How to Value Your Time When Getting Out of Debt

by Kevin on December 4, 2011

Getting out of debt is a whole less fun than getting into debt. Getting into debt is spend, spend, spend. Getting out of debt is painful cutbacks, tough decisions, and saying “no” a lot. As you start changing your mentality toward debt and push to climb out of the hole you are in you must learn to value every minute of every day. Ideally you are doing that already because let’s face it, life if short, but your time becomes even more valuable during a push out of debt.

Why Valuing Your Time is Important

There are two reasons that valuing your time is extremely important:

Turning Down Expensive Opportunities

The first reason is that you start to look at every situation in a “what is this going to cost me?” mentality. Some argue that can be a negative way to look at life — it’s okay to grab coffee with your mother on Tuesday — but at the same time you need to be running your life like a business. Every moment is an opportunity to make or save money. Instead of meeting Mom at Starbucks you can invite her over for some bagged coffee from the grocery store. Instead of going out drinking to see the big game you have your buddies over with beverages and snacks purchased at the store.

What Can You Outsource?

A second reason understanding what your time is worth is you can begin to outsource menial tasks that you don’t enjoy and that are also taking up a lot of your time. If you’re in debt it probably isn’t good to outsource everything, but if you could get a great deal on mowing the yard and you could use that time to earn money at a how hourly wage, then it makes absolute sense. Not every hour that you are doing something menial can be turned into a profitable outsourcing — remember, you have to work to make up the cost plus turn a “time profit”, but there are some scenarios this will work for you.

Calculate Your Hourly Earning Capability

The best way to know what your time is worth is to come up with an estimate of your hourly earning capability. For some this is a simple calculation: could I get an extra shift at work this week? If you are paid by the hour it is simple to know what the cost is to you. Even if you work at a restaurant and rely on tips you probably have a mental calculation of how much money you earn in a shift. Use those figures to determine what an extra hour of your time is worth. If you could earn $30 per hour and get your yard mowed for $20 in an hour, it makes sense to outsource the yard and work the extra hour. (Just don’t forget to factor in income taxes into your hourly estimates.)

You may not have a lot of options to earn extra money. Maybe your job doesn’t have extra shifts for you to pick up. If that’s the case you need to figure out a way for you to earn additional income through freelancing, starting a business, or turning a hobby into a business. Keep your eye on the prize: every extra dollar goes towards your debt (not padding your lifestyle) and accelerates how fast you will be debt free.


Emily December 7, 2011 at 1:14 pm

I disagree with the outsourcing thing. If you’re serious about getting out of debt, you’re not going to spend money on extras.

Kevin December 7, 2011 at 1:24 pm

So you wouldn’t spend $10 to free up an hour of your time to earn $20-30?

That doesn’t make sense.

Emily December 7, 2011 at 2:03 pm

Somehow, I glossed over that detail. In that case, you’re right. But I’m more of the mindset of, well, I’m not going to spend all my waking hours trying to make an income, so I might as well go ahead and mow my lawn myself during my free time and save myself the money.

I know, I know, I’m cheap. Blame it on my parents. 😉

Jenny Rourke June 2, 2012 at 7:07 am

I like this concept you mention of evaluating each and every situation in terms of money saved or money spent (Starbucks coffee is an interesting example). I guess it does instill a business mentality. Good article… Jen

Dmitrij Harder May 21, 2013 at 11:10 am

I love this post! It truly is a new mind set to get out of debt. Thanks for posting this! As an international finance expert, this debt problem is becoming more of an issue globally, so it’s really important to encourage people to change the way they think about debt!

shane November 2, 2013 at 1:39 am

thanks for the help it really gives me a new way of thoughts on Debt..As financial crisis is world wide so preventive measures are must

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