Time Well Spent – Or Not?
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowDo you spend your time wisely? When it comes to financial decisions, do you spend a significant amount of time on the small stuff? Have you ever calculated whether the outcome was worth it? Remember, time is money!
Here’s an example. I recently spent 30 minutes in line at the grocery store waiting to get refunded for a $3 overcharge. You’ve probably done something similar, right? But was that a good use of time? I think you’ll agree, it was a total waste of time!
There are many ways you can save time or money, and if you’re lucky, both. Be proactive, look for alternative solutions, and weigh the total costs (including your time) versus the outcome. Here are some suggestions to get you started.
Prepays And Autopays
Many companies offer discounts for prepaying or auto-paying for their services. Lawn care, insurance, and cable companies typically use this model of payment. Often, the more you pay upfront, the larger the discount. In addition, you don’t need to write monthly checks. And, since your payments will never be late, you avoid late fees.
I saved 10 percent on my lawn care service by prepaying a year in advance rather than making monthly payments. I saved time by opting to use autopay for my cable bill.
Take advantage of offers like these, but pay attention to the monthly charges. Over time they will likely increase. If the higher cost outweighs the benefits of the service, you’ll want to discontinue it or negotiate a lower cost. In this case, a quick call to my cable subscriber requesting a reduction in my monthly charge saved me almost $50 per month. That was time well spent!
Monthly Charges
Review the automatic payments you have set up against a credit card or bank account to ensure you aren’t being charged for discontinued or unused services.
Our family places frequent orders to Amazon. Each month these purchases show up on our credit card statement. Recently I questioned a $5 monthly charge from Amazon. Turned out it was a service we signed up for but had forgotten about. We immediately canceled the service, reducing our monthly bill. If left undetected, we could have paid for it for years!
Failed New Year’s Resolutions
Did you join a gym at the start of the year, vowing to make healthy lifestyle changes? If you’re like most people, you probably didn’t make it through February. According to the International Health, Racquet & Sportsclub Association (IHRSA), gyms typically expect only 18 percent of members to consistently use their gym membership.
Here’s the tip: As soon as you stop going – be honest here – contact the gym and cancel your membership! Depending on your contract, you might be able to recoup part of your fee. If you feel the urge to rejoin, opt for a gym or a class that allows you to pay per use.
What About Investments?
Spend your time focusing on the quality of your investment portfolio, not on whether you pay $8.95 or $9.95 per trade. Finding investments that have better growth potential and lower risk is time well spent. Switching brokers to save a couple of dollars on 5 trades per year… not as helpful!
My favorite example of time not well spent is with class action lawsuits tied to securities. You owned a stock back in 2005 and you received notice of a class action lawsuit. To ensure qualification, the attorneys need you to provide paperwork proving ownership during the qualifying time period. Now you have to spend hours searching for trade confirmations or account statements that you may have already shredded. Is this time well spent?
Usually buried deep in the class action notice is an estimated recovery value. After deducting attorney fees, many times the net recovery to you is pennies per share. If you owned 100 shares, your net recovery is often less than $10. Do you want to spend hours of time researching for less than $10? Probably not!
Summary
As you consider your expenditures, you will hopefully find additional ways to lower your costs and save time. Initially it will involve a small investment of your time as well as some routine oversight, but it can be well worth it. And, the more you look at your expenses from this perspective, the easier it will become.
Good news: At that point, you can turn your attention to more important issues – such as why we wash our dishes before putting them in the dishwasher!
Bill Wendling, CFA, is a Senior Portfolio Manager with Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website at bedelfinancial.com or email Bill at bwendling@bedelfinancial.com.