Your Money or Your Life? Both, Please | White Coat Investor

2022-09-03 04:06:40 By : Ms. Laura Song

By Dr. Leif Dahleen of Physician on Fire, WCI Network Partner

The 1992 book Your Money or Your Life by Vicki Robin and Joe Dominguez is considered by many in the financial independence space to be one of the most influential bodies of work in this realm.

Joe at Retire by 40 reviewed the book back in 2011. Mr. Money Mustache wrote about the book in 2012. More recently in 2016, Coach Carson shared his thoughts on the pivotal paperback.

I knew it was a book I would likely enjoy reading, but I wasn’t all that interested in reading a book published 30 years ago. A lot has changed since, then, and to be honest, I thought it was quite a bit older than that based on some of the buzzwords like “life energy” that were being tossed around in reference to YMOYL. What kind of hippie talk is that?

A couple of years ago, however, I ran out of excuses. The book had been updated for 2018, with a foreword by the aforementioned Mr. Money Mustache, and I was offered a copy to review by the publisher. I couldn’t say no to that!

So, I got out my pet rock, lit some intense incense, and got comfy in my bean bag chair to dig into this groovy guide to a better life.

The subtitle of this book is “9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence.” I would say the target audience is the reader in a financial rut, living paycheck to paycheck and wondering how to somehow get ahead or why it’s important to do so.

In other words, the target audience is not me. And if you’re well on your way to financial independence or you’ve already achieved financial freedom, it’s not you, either.

While this book was first published in 1992, its roots are in the 1970s, which helps explain the new-age vibe that survived the more recent update. The co-author, Joe Dominguez, who sadly lost a battle with cancer in 1997 at age 58, actually retired at age 31 from his job as a financial analyst in Manhattan. He was Mr. Money Mustache before Mr. Money Mustache was born. And yes, Dominguez had a mustache.

Not long after Joe retired as a young man, he and Vicki Robin teamed up to help others learn to think about money and life in a new way. They put on seminars, recorded cassettes, and eventually published YMOYL after about 20 years of teaching, changing lives, and raising money for their nonprofit, the New Road Map Foundation.

The premise of the book is to examine your relationship with money and answer the question of what’s more important: your money or your life? Assuming you choose life, the book goes through the nine steps to help you achieve financial independence for yourself.

I won’t detail the individual steps—that was done well in some of the reviews linked in the introduction, but I will share some of what I learned, what I liked, and what I didn’t like in the newly revised 2018 version of YMOYL.

It’s only fair to point out that when it comes to either your money or your life, the book doesn’t really force you to choose one or the other. In fact, on page 4, you’ll find:

“There is a way to live an authentic, productive, meaningful life—and have all the material comforts you want or need. There is a way to balance your inner and outer lives, to have your job self be on good terms with your family self and your deeper self. There is a way to go about the task of making a living so that you end up more alive. There is a way to approach life so that when asked, ‘Your money or your life?' you say, ‘I’ll take both, thank you.'”

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I want to reiterate that there is so much that can be gleaned from YMOYL if you’re naive to the concept of financial independence and haven’t yet begun to master money. If I weren’t reading this from the perspective of being “post-FI,” this section would be a few thousand words long.

Still, every day is a school day. I still learned a number of interesting tidbits, and many of my money beliefs were reinforced by what I read in these 300-plus pages.

For example, in their seminars, they would ask people to jot down how much money they had and how much money would make them happy. They were also asked to rate their happiness on a 1 to 5 scale.

The results? Everyone, regardless of their current status, would be happy with about 50%-100% more, regardless of their starting point. And their current level of happiness didn’t vary by income or net worth.

Similarly, when asked for monthly income and a 1 to 5 life rating, the ratings at their seminars did not improve with increasing income.

A related fact is that those who complete the nine steps report reducing their spending by an average of about 25%. In spite of the lower “standard of living,” most feel happier and find their relationships with family and partners improve.

Do you see how there might be a disconnect between happiness and money? From Vicki and Joe:

“These results astounded us. They told us that not only are most people habitually unhappy, but they can be unhappy no matter how much money they make. Even people who are doing well financially are not necessarily fulfilled.”

Sadly, we’re a sad lot, and according to YMOYL, the number of people who describe themselves as very happy in the United States has been steadily declining for the last six decades.

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The book and its steps are truly a great roadmap to transforming the way you approach money and improving your life’s circumstances if you’re not where you’d like to be in terms of saving, spending, and living.

There is a great section on how marketing has stressed the importance of consumption for the better part of a century.

In the first chapter, the 1929 progress report from Herbert Hoover’s Committee on Recent Economic Changes was quoted:

“The survey has proved conclusively what has long been held theoretically to be true, that wants are almost insatiable; that one want satisfied makes way for another. The conclusion is that economically we have a boundless field before us; that there are new wants which will make way endlessly for newer wants, as fast as they are satisfied . . . Our situation is fortunate, our momentum is remarkable.”

That was written nearly 90 years ago, and it holds true to this day. It’s only become truer as time has marched on.

