# How Long Did You Have to Work to Buy That?

Very nice. Very expensive.

Whenever you look at something that you’re going to purchase, the first thing that you look at is the price tag. A Starbucks caramel macchiato costs \$4.75. A Porsche costs \$50,000. If you have the money, or the credit (argh!!!!), you buy it assuming that you want it and you have the funds or access to funds.

What you don’t think about, though, is the opportunity cost as it relates to what you make in your job. Instead of thinking about how much something costs in terms of dollars and cents, why not think about it in terms of how much work you’d have to do to replace the money you spent to get that item.

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For example, let’s assume you work an 8-5 job and have 4 weeks of vacation a year. In 2012, that would mean that you have 241 days of work. That’s 1,928 hours of work. Normally, it’s 1,920 hours of work, but the leap day was a boon for employers. Furthermore, let’s assume you make \$75,000 a year in salary, and your overall tax rate (federal, state, local income tax) is 28%. That means that you make \$28.01 per hour in after tax income. That’s about the cost of one dinner at a mid-sized restaurant.

### Let’s look at some other cost comparisons.

• One day of work is \$224.07: the car loan payment for a \$10,000 car at 3.4% interest for a 48 month loan; also a Coach handbag
• One week of work is \$1,120.33: the mortgage payment (interest and principal) for a \$242,000 30 year loan at 3.75% interest; also a “cheap” Armani suit
• One month of work is \$4,500.00: the approximate cost of a vacation for four to DisneyWorld for six days

If you make \$75,000 a year, it’ll take a week to earn enough to buy a “cheap” Armani suit. – Click to Tweet

Next time you think you MUST have that Coach bag or Armani suit, think about how much longer you’re going to have to work to pay for it, not the actual amount of money you’ll have to shell out. It may cause you to rethink whether or not you NEED it.

By the way, next time you reach for a Coke, think about the hour you’ll have to run to burn off the excess calories. It works!

What purchase do you think is worth the time it takes to earn it? Tell us about it in the discussion below!