Making Money

The $109,000 Hair Cut

Hair Trimming

I’m a little unusual for a guy.  Rather than go to a walk-in barbershop and getting assigned a random barber to cut my hair, I’ve seen the same barber/stylist for the last 30 years. My dad brought me in to see her when I was a child and I’ve always made it a point of using her when I needed a cut. Except for the couple of years when I lived outside of Minnesota I’ve kept that promise, and its been wonderful getting to know each other over that time and sharing life stories.  I’ve wondered lately though what I’ll do when she retires. She’s nearly 65 and has rarely charged me the going rate for a haircut.  For years it was $14 until I discovered that I was being under-charged and made her take my $20 bills.  Even this was a few years ago and I know that other places charge way more than this now. Once she hangs up her scissors my budget will likely take a hit.

From the perspective of seeking financial freedom though, none of this makes any sense. As a guy I’ve found that the older I get, the more utlitarian my haircut becomes. My hair once drapped to my shoulders before getting trimmed to my neck, and then later buzzed down to the back of my head. The top of my hair got shorter and shorter and needs ever less product to look right.  At this point, all I REALLY need is a trimmer for my haircut and I got a decent Wahl set a year ago when I was growing my beard out.  I could technically do my own hair and go from spending $20 every 4 weeks (or $260 a year) to $0. I could also do it more often than every 4 weeks and keep that nice short look permanently, and not suffer that last week before my next appointment when my hair becomes overgrown 🙁

Of course, some might say that the time spent doing this is time that could be used more productively elswehere…but let’s be real. You can’t exactly read, work, or do your taxes while someone is manhandling your head for a cut. I can’t even write one of these blog posts if I was getting my hair cut, and they’re lighter fare. I certainly wouldn’t want my barber to see the personal financial information I put in these entries, and a lot people can’t talk or work true business issues in front of others for other privacy reasons.

That argument aside, if we broke this out to the Rule of 752**, where we take a weekly cost and forecast its value over 10 years in the stock market assuming an average 7% return, then getting your hair cut by someone else actually costs you $3,760. This is a drastic understatement though. Since you can never escape the need to get your hair cut unless you go bald, the lifetime returns of cutting your own hair are much greater.  I’m 32 now, so applying a 7% APR by 5 decades until I was 80 would equal around $108,961.42**.  You could probably double or triple this amount if you were a woman paying for the innumerable stylings girls go for.

At $109,000 we’re talking serious money. In large parts of the U.S., its half the value of a house. Its several years of college tuition, even at a private U.S. university. Time-wise, its several years of savings for median wage workers. It’s also several years of retirement for frugal people.  It certainly makes our grandparents’ generation look a hell of a lot smarter! Knowing this, I definitely plan on cutting my own hair once my barber retires. Is anyone else going to as well? Do you have other cost-saving hacks like this?

*A longer description of the Rule of 752 (or 173 for monthly expenses) can be found on Mr. Money Mustache.

**Calculated this in Excel using the formula =FV(0.07/12,600,20), where 0.07/12 is the yearly interest, 600 is the number of months, and 20 is the monthly cost.

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