A Case for Outsourcing

Like a lot of personal finance junkies, I am a big fan of Mr. Money Mustache. Latecomer that I am, he was the first blogger I found who was writing about early retirement through frugality. And one of my favorite early posts of his was on the subject of outsourcing housework and, more broadly, about outsourcing in general. The MMM approach is to "insource" everything: domestic chores, home improvement, car repairs...do everything yourself. His argument for insourcing states that, regardless of your hourly wage, you cannot work any job or freelance activity for all waking hours: you would burn out. The breaks taken to clean your house, maintain your property, cook your own food, and wash your own dishes provide variety, prevent burnout, and save money. In addition, insourcing larger tasks, like home improvement, builds your base of skills. What's not to love?

But is the approach to "insource everything" truly possible, or optimal?

Readers will note that when Mr. Money Mustache says he does not outsource "ANYTHING" there is a footnote: he buys food from the store and outsources the formal education of his son. These seem like reasonable things to hand off to someone else. But it should be noted that while these aren't exactly small chores, some people do these jobs themselves. Homesteading and gardening are certainly possible, as is homeschooling. But I think these exceptions underlie the point I'd like to make: living in a society with others provides a strong incentive to outsource some things. When we have such a diversity of skills available in our society of people, there's no need to perform every single task or produce every single good yourself. Trading money instead of time is often the smart choice. Additionally, it's impractical (maybe impossible) to say that an individual is going to be entirely self-sufficient. One might maintain his home, but it's likely he did not build it. Even if he did hammer in each nail with his own two hands, it's likely that someone else was holding the boards in place.

The question isn't whether outsourcing should be done; rather, it's just a question of what we choose to outsource.

Mr. Money Mustache might do all his own construction work, but the base materials involve a series of outsourced services. Why buy two-by-fours when you can learn to fell the trees in your yard and process them to lumber? Why buy furniture when you can build your own with a table saw, planer, and a router? Why buy nails when you can learn to make your own from steel wire? Heck, why not smelt the steel yourself? 

There are certain goods and services that would require so much time and effort as an insourced job that their dollar cost is more attractive. Due to the huge advantage of industry and mechanization, companies can perform things at many times the efficiency of a single producer. Additionally, there are some goods and services that if I tried to make (or perform), the quality would simply be bad for a long time: the learning curve might involve a dozen iterations before I make a decent two-by-four from the trees in my back yard.

And perhaps most importantly, there is the aspect of personal enjoyment. People and jobs are different, and some provide a better match than others. I might find a zen-like pleasure in washing dishes (I do) but hate going out into the Arizona heat to do yard work in the summer (I do). Not to admit wussy pants status, but shouldn't our personal preferences on how to spend our time matter?

Besides, the argument to insource everything is kind of a curious one in the early retirement community. If our limited time on this earth is so precious that we ought to try to reach financial independence and leave our corporate jobs in short order, why doesn't that rationale apply to the time we spend doing everyday tasks? Why is it only important to get back the eight hours a day we spend in the office?

The outsourcing versus insourcing debate seems to be a bit of a false dichotomy. We all trade time to save or earn money, and we all trade money to save time, too. It's just a matter of personal choice. Going back to another of Mr. Money Mustache's concepts, the simple math of early retirement shows that savings rate is the one metric that really matters. If you achieve a savings rate that puts you on the path to financial independence in short order, does it really matter if you go to a restaurant regularly or hire someone to clean your house? Spend your money, and your time, as you want.


*Photo is from Dan4th at Flickr Creative Commons.