Maybe I Should Save Money and Blog Less?

Most hazard lights on your dashboard can be ignored for a while. For example, the important-sounding “service engine soon” light, which invokes the imagery of an exploding car engine (but can be triggered simply by screwing the gas tank cap on wrong). However, the mischievous battery light is not one of those lights.

It’s tempting to ignore. You’ve probably seen the light pop on right before you turn your car over and start the engine. What you don’t want to see is that light come on while your car is running. It means that there is a problem with your electric system, and usually your alternator has made the long trip to the big junk yard in the sky. For us mortals still driving around on earth, when you see the light appear, you have a few minutes before your battery dies and your car stops running.

I’m familiar with this light since I’ve been victim of its appearance in the past. Add in a few long hours stranded on the side of the road, and you can probably guess the bitter emotions that well up whenever I see the Red Battery of Sudden Car Death. I saw this light just one week ago, right before I started my stay-cation.

In Which I Run a Boring Cost-Benefit Analysis

After my man-trum ended and I stopped pitying myself, I thought up two options for fixing my car problem:

  • I could spend two hours replacing the alternator. It is within my limited car fixing ability. Although I should note that it is more like a one hour job, but having no power tools usually means spending an hour trying to loosen various rusted bolts.
  • I could take the car into my mechanic and not bother with the repair. Sure, I know how to fix my own car, but I’ve been working a lot, have a strict blogging schedule and I don’t want to spend two hours of my free time fixing my car.

Being an economics-educated accounting nerd, I couldn’t make a decision without a cost-benefit analysis. So I called the local parts store and my preferred mechanic to get my head wrapped around some costs.

I found the best deal for a new alternator at one of the local part store for $132. It turns out that my mechanic has no issue with using parts I bring, so there is no extra cost or benefit with my options for buying the alternator I need.

However, the difference was in labor costs. My mechanic runs at $60 per hour, which is not really a bad price, especially since he has power tools and can change out the old alternator in one hour; half the time it would take me.

What to do? I really didn’t want to use up my stay-cation fixing my car for two hours. However, paying $60 to do a fix I could do myself seemed excessive. Were there any other costs to working on my own car that I was missing?

Opportunity Cost of My Time

It turns out that there is one more cost worth considering in my scenario above. You see, I don’t just blog, I make money blogging. In fact, I make good money blogging.

I’d estimate that an hour of my blogging could turn into a revenue payment of about $32. If I used two hours of my time to blog instead of fixing my car, I could make $64. Thus, by using a mechanic, I could actually make $4. This type of time valuing is a valid consideration and economic concept known as opportunity cost of time.

Opportunity cost arises when you have multiple choices to earn money. Since those opportunities could become money earned, there is a cost to forgoing an option in favor of an alternative. The bigger the opportunity you pass up, the larger the cost you incur. When the opportunity involves spending time, you can use this method to value your time.

So, to summarize the economics, I can have my mechanic fix my car and sleep soundly knowing that I’ve actually made some money avoiding something I don’t feel like doing, right? Have you also used your blog revenue, as I have, to calculate your opportunity cost of time?

Sad News: My Revenue is Not My Opportunity Cost

Unfortunately, my use of $32 is completely inaccurate. While I could generate $32 in revenue per hour, it’s not my true opportunity cost. I’m an entrepreneur and we are creatures who obsess about revenues and forget all the costs that go into coming up with the final income figure.

My margin, or the percent of revenues that actually lead to profit (revenues minus expenses), is only really about 90%. You see, I have to pay for hosting my site, my internet connection and even the equipment I use to write like my computer and router. That means that my opportunity cost is really $28.80?

I’m still not done cutting into my earnings. I also need to add in my taxes which include 14 percent in employment taxes, 15 percent in income taxes and another 7 percent in state income taxes; for a total of 36 percent. Now I’m left with a miniaturized opportunity cost of $18.43 per hour.

Sadder News: My Opportunity Cost is Actually Zero

However, even the $18.43 is too optimistic. While I generally earn $18.43 for every hour I blog, I’m not exactly turning down any money offers. The laws of economics tell me that returns diminish the more I work.

I’d probably need to work a lot more than two hours to generate an additional opportunity. Those two extra hours blogging instead of fixing my car might be more like $9 an hour by the time I get a viable offer. It could be zero, in fact, but it’s definitely less than $18.43.

Even worse, I’m not really serious about blogging for an extra two hours. What I’d really be doing, while my mechanic fixes my car, is hanging out with my family for some much needed R&R.  In this case, my supposed blogging opportunity is really just a straw man argument to justify spending money on a mechanic. If I’m not serious about taking an alternative opportunity, my true opportunity cost is zero.

It’s an important nuance to understand, because while I’m rationalizing an opportunity cost to settle my conscience about hiring a mechanic, what I’m really justifying is spending $60 for two hours of leisure time.

Are You Paying for Your Leisure Time?

I’m sharing my story and writing this article with grander intentions than boasting about my blog revenue generating abilities. I hear people quote the opportunity cost of time frequently and it usually comes from two sources:

  • Family and friends who are high wage earners
  • Bloggers who are successful at making money online

There is a reason for this trend: both tend to work too much. Probably more than they should.

Let’s say that you are me; a married father with children under the age of 18. According to the averages at the Bureau of Labor Statistics, somehow I work only 6.3 hours and have a total of 3.6 hours of leisure time. It sounds funny, but not when you consider that the statistics are daily, so you multiply 6.3, times 7 days and get to the average hours you work each week.

