Summary of Your Money or Your Life

2/1/2016 Summary of Your Money or Your Life | Vicki Robin

http://vickirobin.com/books/summaryofyourmoneyoryourlife/ 1/13

Transforming Your Re lat ionsh ip Wi th L i fe

Summary of Your Money or Your LifeTransforming Your Relationship With Money and Achieving FinancialIndependence

Summarized (with care and dedication) by editor Clare Moss with Laurence Toltz tointroduce people to the ninestep program in Your Money or Your Life.It is based onthe original book so How this book came about This book is not based on theory,good ideas or a new philosophy. It is the result of 50 years of combined experience (30years for Joe Dominguez, 20 years for Vicki Robin) in living the principles presentedhere. This book just didn’t happen, it evolved. Joe Dominguez was a successful financialanalyst on Wall Street before retiring at the age of 31, never again to accept money forany of his work. Vicki Robin graduated with honors from Brown University and later lefta budding career in film and theater in New York. Her open mind allowed her torecognize the value of Joe’s new road map for money and apply it to her own life. He andVicki Robin were founders of the New Road Map Foundation, an allvolunteer, nonprofit organization that promotes a human, sustainable future for our world. JoeDominguez died on January 11, 1997. His work and message live on in the transformedlives of program followers throughout the world. Your Money or Your Life is full ofexamples, stories and experiences of many people who have followed their ninestepprogram in their journey to financial independence. Ask yourself these questions:

Do you have enough money?Are you spending enough time with family and friends?Do you come home from your job full of life?Do you have time to participate in things you believe are worthwhile?If you were laid off from your job, would you see it as an opportunity?Are you satisfied with the contribution you have made to the world?Are you at peace with money?Does your job reflect your values?Do you have enough savings to see you through six months of normal livingexpenses?Is your life whole? Do all the pieces — your job, your expenditures, yourrelationships, your values — fit together?

http://vickirobin.com/



If you answered, ‘no’ to even one of these questions, read on. The purpose of Your Money or YourLife is to transform your relationship with money. That relationship encompasses more than just yourearning, spending, debts and savings; it also includes the time these functions take in your life. Inaddition, your relationship with money is reflected in the sense of satisfaction and fulfillment that youcan get from your connection to your family, your community and the planet. Once you have changedthe nature and function of your interaction with money, through following the steps, your relationshipwith money will be transformed — you will reach new levels of comfort, competence and consciousnessaround money. Many books on money are available today. What these books have in common is thatthey assume your financial life functions separately from the rest of your life. This book is about puttingit all back together. It is about integration, a ‘whole systems’ approach to your life. It will take you backto basics — the basics of making your spending (and hopefully your saving) of money into a clear mirrorof your life values and purpose. It is about the most basic of freedoms — the freedom to think for yourself.What you can expect from this book Through the hundreds of letters we’ve received, we knowsome of the ways people’s lives have been enriched by following the program in this book.

They finally understand the basics of money.They reconnect with old dreams and find ways to realize them.With a great sense of freedom and relief, they learn how to distinguish betweenthe essentials and the excess in all areas of their lives and how to unburdenthemselves.They find their relationship with their mates and children improve.Their new financial integrity resolves many inner conflicts between their valuesand their lifestyles.Money ceases to be an issue in their lives, and they finally have the intellectualand emotional space to take on issues of greater importance.At a tangible level, they retire their debts, increase their savings and are able tolive happily within their means.They increase the amount of their ‘free time’ by reducing expenses and theamount of time on the job.They stop buying their way out of problems and instead use such challenges asthe opportunity to learn new skills.Overall, they heal the split between their money and their life — and lifebecomes one integrated whole.

The old road map for money has trapped us in the very vehicle that was supposed to liberate us from toil.The landmarks of the old road map were clear: ‘nine to five till you’re sixtyfive’; ‘owe your soul to thecompany store’, pushing for a higher ‘standard of living’ regardless of moral, ethical, emotional,cultural, spiritual, marital, environmental and political consequences. And it delivered — but only aslong as people really needed more material possessions. When we are not taking our identity from ourjobs, we are identified as consumers. According to the dictionary, to consume is to ‘destroy, squander,use up.’ We consider shopping to be recreation, so we ‘shop till we drop.’ We want a good future for ourkids, so we work harder or become a two income family and delegate raising the kids to day care centresor nannies. We buy them the newest toys to prove our love. We are spending so much of our precioustime earning in order to spend that we don’t have the time to examine our priorities. Our old financialmap, instead of making us more independent, fulfilled individuals, has led us to a web of financialdependencies. From birth to death we have become financially dependent — on our parents for our firstfinancial sustenance, on ‘the economy’ in order to get a good job, on ‘the job’ for our survival, on‘unemployment’ handouts to tide us over between jobs, on our pension to pay our way in old age and onMedicare if we get sick before we die. The material progress that as supposed to free us has left us moreenslaved. At some point in the last forty years, though, conditions began to change. For many people,material possessions went from fulfilling needs to enhancing comfort to facilitating luxury — and evenbeyond to excess. Unlike the past, problems began to emerge that could not be solved by providing morematerial goods. The planet itself began showing signs of nearing its capacity to handle the results of oureconomic growth and consumerism — water shortages, topsoil loss, global warming, ozone holes,species extinction, natural resource degradation and depletion, air pollution and trash buildup are all



