Your Money or Your Life

Transforming Your Relationship With Money and Achieving Financial Independence

by Vicki Robin

366 pages, ★★★★★
Finished on 29th of January, buy here.

🚀 The Book in 3 Sentences

  1. Be conscious about the exact amount of money (money equals your life energy) which enters and leaves your life.
  2. Frugality is the key: putting away money in a smart way is like paying your future self first.
  3. Make it visible by drawing three updating graphs, first your monthly income, second your monthly expenses, third your total capital, and watch the latter grow until hitting the “crossover point” when the capital line (times an achievable interest rate divided by 12 months) has a higher value than your monthly income → retirement achieved.

🎨 Impressions

Vicki Robin succeeds in making saving money look cool. She talks about the things which are often considered taboo and gives practical advice on how to look at money and its value. It makes the defined end goal of Financial Independence look attainable and asks interesting questions along the way, like for example: What would you do with your time if you wouldn’t have to work for a living?

🍀 How the Book Changed Me

  • Living life to its fullest isn’t equal to throwing out money as much as you can. Great experiences can cost lots of money but don’t have to.
  • Not spending everything I earn isn’t only a frugal way of life, but can be seen as an interesting challenge which brings out what I really value in life.
  • The world of socially responsible investing is large and hard to grasp. There’s no one solution to it and a risk is always present. But paying attention and learning about it early on will create huge benefits in life.

✍️ My Top 3 Quotes

  1. When asked “how much money would it take to make you happy,” almost everyone, in every income bracket, said: 50 percent more than I have now.
  2. Born to shop. Whoever dies with the most toys wins. Winning isn’t having the most toys. It’s having precisely what you need and nothing in excess and being able to stop playing the game at will.
  3. Most important, develop a discipline of buying only what you need. It’s like working a muscle—your frugality muscle.

📔 Summary & Notes

Introduction & Foreword

  • Endless desire is one of the pitfalls of human nature, and one of the first things you need to cure if you want to get ahead more quickly.
  • “how much would it take to make you happy,” almost everyone, in every income bracket, said: 50 percent more than I have now.
  • Financial Intelligence is the ability to step back from your assumptions and your emotions about money and observe them objectively. Does money really buy happiness?
  • When we talk with others about our dreams, confusion, fears, and persistent questions, change happens.

I: The Money Trap

  • The bottom line is that we think we work to pay the bills—but we spend more than we make on more than we need, which sends us back to work to get the money to spend to get more stuff—that sends us back to work again!
  • “More is better” turns out to be a formula for dissatisfaction. If you live for having it all, what you have is never enough.
  • 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.
  • Born to shop. Whoever dies with the most toys wins.
  • How in the midst of our busy lives can we become aware of, much less do something about, the enormous problems we’re facing? “What can one person do?” we ask, and then change stations on the radio.
  • Until one day we found ourselves sitting, unfulfilled, in our big home on two and a half wooded acres with a three-car garage and expensive exercise equipment in the basement, yearning for the life we had as poor college students who could find joy in a walk in the park.
  • the photography buffs with suitcases full of lenses and filters who get their best shots with a smartphone. All of that is clutter—elements in your environment that don’t serve you yet take up space.
  • No shame, no blame.
  • the difference between prosperity and poverty lies simply in our degree of gratitude.

II: Money Ain’t What It Used to Be

  • Money = Life energy. Something you trade the hours of your life for.
  • Resisting consumerism becomes easy: Is that bathing suit or car worthy of my life energy?
  • ultimately you are the one who determines what money is worth to you.
  • Your first step toward the experience of having enough—and then some—is liberating your mind from its preexisting attitudes toward money.
  • “It’s been such a heavy week at work, let’s have a night on the town to blow it off!” or “Let’s get away from it all this weekend and go to Vegas!” Would these be necessary? What are the costs in life energy and money?
  • Since money has a direct correlation to your life energy, why not respect that precious commodity, your life energy, enough to become conscious of how it is spent?

III: Where Is It All Going?

  • It’s about identifying, for yourself, what you need as opposed to what you crave, what purchases or types of purchases actually bring you fulfillment, what represents “enough” to you, and what you actually spend money on.

IV: How Much Is Enough? The Quest for Happiness.

