Note: This is the
second in a series of book reviews about books that inspire, that offer
practical tips about goals, habits, productivity, simplifying, frugality and
more. This series should run every few days or so, and it will cover some of my
favorites in this fairly large genre.
Overview
Your Money or Your
Life: Transforming Your Relationship with Money and Achieving Financial
Independence, by Joe Dominguez and Vicki Robin, is absolutely one of my
favorite books ever and perhaps the best book on personal finance ever written.
It changed my life.
That might sound
like a pretty rave review, but it’s genuine, and I believe it’s justified. If
you’re expecting a typical book about personal finance — investing, saving,
budgeting, etc. — you’ll be surprised. It has those elements, to be sure, but
it approaches everything with a refreshing perspective: life isn’t worth
wasting away by working 40+ hours a week for the rest of your life, just so you
can have enough money to buy material possessions. Once you realize this, you
realize that you can live on less, and retire early.
That’s right: live
on less, and retire early. Simple yet brilliant. You’ll love this book. Read on
for more.
The core philosophy
The book begins by
talking about the typical lifestyle of people in our society — working long
hours, stressed out, not seeing their families … all to support a lifestyle of
luxury, to have material possessions. Sound familiar? If so, this book will
speak to you.
The book then talks
about how precious our time is, how little of it we have, and how we are
exchanging our life in order to get money to buy possessions. If this
transaction is not fulfilling to you, then they suggest an alternative: reduce
your living expenses, increase your income, invest the difference, and retire
early.
The books authors
did just that — reducing their annual expenses to just $6,000 — and spend all
their time volunteering and making other people’s lives better.
Some of the things
the book will help you do:
get out of debt and
develop savings
reorder material
priorities and live well for less
resolve inner
conflicts between values and lifestyles
convert problems
into opportunities to learn new skills
attain a wholeness
of livelihood and lifestyle
save the planet
while saving money
Retiring early
One of the key
concepts in the book is the Crossover Point. Here’s how it works:
Track your living
expenses on a graph, trying to continually reduce them and lower the line on
your graph.
Track your income,
trying to raise it above the living expenses.
Take the difference
between income and expenses, and invest that amount.
Track the income
from your investments, watching it rise on your graph until it crosses over
your living expenses — the Crossover Point.
Once you reach that
Crossover Point, you have enough income from your investments to retire. They
don’t recommend you retire right away, as you should build up a cushion to live
on and to use in emergencies, but at this Crossover Point, you have the ability
to walk away from your job.
That’s a liberating
idea. Because then, your job is no longer something that will go on
indefinitely, but something you’re doing for a limited time so that you can
quit, and go on to do whatever you want.
Conclusion
There’s a lot more
to the book, but I decided to give you just my favorite part. In the end, the
book is more about your values and aligning your lifestyle with those values,
than it is about wealth. It’s more about our relationship with money than it is
about money.
Needless to say, I
give this book my highest rating, with a very strong buy recommendation. You’ll
love this book, and it has the power to change your life.
If you’re interested
in the book:
check it out below : Your Money or Your Life: Transforming Your
Relationship with Money and Achieving Financial Independence