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What's The Cost In Time
This week, I am skiing in the Rockies. Each time I’m up here, I get the urge to buy a place. To date, one of my best investments has been not acting on this impulse.
The typical question: Can I afford it?
Two better questions:
What’s the cost in time?
How will this make things better?
Dig as deep as you can with those questions.
TIME is more than what we spend directly on a project.
Energy spent indirectly
Energy not available for other projects
Crowding out good ideas…
…because we are thinking about assets we didn’t need in the first place.
It’s difficult to see the value of keeping space in our lives.
What are your top three tasks for 2023?
Where do you desire MORE?
Share Experiences with My Wife
My list requires time, not more assets.
How about your list?
As I age, I get more time. Thing is… I have less energy.
Three favorite articles on time, follow.
The Window of Time, How I Broke Free
Wealth In Time, A Better Way of Calculating Wealth
Money Value of Time, A Framework for the Self-Employed
They’ve been lightly edited.
The Window of Time
I was taught that all my problems would be solved if I made enough money.
Spending creates golden handcuffs.
Living a big-city lifestyle had my younger self trapped. His large spending created a hurdle that would have taken him decades to overcome.
Put another way, the weight of my spending was preventing me
From launching towards my true self
Meeting a wonderful wife
Creating a better life
My solution was simple
Save half my take home pay
Get myself to a low-cost environment
Create independent income streams to cover my cost of living
Surround myself with people who lived my values
My 30-something self did a good job for me.
What he wasn't able to see was the Window of Time. It didn't matter to him because he was “rich in time.” Having his basics covered, he risked time on changing direction.
Eventually, we realize we have more wealth than time. This is most likely to occur in what we call the "peak earning years."
Cutting spending, leaning into saving, buying an extra couple years before I'm old...
...all trades you should consider.
Two landmines I hope you avoid are:
Peer-driven spending that leads you away from what fills your heart
Creating capital for future family members, when they'd rather spend time with you now
Buy time gradually.
Spend time with intent.
Wealth In Time - WIT
How to connect:
Let’s bring back my 20-something self. He was living in London, working in finance and renting a room to keep his overheads down.
Coming out of college, having more cash flow than he needed, he felt rich.
But was he?
He earned $75,000 and was spending $32,000. How wealthy was he?
His net worth was $20,000.
Net Worth “divided by” Spending = WEALTH IN TIME
His WIT was 7 ½ months.
Roll forward to my early 30s. I’m a young Private Equity partner and hit $1 million net worth.
I was spending $250k a year, felt flush, but was I wealthy? Let’s find out.
$1,000,000 / $250,000 = 4 Years
Not wealthy, especially when you consider my life expectancy was over 50 additional years.
At 31, I realized my spending was buying me NOTHING.
What I liked to do was swim, bike and run
I had fantasies of leaving the corporate world
I took action
I applied to emigrate to New Zealand
Arriving in Christchurch, I was able to buy a five-bedroom house for US$110,000. My cost of living plunged to $25,000 (NZ$60,000).
My WIT jumped to 40 years.
Most of my family thought I was nuts.
Best trade I ever made.
Money Value of Time
This is a useful calculation.
Annually, I make the calculation at the level of Business, Family, Household and myself.
Start with time:
How many weeks a year do you want to work?
How many days a week?
How many hours per day?
Weeks * Days * Hours = Billable Hours
Billable Hours are the time you have to generate revenue.
What should you charge per billable hour?
Desired Net Income + Overheads = Gross Revenue Requried
Gross Revenue Required / Billable Hours = Rate Per Hour
A case study from my 40s to illustrate:
The first column was my 2009 goal for my athletic consulting business.
Generate $5,000 per month net cash contribution to my family
One week per quarter spent training alongside the team
Four hours of focused work per day
One day off per week
The second column was reality, and it was a good life.
Work every day
Discover I can only be productive for three hours per day
Take two weeks off and return to 1500 messages - realize I can't "bill" my inefficiencies
The third column was my goal for my 50th birthday.
Understand: Your average billing rate is your new minimum
Vow: I will stop doing low-value work
Consider: Where can I deliver 2x my billing target in value added
Can I be 3x more efficient than a $35 per hour coach? Yes. The two-year transition was painful, but I got there.
When I arrived at the middle column, I needed to make a decision moving left (for a little more time) or moving right (for way more time).
How much of your time is spent on bringing satisfaction to your life?
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