive investing, the hourly rate becomes fairly large. It’s this perspective that encourages me to use passive investing techniques (essentially, I pick a fund or two in my retirement or investing account, then set up an automatic investment into those funds and sit back). I might earn a greater return if I was more actively involved, but I’d be investing significant time to earn that greater return and my hourly rate would go down.

Thus, I would only actively invest if I were having a lot of fun doing it. It would have to bring me personal enjoyment to make up for the drop in hourly rate for the time invested.

Finally, the things I do for fun are altered by this “time is money” perspective. I might enjoy golfing, for example, but to do that, I’m paying about $20 per hour for enjoyment. I could do a lot of things I personally enjoy more for that $20 an hour rate, so why would I golf?

That $20 per hour equates to about an hour and a half of work for me for that one hour of fun, so that one hour of fun better be a very good hour of fun.

When I start using this perspective, the free and fun things to do in life start to take on a lot more appeal. I could ride my bike to the park with my kids for free. I could play a round of disc golf while there with my wife and my oldest son for free. All I’m spending is that time – and I’m enjoying it. I’m not spending money doing it (which is actually time spent working).

In short, when you spend money, you’re actually spending time at work. If you actually earn $8 per hour invested in your job and you buy a $2,000 television, you’re swapping 250 (!) hours of your life working for that television. Why not buy a $1,000 television and reclaim 125 hours of your life?

If you earn that $8 an hour and buy a $200,000 house on a 30 year mortgage, meaning you actually dump in $400,000 after the interest, you’re swapping 50,000 hours of your life for that house. Why not live in a $100,000 house and reclaim 25,000 hours of your life? That’s twelve years of working 52 weeks a year, five days a week, eight hours a day.

Some food for thought this Saturday afternoon.

Ten Pieces of Inspiration #36

Posted: 10 Sep 2011 07:00 AM PDT

Each week, I highlight ten things each week that inspired me to greater financial, personal, and professional success. Hopefully, they will inspire you as well.

1. Dave Ramsey on work and money
Dave clues in on one of the key components of making money.

“We learned early on that if we help enough people, the money will come.” – Dave Ramsey

Do you have a skill or a product that can make people’s lives better? That’s probably your key to making money.

2. Dan Ariely discusses learning and conflicts of interest
I see this all the time, particularly when it comes to politics.

If you’ve already made up your mind before you sit down, you’re not going to learn anything. If you’re going to sit down to learn something, don’t waste your time by coming at it with preconceptions.

3. Charles Schwab on working for money’s sake
Ever notice how the people who seem to get ahead in life are the ones who are passionate about what they’re doing?

“The man who does not work for the love of work but only for money is not likely to make money nor find much fun in life.” – Charles Schwab

There’s a big connection there. People will always pay for the combination of passion and skill.

4. Artfire
Artfire is a site somewhat like the previously-mentioned Etsy. Both focus on handmade goods and provide a platform for people to make items at home and sell them to a large audience.

I often look at these sites for gift ideas (things I’ll make myself to give as gifts) and sometimes as a place to purchase a gift. It’s also a powerful way for people with an artistic or crafty bent to make money on the side.

5. Linus and Lucy
This is the song I’m trying to learn on the piano right now.

I’m going to guess it’s going to sound familiar to an awful lot of you.

6. Henry Ward Beecher on the measure of a person
I would far rather hang out with a great person without much money than an awful person with a lot of money.

“He is rich or poor according to what he is, not according to what he has.” – Henry Ward Beecher

You can decide for yourself who is worth paying attention to.

7. Van Gogh’s The Bedroom (1889), at the Art Institute of Chicago
I was there less than a week ago. This was one of the two highlights for me.

Van Gogh's The Bedroom

Something about this painting just lit up the room for me.

Thanks to Dawn Zarimba for the wonderful photo of this painting hanging in the gallery.

8. FDR on money and effort
I’m happiest not when I’m making money, but when I’m creating something.

“Happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.” – Franklin D. Roosevelt

Money is a nice reward that comes later. It’s the act of doing something that’s exhilirating.

9. Camille Pissarro
I had never appreciated Pissarro’s art until my visit to the Art Institute of Chicago last weekend.

Many paintings by him spoke to me, but the one that really stood out to me was this one, Woman Bathing Her Feet in a Brook (1894/95).

Camille Pissarro

This was easily my daughter’s favorite painting at the entire museum (and one of mine, too!).

Thanks to one2c900d for the picture!

(I also really liked The Place du Havre, Paris (1893) by him, as well, but I couldn’t find a good public domain picture of it.)

10. Emerson on the reality of money
People often seem nostalgic for the great times of the past. In truth, though, the past wasn’t really all that better than today. As humans, we tend to remember the good times and forget the bad ones, so the past often looks pretty good.

“Can anybody remember when the times were not hard and money not scarce?” – Ralph Waldo Emerson

One can never really roll back the clock to some earlier great times. Instead, we have to move forward from where we’re at.

Copyright Terjago © 2010 - All right reserved