signs that our survival is in question. Even though we ‘won’ the industrial revolution, the spoils of warare looking more and more spoiled. New tools for navigation are needed. What we need is a newfinancial road map that is based on current global conditions and offers us a way out. CREATING ANEW ROAD MAP — FINANCIALLY INDEPENDENT THINKING How do you find a new road map formoney? It requires thinking in new ways. One of the keys to creating your new road map is what we callFinancially Independent ‘FI Thinking.’ This is the process of examining those basic assumptions thatyou have unconsciously adopted, of evaluating your own road map. Until you can deliberately anddispassionately question your own inner road map for money, you will be stuck in classic financial deadends, such as:

Spending more than you earn.Buying high and selling low.Not liking your job, but not having a way out.Needing two paychecks to make ends meet.Being so confused by money that you leave it to the experts, who in turn feed onyour ignorance.

Exploring the following concepts will transform your relationship with money and will lead you to FI —Financial Intelligence, Financial Integrity and even Financial Independence. FinancialIntelligence In order to gain Financial Intelligence you first need to know how much money youalready have earned, what you have to show for it, how much is coming into your life and how much isgoing out. But that isn’t enough. You also need to know what money really is and what you are tradingfor the money in your life. One tangible outcome of Financial Intelligence is getting out of debt andhaving at least six months of basic living expenses in the bank. If you follow the program we present, itwill lead to Financial Intelligence. Financial Integrity Financial Integrity is achieved by learningthe true impact of your earning and spending, both on your immediate family and on the planet. It isknowing what is enough money and material goods to keep you at the peak of fulfillment — and what isjust excess and clutter. Financial Independence Financial Independence is defined as having anincome sufficient for your basic needs and comforts from a source other than paid employment. It is alsoindependence from crippling financial beliefs, from crippling debt, and from a crippling inability tomanage modern ‘conveniences’ — from repairing your car to fixing your central heating. Financialindependence is an experience of freedom at a psychological level. You are free of the guilt, resentment,envy, frustration and despair you have felt about money issues. Financial Independence has nothing todo with rich. Financial Independence is the experience of having enough — and then some. The oldnotion of Financial Independence as being rich forever is not achievable. Enough is. Enough for youmay be different from enough from you neighbor– but it will be a figure that is real for you and withinyour reach. Your Money or Your Life If someone thrust a gun in your ribs and said that sentence,what would you do? Most of us would turn over our wallets. The threat works because we value our livesmore than we value our money. Or do we? Where’s all the life we supposedly made at work? For many ofus, isn’t the truth closer to ‘making a dying’? Aren’t we killing ourselves — our health, our relationships,our sense of joy and wonder — for our jobs? We are sacrificing our lives for money — but it’s happeningso slowly we barely notice. Eventually we may have all the comforts and even luxuries we could everwant, but inertia itself keeps us locked into the ninetofive pattern. Psychotherapist Douglas LaBierdocuments this ‘social disease’ in his book Modern Madness.He found that focussing onmoney/position/success at the expense of personal fulfillment and meaning had led 60 percent of hissample of several hundred to suffer from depression, anxiety and other jobrelated disorders, includingthe ubiquitous ‘stress.’ What do we have to show for it? If the daily grind were making us happy, theirritations and inconveniences would be a small price to pay. Our levels of debt and our lack of savingsmake the ninetofive routine mandatory. Participants in our seminars, whatever the size of theirincomes, always said they needed ‘more’ to be happy. We asked people to rate themselves on ahappiness scale of 1 (miserable) to 5 (joyous), with 3 being ‘can’t complain’ and we correlated theirfigures with their incomes. In a sample of over 1000 people, from both the United States and Canada,the average happiness score was consistently between 2.6 and 2.8 (not even a three), whether theperson’s income was under $1000 a month or over $4000 a month. If this were just a private hell itwould be tragedy enough. But it’s not. Our affluent lifestyles are having an increasingly devastating



