Tuesday, May 13, 2008

"Your Money or Your Life: Transforming Your Relationship with Money and Acheiving Financial Independence" by Joe Dominguez and Vicki Robin

In these tough economic times, I thought this book would be a very enlightening (and hopefully helpful) read. "Your Money or Your Life" is supposed to be one of the Holy Grails of financial advice; pick up any other book about how to cut your bills, save money, etc, and chances are very good that you'll find this title listed in the bibliography.

I was really hoping for some wise insight here. With gas running almost $3.75/gallon, milk over $4/gallon, eggs up to over $2/eighteen, etc, I could really, really use some wise advice on how to cut corners and still be able to have a life and put money into savings. Well, this book would be great for those who have never really had to scrimp and save, or perhaps for those who were never really taught about how credit works, interest rates and such being what they are now. But for someone like myself who grew up knowing the value of a dollar, there's not a whole lot that's new here.

The authors pretty much advocate the "live below your earnings" principle, which is what we all should have been doing all along. But in our society of rampant consumerism, most of us have been living above our means and using credit cards to do so. Those accounts have to be paid at some point, whether you pay them off each month or just barely make the minimum payment. And the less you do pay on them, the faster your balance goes up and the more you have to work to just get by. What the authors want people to do is to pretty much stop and think about each purchase; it's good advice in my opinion. "Conscious spending" should go hand in hand with "conscious eating", "conscious relationship-ing", etc. We spend so much of our time thinking about the future rather than living in the here-and-now. Think about it - when was the last time you truly listened to your spouse/children/co-workers? When was the last time you spent time saving up your pennies to make a purchase? When was the last time you sat down to eat that you had the TV turned off? We don't appreciate the things we do have, so we go out and try to buy our way to happiness.

Doesn't really work, does it? That's what the authors are trying to tell us. They also point out that a high-paying job may not really be the answer if you have to spend more on clothing/gas/items you buy to de-stress from said job. This part of the book I could totally relate to! I worked in an office, a "real job", for around 6 years; by the time I left I was miserable. I hated the job, didn't like the people I worked with, and spent money to try to "cheer" myself up. When I finally left, I went to work for a used book store making about half of my previous salary - and loving every minute of it. Sure it was scary at first, but what was really surprising was how easily I adjusted to that new lower income. I took my lunch to work, could wear jeans/T-shirts, and only had to drive about 10 minutes away rather than 30 minutes into the downtown area. I was doing something I really enjoyed and working with people who liked and respected me. The authors are very correct to encourage people to "look outside the box" when it comes to thinking about earning a living; the best job for you isn't necessarily a 5-figure job.

The other point they made over and over that I really liked (and truthfully hadn't thought much about) was that we all have jobs, whether we are actually working for a paycheck or not. This is very important; too many of us define ourselves by our career path, rather than who we actually are. We are not just clerks, cashiers, accountants, etc; we are also husbands and wives, parents, best friends, caregivers, housekeepers, etc. Those are all very valid jobs - we just don't earn a paycheck for them. It doesn't make them, or us, any less important. Very good advice to keep in mind the next time you're downsized!

As for their financial advice, well, it's pretty much what we've been told over and over - don't overspend, pay yourself, and stop buying so much "stuff". Their plan for financial independence was shocking, though - BONDS. Yes, once you have your debt paid off and your 6-months cushion in the bank, you should run out and use the rest of your savings/extra income to purchase U.S. Treasury Bonds. WHAT? I mean, they're not a horrible investment, but they certainly aren't a great one, either. They are, I suppose, very safe; perhaps that's the appeal to the authors. But they certainly wouldn't be my first or only choice!

Overall, this isn't a bad read and there is some good advice. I don't think it's the "answer" to every one's financial problems, though.

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