How Not To Save Money: Lie To Yourself And Hide Hidden Costs

Have you ever read a personal finance blog for money saving tips?  How about trying to DIY a home improvement project?

Saving money is important — If you’re not financially independent, boosting your savings rate higher is the easiest and surest way to reach financial independence faster.

But DIY’ing isn’t always the right answer — sometimes the capitalist machine is so efficient it’s often cheaper to Buy rather than to DIY.

Most frugal life optimizing tips fall into these two categories like neat little Tetris blocks — How to buy stuff for cheap, and how to DIY to save money.

Many of life’s big money decisions boil down to this very basic question:  Should you DIY, or should you buy?

(Insert repetitive but addictive Tetris music here)


The Three Camps

In general, people fall into three camps — The first camp of people is those that firmly believe in DIY’ing everything they can to save money.

Let’s call this the “DIY Everything” group.  It’s a noble camp of people — They’ll tradeoff precious leisure time to make their own soap, build their own furniture, synthesize their own biofuel, brew their own beer, and grow every last vegetable in a backyard garden.

The results from this group are often impressive… but the pile of backlogged DIY projects seems to grow year after year.  They just don’t have enough time to do everything.

In the second camp we have the “Buy Everything” crowd.  This group feels most DIY activities are a poor use of time — they could easily earn more money by spending additional time working or creating a side-hustle to generate extra cash.

This group of people can often be found in restaurants and bars running up large bills instead of working extra hours or starting side-hustles.  Oops!

Can you saving money by running up a bar tab?  Many people have tried, but I’m not convinced yet.

All kidding aside, most people actually belong in the third camp of people.  A group that tends to do BOTH a little DIY and a little buying.

This “middle of the road” path gives ample opportunity to make time-value tradeoffs…. but are you really making optimal use of time and money?

Ultimate how you make those tradeoffs is entirely up to you.  It’s your time and your money.  Far be it from me to tell you how to run your life.

However, I constantly see people making mistakes when it comes to calculating DIY-or-BUY trade offs.  They miss all kinds of “hidden costs” in their calculations, and tell themselves “white lies” associated with these activities.

Today I’d like to bust-out The Big Flashlight of Truth, and shine a little light on some of these “hidden costs”.


1. Faulty Time Value Of Money Calculations

The first one on my list is a “white lie” frequently used by the “Buy Everything” Camp.  When confronted with a DIY or Buy decision, they surmise that because they earn $75/hour at their job, any DIY activity earning less than $75/hour is no longer worth their time.

This reasoning has some serious faults — for one, most people can’t endlessly add paid hours to their employment.  Either you work a salaried job where the amount of hours worked doesn’t change your paycheck, OR you work an hourly job with a fixed number of hours (usually set by the employer at 40 hours per week).

What most people have left to work with is leisure time.  After all the commuting, grocery shopping, errand running, and other activities that fill-up a day, leisure time is simply what’s left.   Most people I know only have 4 to 5 hours per day of leisure time.  That’s it!

diy or buy
For most people, leisure time is very limited. Are you willing to give it up?

What people really need to be calculating is the time-value of their leisure time.

Yes, you can start a side-hustle in your spare time to make a few extra dollars — but most side hustles aren’t going to come anywhere near that $75/hourly rate.  Don’t fool yourself.  You might make less than minimum wage!

What’s your leisure time worth if you spend most of it watching TV?  Basically — $0/hr.  That means any DIY activity you engage in could be worth your time.


2. Sustainability Is Hard!

The next “white lie” on my list is Sustainability.  Sustainability (in this case) is the ability to sustain a DIY money saving activity for a very long period of time.

Most people suck at sustainability.  They’ll start a DIY activity in their leisure time, and actually succeed for a little while.  After a few go-arounds they’ll quickly tire of the activity or “get busy” and it’s here that the money saving ends.

This is unfortunate because the real dollars in DIY savings can be found in sustainability — repeating that same money saving activity for a decade or more.

This is exactly why I wrote my Sticking With It post — One of the biggest and easiest ways to save money in a household is by cooking at home consistently.  Yet, in my experience few families go longer than a week without eating out.  Sometimes it’s only a couple of days between restaurant visits!

I recently started keeping track of how long it’s been since we ate at a restaurant using my “Days Since” widget over in the sidebar.  At the time of writing this, it’s been 28 days.


3. Conveniently Forget Tool & Depreciation Costs

If you choose to DIY something, chances are you’re going to need tools.  Whether it’s a sewing machine, gardening tool, a soldering iron, or even just pots and pans — nearly all DIY activities require some kind of tools.

Tools (as I’m sure you know) cost money.  Sometimes A LOT of money.  It’s the tools, or rather the depreciation of the tools that I often see missing from most DIY cash flow calculations.

