The Hidden Cost of DIY

In theory, DIY-ing everything — from oil changes to laundry to taxes — sounds like a smart way to save money. But when you sit down and look at the numbers, it turns out that doing it yourself can come with a financial penalty, and it usually makes more financial sense to outsource most of your to-do list. Here are the hidden costs of taking every task into your own hands.


When Mistakes Cost Money

In theory, DIY-ing everything — from oil changes to laundry to taxes — sounds like a smart way to save money. But when you sit down and look at the numbers, it turns out that doing it yourself can come with a financial penalty, and it usually makes more financial sense to outsource most of your to-do list. Here are the hidden costs of taking every task into your own hands.

Fixing Your Car

What you can safely do to your car depends entirely on your background knowledge and abilities. “Someone could do their own oil change in their driveway and be fine; someone else might put in the wrong filter and kill the engine,” explains automotive technician Erica Jacobs of Autocraftsmen in Montpelier, VT. “As a rule of thumb, unless you’re 100 percent sure you know what you’re doing, leave it to the pros,” she says.

She points to a recent customer who tried to replace her Jeep’s oil filter. Because the customer used an incorrect model, “she would have been looking at $4,000 for a new engine. Luckily she brought it in in the nick of time, and we were able to fix the filter for $65,” Jacobs says.

Even if you’re super savvy with cars, there are some tasks that only professionals should handle, according to Greg Gunter, technical team leader for the Ford Accelerated Credential Training Program at the Universal Technical Institute in Exton, PA. Let experts test and/or replace the battery, check the brakes, inspect the steering and suspension system, align the wheels, and rotate the tires. And keep in mind that since modern cars are computerized, they’re more complex than the ride you grew up with.

Selling or Renting Your House

Considering that real-estate agents take a portion of each home sale as a commission, it can be tempting to nix the middleman and find a renter or buyer on your own. But chances are your wallet will take a hit.

“The biggest hidden cost of not using an agent is a lack of market exposure,” says Jonathan Macias, a Realtor based in El Segundo, CA. “You’ll have fewer people looking at your property, which translates to less competition and a lower purchase price.”

He remembers a recent client who tried to lease his property for $5,000 a month. When he hadn’t found a qualified tenant after several weeks, he hired Macias, whose team did a market analysis and found that he’d underpriced by $1,400. They rebranded and advertised the property, and two weeks later someone signed a $6,400 monthly lease.

Another surprising cost is in the negotiating process. “An experienced broker will be able to negotiate on your behalf based on current market conditions and bring up a buyer’s initial offer,” Macias says.

If you’re still on the fence, consider that another dollar-stretching perk of hiring a Realtor is that they can snag you reduced vendor fees for escrow, inspectors, and contractors. Sold.

Preparing Your Taxes

Not only will hiring a pro save you mind-numbing hours of boredom crunching numbers, but it can save you major bucks, too.

“If a taxpayer has a straightforward situation — meaning a couple of W-2s and a handful of itemized deductions — then going the DIY route using tax software is usually the smartest thing to do,” says Gabe Lumby, a CPA in Springfield, MO. But “as life becomes more complex — buying a rental property, starting a small business or freelancing, inheriting investments, etc. — it’s a good idea to sit down with a CPA for some basic tax planning. I rarely see examples of DIY tax prep done correctly with complicated scenarios.”

For one thing, many amateurs are clueless about tax breaks they could be taking advantage of. Case in point: One of Lumby’s clients inherited a large amount of stock from her deceased mother. She didn’t understand that she could deduct the value of her stock on the date of her mother’s death from the amount she sold it for the next year, a mistake that cost her more than $10,000 in extra capital gains taxes paid.

On the flip side, underestimating what you owe Uncle Sam can result in hefty fees. Several years ago, Chicago accountant Kenneth Reid had a client who prepared their own taxes and failed to properly record transactions on their return. They ended up having to shell out $10,700 in IRS penalties and interest alone.

