Disclaimer-Captain DIY and DIYtoFI.blog highly recommend exercising extreme caution when attempting DIY projects. Not everybody can do everything, and some things should only be done by professionals. Keep your digits attached, and keep the insurance company off of your back. Do it right or call the right people!
I’ve spoken about the merits and psychological benefits of learning skills and doing projects for yourself. I’ve even touched upon the monetary benefits and how doing your own maintenance and repairs can help expedite your path to Financial Independence (FI). Now it’s time to take a look at the numbers.
Let’s look at a nice simple job, such as replacing a receptacle. This case study is an easy one to wrap our heads around, and it has nice simple numbers that are easy to figure. We’ll start with materials.
According to a quick search of Home Depot’s website, you can get an average quality receptacle for $0.68. You can certainly spend a lot more if you are looking for higher quality, but let’s assume this is just a regular outlet in the living room. Let’s also assume we will need to replace the wall plate at a cost of $0.20. Include three Wire-nuts at $0.09 each for a total of $1.15. One dollar and fifteen cents spent on this project.
I’m not going to put any value on the time spent on this for a few reasons. One, this is a project that can be done in a short amount of time, maybe even tucked around other chores like doing the laundry or vacuuming. Two, if you are really embracing the DIY lifestyle and hoping to gain new skills, doing this small repair will boost your confidence and give you the skills to complete more minor electrical repairs in the future.
Now let’s take a look at the cost of having a contractor come and make the repair.
Assuming the same materials used, plus the market rate mark up of 30%, we are looking at $1.50 for materials. Not bad, only 35 cents extra. But here’s where the real savings come in. The average electrical contractor, at least in the northeastern United States, will run between $85 per hour and $135 per hour. If you are unlucky enough to have selected a shop that sends a licensed electrician and an apprentice together for every job, you’ll be on the higher end of this scale. Hopefully you shop around and find one that will only send one guy.
Every contractor that I know has a one hour minimum charge. This accounts for travel, time spent gathering materials (although they should have the necessary materials for a job this small kicking around on their truck), and paperwork. Assuming you have found a shop on the lowest end of the scale, and assuming the contractor is competent and ethical enough to get the job done in less than one hour, we can figure a labor charge of $85. Add to that the $1.50 for materials, and we have a bill of $86.50. So far we have spent $85.35 more than if we had done it ourselves.
We haven’t yet taken into account the fact of working hours. Contractors like to work during the weekday like the rest of the world, so if you want to be there to let them in and show them which receptacle needs the replacement, that’s going to require taking time off of work. There are a lot of variables here, but let’s assume you are right on the cusp of average in your salary, which according to the Bureau of Labor Statistics is $859 per week. That puts us at $21.48 per hour.
If the contractor is able to come first thing in the morning, you’ll at least be able to just go into work a little bit late. Assuming you are there with them for one hour, we can safely say you will need to take at least one and a quarter hours off to be available, and to account for travel time to work. That puts the loss of paid work time at $26.85.
So far, our total expenses for this job are sitting at $113.35. Suddenly that hour spent figuring it out on your own doesn’t seem so bad. You are effectively paying yourself $112.20 for less than an hour’s work.
Now let’s look at what that $112.20 could be if we were to invest it in an index fund and leave it for a decade instead of spending it on the luxury of hiring someone to do your work for you. According to the investment calculator at investment.gov, using the average after-inflation growth of an S&P 500 index fund over ten years (roughly 7%) that $112.20 would grow to $220.71! Hiring someone to do the job for you will cost you 19,092% more than doing the job yourself.
Obviously there are times when we are not able to do the work, or it may work out to more in your favor if you are able to leave the contractors alone and the wage you receive changes the scale in your favor. But in this case study, the numbers don’t lie. If you are serious about reaching financial independence in a reasonable amount of time (15 years or less) you have to strongly consider the benefits of learning the skills needed to maintain your possessions.