Opportunity cost and the home
Is fixing this myself worth the opportunity cost?
I met someone recently who bragged that she and her husband had saved hundreds of thousands of dollars over the years because they did all the work around their house themselves. That means yardwork, maintenance, the whole nine.
But did they really save money? What if they ran the numbers on that opportunity cost equation and found they actually lost money?
I'm thinking a lot about this right now, because I bought a new house recently, and there's plenty of maintenance to be done. In fact, right now, there's a guy out back fixing a busted pipe in my sprinkler system. And I’m feeling a bit guilty: Should I be out there fixing that thing? It doesn't look that difficult – all it really amounts to is replacing a piece of broken plastic piping.
The case for outsourcing
- I know nothing about sprinkler systems. Nada. Zip.
- I have no specialized equipment, or materials, so I’ll have to find out what I need to buy and then go buy it. And then get distracted in the grilling section of the hardware store. And end up spending way more than I really should.
- I’ll probably make a mess of it the first time and have to do it over. Plus there’s that vital part that I didn’t get at the store, so I have to make another trip.
- It’s what time? Where did the day go?
- I didn’t even start writing this blog, and now I might get fired.
- My sprinkler guy will take 30 minutes and charge me $50. Boom.
The case for DIY
- I’m gaining valuable experience. Once you’ve done something once, whether its stucco, or concreting or sanding a painting a deck, you know what to do, what equipment to buy or lease and how much time it takes. And that investment could mean that every time my sprinklers go kablooey, I have the confidence, know-how and gear to fix them myself in short order, and for next to nothing.
- I’m not making any money during the time that the sprinkler guy is fixing my stuff: I’m an exempt employee and I don’t’ get paid overtime.
- I get huge satisfaction out of fixing stuff myself. I feel like a provider, a fixer, someone who can be relied on to get things done when things break down. I feel like Magyver. I feel … like a man!
- Fixing stuff is fun. Plus you have bragging rights.
If opportunity cost is "the road not traveled," then the cost of outsourcing is the improvement in my expertise and sense of satisfaction. The cost of DIY, on the other hand is all the time (and maybe money) that I could otherwise spend either making money or relaxing (hey, it's the weekend).
Which means that the opportunity cost calculation of whether or not to outsource household chores becomes a very personal one. People calculate it when they decide whether or not to get groceries delivered, to have a gardener come to work on their yard, or to have their house cleaned by someone else. And a big factor in the decision is how much you enjoy doing those chores yourself. If you really, really hate it, and it takes forever, and you'd enjoy that time so much more doing something else productive or fulfilling or rewarding, then go ahead and outsource.
For a lot of people, of course, there is no question of doing an opportunity cost calculation: they simply don't make enough money to even consider paying someone else to do something for them, so they have to do it themselves. Which means that if you're in a position where you find yourself wondering about opportunity cost, it means you're lucky. Even if it does mean doing some math.