Book Review: Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence by Vicki Robin and Joe Dominguez
Dominguez achieved Financial Independence at the ripe old age of 30 and proceeded to provide his method to friends who encouraged him to offer it as a class. He finally wrote a book, and this edition is revised and updated for modern times by his friend and fellow achiever of Financial Independence, Vicki Robin. Offering steps and mind-set changes, not magic formulas, they promise that if you follow the steps, you can be Financially Independent in 5 to 10 years, no matter how much debt you are currently in or how much money you make.
It took me an astoundingly long time (for me) to read through this book, partly because the information really does alter your world-view, and partly out of a desire to let each step sink into my mind before reading the next one. I took sixteen pages of typed notes, something I haven’t done since grad school (ok, ok, undergrad….). The information is just that good.
What is Financial Independence? It’s when you’re out of debt and making enough income off of safe investments that you do not have to work for a living. This frees you up to do what you want with your life, whatever that may be. Some people volunteer, others start a business, some spend their time with family, some travel, the options are endless.
The steps are simple and straight-forward, but they all come back to the central idea that money is something we trade our life energy for. It seems obvious when you hear it spelled out that way, but personally it was not routine for me to think of my money and spending in that manner. Not anymore. When I was a work-study student and got to keep all my money, no taxes, no commute time, no work wardrobe to buy, no work lunches, it was easy to think “Ok, I have to work this many hours to buy this thing.” Grown-up, real world work isn’t that obvious. So figuring out my “real wage” by calculating out how many hours I actually spend working (including commute and lunch break), the cost of working (work wardrobe and T pass), reveals that one hour of my life equals $7. I figured this out back in December. Trust me, it completely changed my spending habits. It’s abundantly clear when you look at my mint.com account.
So, I can say that the early steps definitely have changed me. Can I tell you this book will work, and I will be Financially Independent in 5 to 10 years? No. I have no clue yet. I can tell you, though, that the steps are real and not toted as magic. It will take a lot of work. That, combined with the effects on me of the early steps, are enough for me to say that this book is worth it. It teaches you to be in control of your life, instead of letting money and the “American Dream” control you. But let me tell you the nine steps, just to prove to you that none of them are a “magic formula” type thing.
- Make peace with your past
- Track your life energy
- Tabulate monthly
- Ask yourself the three questions for each category during your monthly tabulation: a) Did I receive fulfillment, satisfaction and value in proportion to life energy spent? b) Is this expenditure of life energy in alignment with my values and life purpose? c) How might this expenditure change if I didn’t have to work for a living?
- Make a wall chart where you can plot your monthly expenditures, total income, and investment income in three different colors to help you see change and progress over time.
- Value your life energy by minimizing spending
- Value your life energy by maximizing income
- After you’ve tracked on your Wall Chart for a while, calculate your Crossover Point–the point in the future where your investment income and expenditures meet and “cross over.”
- Become knowledgeable and sophisticated about long-term income-producing investments and manage your finances for a consistent income sufficient to your needs over the long term.
If these steps intrigue you and you have a desire to become Financially Independent, then I strongly encourage you to read this book. In fact, I encourage everyone to read at least the first few chapters to learn how to have a different relationship with money. One where you are in control of it and thus regain control of your life.
5 out of 5 stars
Source: Public Library