With tool depreciation costs included, DIY returns are often far lower than what’s initially projected.  Yes, let’s not lie to ourselves — no tool lasts forever.  Eventually they all need replacing!

thrift store drill
If you buy tools to complete a DIY project, you should be depreciating the cost of those tools.

One rule of thumb I like to use: Unless the DIY activity can recover the cost of tools in 3 to 5 years, it’s probably not worth your time or money.

Remember, you’re not saving any money until you fully recover the cost of the tools involved.  Although, it certainly helps if most of your tools are free.


4. What Energy & Fuel Costs?

Another “hidden cost” I see missing from most money calculations is energy costs — the cost of fuel, electricity or natural gas required.

When cooking at home, are you calculating the cost of running the oven for an hour?  Energy isn’t free!  Likewise, if you go to a restaurant for dinner are you calculating the cost of the fuel for your car?

pizza ready for cheese
Can you save money by making pizza at home?  In my experience, yes you can! — but don’t forget to account for the cost of running the oven!

It seems obvious, but I rarely see these costs properly accounted for.  So don’t forget!

Find out how much a gallon of gasoline costs or how much you pay per kilowatt hour for electricity and add these costs into your calculations!


5. Instantaneous Travel Time With No Wait

Here’s one I see frequently “forgotten” by the Buy Everything crowd — Travel time and waiting time.

Stop me if you’ve heard this story before — You and your significant other hop into the car on Friday night for dinner.  After 20 minutes of driving, you make it to the restaurant.  Then it takes 5 more minutes to find a parking spot.

Once you step into the restaurant you have to put your name on a list.  It’s Friday night, so it’s crowded.  The hostess tells you it’ll be 30 minutes of waiting until your table is ready.  So you decide to wait… and your table is finally ready after 40 minutes of waiting.

Then you sit down, order your drinks and food — Another 10 minutes gone.  Then there’s another 20 minutes of waiting until the meal is delivered.

After all that, we can’t forget the drive home — Put another 20 minutes on the clock.

The total cost in time for a meal-out can easily add-up to two hours or more.  Cooking at home can often be faster than eating out!

Don’t forget to include travel time and waiting time in your calculations!


6.  The Entertainment Factor

Alright alright, I know most of the people in the DIY Everything camp are just waiting to tell me “But I do it for fun!  It’s a hobby too!  It’s not just a way to save money, it’s entertainment!”

Yeah, OK.  DIY activities can be fun, but most hobbies aren’t activities that get sustained long enough to really save money or cover tool depreciation costs.  Usually hobbies end-up costing you money … which is totally OK!

But let’s not kid ourselves into believing it will actually save much money.  It probably won’t.

This is exactly why I believe most “money saving” hobbies should be tested against the 10,000 hour or 5 year test — If you’re not willing to engage in the hobby for 10,000 hours of your leisure time, you won’t really build-up significant savings (or recover cover your tool costs).

If it fails this test, just call it what it is — a temporary fun hobby that’s going to cost you money.


Final Thoughts

It really all comes down to decisions.  The difference between having wealth and not having wealth is about making decisions.  Make the “right” decisions and you could end-up with a bunch of spare cash in your bank account.  Make the “wrong” decisions and…. it’s debtor’s prison for you!

So it’s important to get your facts straight — Without having all the costs properly accounted for, making good DIY or Buy decisions is going to be hard.

So is it better to DIY or Buy?  It really depends.

In my experience, capitalism is incredible at putting goods on your front door for a very low cost.  Most people can’t compete with low cost labor from automated factories or giant farms when all costs are accounted for.

That said, quality is often lacking.  This is where DIY really fills the gap.  Whether it’s growing heirloom tomatoes in your Economic Garden, making your own fancy soap, or building your own furniture — DIY is how you find quality these days without spending a ton of money.

So instead of asking ourselves “Where can I save the most money”, perhaps we should be asking “Where we can I DIY the biggest improvement in my quality of life?”


[Image Credit: Flickr, Flickr2]

31 thoughts on “How Not To Save Money: Lie To Yourself And Hide Hidden Costs

  • April 18, 2018 at 5:32 AM

    We try to DIY the low hanging fruit and pay for everything else. Being comfortably FI and still high earners, there is little impetus to be polyanna about DIY projects.

    • April 18, 2018 at 8:26 AM

      What’s low hanging fruit for you guys? I’m curious!

      Also, that’s a very interesting expression “to pollyanna”… I had to look it up! 🙂

      • April 18, 2018 at 8:36 AM

        Low hanging fruit: Simple (less than 1 hour) house repairs, cooking (6 days a week), gardening. Light cleaning. Anything that we enjoy.

        Not worth our time: lawn service and deep house cleaning (every two weeks).

        I now DIY my investments. I didn’t in the past,

  • April 18, 2018 at 5:44 AM

    What’s with the beer pics lately, you are making me thirsty!
    DIY Beer? 😉 It was cheaper in Canada, but now that we are back in the Netherlands I cannot bother.

