The cost of frugality

Kirby on Finance has a few great posts that address an interesting question:

Can you afford to be so frugal?

With this he makes an excellent observation:

“So often we talk about the time value of money in terms of saving, but we rarely think about money value of time in spending!”

Time and money are not the same thing because their very nature is different. If you lose $1,000 in the stock market, you can earn it back some other way. On the other hand, if you waste a couple of hours, you can't ever get those hours back.

Of course, one hour is just as irreplacable as the next, but as you get older, each remaining hour becomes more valuable. So, our level of frugality (how much time we spend to save money) probably should be higher at a younger age than at an older age.
Though our time becomes more valuable as we age, we may have greater or fewer constraints on our time at any particular age. Do we still need a paycheck at age 65? If we spent time earlier in life by finding the deals, clipping coupons, changing our own oil, mending our socks, packing our own lunches, and cutting our own grass, then we might not need the paycheck and could spend the time in retirement as we pleased. But if we spent money earlier in life to save time, we may fall short in old age and may not be able to quit completely — if we can still work at all. If we can't work at all, we become wards of the state or dependent on others.
In my mid-thirties, I may be able to not spend $1,000 this year by putting in 100 hours of work (say). So I “earn” $10/hour. That's not the whole story, though. If I let that $1,000 compound for 24 years at 6%, it will be about $4,000 at the end. My time, in the long run, is then worth about $40/hour — much more respectable.

This example might be the end of the story for people who would otherwise watch TV or do something else unproductive. But what if you instead use the time to make more money than it's costing you to do the money-saving activities? I'll use FMF's oil change as an example. He spends an extra $20 for an oil change so that he can get free food and an internet connection while he waits. Let's say he can churn out an extra couple of posts in these nicer circumstances. The incremental revenue he generates with those extra posts may easily exceed the $20 extra he spent at the dealership.

On the other hand, I'll probably change my own oil until I'm not able to anymore — even if my effective pay is only $4/hour for the money I'm saving. Why? Because the last time I had someone else do it, someone stripped the threads on my oil pan — either the last guy to touch the car or the second-to-last guy — and neither one would fess up to stripping the threads. That cost me $400 to replace. Since I don't want that to happen again, I'll do it myself, if for no other reason to avoid the risk that someone else will screw it up. Now, if I were $1,000 an hour, then I could pay for a new oil pan, and I'd have someone else do it again. So it's all relative.

So, with this in mind, you might consider a few factors as you ponder the cost of your own frugality:

• Your age. The older you are, the less an extra saved dollar means in terms of the time it took you to save it. I think that it's wise to save like gangbusters when you're young so that more options for your time will be available later.
• How you would use the time otherwise. See whether the value of the time is worth more than the money saved. If you would have earned nothing during that time, then any savings is good. If you would have earned more than you saved during that time, then it may have been a bad choice.
• Your available options given your current financial status. If you need money to make the rent payment, then your decision is already made for you, if you're responsible: you spend time on the frugal activities, period.
• Your values.
• How much enjoyment you receive from the activity. If changing oil is fun for you, then do it!

Any that I missed?