In another oldie-but-goodie quote, we have a 1955 quote from retailing analyst Victor Lebow:

“Our enormously productive economy . . . demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption . . . We need things consumed, burned up, worn out, replaced, and discarded at an ever-increasing rate.”

The revised edition also cleverly incorporated lessons from books published in the interim, including one of my favorites, The Millionaire Next Door. She mentions how Drs. Stanley and Danko noted that “people who have achieved a high net worth relative to income know how much they are spending on clothes, travel, housing, transportation, and so on, and those who don’t achieve high net worth relative to income have no idea how much they spend. It’s a stark contrast.”

The movie The Matrix also gets some love. After quoting Morpheus describing The Matrix to Neo, including the excerpt, “You take the red pill–you stay in Wonderland, and I show you how deep the rabbit hole goes.”

She says that understanding that money is life energy is the equivalent of taking the red pill. You can see your choices and their consequences more clearly. Taking the blue pill would be akin to maintaining a work-consume-replace-repeat sort of existence where you carry on without intention or financial progress.

I also like the fact that the final step, Where to Stash Your Cash for Long-Term Financial Freedom, was updated. When Vicki and Joe were traveling the country giving seminars, treasury bonds offered high-single-digit to low-double-digit returns. The 1992 book pointed to them as an easy way to have guaranteed income.

Today, you’d be lucky to find guaranteed returns that can keep up with anticipated inflation. In the 2018 revision, low-cost passive index funds are touted as one of several viable options to place in your portfolio. The Bogleheads get a well-deserved shoutout.

She also discusses the benefit of DIY investing and fee-only advisors, spends a few pages on real estate, and touches on socially responsible investing.

Finally, I’ll mention that I liked the real-life examples sprinkled throughout the book. Vicki and Joe touched many thousands of lives, and they’ve clearly got ample stories to use to demonstrate a dilemma or success story from any angle imaginable.

While it’s a great book, it’s not perfect, and a review of the book would be incomplete if I didn’t point out what I perceive as a few imperfections.

Both Mr. Money Mustache and Joe from Retire by 40 mentioned that it took them longer than usual to get through YMOYL. I had a similar experience. I imagine that has more to do with the fact that all three of us were reading it from a perspective of understanding the concept of enough and having it. It might be more of a page-turner to the uninitiated.

I alluded to this earlier, but there were times I swore I could hear “. . . this is the dawning of the age of Aquarius . . . the age of Aquarius . . .” despite the fact that no audio source was powered on anywhere near me. YMOYL was written by two free spirits, and it shows. In general, that’s a good thing, but the talk of gazingus pins, economist-gods, and life energy didn’t resonate with me as well as I’m sure it does with others.

At times, some of the well-intentioned updates seemed like anachronistic add-ons to bring a book from the 1990s with roots in the 1970s up to date as we reside in the 2020s.

Can you tell which one thing was added here? “When we are bored, we buy something. A magazine. A cruise. A mobile app. A bet on the horses.” Or here, when recurrent spending was addressed? “Your phone plan, your Internet plan, your car payments, your insurance, your energy consumption in your car and house, your rent or HOA dues or property taxes, service people to fix your car, clean your house, or soothe your soul, your tickets to concerts and conferences and vacations . . .”

Even capitalizing the word “Internet” is considered outdated by many. I appreciate the edits to freshen up the text with modern-day objects, but it felt a bit forced in certain places.

Some of the details in the steps are a bit rigid for my taste. Track spending down to the penny. Add up your belongings and assign a value to absolutely everything you own with a value of a dollar or more. I think you can benefit from the steps without following them as precisely as indicated.

There’s a concept I really like about calculating your “real wage.” It’s how much you earn per hour after accounting for all the time you spend directly at your job and in job-related activities. You also subtract money for taxes, commuting costs, work-related clothing costs, meals, and more. While I believe it’s valuable to think about all the time that goes into your job and all the money you spend or lose to taxes related to work, the formula offered is skewed to give you a very low real wage. For example, you’re supposed to add time and subtract earnings for categories that include decompression, escape entertainment, and vacation.

I don’t know about you, but I’d be traveling with or without a job, I’ll need to decompress with or without paid work (I’ve got kids!), and I don’t know exactly how I am to distinguish “escape entertainment” from the run-of-the-mill entertainment I’d be enjoying whether or not gainfully employed.

I didn’t mean for the negatives to take up as much or more space as the positives. There is truly a lot more to like in YMOYL than I could mention here, and I had to reach a bit to find things I didn’t love. All in all, on a 1 to 5 scale, I’d give it 4 stars. If I had come across it 10 years ago, it would have gotten an extra half star, maybe even three-quarters of a star.

This book would be an excellent gift for a recent graduate who is just now embarking on the next chapter in life, whether that’s further schooling or a first job. It’s also perfect for someone who is discontented with their current lot in life and is open to making some changes to improve it.

While the book was not a revelation to me at this stage in my life, I can see how it has been life-altering in the most positive ways for many who have discovered it over the last 30 years.

