As I read through the finance classic Your Money or Your Life by Vicki Robin and Joe Dominguez this past month, in snatches here and there by the wood stove and in the loft late at night, I had a sneaking suspicion I had read this book before.
And several chapters in, it dawned on me: eight years ago in our first apartment fresh after moving to Colorado, I had been hungry for financial truth and had found and read this book. Boy, if only I had had the confidence and foresight to ignore other voices, have confidence in my own vision, and implement its wisdom then!
Evaluated against the teetering stack of other finance books I was devouring at the time, trying to make sense of how to wisely save and steward our meager resources, this book shined out as a radical choice far beyond budgeting and investing.
It’s a book proposing a reinvention of our consumer identities. It’s an idea that we can pursue a joyful transformation with our relationship with the finite resources of money and time. And in turn, we can breathe life and meaning into our lives and those around us when we are no longer held captive to our jobs or our finances.
And really, considering our crazy tiny house leap of faith, it’s no wonder Your Money or Your Life is the book for me.
Of course Dave Ramsey, Suze Orman, and the like all espouse some nuggets of good financial philosophy. Otherwise, they wouldn’t be so perennially popular. Advice such as building up several months’ savings for life’s inevitable surprises, avoiding consumer debt, diversifying your investments is all standard. But have you ever been reading these books and first told yourself, “Duh! I already knew this stuff” and then wondered, “Isn’t there more?”
Financial Independence (FI)
Well, my friends, there is. And it’s called the Financial Independent movement, an underground, countercultural, unaffiliated band of rebels chucking their societal identities as consumers and workaholics.
The pursuit? Maximizing earnings, minimizing expenses, and investing wisely in simple, proven ways. All with the goal of a more meaningful life with loved ones and a greater stewardship, giving, and aligning our energies with our values.
Toward a New Mindset & World of Options
Differing from most other finance books, Your Money or Your Life is all about a mindset and lifestyle shift, so the chapters are laid out in nine steps to take on your journey toward financial independence.
Some main themes:
- We don’t have to surrender to the “9-to-5 til you’re 65” timeline of the American worklife. Instead, we can pursue Financial Independence and lead meaningful lives both with and without paid employment.
- We don’t have to embrace consumerism as a national pasttime, a right, an obligation to the economy, or as an identity. Instead, we can lead lives of simplicity, frugality, joy, gratefulness, and generosity to others.
- We can seek having “enough” material fulfillment and find contentment with neither riches nor poverty. “People need identity, community, challenge, acknowledgement, love, and joy. To try to fill these needs with material things is to set up an unquenchable appetite for false solutions to real and never-satisfied problems.”
- We can strive for honesty, integrity, impeccability, discernment, and growth in finance and in life.
Your Money or Your Life: the Steps
1) Tallying up lifetime earnings and current net worth. A learning exercise with “no shame or blame” to make peace with your past.
2) Becoming aware of hidden costs of working. Commute, dress, decompression activities, extra eating out, daycare, work-related stress and illness, etc. Calculating your true hourly wage to accurately evaluate your job. At the same time, tallying monthly expenses.
3) Converting money spent into life energy spent based on your true hourly wage and your unique expenses.
4) Reflecting on values, dreams, passions, purpose, giving, and what fulfillment is. Evaluating how you currently spend your money/life energy and whether this aligns with your values.
5) Visually charting your financial picture over time, with lines representing income and expenses, the gap representing savings. Simultaneously evaluating whether your expenditures of money and time align with your values.
6) Pursuing your own American dream through frugality, which is “the wise stewarding of money, time, energy, space and possessions.” Treasuring community, nature, and simple pleasures. “To be frugal means to have a high joy-to-stuff ratio.”
7) Rethinking the true purposes of work, paid and unpaid, and our identity in relation to work. Maximizing earnings out of self-respect and valuing our life energy.
8) Investing and reaching the Crossover Point of FI at which investment income can replace active income.
9) Empowering yourself with financial knowledge so that investing decisions aren’t made out of greed, fear, or ignorance. Building capital, cushion, and cache for the future. An overview of bonds, mutual funds, index funds, and real estate.
Strengths of Your Money or Your Life
There are so many lightbulb moments and memorable quotes from this book. Here are some of its strengths:
- Introducing FI to millions and defining FI holistically as financial intelligence, integrity, and independence.
- The book’s many interesting narratives of people, their situations, and their challenges and successes in pursuing FI.
- Giving some specific wise financial instruction. These include: making it a lifelong goal to educate yourself about your financial options; only paying a financial advisor who is a fee-only fiduciary; and seeking out simple, low-fee, no-load investments that jive with your goals.
And Yet, the Your Money or Your Life Book is not a Panacea
No book is perfect, and even the best cannot take the place of good old-fashioned brain, muscle, and discipline on the reader’s part after finishing an inspiring book.
Obviously, I did not take this hidden jewel of a book and cash it in the first time around. But why? As I look back eight years ago, there were two stumbling blocks preventing me from truly seizing and acting upon this book’s message:
1) the incoherent and now obsolete advice about buying treasury bonds as your primary investment (updated somewhat in the current edition), and
2) the overwhelming enormity and naked, painful self-reflection of the tasks of assessing net worth, income and expenses over years’ time.
However, if you as a liberated reader can fully overcome these two hurdles, this book is no less than a godsend. This book is just too good to lay back on the shelf without pausing the work-spend-die routine to question whether there could be another road map for your life.
Thus, my suggestions for each of the book’s two weaknesses:
1) Learn all you can about low-fee, diverse index funds, as pioneered by Vanguard, as well as real estate and other investment options. Read everything you can from Mr. Money Mustache, Frugalwoods, and the many other sophisticated and inspiring FI writers out there. Keep learning, even and especially when what you don’t know is uncomfortable.
2) Begin with YMOYL’s Step 2, and begin now. Knowledge is power, and if we don’t know exactly where our money/life energy is going and whether our values are aligned with that, then we really don’t know what we’re doing with our lives. So it’s time to begin. Self-reflection and accountability plow the way for immense growth.
Your Money or Your Life, a Way of Life
So as you can see, this book was a beautiful breath of fresh air for me. And I am determined to keep breathing this philosophy of financial intelligence, integrity, and independence for a long time.
To keep this momentum rolling in the coming year, along with continuing to count my blessings through our I Choose Joy series, I have decided to proceed with the steps and fully track our income, expenses, and growth toward our goals.
Do I really have time for this, amid chasing the three little rapscallions around the tiny house and brainstorming, yet again, what in the world we’re doing for our work life / future plans / home?
Absolutely I have time. Truly, as I can attest from all the years of pain from all I did not know, financially and otherwise, I cannot afford not to. So here’s to financial liberty!