When getting a deal isn't worth it
Spend hours and hours searching for the best price? Maybe you're putting too low a value on your time.
(Money Magazine) -- It's no exaggeration to say that a large chunk of my early winter was wasted trying to buy a wide-screen TV. After finishing my basement with the explicit goal of turning an empty concrete space into a Wii-playing, movie-watching, comfy-couch-laden rec room, I knew that the TV had to be really big and really flat, with good but not top-of-the-line picture and features. Easy enough.
I started online: ConsumerReports.org, CNET.com and a dozen or so reviews from magazines and newspapers. Then, more confused than before, I went shopping: Costco, Best Buy, Sam's Club, Costco again, where I discovered that none of these sets would come close to fitting in my car.
Back to the computer, where I decided to let PriceSCAN.com, with its star ratings from consumers and search engine for the best prices (including shipping), have the final word. I settled on a 58-inch Panasonic widely available for around $3,000. And then I couldn't pull the trigger, wondering if there wasn't a better deal to be had - if only I looked some more.
It began to dawn on me that I had spent the equivalent of a full workweek searching for a bargain that might save me a few hundred bucks. Crazy, no?
But I have plenty of company. My friend Paige, a management consultant, tells the tale of "visiting" the Honda CR-V she wanted so many times that the salesman didn't believe her the day she arrived to finally buy.
And in this era of high gas prices, how many times have you heard of drivers heading across town or a state line to save $5 on a fill-up? Do they stop to consider the value of their time (not to mention the extra gas they burn)?
Clearly, I was in need of some perspective, and others are too. So I spent some time with experts on - what else? - time management. What I learned about how to value my waking hours has helped me, and it could help you.
We have a "vague sense of 'time is money,' but it's not telling enough for most people," says Tim Ferris, author of the bestseller, "The Four-Hour Workweek," which argues that more efficiency would allow us to cut way back on time in the office. "Only what gets measured gets managed," says Ferris.
It's easy enough to measure how much money you can save by shopping around or by taking on an unpleasant chore, but most of us don't run the numbers on our time.
There's a quick, and enlightening, way to estimate that, Ferris explains. Say you make $100,000 a year. Remove the last three zeros ($100), divide the number in half and you get your approximate hourly rate, in this case $50. Unless you're "making" that much by shopping for your TV or constantly combing the Internet for slightly higher CD yields (or whatever your time-suck happens to be), you're losing money.
It's a bit of an academic exercise, I'll admit. If you work on salary, you can't just put in an extra hour and get paid for it. But knowing the value of your time can make you pause and consider when you're spending more time on a task than it really merits.
It took me a while to realize how overboard I'd gone on the TV quest. Ferris says that's endemic. Michael J. Silverstein, author of "Treasure Hunt: Inside the Mind of the New Consumer," suggests keeping a time log.
For a month, record the amount of time you spend shopping, what you were looking at, your estimate of the original price and the price you actually paid. If you put 40 hours against a purchase to get a $200 savings, you need to ask yourself: Is my time worth more or less than $5 an hour?
The other question to ask yourself, says Silverstein: Did I enjoy myself or did I hate it? Doing your own lawn work, for example, probably isn't worth the effort judged strictly by your hourly rate. But there's value in exercise, in time spent outdoors, in reclaiming a patch of brown.
I generally like shopping, but in talking to my CR-V-buying friend Paige, I realized that buying a car makes me far less anxious than picking a TV, a computer or even an iPod. Technology stymies me. Next time, I'm subcontracting the tech purchasing to my son.
One final insight came out of my research. A big reason we tend to spend enormous amounts of time on tasks that provide minor payoffs is that we have a void of other activities that are compelling to us.
What happens when you wake up on a Saturday morning, the kids are off at soccer practice and you don't have anything scheduled? You check your e-mail (at least that's what I do), get lost online or maybe watch some dull fare on television. The monetary benefit is nil, and the non-monetary one isn't much higher.
If this sounds like your Saturday, it's time to realize that you need to do a better job of scheduling activities you really enjoy, from exercising to dining out to listening to music. Just as we're better off when we watch how we're spending our money, we're better off when we watch how we're spending our time. It's the best insurance we have that we won't someday wonder how either one slipped through our fingers.
As for me, I finally did get that TV, and my kids and I are having a blast with it - together as a family. And the hourly return on that is off the charts.
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