Your Money or Your Life

your money or your life vicki robin joe dominguez monique tilford penguin 2008Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence by Vicki Robin and Joe Dominguez with Monique Tilford, 3/5

Comparing this book to Robert Kiyosaki’s Rich Dad series, it soon becomes clear that the concept of financial independence means different things to different people.  To some, such as Kiyosaki, it seems to mean being able to live a luxurious lifestyle, supported by more money than they could possibly spend.  Unfortunately, this seems to coincide with dedicating your life to the all-engrossing pursuit of ever-increasing income, which at the end doesn’t really look like independence to me.  To those who see financial independence more as freedom from obsessive worry over money, Your Money or Your Life asks a question that Kiyosaki would find completely nonsensical: How much money is enough?  It turns out that, thanks to some inexplicable vagary of the human condition, more and more money does not necessarily equal more and more happiness.  The authors argue convincingly that peak fulfillment occurs when we have enough money for the things we need and a little bit more.  By this metric, financial independence is achieved when one’s passive income covers these basic expenses and little luxuries.

Given the mindless consumerism endemic to the average American, it is no surprise that the authors would choose to focus on the low-hanging fruit of lowering expenses rather than the more complicated issue of creating passive income.  Similar to keeping a food diary in order to lose weight, the mere act of tracking expenses, realizing the expended life-energy they represent and assessing the resulting feelings of fulfillment or lack thereof could be a relatively painless way to increase savings, lower debt and create a healthier relationship with money.  However, my personal saving rate is already so high and my expenses so low (my three main hobbies–reading, exercising and surfing the internet–cost less than most people’s coffee habit) that I don’t think any life-changing revelations would come out of applying the book’s method for tracking finances.

I am much more interested in developing sources of passive income, which is a topic that is not addressed very well in this book.  This was very disappointing and surprising, since passive income plays such a huge part in the book’s own description of financial independence.  The authors’ main (basically, only) advice is simply to buy U.S. treasury bonds.  As far as I can understand, you’d have to tie up about $350k in 30-year treasury bonds in order to make just $10k a year at the current 2.87% yield.  I don’t see how this could be a viable path to financial independence for most people, but I guess I need to do more research.

[Why I read it: It was mentioned in a book review of Rich Dad, Poor Dad by Trent Hamm on The Simple Dollar blog.]

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3 comments

  1. Kevin

    Another insightful book review. Also, a very relavent topic for every season of life but particularly went retirement is more than just some future hope that has been faithfully set side with each pay check. Still can’t believe the little red sports car actually happened! That is my correlation to, “…and a bit more….”

    Liked by 1 person

    • Kevin

      “…when….” I hate finding typos after hitting the post button. Prolly shd have finished re-reading the post before writing this to catch any others. Consider them addressed.

      Like

    • omniRambles

      Haha, the author does take a couple jabs at the concept of having nice/fun cars instead of boring, fuel-efficient ones, but I tried to ignore them. I mean, if it’s also a hobby…

      Like

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