If Time Is Money, Use the Closest ATM
Every time someone tells you to do something inconvenient in order to save money, make sure you listen to that lazy part of yourself that doesn't want to get off the couch and clip coupons. When it comes to the small stuff, saving a few dollars here and there, it's rarely worthwhile to go out of your way simply to cut costs. Sweating the small stuff doesn't make sense, and the more time you spend trying to save an extra couple of dollars, the more you lose.
Most personal finance writers will tell you just the opposite. The example they love to use is paying ATM fees. You read some of these columns and come away with the feeling that, short of carrying a balance on your credit card, paying a couple of dollars to use another bank's ATM is the single most grievous financial error since Churchill tried to put England back on the gold standard in the 1920s.
I have done a lot of stupid, irresponsible, even insane things with my money, and I'm more than willing to admit my mistakes and share them with you in truly embarrassing detail.
But paying for convenience is smart. It's efficient. It's a good way to live your life. And if you listen to pretty much anyone who writes a personal finance column, you're not going to live that way.
My checking account is with Bank of America, but there's a Sovereign Bank just a block away from my apartment building. The closest Bank of America ATM is about a 15-minute walk, round trip, from where I live, but I can get to that Sovereign Bank and back in two or three minutes. Let's say that's a 10-minute difference for the sake of argument. I can either pay two bucks to get my money or spend 10 minutes walking. There have to be hundreds of people who have written the same column telling you to save the money and walk, and I believe they're writing the same columns again now that Bank of America increased the fee that outsiders pay to use its ATMs. For a great article about that, check out Philip van Doorn's "Stop Whining About Three Dollar ATM Fees."
The experts have pretty strong opinions about ATM fees. Apparently, when I go to Sovereign Bank instead of Bank of America, I am robbing my own bank account and paying to use my own money. I am financially lazy -- no surprise there -- I'm being ripped off and I'm disorganized.
I also have engaged in the second of "10 Stupid Ways That Smart People Waste Money." And according to CNN
, I'm paying the 22nd most outrageous fee out of a list of 35.
If I did a little more searching, I wouldn't be surprised to find that using an out-of-network ATM is the reason I'm losing my hair. It certainly explains why I'm not losing any weight -- that 15-minute walk to the Bank of America ATM and back would easily make for a 100% increase in the amount of cardiovascular exercise I get in a week.
All the advice that says you should value your couple of dollars more than your convenience is really two-dimensional, and coming from someone as shallow as I am, that's a real criticism. That advice assumes that everything convenient is a luxury, meaning an unnecessary cost, and every dollar saved was worth the effort it took to save it. Wrong and wrong.
Surprisingly, there are circumstances when following in my financial footsteps is the right thing to do, and this is one of them. I pay Sovereign Bank a $2 fee, and I believe it's worth every penny. Why? Because you can put a monetary value on your time, and while I don't know precisely what 10 minutes of my life are worth to me, I do know they're worth more than two bucks.
I suppose if you earn less than $12 an hour, it would make more sense to take the walk, although what an hour is worth to your boss is different from what that hour is worth to you.
I'm not making a point that you would fail to find in any introductory economics textbook, but most personal finance writers haven't gone near an economics textbook in years. At least that's how it seems.
The Internet and print media are overflowing with bad advice that doesn't put any value on your time, even though time is your most valuable resource. The focus is always on money and how you can keep your hands on more of it.
It's unbelievable how monomaniacal the focus is, even when we're talking about something as trivial as an ATM fee. Here's the opinion of an expert: "Paying $2 a time can add up. If you use an ATM twice a week, that could be about $200 a year. If you invested $200 a year in a stock market mutual fund instead of throwing it away on ATMs, you could build up about $97,000 over the next 40 years."
That sage advice came from Gail MarksJarvis, an award-winning columnist, according to her Web page. Experience the full story at the Chicago Tribune's
Unlike other forms of money, the $4 a week you would save on ATM fees can be invested in the stock market and compound over 40 years.
When you bring time back into the equation, you can see how deeply unserious and totally devoid of rigor that argument is. If you included the cost of my walk to the faraway Bank of America in that example, you'd have to factor in the 17.33 hours spent walking to and from the bank in any given year.
Essentially, you're doing a little more than 17 hours of work to make $200. That's an hourly wage of $11.54. Even for those of us who are straight out of college, $11.54 an hour is below the median income. If you want to invest $200, there's an easier way to get that money than using only in-network ATMs, and it's called working.
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