One of the issues with running a business or doing freelance work (or, at times, even telecommuting) is the matter of having to invest on the tools of your trade. For example, I work as a writer in a telecommute position (since blogging’s done online anyway), so I have to invest on things like my laptop, Internet connection, and books.
Thankfully, expenses such as books and whatnot are generally covered by work but the larger expenses such as my computer and routine expenses such electricity and Internet are on me. Besides, I use them for a lot of other things than work anyway so it’s quite unethical to charge them to work. (Though you have a choice in declaring them tax deductible since you use them for work.)
Utilities are routine so it’s easy to budget them on a monthly basis sometimes some companies are willing to subsidize the expenses at least for work hours in telecommute positions.
In cases of these tools of the trade, it’s always great to look at the financials. Things like depreciation and wear and tear really factor in since you’re the one paying for it. My old laptop was a workhorse, bought it for $1,200 about three years ago and decided to give me fits. Three years is bad at all for a piece of electronics that had been practically in use almost everyday of the year.
That’s like spending a dollar a day for it. But that’s lucky. Most computers have a 2-year lifespan. But even at that calculation, it’s a $1.65 a day. Given that I earn more than that a day, I’d have to say that laptop has given me a pretty swanky ROI.
When it conked out, however, that meant I had to replace it out of pocket immediately. It’s a good thing that I was really saving up for a replacement already so I had the funds readily available. You see, wear and tear will be part of it. And tools of the trade are essential to earn a living so there’s no excuse not having contingency plans when they break down.
A good plan is to make sure that you know the real impact of the tool to your trade. Here are a few things that you might want to take note of in .
1. Warranty - How long is the warranty for the item? This is usually a good predictor of the lifespan of the item. While many items would blow past the warranty period and still work perfectly fine, the warranty also determine the “protection” you have from having to possibly spend on a new one just in case it conks out.
2. Serviceability - How easy will it be to have the item replaced or repaired? Do you have to spend on shipping or travel to the nearest service center? Some take a week to process and even up to a month to service.
3. Downtime – Just in case the item breaks down, how long will you be without the item? Will you still be able to function just in case it breaks down? This is one good reason to always have a spare. But for some high value items, this might not be viable. Still, do the math. Check if the cost of not being able to work have a bigger impact on your finances than simply opting to have a spare.
4. Replacement – Given wear and tear, you have to plan for replacement. It’s usually a good thing to start saving up for a replacement halfway through the expected lifespan or warranty coverage of the item.
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