And further complicating matters is that the tax law changes every year: “In 1995, there were approximately 14 penalty provisions in the Internal Revenue Code,” says CPA Ted Kleinman of U.S. Tax Help. “There are now more than 10 times that number.” Plus, since the Affordable Care Act was enacted, health insurance is required to be reported on tax returns, causing confusion for taxpayers, Reid says. You don’t want to risk navigating that minefield without a trained guide.

Doing Chores and Errands

These days, you can farm out nearly any task you have to get done: For a few bucks, Instacart arranges a personal shopper to bring groceries from nearby supermarkets straight to your door in an hour or two. Munchery will deliver meals prepared by local chefs (cost: about $10 a serving). Shell out $5 for Shyp’s couriers to pick up, pack, and mail packages for you. Google Express will send goods from local shops to your door within a day — for free. Washio picks up your laundry and returns it to you clean and folded for $1.85 a pound.

The question you have to ask yourself is: How much is your time worth? For whatever jobs you need to knock off, do a quick cost-benefit analysis to see whether your time would be better spent on other pursuits. If paying $5 for someone else to do your grocery shopping means you can put in an extra hour at your $20-an-hour job, it’s a no-brainer.

Staying Home With the Kids

The cost of day care or a nanny gives many new parents serious sticker shock. According to the Pew Research Group, in 2011 day care averaged $179 a week for families with a kid under five, and according to a 2012 survey by the International Nanny Association, nannies with four to six years of experience earn an average of $18.66 an hour, or $746 per week if you employ your nanny full-time — a major bite out of your income.

Considering those steep prices, it can be tempting to step out of the workforce for a few years to care for your kids. In fact, 29 percent of moms opted to stay home in 2012, up from 23 percent in 1999.

But leaning out can dock you more earnings than you may realize. Not only is it hard to find a new job when you’ve been off the scene for a while, but even brief interruptions to your career can stunt your earnings potential. An analysis by the Harvard Business Review found that the average amount of time women off-ramp is 2.2 years — and that they lose an average of 18 percent of their earning power when they do (that figure rises to 28 percent for women in the business sector). The longer your break, the harder you’re hit: Women who spent three or more years out of the workforce lost 37 percent of their earning power.

Remodeling Your Home

From turning an old door into a coffee table to creating mason jar light fixtures, Pinterest can inspire anyone’s inner Martha Stewart. But getting carried away with home improvement projects can backfire.

“One problem is that people often don’t follow the building code,” says Mary Ann Moran, kitchen and bath designer, contractor, and owner of The Kitchen Coach in New Haven, CT. “For example, if you install an island in your kitchen but don’t put in an electrical outlet, then it’s against code. If you want to sell your house later, you’ll have to redo the entire island.”

Two of the trickiest areas to navigate solo are plumbing and electrical work. Small jobs like replacing a faucet are usually safe to DIY, says David Ratliff, owner and CEO of Midway Plumbing in Texas. But leave bigger stuff to the experts.

A few years ago, Ratliff had a customer who installed his own hot water heater and cracked the drain valve when he put it in. The garage flooded, racking up thousands in water damage. “Plumbing is particularly dicey in old houses, where the pipes are easy to break,” Moran adds.

Electrical repairs are precarious, too. According to Joel Worthington, president of Mr. Electric, checking smoke and carbon monoxide detectors is fine to do on your own, but installing outlets and repairing broken wires or fuses is a job for pros only.

There’s also a health risk to remodeling: If your house was built before 1970, you could encounter asbestos or lead. “Many people make the mistake of scraping off or painting over lead paint, but that can have serious consequences,” says Moran, who worked with a client whose child suffered brain damage after chewing on a windowsill where an old coat of lead paint had simply been painted over.

“Plus, the minute you move a piece of material that has asbestos in it, you run the risk of it getting loose and going into your lungs,” she warns.