Have you ever thought that you buy things with your life and not necessarily with money or, in other words, you buy things with the hours you dedicate to your life? I understand it’s a radical notion to think that when you make a purchase, say something really big like an 82″ flat screen TV, what you’re really doing is trading a part of your life for it.
Before you dismiss my statement, hear me out.
Assuming you work hourly and do not receive royalties or any type of passive or residual income, ask yourself the following question: If you stopped doing what you currently do for a living, would you also stop receiving your salary? For most people, the answer to this would be yes because, in essence, you are trading time for money, which is a topic I discuss in my article “Pajama Money: Earn Passive Residual Income and Live the Lifestyle You Really Want.” “. but I digress. By trading time for money, this brings me back to my initial statement of “you for things with the hours you spend in your life.” You may be wondering how I came to this conclusion, so let’s get down to the facts.
According to Wikipedia, the median American household income in January 2019 was $63,688. In an effort not to get into complex formulas, I’ll use the simplest numbers possible and refrain from using tax and interest in my equations. So, for the sake of this conversation, I’ll use conservative numbers by rounding down to balance this number at $63,000, which would be $1,211.54 per week and $30.29 per hour.
Now, let’s say you want to buy the TV mentioned above. After doing a quick search for “average price for an 82-inch TV in the US today,” I found the price to be over $4,000. So how much would it cost you in hours worked?
Samsung 82″ Flat Screen TV ($4000) = 132 labor hours or 5.5 days
So let’s say you and I work together and one day you come to work and you hear me talking to another colleague and say, “Hey Jim, guess what? Over the next five and a half days, I’ll be working 132 countdowns.” hours just so I can buy my new 82″ flat screen TV. Isn’t that exciting?!!”
Forgive me, I know that was a bit hyperbolic, but it proves my point more clearly and I don’t know about you, but doesn’t that statement sound weird? Regardless, by taking this approach, you can help put things into perspective, or at least start to increase your awareness. Of course you don’t have to change your lifestyle or habits if you don’t want to, however it’s good advice to be more aware, that’s all.
Let’s take a quick moment now to look at some other common purchases:
Grande Starbucks Cappuccino ($4.00) = 0.13 labor hours or 8 minutes
Apple iPhone 11 ($700) = 23 working hours or 1380 minutes
New Ford F-150 Pickup ($28,000) = 3,864 labor hours or 5.3 months
US median home listing price ($226,800) = 31,536 labor hours or 3.6 years
Remember, these numbers reflect the time spent earning the amount needed to make the purchase where daily expenses and the like have not been considered. And with this new perspective, I’d also like you to consider that over time, as inflation rises and prices continue to rise, your “sweat equity” starts buying less, which means the value of your time goes down. . When you consider that prices on average have risen nearly 50% in the last two decades, it becomes easy to understand why so many people are struggling with mountains of debt ranging from financing loans and credit cards to mortgages over 30 years.
It’s amazing to see the actual numbers, but I’ve put together a short report called “Inflation: The Hidden Fiscal Agenda Silently Stealing and Confiscating Your Wealth.” that highlight 3 agendas that deplete your money’s worth without you realizing it.
If you want to learn more, including how you can hedge against inflation, check out my free report by clicking here.