Trading Time For Money? When Is Enough?

One of the pervasive messages of our time is that more is better. The bigger house, the nicer car, more stuff, fancier stuff; it’s an assumed goal. But every choice we make about lifestyle comes at the expense of our time. Time committed to working and earning. It comes at the expense of pursuing non material things that can, in fact, be more valuable to your life. If you want time freedom, you have to define your point of enough.

Tyler Durden: The things you own end up owning you. – Fight Club

This point was driven home last week touring a Home Show Expo. I have been to these events over the years and it is interesting to watch how every year the standards are a little higher. More is better. They were beautiful, for sure. But I couldn’t imagine owning one. My time freedom is much more valuable to me than that.

That is the best choice for me. Clearly not for everyone, because several homes in the show were already sold. A wealthy life is defined by your values. Earning and spending in alignment with what matters most to you.

But how much does that new house actually cost? How much are you trading in terms of your time to own it? Will there be enough time left over once you have paid that cost for the other things in life you want?

I’ll show you how easy it was for me not to have house envy. The example is extreme by midwest standards, but you can apply the same idea to other decisions you make, no matter the price tag.

And the price tag? $850,000. Wow.

So I could have this one awesome house or 8 bread and butter rental houses. Would I be in the same place financially? Heck no.

The awesome house had a huge yard, a pool and 5,000+ square feet. It can’t just sit empty. It needs stuff to fill it. Lots of stuff. It had multiple sets of appliances…..of course you need a washer and dryer out by the pool! And someone will need to take care of all that. Time and/or money spent.

The awesome house was in an awesome neighborhood. You need an awesome car to go nicely with the house and neighborhood.

I am betting the awesome neighborhood has awesome parties too. $$$$

All of this awesomeness is paid for with after-tax dollars that someone has to earn. (Ok you can probably deduct your mortgage interest and property taxes).

And the bread and butter rentals? I’d have 8 rental checks coming in ever month (maybe a vacancy here & there). I wouldn’t need to fill it with any stuff, the tenants would do that. Sure, I’d have multiple sets of appliances, but I am getting paid to provide them….it’s part of the rent. Yup, there would still be maintenance and upkeep on the property. And property taxes. All tax deductible.

In classic financial terms, we would call both the awesome house and the rental house ASSETS. But one is a lifestyle asset and the other an investment. Robert Kiyosaki would argue that the lifestyle asset is actually a liability. It takes money out of your pocket. The rental property, he would agree is an asset. It puts money in your pocket. This creates income to fund your lifestyle.

Over time, the difference in these two choices becomes huge. Which illustrates another concept. Every financial choice we make today, also effects us in the long-term as well. Compounded. I didn’t do the math, but I am guessing that I could have at least 10 rental houses when you consider all the costs involved.

Ultimately, it is about what you value. Maybe that is the right neighborhood for you. The schools might be great. The neighbors could become your friends or business connections. You could have great parties there connecting with friends and family.

But for me, it isn’t even tempting.

If you want time freedom, you have to define your point of enough. Click To Tweet

Comments

comments