If I then add in 3 hours of blogging every day, you can see that leisure time is almost non-existent. Even two hours a day really impacts leisure. That takes a toll when you are married and it’s even more difficult when you have small children. It’s enough to get me thinking that it would be wise to spend $30 an hour to buy back my leisure time, when most Americans pay nothing.

It’s Actually Cheaper to Blog Less

Now that I’m being honest and confess that my real motivation is to buy leisure time, the real financial decision before me is:

  • Should I buy my leisure time at a cost of $30 an hour to hire a mechanic?
  • Or, should I blog for two hours less and reclaim my leisure time at a cost of $18.43 an hour?

It would be a no-brainer if I weren’t addicted to this thing called blogging. That’s why I found a way to come up with a comparable alternative to cutting my blogging, without really cutting back on blogging. I could hire someone to write two posts at $20 a post. Given a 15 percent tax effect, it would only be an effective cost of $17 per hour, which is cheaper than $18.43 an hour in lost blogging revenue.

What should I do? I’ve long made up my mind, but don’t duck the more important question: what should you do? I’ve been reading blogs for over a year and I’ve seen many articles where opportunity costs were probably used to justify buying leisure time. Are you guilty? It’s not just blogging, this could be the case for many leisure activities or money making activities where we’ve over indulged.

Don’t get me wrong. Buying leisure time is a valid decision. It’s what you are doing when you buy a washing machine instead of washing by hand or a vacuum instead of sweeping. I’ve also seen people try to convert work into leisure by making things like couponing, a family activity. What is important is to identify when you are so busy you start buying leisure time, understand how much you are paying for it and if you can, find a smarter, cheaper alternative. Maybe it means saving some money by blogging less?

What do you think? How much would you pay for leisure?


Maybe I Should Save Money and Blog Less? — 19 Comments

  1. It is only opportunity cost if you take advantage and actually find a way to make that money. It is definitely harder to quantify with blogging then working an hourly job. I would probably pay the mechanic just to make sure it is done right but I am not mechanically talented.

    • That’s an important distinction Lance. I know many people who will throw out an opportunity cost without actually having an opportunity. It’s even hard to use your day job as an opportunity cost. Odds are, your employer is giving you as many hours as they are interested in giving you. Try getting an extra hour or two each week. I’m sure it’s a difficult feat.

  2. Wow. I’m not sure I’m awake enough to take in all the math in this post. :). I tend to squander my leisure time and not value it enough. What I’d pay anything for is a good night’s sleep!

  3. That’s a lot of math to comprehend and wiggle through. Personally, I think $60 for a mechanic is a steal these days and I’d probably go for that just for the convenience and time factor.

    One thing to keep in mind is to take into consideration which time you’d be ‘borrowing from’ to do something yourself. If you take it from leisure or sleep time, you’re not taking away from income time. Many people use the ‘opportunity cost’ argument with the math pointing that they could make money 24 hours a day 7 days a week, which is simply not possible. If you can do the repair and take it out of time you might just sit and watch TV, then your math is different if you take it from time you’d be blogging.

    • You’ve hit on the point I was trying to make. How you spend your time determines whether it’s an opportunity cost or a cost of leisure. Buying time to sit on the couch is a cost of leisure. Buying time to blog is an opportunity cost.

      However, generally when I see someone rationalizing an opportunities cost, they have the situation switched. What they really want to do is buy time for more TV and justify it by creating an opportunity that they either aren’t serious about or doesn’t really exist.

  4. Is the mechanic going to come to wherever your car is to fix the alternator? If not, you have to take into account that the time it takes for get to bring your car to the mechanic and to get it back. That would have to come out of your two hours of blogging, which reduces the benefit even more.

    • That’s very true! I did consider doing this in the post. The transit time and cost are very material consideration. However, I thought it might create an even more over-analyzed post. I’m glad you picked upon it though!

  5. Most of my leisure time is free or at steep discount! I download ebooks from my public library, go the movies using group discount (50% off) tickets and time on the internet/blogging. Blogging time is fixed whether I use it or not.

  6. I think this is the case where math doesn’t matter as much as the general state of how you FEEL.

    If you feel better blogging less, then blog less or not.

    I know work about 3 hours a day now from 12+ hours and it feels great.

    • Great point Sam. Perhaps my over-analyzing is really indicative of a great problem that needs to be addressed and counting pennies is just an excuse. However, there is definitely not an easy short term solution, to the bigger picture.

  7. You truly are a math/accountant nerd! lol.

    This is a great breakdown but I avoid really taking things that far. I certainly pay for leisure as I value my time more than I value money. I’m glad to pay people to perform their jobs and make my life easier (assuming that it fits in my budget). I don’t have a “cleaning person” but I can’t wait until the day I can bring one in the house once or twice a month. Even if the math doesn’t work out in my favor, it’s hard to put a price on my time as I only have a small amount of it.

    • I proudly flaunt my financial calculator and mourn the days were pocket protectors were easy to come by.

      My strategy on the house cleaning is to pay the children my wife made something called an allowance. I just have to wait for them to ripen 😉

  8. Blogging to me is an intellectual exercise. It keeps me focused to learn about personal finance and personal growth while having fun sharing my thoughts with others. I agree that financially it doesn’t make sense to blog unless you are making a great deal of money online.

  9. Very good points. In my example, I’m perfectly capable of changing my alternator and in a world where I had too much free time, I’d jump at the chance to do the repair. It really troubles me to pay for something I’m more than capable of doing on my own.

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