Two Fridays ago, I put a down payment on the bike I wanted since the bike shop had to order it for me. After picking out my color, the salesman rang up my order to get my final total. With sales tax, the amount came out to be around $330, but what I heard was, “This bike costs 13 hours of your life.”
I don’t think I’ve been keeping it a secret, but I make $70k each year. After taxes and withholdings for insurance and my 401(k), I bring home around $52k anually. If you break that down into an hourly wage, my effective earning rate is about $25 an hour. (Divide a salary by 2,080 – the standard number of work hours in a year – to get an estimated hourly rate.) So I need to work for 13 hours to bring home enough money to pay for a $330 bike.
That got me to thinking about some of the other things I spend my money on. My mortgage payment, including tax and insurance, is $1,434. That means that I have to work almost 58 hours each month just to pay for my house. And over the course of a year, I work over 688 hours for my house. Considering the previous mark of 2,080 hours in a work year, I’m working 33% of the year just to pay for my house!
Each month, we allocate nearly $2,300 to pay for our debt. I work 92 hours a month, 1104 hours a year, or 53% of the year to cover our debts. Talk about being a slave to one’s debts!
This is exactly why every personal finance-minded person focuses so heavily on paying off debts. Once you’re free from those shackles, you can start working for yourself instead of working for the bank. A good personal finance strategy is all about freedom, and what is more free than being able to use your money to live your life instead of paying for stuff?
Take a moment to think about how many hours of your life you’re burning just to cover your debts. Like me, you may realize that most of your life is being stolen away by your random purchases. That is when you realize that frugality is more than just reducing unnecessary expenditures – it’s about reclaiming your life.
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Very interesting way to look at it. Now I need to go figure out my hourly rate, yikes.