  • It’s fairly easy to know what fulfillment is in terms of food or other temporary pleasures, but to have fulfillment in the larger sense, to have a fulfilled life, you need to have a sense of purpose, a dream of what a good life might be.
  • What did you want to be when you grew up? What have you always wanted to do that you haven’t yet done? What have you done in your life that you are really proud of? If you knew you were going to die within a year, how would you spend that year? What brings you the most fulfillment—and how is that related to money? If you didn’t have to work for a living, what would you do with your time?
  • Guaranteed, if you think your dream is getting an A on a test or beating your opponent, you will chase after external rewards your whole life.
  • Purpose is the overarching goal that embodies our values and our dreams.
  • What is a purpose higher than getting what we want? The opposite of getting is giving—and therein lies a secret to fulfillment.
  • “It”—as in his life—did not belong to him. It belonged to the world. He dedicated the rest of his life to seeking ways to optimize life for everyone. His game became “Make the world work, for 100% of humanity, in the shortest possible time, through spontaneous cooperation, without ecological offense or the disadvantage of anyone.”
  • What a great dream this could be for all of us who discover our personal enough through doing these simple steps consistently over time and then dedicate our liberated life energy to service.

V: Getting It Out In The Open

  • We often hear that the journey of a thousand miles begins with a single step. What we don’t hear as often is that you arrive at your destination by hundreds of thousands of additional small steps forward.
  • Over time, you actually find yourself feeling better by not spending; not buying a gazingus pin now becomes a source of fulfillment because you yourself have determined that gazingus pins don’t bring you fulfillment.
  • Ask “What would this expense look like in a just and compassionate world?”
  • But stay with the question and discover the possibilities of what you would choose to do if you had enough savings that you didn’t need paid employment for one year.

VI: The American Dream – On a Shoestring

  • To be frugal means to have a high joy-to-stuff ratio. If you get one unit of joy for each material possession, that’s frugal.
  • Frugality isn’t being a lone and lonely ranger, perfect in your self-reliance. It’s discovering that you have more to give and more to enjoy than mere material possessions. In fact, Financial Interdependence is one key to successfully transitioning from “more is better” to “enough is enough.”
  • We’re talking about creative frugality, a way of life in which you get the maximum fulfillment for each unit of life energy spent.
  • If you must, impress people with how much money you saved with your creative DIY project or travel hack, or the natural beauty you experienced while camping instead of going to a resort.
  • Most important, develop a discipline of buying only what you need. It’s like working a muscle—your frugality muscle.
  • They don’t need closets full of clothes; they need to feel attractive and they need excitement and variety and beauty. People don’t need electronic equipment; they need something worthwhile to do with their lives.
  • If you have to own a car, get something that’s reasonably reliable and fuel efficient, maintain it well, and keep it for as long as you can. This will nearly always be cheaper than buying a new car, even over the long run. Then find ways to drive it less to wear it out slower. Join a carpool, take the bus, live close to work, work from home some days if you can, and do errands on foot or bicycle.
  • Michael Pollan’s pithy seven-word food rule, “Eat food, not too much, mostly plants,” has helped people rethink meat as more of a condiment than an entrée.
  • The first is to be active in pursuit of health (don’t just be a pill-popping, insurance-dependent senior). The second is to cultivate new friends, especially younger ones, and to participate in community—both of which remind you daily that you are alive and valued. The third is simplifying possessions while regarding inevitable changes within and around you as the next adventure rather than the last straw. Finally, attend to traditional investments like owning a house and having enough—but not more than enough—income.
  • You will see many places where you can choose a nonpolluting pleasure and have twice the fulfillment—once for you and once for the planet. Indeed, enjoying nature and feeling your vital connection to the earth, the source of all life, is one of the greatest pleasures there is.

