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Looking at net income makes sense, but when it gets into expenses I'm not sure I follow. The idea behind outsourcing is that you can spend additional hours doin

Looking at net income makes sense, but when it gets into expenses I'm not sure I follow. The idea behind outsourcing is that you can spend additional hours doing paid work. You can't look at your fixed expenses in terms of a fixed amount of each hour's wage if you're increasing the number of hours worked. Of course, it also assumes that people can choose exactly how many hours they work at their regular hourly rate, which isn't usually the case, but that's a separate quibble.

jpttsn 6y ago
Yup this is where this article went off the rails for me. After-tax income makes sense when income is what you’re taxed by; the day job creates the income and the tax. But the day job shouldn’t be laden with all costs of living: only the costs of the day job. The author must know either way more economics than me or way less.
nicbou 6y ago
> The idea behind outsourcing is that you can spend additional hours doing paid work There's a whole section of the article that argues that this is not possible. You can't scale your income up and down on a whim. > Of course, it also assumes that people can choose exactly how many hours they work at their regular hourly rate, which isn't usually the case, but that's a separate quibble. It doesn't. There's a whole section just about it. Have you read the whole post? > You can't look at your fixed expenses in terms of a fixed amount of each hour's wage if you're increasing the number of hours worked. There isn't a linear relationship between your gross income and your disposable income, but that doesn't invalidate the calculation. You could say the same about health insurance and income tax. The former is capped (in Germany) to a certain amount, so it becomes a fixed expense past 56250€ per year. The latter is a progressive tax, so it doesn't grow linearly with your income.
- throwaway2245 6y ago
  > Of course, it also assumes that people can choose exactly how many hours they work at their regular hourly rate, which isn't usually the case It can be the case, but then the trade-off is even worse: This article suggests calculating your net income as an average rate across all your hours worked. If you have chosen to increase your hours, you are taxed at the marginal rate on these increased hours, i.e. the highest possible tax rate. Your net income per hour is reduced - as such, you are undervaluing your own time.
  - someguydave 6y ago
    even worse, while some folks have access to a second job or overtime, very few can scale their hours below 40 without angering their employer
- tempestn 6y ago
  Right, yes. My point though is that for this kind of value of time calculation to make any sense, you need to assume the amount of work for money someone can do is variable. Otherwise the amount you earn at work is essentially irrelevant when you're looking at the opportunity cost of spending time on something. So then if you are going to look at your net hourly earnings at work, I don't see how it makes any sense to consider all your expenses on the basis of per hour worked.
  - nicbou 6y ago
    That's a whole section of the article

jpttsn 6y ago

Yup this is where this article went off the rails for me. After-tax income makes sense when income is what you’re taxed by; the day job creates the income and the tax. But the day job shouldn’t be laden with all costs of living: only the costs of the day job. The author must know either way more economics than me or way less.

nicbou 6y ago

> The idea behind outsourcing is that you can spend additional hours doing paid work There's a whole section of the article that argues that this is not possible. You can't scale your income up and down on a whim. > Of course, it also assumes that people can choose exactly how many hours they work at their regular hourly rate, which isn't usually the case, but that's a separate quibble. It doesn't. There's a whole section just about it. Have you read the whole post? > You can't look at your fixed expenses in terms of a fixed amount of each hour's wage if you're increasing the number of hours worked. There isn't a linear relationship between your gross income and your disposable income, but that doesn't invalidate the calculation. You could say the same about health insurance and income tax. The former is capped (in Germany) to a certain amount, so it becomes a fixed expense past 56250€ per year. The latter is a progressive tax, so it doesn't grow linearly with your income.

throwaway2245 6y ago
> Of course, it also assumes that people can choose exactly how many hours they work at their regular hourly rate, which isn't usually the case It can be the case, but then the trade-off is even worse: This article suggests calculating your net income as an average rate across all your hours worked. If you have chosen to increase your hours, you are taxed at the marginal rate on these increased hours, i.e. the highest possible tax rate. Your net income per hour is reduced - as such, you are undervaluing your own time.
- someguydave 6y ago
  even worse, while some folks have access to a second job or overtime, very few can scale their hours below 40 without angering their employer
tempestn 6y ago
Right, yes. My point though is that for this kind of value of time calculation to make any sense, you need to assume the amount of work for money someone can do is variable. Otherwise the amount you earn at work is essentially irrelevant when you're looking at the opportunity cost of spending time on something. So then if you are going to look at your net hourly earnings at work, I don't see how it makes any sense to consider all your expenses on the basis of per hour worked.
- nicbou 6y ago
  That's a whole section of the article