I always tell people, the most valuable thing you can buy with money is time. I can clean my house, but I am fortunate enough now that I can pay someone else to do it. I don't sit around and do nothing in that time, I enjoy my life or do other tasks. I never feel bad exchanging money for time.
The issue I often find is that by the time I pay taxes on my own salary, their salary, their insurance and overhead, I lose more time hiring it out unless my wages are at least 3-4x theirs.
The real hack to DIY is you eliminate taxes and insurance, other than sales tax. It's one of the few ways to actually keep almost all the value you generate.
Indeed. For me to end up with the same amount of money after paying a company $100 rather than doing something myself, I have to go out and make an extra $167. That company probably then pays the actual worker something between $25 and $50, so I have to have a quite high multiple (plus the opportunity to just go work a small amount extra for pay) to make the trade make economic sense.
> For me to end up with the same amount of money after paying a company $100 rather than doing something myself, I have to go out and make an extra $167. That company probably then pays the actual worker something between $25 and $50
For some types of services, once you've found a person who does good work, you can privately ask them if they'd like to cut out the middleman: they get a pay raise and you pay less. This is particularly relevant for online services that find a professional for you.
I'm not talking about paying people under the table. I'm talking about cutting out whatever agencies or referral services are adding a substantial portion of the overall cost.
> The middleman being the IRS?
Only to the extent the money may get taxed 2-3 times on its way to the actual person doing the work (which may or may not be the case in any particular instance). (For instance, sales tax and multiple levels of income taxes.)
All of which is strong argument in favor of replacing all income tax with land tax.
The idea starts to make a lot of sense once you look at its framing. This includes the argument you make above (why can't you hire help out of pre-tax income, like any other business can?) and more on the legitimacy of taxation.
>why can't you hire help out of pre-tax income, like any other business can
Leaving aside the obvious fact that your personal activities are not a business[0], you can indeed hire help out of pre-tax income -- in the U.S. no one pays income tax on their gross income, only their taxable income. By the time common tax credits are factored in, a married couple with children may easily have $30-40K of gross income each year not subject to income tax.
Many, if not most, homeowners do not need to go out and work extra hours to pay someone to do work to repair their property, any more than they need to work extra hours to pay for food and clothing, so looking only at the marginal tax rate is misleading (as in the example above of earning an extra $167 to have $100 after tax).
Further, work you pay for that improves the property (as opposed to repairs) is added to the tax basis of the property, reducing future taxable income when the property is sold. Along with the potential to exclude up to $250K/$500K (single/married) of gain[1] from selling the property is a huge source of pre-tax income.
[0]and even businesses can only deduct expenses for people they hire for services that are related to generating a profit.
The decision to work extra in order to pay to outsource a task vs doing it yourself (as was framed above) is exactly the type of economic decision where the full marginal tax rate applies.
The idea that trading money for time is only worth it if you can spend that time making an equivalent amount of money, implies that the only value of time is as a resource for making money.
On its face, that doesn't seem to stand up to scrutiny.
Is this the basis of the so-called "human-centred economy" that seems to be gaining attention?
When I first heard of it, it seemed like it literally described the very same economic model we're accustomed to. But now that you mention this, there does seem to be an underscore of "just 2 guyz who are having a good time", without proper accounting of the exchange of value, thereby making it difficult to prove that a taxable event occurred.
- the enjoyment of creating or building something decent (if you enjoy it)
- the enjoyment of learning for its own sake
- the knowledge that the next time you do this task, you'll
be more efficient at it
- the knowledge of how the process works, so you know it was done right, and can fix it if it breaks
There's a variety of others. I agree that if it's a task you don't enjoy or don't rely on, then outsourcing it often a great idea.
Some things greatly reward a DIY attitude. Like knowing how to wrench on your bike when you're on a trip far in the wilderness and something goes wrong. You can even help out others!
Completely agree, but you're ignoring that not everyone gets the same enjoyment out of everything.
For example, I enjoy doing electrical work, but hate plumbing. I'll do the former, but hire someone to do the latter.
Last year we bought a house that had a bunch of windows with missing screens. I ended up making new frames for all but one of those windows. The last one I didn't get to with the time constraints I had, and I've been procrastinating for the past year because it's a repetitive, fiddly job that doesn't really give me any joy. I'm sure I'll get around to the final screen eventually, but not every DIY project gives enjoyment for everyone.
Your comment literally makes no sense. I pay someone to clean my house so I can spend more time building things and learning things. Do you enjoy having less time to do all the things you mentioned?
You clearly don't like cleaning - cool beans. But let's say you made that argument about fixing your bike, that's what my response was about. People value things differently, some people might value and even enjoy cleaning more than you do. Some people might find fixing a fence (or hacking an ardiuno gadget, etc) to be like torture, to each their own. We're allowed to like different things.
I took time to underline the fact that if you don't like the task, you ought to outsource it. Not sure how I could have been clearer.
Also: your tone comes off as dismissive and snarky.