Have you read Your Money or Your Life? Have you followed the 9 Steps? What did you learn, like, or dislike? Comment below!

It’s the 2018 that’s bloated and drags on. I prefer the more concise original version, regardless of certain things being “out of date”. I preferred it as a philosophical guide, rather than the 2018 version which attempts to be an “all you need to know”.

I read it many years ago and gave a copy to my then 21 year old eldest daughter.

It took sorting, donating, selling, packing, and moving all of our cumulative purchases, and doing all this again after moving for the message to sink in.

Now, I’m a 58 year old, semi-retired anti-consumer. I specifically think about every non-food, non-essential purchase as a potentially life stealing decision, because it’s true. If I spend too much, I’ll have to work more.

I haven’t bought anything substantial since we started packing back in April. I pay my bills and try to reduce them if possible. I use an app to track my spending and subscriptions in order to boot any I don’t really use and enjoy.

I had to buy a power line Internet extender to get my WiFi to go to the far reaches of our finished basement for my “telehealth only, no commute, two day a week” job.

Every time I go into a store now and think about buying something, I get nauseated. I avoid the Knick knack shops in all the towns we visit and sit outside instead.

I invest my excess cash for yield and love seeing the money from money come straight into my account. I may never buy anything non essential ever again. I know, I’m full of it, but I can dream.

I’ve got vacations lined up in October, November, and am looking for one for Spring. I’m willing to spend vacation money. Today we are doing free Yoga at a vineyard, then buying a bottle to sip on the mountain there. That will be money well spent.

The most fun activities I’ve had this week have all been free (hiking, fitness, vineyards) unless we bought a drink.

The only way I could be more happy is if I’d saved even more in order to fully retire at 58. Instead, I spent it on crap that is now at Goodwill or in boxes…a lot of which is waiting to go to the garbage or Goodwill. At least my kids won’t have to clear out this consumer folly when I die. I can dream.

Joe was a brilliant, generous, and funny man. You would have loved him.

To my knowledge he was the first to ever write about “FI.” So I believe he coined the term we all use.

He thought clearly about whether to take unnecessary investment risk. Having worked in Wall Street he knew the other side.

He taught people how to make passive income through investments to provide the option of cutting back from work.

The gazinga pin is what Kiyosaki called doodads. I’m not sure of the best name but it is an important concept.

The exercise of finding your wage would be helpful to most doctors. If you consider your total work hours, licensing fees, call, and charting your hourly pay may be less than you realized.

Another powerful tool he recommended was going through your spending and asking “is this consistent with my values?” “Did this give me the joy that was worth the four hours of work required to pay for it?” We could all benefit from such clear thinking.

I really benefitted when I first read it- 25? years ago- from the epiphany of how many work hours an item (plus any interest on a loan to buy it) cost me. Not certain if this idea also comes from YMOYL but the concept of you might have to work until you die if you don’t plan otherwise was also important in my finances.

Yeah definitely great book but hard to relate with the examples of money and budget given I am a high income professional. In the example where a girl tracks her budget, I spend more in a day than she spends in a year! Not sure if this book was updated for inflation but made it hard to relate although the point still shines through how making money is really at the sacrifice of life energy.

I read the original 20 years ago and loved it. As an hourly ER doc, I immediately understood “life force,” and ever since then I have related every spent dollar to how much life force I would lose. I still remember the paper spreadsheet of expenses taped to the fridge. There was no”Personal Capital” back then, and you’d be lucky if your credit card had a website.

Because of this book, I lived like a resident for a few years, paid off all my debt, and saved enough for a down payment 4 years out of residency. But then family life got complicated, and I lost my way. Not everyone could see the “life force” as clearly as I did, and I somehow ended up with a doctor house, a landscaper, and organic mattresses made of bees wings.

For the last 8 years I’m getting back on track, but now I find the concept of “life force” a minor hindrance. The link in my mind to hours spent working to dollar spent is almost too precise. If I don’t get the best deal on airfare, for example, I will think about my last night shift wasted.

Anyway thanks for the trip down memory lane. This book was meaningful to me at the time, but I think WCI etc. have basically taken the reins for now.

I read this book about 15 years ago – the original version – and it shaped the way I think about time/money balance. The exercise of figuring out your “real wage” was a game changer for me in how started thinking about the time purchases cost me. I’ve read many financial books, but this one is one of three I credit with helping me reach financial independence by age 44. I haven’t read the new version, but I recommend this book.

The YMOYL exercise in which you list your top ~5 values, then list your top ~5 spending areas, was what really stuck with me. Figuring out what I esteem and enjoy the most and making sure my spending maximizes that part has made my life better.

E.g.: Love to travel and explore on foot. Don’t really care about thread counts in sheets. Ergo, I get to travel more and stay in great areas by using hostels and room-rental AirBnBs.

I read YMOYL in 2018 and while I struggled with the New Age-y tone, the concepts have been fundamental to really getting joy from my spending. I highly recommend it.

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