    • April 18, 2018 at 8:28 AM

      I’ve never really looking into the Homebrew scene, but a lot of people are really into it.

      Why would you not bother with cheap beer in the Netherlands? Is the cost of beer a set rate or something?

  • April 18, 2018 at 6:44 AM

    I think it depends too. We need to replace our very old, non functioning HVAC system.
    DIY would cost $2-3,000. Hiring it out would cost around $8,000.
    DIY would take a ton of time and energy because I don’t know anything about HVAC. It’s an electrical system. I’d probably need to hire an electrician to wire it up and get quite a few tools.
    I don’t have that much leisure time either. What do you think?

    • April 18, 2018 at 8:40 AM

      Honestly, for that much money I’d probably DIY it. A professional installer could have the job done in a single 8 hour day, no problem. It might take you a bit longer, but the hourly rate still seems worth it. For that much money you make time! 😉

      The electrical wiring really shouldn’t be that hard if you have existing wires in place. If you lack tools that could be a problem. Do you guys have a tool library nearby? Those can be a huge help.

      It might be worth watching some youtube videos to get a better idea of what’s involved and what tools are needed.

  • April 18, 2018 at 9:13 AM

    If I want to do a DIY project and I don’t have all the tools, I have several plans:

    Plan A: Borrow the tools from someone else.
    Plan B: See if I can get the tools cheap from Craigslist.
    Plan C: See if it makes sense to pay to join a local tool library.
    Plan D: Oh crap! I guess I have to buy new. Find the cheapest place to get the tools.

    Of course, this all takes time and you have to account for this in the DIY cost.
    Mr. Freaky Frugal recently posted…The 9 keys to Financial Happiness via the Blue Zones
    Mr. Freaky Frugal recently posted…The 9 keys to Financial Happiness via the Blue Zones

    • April 18, 2018 at 9:59 PM

      Yeah, I usually try to borrow tools before I buy them. The ones I keep needing over and over again I end-up buying. In that case, the odds seem pretty good that I’ll earn back the cost.

    • April 18, 2018 at 10:01 PM

      Indeed, some people love eating out. I personally don’t get it — the food is almost never as good as what I can make at home, plus I don’t have to spend all that time waiting around for servers and long lines of people.

  • April 18, 2018 at 11:27 AM

    I’m super lazy and the least handy person on earth.
    I love watching endless amounts of
    Movies and TV. Sometimes days at a time
    Non stop. No wonder my back is always killing me.
    This is why I have to pay to get everything done. My lazy time is more valuable to me than most anything else.

    • April 18, 2018 at 9:58 PM

      Interesting! You’d rather trade money for “lazy time” now rather than more “lazy time” in the future (i.e. not working).

      • April 19, 2018 at 8:33 AM

        Well trying to balance both. I’ve tried the two extremes and they don’t work for me in the long run.

    • April 18, 2018 at 9:56 PM

      Possibly. I suppose it depends entirely on what the side hustle is. Do you have one that earns over $75/hr?

  • April 18, 2018 at 3:26 PM

    I try to DIY either if I think I’d do a good job at it, or if I want to learn something that I might be able to use again in the future. For instance, a pane of glass broke on my side door last year. It required me to cut glass to fix it, which I had never done before. So I wanted to try it. The fix turned out pretty good actually, although of course it would have been done way faster if I just paid a pro. But I learned how to score glass. Who knows if I’ll use it again.

    Another great post Tako!

    • April 18, 2018 at 10:06 PM

      Thanks Accidental Fire! I love DIY because I get to learn new things too! For me, it’s quite enjoyable to fix the dishwasher, repair a TV, or even do simple repairs on my home. I’ve never met an appliance I couldn’t fix.

      Besides that, I’ve got my wife convinced I’m wicked smart! 😉

  • April 18, 2018 at 3:59 PM

    I doubt I will ever stop eating out. I am a horrendous cook. I also happily pay for all the shop owners/ restauranteurs in my local area. I want to see them succeed!

    On the other hand, I have never paid anyone to clean my house.

    Eating out is expensive, it’s ranked third in my expenses. But right now it’s “my precious”.

    • April 18, 2018 at 9:55 PM

      Hehe… my precious! Funny stuff Dr. MB, and that’s very kind of your to share your wealth with the local shop owners!

  • April 18, 2018 at 5:40 PM

    I am totally aware that i’m useless at DIY, but with Youtube and my much handier wife we do simple things like regrouting bathtubs and showers, unblocking dishwashers. However we have had to have pros in to fix our oven and to replace a full shower in the last 6 months as we weren’t confident we could do it and also we need to make sure the work is professional enough to pass any inspection should we choose to sell.

    Light garden work we do and house cleaning is totally our job (we have a rota involving a room or 2 each day).