VII: For Love or Money: Valuing Your Life Energy–Work And Income

  • The push for full employment, along with the growth of advertising, has created a populace increasingly oriented toward work and toward earning more money in order to consume more resources.
  • We’ve come to believe that, through this job, we would somehow have it all: status, meaning, adventure, travel, luxury, respect, power, tough challenges, and fantastic rewards. All we need is to find Mr. or Ms. Right—Mr. or Ms. Right Job.
  • Growth potential, communication channels, interest in work, and recognition make a job satisfying—not pay.
  • Separating work from wages means all moments in your life matter, and reclaiming more moments to spend as you will, not as you must, is a worthy goal indeed.
  • For the Greeks, leisure was the highest good, the essence of freedom—a time for self-development and for higher pursuits.
  • Insisting that your calling and your paid employment be one and the same can tip the balance of your focus from mission to money.
  • If money = life energy, then by increasing your income you increase the amount of life available to you.

VIII: Catching Fire: The Crossover Point

  • The rule of thumb is that anything will double in 10 years if it grows at a 7 percent rate. Money you’ve invested. Human population. Your debt!
  • Common wisdom says you should have three (ideally six) months of expenses in liquid cash stashed in your bank.
  • If you see your life as bigger than your job and can conceive of having to work for money for only a finite and foreseeable period of time, then you are likely to be an even more highly motivated, high-integrity worker.
  • You would still appear to be working for your boss, but you would know you were working for your own freedom.
  • Even if your freedom leads you to another career, another irresistible business idea, or another lifestyle choice that costs more money and you return to paid employment, your first finite period of time changes you forever. You know you can do it again. You’re savvy and empowered, resilient and knowledgeable.
  • This is Financial Interdependence, which in fact is the wealth most of us depend on. It is the wealth we all share when we coexist together. You don’t have to believe in this for it to be true.
  • Abilities, Belonging, and Community are the three forms of natural wealth you build intuitively in the process of aligning how you earn, spend, and save money with your purpose and fulfillment.
  • Honing your skills gives you leverage, freedom, and choice. This diversity of abilities is one form of wealth that you can build over a lifetime
  • What could you learn to do for love—and money? What have you always wanted to know or never thought you could master? Could you set a goal to do it? What did you love doing as a kid that you could train in now for a side gig or a survival skill?
  • Just as dancing is a skill, belonging is a skill you can build through listening, acts of kindness, and simple rituals like a weekly call, a monthly women’s or men’s circle, or book or craft groups.
  • If you could take a year off work, how would you spend it?

IX: Where to Stash Your Cash For Long-Term Financial Freedom

  • One of our primary missions in this book is empowerment—allowing you to take back the power that you have inadvertently given over to money.
  • Legendary investor Warren Buffett said, “A low-cost fund is the most sensible equity investment for the great majority of investors.”
  • Understand your risk tolerance and diversify into stocks, bonds, and domestic and international index funds to reduce your overall risk. Since landing the perfect mix of asset classes is impossible, the most important thing is reducing exposure to one single government or company. Review the expense ratios, or fee, of each fund. As with most long-term investments, stay the course and tune out twenty-four-hour financial media. The only days you care about an investment’s value are the day you buy it and the day you sell it.
  • Mr. Money Mustache. He has touted his relationship with index funds for years, even calling individual stocks a “sucker’s bet.”
  • Is the property in a location that you are comfortable with being a part of your life for the next few years, or indefinitely? Is the property in a location that you believe has good prospects? Is it likely to appreciate? Is the neighborhood likely to stay attractive and safe?
  • Where I put my money reflects who I am—as it will for you, whatever your choices. This is inescapable.
  • Is this investment in line with my values? Is this investment in line with my tolerance for risk? Does this provide overall diversification for my investments? Does this provide the current and future income I need? How easily can I liquidate (sell out of) all or part of this investment? What sales charges or penalties (if any) will I incur in getting into or out of this investment? What are the federal, state, and local tax implications of this investment for me? (Is it tax efficient for my income bracket or situation?)
  • Become knowledgeable and sophisticated about long-term income-producing investments and manage your finances for a consistent income sufficient for your needs over the long term.

Quick Reference

  • Did I receive fulfillment, satisfaction, and value in proportion to life energy spent? Is this expenditure of life energy in alignment with my values and life purpose? How might this expenditure change if I didn’t have to work for money? For each question in each category, evaluate whether the expense should increase, decrease, or stay the same for your optimal fulfillment. This is the heart of the program.
  • We can both accelerate our own journeys and be radical culture changers by changing the subject of our conversations from small talk (trivia, gossip, complaining) to BIG talk about money and life.

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