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Outsourcing Your Way to Wealth

by Jason Dean 


4-hour workweekSo much personal-finance writing is about how you can save money — as if stacking up little green pieces of paper were the purpose of life. In reality, money is worthless: It’s what you can buy with the money that’s important. So why should the focus be on saving? What if you can spend your way to a happier, healthier, and ultimately wealthier life?

The 4-Hour Workweek is a new hit book. I read it around a month ago, and I immediately began putting some of its principles into action. Four weeks later, I’m doing better financially, I’m feeling much more rested, and my wife and I are arguing less. Although I’m still working a lot more than four hours, I am spending less time on the less desirable daily tasks all but the richest people in our society continue to do themselves. Why?

For example, my wife and I no longer do our own laundry. We no longer cook our own meals. In fact, we don’t even do our own grocery shopping. And we’re not rich people by any means — we just live like we’re rich; or at least, we have been for the past few weeks.

Back in mid-August, I put the following ad in the classifieds section of my local newspaper:

Young family seeks assistance with cooking and light-housework. Pay: $8-10/hour. Hours: 17 per week. Contact 555-5882.

In Michigan’s depressed economy, we received no shortage of applicants, and thus, we were able to pick the person we liked most out of more than a half-dozen. We’ll call her “Lucy” for the purposes of this article.

Lucy’s responsibilities consist of the following:

  1. Every Sunday night, my wife and I prepare a five-day menu for the week’s meals, usually from Every Day with Rachel Ray, and print a grocery list for Lucy. We give her the list on Monday, and she does our shopping for us. She puts the groceries away, too. We just give her the cash for the food (she gives us the change) plus $20. It takes her around two hours, and in that time, my wife and I are easily able to do $40 or $50 worth of extra consulting work. Or alternatively, we can just do $20 of extra work and spend the rest of the time with our daughter.
  2. Lucy comes by at 5:00 p.m. every day and cooks us a meal using our selected recipe. Including clean-up, it takes around an hour-and-a-half, for which we pay her $15. That’s $75 a week, but I can easily pay for that by doing an extra two to three hours worth of work — meaning I can pay for a week’s worth of cooking labor for just two days (or less) worth of extra writing or consulting. Previously, my wife would prepare our meals while I would watch our child. Now, one of us can do work while Lucy makes the meal. This is a net gain in either money or time for our family.
  3. Thursday is trash day and my wife and I are notorious for forgetting to put our trash at the curb. This usually results in a minor squabble and recriminations that can last until the next trash day. So why not outsource it? After cooking on Wednesday, Lucy rounds up all the trash from our kitchen, bedrooms, bathrooms, and basement — including our cat’s litter box — and takes it out to the curb. We pay her $10 for this task that takes less than twenty minutes, but guess what: It always gets done and there’s no more domestic squabbling.
  4. Every Thursday, Lucy picks up our laundry from our basement. We have our dirty clothes in hampers for her, which she takes to the laundromat, or her own house, or a drop-off service, or… we don’t care, so long as the laundry is returned the next day, and put away in our closets and dresser-drawers. My wife and I have a tri-level home, with our washer and dryer in the basement and our bedroom on the top floor, and we have gotten in countless fights over not putting the laundry away. Now, Lucy does this for us. We pay her $50 a week, which includes her expenses and supplies.
  5. Every Friday, Lucy vacuums our carpets, cleans our kitchen and bathrooms, and does an all-around tidying. It takes her two hours and we pay her $20. Again, we can easily earn enough to pay her in half that time.

Economics teaches the virtues of division of labor and comparative advantagee. My wife and I are self-employed consultants, and we each earn between $25 and $40 an hour. We both enjoy our work — a lot more than we enjoy cooking, cleaning, or doing laundry — and those jobs all command lower pay rates in the marketplace than our skills do. So why should we do them ourselves? Why not do extra work during the times that we would be doing those jobs, or better yet, do just enough work to earn the income to pay for those jobs to be performed, and “pocket” the extra time?

In fact, if you think about it, doing your own cooking, cleaning, laundry, and other “unskilled” tasks actually takes away from society. You could be more productive doing other work, and the person you could be hiring to do your housework earns less because you insist on doing your it yourself. With me, my wife, and Lucy, we have a win-win-win situation, and we have Adam Smith, David Ricardo, and Timothy Ferriss to thank for it.

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Comments

2 Responses to “Outsourcing Your Way to Wealth”

  1. Patrick on September 13th, 2007 6:21 pm

    That sounds like a great setup for your family. My wife and I enjoy cooking and don’t mind cleaning, so I don’t see us doing it anytime soon. Although… we don’t have kids yet, so check back in a couple years!

  2. Jason Dean on September 15th, 2007 2:29 pm

    Patrick – Thanks for commenting again. My wife and I also enjoy cooking, but we found that we just did not have time to do it, so it would frequently not get done — which ends up with pizza, fast food, eating out, or frozen meals. Now that we have a toddler, none of those options are acceptable. If you and your wife enjoy cooking more than you enjoy the potential financial benefits of outsourcing, AND you always/almost always get it done (when you want to), then this wouldn’t make sense for you. But many people are in the same boat as my wife and I, and it’s important them to evaluate this option from an economically rational point of view.

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