I hate the term YOLO…with a passion.
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For those of you who are unfamiliar, this overused acronym stands for “You Only Live Once,” and has become the millennial version of “carpe diem” ever since a few rappers made it popular in 2011.
Why do I hate it, you ask?
Here’s why.
I hate the term YOLO because it diminishes the true meaning of the words that it is meant to represent.
YOLO is plastered on everything from T-Shirts to tattoos. However, the concept only seems to be summoned when a high school senior needs an excuse to skip class, or a strict paleo dieter wants a reason to order a Venti Mocha Frapp from Starbucks.
YOLO has become an excuse…a cop out.
However, acknowledging the idea that you only live once is much more than that…it is literally life changing (no pun intended). As a matter of fact, it is the sole reason that I took control of my personal finances a year and a half ago and found real estate.
The Time You Have (in JellyBeans)
A lot of people ask me why I decided to start investing in real estate. Well, I can safely say that a large part of the reason was thanks to a YouTube video.
Yup. You heard me correctly.
I know what you are thinking. But Tyler, isn’t YouTube nothing but cat videos and terrible acoustic covers of pop songs? You’d be wrong.
Please watch this.
Do I have your attention yet?
I thought so.
You Only Live Once
Is your life tied to your W-2 income?
Are you trading your time for your money?
Are you putting cash away in your savings account hoping that your interest rate will beat out inflation?
Are you relying on a 401k or Social Security to save the day when you’re face to face with retirement?
Are you interested in traveling the world instead of just taking vacations?
Are you treating your home as your best investment?
Do you think that life was meant to be lived in a cubicle?
If any of these apply to you, I urge you to use the video above as motivation. Get out there, start reading, and create some passive income through real estate for yourself and your family.
For those of you who have already seen the light when it comes to investing in real estate, let’s talk about the value of your time.
How Much is Your Time Worth?
It was back when I was a little kid that I realized I valued my time much more than my money. I still remember wondering why my folks always drove out of their way in order to go to the gas station that was a few cents cheaper per gallon.
It just didn’t make sense to me.
Now that I’m older, and maybe a tad bit wiser, it has all started to become a lot more clear.
Different people value their time and their money differently.
However, there are some ways to actually quantify the value of your time in order to make decisions a little bit easier.
If you haven’t done much thinking about this concept, check out the Time and Money Calculator from the good people over at ClearerThinking.org. Instead of merely dividing your salary by the number of hours you work in a week, this 10 minute long survey takes a systematic look at all of the variables involved in determining the value of your time.
The Way Forward
Most of us small time real estate investors don’t have salaried employees working under us. We don’t have a secretary, a marketing division, and full-time handyman. This means that we have to take special consideration into what jobs we outsource, and what jobs we take on ourselves.
Once you have completed the Time and Money Calculator, here are a few exercises to get you thinking about how you can use this time value in your everyday investing life.
Lets say that the value of your time = $45/hour
- The door knob at one of your rentals broke.
- Option A – DIY
- Cost: -$10 for parts
- Time: -1.5 hours for travel & repair
- Total Cost of Time/Money: -$77.50
- Option B – Outsource
- Cost: -$75 for a handyman
- Time: 0 hours
- Total Cost of Time/Money: -$75.00
- You’re considering buying Quickbooks, or continuing to use your system of bookkeeping
- Option A – Buy Quickbooks
- Cost: -$13/month
- Time Saved: +3 hours/month
- Total Cost of Time/Money Saved: +$122.00/month
- Option B – Continue to use Excel
- Cost: $0/month
- Time Saved: 0 hours
- Total Cost of Time/Money Saved: $0.00/month
- You’re in the market for cheap flooring
- Option A – Drive across the city to a wholesale store in order to purchase 100sf of wood laminate @ $1.79/sq ft. Round trip takes 1.5 hours.
- Cost: -$179 for flooring
- Time:-$67.50 for travel
- Total Cost of Time/Money: -$246.50
- Option B – Drive just down the street in order to purchase 100sf of wood laminate @ $2.50/sq ft. Round trip takes 30.
- Cost: -$250 for flooring
- Time: -$22.50 for travel
- Total Cost of Time/Money: -$272.50
Final Thoughts
There are no right or wrong answers to these scenarios…they are merely a tool to start thinking about the types of time/value decisions that we unknowingly make every day.
For example, in scenario #1, it is cheaper to hire out the labor than to do it yourself. But what if you really enjoy fixing door knobs? Well, then by all means do it. This is a guide, not a rule of law.
However, I urge all of us to reach for consistency whenever we can. If we are willing to drive all the way across town to save $26 on flooring, why would we NOT be willing to purchase a software for $13/month that could potentially save us $122 every month?
By setting a dollar value for each hour of our time, it helps us to make quantifiable decisions about how to spend our time instead of abdicating that responsibility to our own biases.