    It’s a balance.

    • April 18, 2018 at 10:10 PM

      You might be useless now, but with some practice anyone can become good at DIY. It’s a skill like anything else.

  • April 18, 2018 at 9:37 PM

    Interesting post, Mr. Tako. For me, I’m 100% DIY with tech-related tasks, and 100% pay for it when it comes to cars or home construction. I’m mixed with most other things, but eat out more than I cook (though I’m trying to swing this into a better balance – it’s cheaper and healthier to eat at home).
    Michael – Financially Alert recently posted…Top 5 FIRE Strategies: How to Capture the Lifestyle You’ve Always Dreamed Of… Quickly.

    • April 18, 2018 at 10:14 PM

      I’m with you on the cars. While I technically could work on them myself, I lack a lot of the specialized tools, lifts, and other equipment to do it safely.

      We had a friend die while working under his car, and it’s not something I’m anxious to repeat.

  • April 18, 2018 at 11:59 PM

    Great post Mr. Tako! It’s so true that a lot of DIY don’t consider many of the costs as you explained. However, good tools are lasting for a very long time if they are quality tools. If you do a lot of DIY projects, the cost of the tools should be set over all these projects and decrease. Of course, if one buys a Dremel tool at 100 USD only to be used once for a DIY project saving 10 USD, one is lying to himself.

    I like DIY especially for tech things. For the rest, I like it, but I’m not very good at lacking a lot of tools and workspace. For me, one of the good arguments of DIY is also fun 🙂 It’s often a pleasure to do it 🙂
    The Poor Swiss recently posted…The three pillars of Retirement in Switzerland – 3. The third pillar

  • April 19, 2018 at 7:41 AM

    we paid a ton of money to have our roof replaced (34k) with asbestos abatement. as a homeowner you are permitted to remove those asbestos shingles yourself without a permit but the roof is a steep pitch and about 35-40′ at the peak and the thought of death had me paying somebody. same with the paint job. it’s too damned high. i hate writing those checks as we DIY as much as possible from the garden to the cooking 98% at home.
    here’s an interesting one: last year our sink basket leaked right at the drain. i spent a couple of hours looking on youtube for how those things are put together and found the solution. for a couple of hours sweating bullets on a hot day i could not get that big 6″ nut off the basket even with heating it up with a little torch. we already owned the tools but when i finally threw in the towel and called the plumbers they had to cut the nut off with a ceramic sawzall blade which i didn’t have and would not have tried. so, the scenario where you take all the right steps and spend several hours of your precious time and pay the money anyhow really really sucks. must have been karma.

    • April 20, 2018 at 8:27 AM

      Well, that sucks… but sometimes you just need “professional” help.

      There are some jobs that are just too big or too difficult to tackle alone (or need very specialized tools). In those cases, sometimes paying for help is the best way to go. 😉

  • April 19, 2018 at 10:00 AM

    I’m in the middle camp, and it depends on how difficult the DIY project is and the cost of not DIY. The classic risk versus benefits analysis. The place I go to to change my winter tires will now be charging $40 every time I change my winter tires to summers (and vice versa) whereas before it was free and included with the purchase of my winter tires. So I’m going to try to learn how to DIY and swap my winter tires because that’s $80+ tax every year. I’ve heard it’s pretty straight forward.

    PS love the new side bar counters! Last restaurant visit 29 days, amazing!
    GYM recently posted…Net Worth Means Nothing if You Don’t Have Cash Flow

  • April 20, 2018 at 3:59 AM

    Very thought provoking. You make a good point about people forgetting the tool depreciation part of DIY. And as for the buying everything people, they’re saving time but is it really put towards anything good? If you’re saving time and end up wasting the time you save, what’s the point?

    As with most things, middle ground usually works better. Though I don’t remember the last time I picked up any tools for anything DIY…unless you consider not buying tour packages as “DIY”, since I hate paying extra to be herded from attraction to attraction. If DIY gives you joy, saves you time, and costs you less, it’s a win! And if buying saves you time to do something you love, also win!

    • April 20, 2018 at 8:24 AM

      You might be more of a ‘traveler’ type than a DIY type FIRECracker, but I still appreciate you visiting and commenting! Thank you! 🙂

  • April 28, 2018 at 5:14 AM

    When I visited my mom, she requested help removing ‘decoratve’ grass outside her house. We removed two smaller ones with little effort. The larger one was much more difficult and had the added complication of the sprinkler system running past it and the other ones. This task was also taking both of us. She came to the decision she has more money than time for a task like this and decided to hire out the removal of the remaining 7 or so.
    At the same time, she tiled her own backsplash, and built headboards in the guest rooms. At the cabin she and my aunt designed and built a Murphey bed.
    She is a very talented DIY person, but sometimes paying someone else to do the pain the the back (literally) task is worth it if you do have the money.


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