Continuously count the cost

On the way up to my parents' house recently, we took some time in the trip to review and discuss our personal finance plan. It wasn't too complicated:

• Build up an emergency fund of $5,000.
• Further accelerate paying down our van loan.
• Build up savings for the next vehicle, and further accelerate paying down the mortgage on our investment property.
• Pay down our primary mortgage faster, and/or build up for a down payment on another investment property.

We agreed on the points up to the very last one. The last one we discussed at length, as other factors had come into play since the last time we looked at it. There was not just an “either-or” decision, but an “either-or-or” decision. And they were all costly.

Time and money are a zero-sum game

Wouldn't it be nice if we could make a five-year (or more) plan and have everything just fall into place? The reality is that situations change all the time, and plans need to be revised.

My research adviser in graduate school said to me many times: “God is very fair. He gives everyone 24 hours.” At the time, she was referring to how much I was working (or not working, depending on how you look at it!)

But we are all given exactly the same 24 hours each day. And we are constrained by our resources at the time we need them. We must work within these constraints. We have no choice.

What this implies is that using money for one thing is always at the expense of another thing. Money can only be spent on one thing. Then it's gone.

The same is true of time. Every minute goes to one use, and one use only.

Count the cost — and count it again

“Counting the cost” is a Biblical term:

“For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it?” ~Luke 14:28 King James Version

Counting the cost day to day isn't quite so involved. Most decisions of frugality are a tradeoff of time for money, such as:

• Making meals in vs. eating meals out.
• Doing your own car repairs vs. going to a mechanic.
• Mowing your own lawn vs. hiring someone to mow it.
• Clipping coupons vs. buying groceries on Amazon.

The bigger the decision, though, the more important it is to count the cost, to consider what will need to be given up for a particular purpose. Because, again, there is only so much time and so much money:

• Sending children to public school, vs. sending them to private school, vs. homeschooling.
• Paying down a mortgage vs. buying an investment property.
• Sending aging parents to a nursing home vs. caring for them in-house.
• Going to college, vs. living at home and doing distance learning, vs. trade apprenticeship.
• An undesirable career that pays well, vs. a fulfilling one that pays far less.

There are no free lunches. But at the very least, you aren't condemned to eating the same lunch every day for the rest of your life. You can re-evaluate at any moment where you're going, how you're spending your money, and how you're spending your time.

This isn't meant to condone capriciousness, but is meant to serve as a reminder to check in with where you're headed.

Make sure the price that you're paying is worth it.