effect on our planet. The creation of consumers Perhaps we cling to our affluence — even though itisn’t working for us or the planet — because of the very nature of our relationship with money. Weproject onto money the capacity to fulfil our fantasies, allay our fears, soothe our pain and send ussoaring to the heights. In fact, we meet most of our needs, wants and desires through money.We buy everything from hope to happiness. We no longer live life, we consume it. We have come tobelieve, deeply, that it is our right to consume. If we have the money, we can buy whatever we want,whether or not we need it, use it or even enjoy it. And if we don’t have the money … heck, what are creditcards for? We have taken our right to consume to heart, and perhaps placed it above other rights,privileges and duties of a free society. At the same time, between the ads, our televisions, radios andnewspapers are reporting the bad news about the environment. Product packaging is clogging thelandfills. Product manufacturing is polluting the groundwater, deforesting the Amazon, fouling therivers, lowering the water table, depleting the ozone layer and changing the weather. Transforming ourrelationship with money and reevaluating our spending activity could put us and the planet back ontrack. We need to learn from our past, determine our present reality and create a new, realitybasedrelationship with money, discarding assumptions and myths that don’t work. The beginning of anew road map for money There is a word that provides the basis for transforming your relationshipwith money. It’s a word we use every day, yet we are practically incapable of recognizing it when itsstaring us in the face. The word is ‘enough’. Enough for our survival. Enough comforts. And evenenough little ‘luxuries.’ We have everything we need; there’s nothing extra to weigh us down. It’sappreciating and fully enjoying what money brings into your life and yet never purchasing anything thatisn’t needed or wanted. So what’s all that stuff beyond enough? It’s whatever you have that doesn’t serveyou, yet takes up space in your world. Clutter! To let go of clutter, then, is not deprivation, it’s lighteningup and opening up space for something new to happen. Enough is a wide and stable plateau. It is aplace of alertness, creativity and freedom. From this place, being suffocated under a mountain of clutterthat must be stored, cleaned, moved, gotten rid of and paid for on time. NINE MAGICAL STEPS TOCREATE A NEW ROAD MAP These steps are simple, commonsense practices. It is absolutely necessarythat you diligently do every step. The steps build on each other, creating the ‘magic’ part of synergy —the whole is greater than the sum of its parts. You may not see this effect until you have been followingthe steps for a number of months. Conscientiously applying all the steps automatically make yourpersonal finances an integrated whole. Step 1: Making Peace With The Past The purpose of this exerciseis to increase your awareness. It serves to locate you in time and space and review your earning andspending activity in the past. A: How much have you earned in your life? Find out your totallifetime earnings — the sum total of your gross income, from the first cent you ever earnedto your most recent pay check. How:

Social Security Administration — ‘Request for Statement of Earnings.’Copies of Federal or State Tax Returns.Paycheck stubs; employers’ records.

Why:Gives a clear picture of how powerful you are at bringing money into your life.Eliminates vagueness or selfdelusion in this arena.Instills confidence, facilitates goalsetting.

This step is one of the foundation stones of the program. Since accuracy and accountability are calledfor in every step of the program, starting out impeccably is a good example to live up to. Not only that,but doing this step impeccably may even get you a better job with better pay. So check again. Have youreally done this step with integrity. People who do a halfhearted job often get a life to match. Outsidethe United States it may be difficult or not possible to get past history of your earnings. If thisinformation is not available, then we suggest you list all your previous jobs you can remember andestimate what you think you earned each year after tax. B: What have you got to show for it?Find out your net worth by creating a personal balance sheet of assets and liabilities —everything you own and everything you owe. How:

List and give a current market value to everything you own.List everything you owe.Deduct your liabilities from your assets to get your net worth.



Why:You can never know what is enough if you don’t know what you have. You mightfind there are a lot of material possessions that are not bringing you fulfillment,and you might want to convert them to cash.This is a very basic, fundamental practice for any business — and you are abusiness.

While it may not appear so, this point in the program is very encouraging. So far your financial life hashad very little direction or consciousness. You now have an overview of your financial status and canobjectively choose whether or not to convert some of your fixed assets into cash, thus increasing yoursavings — or getting a bit further out of debt. And remember, No shame, no blame. In creating yourbalance sheet, many feelings associated with your material universe may arise: sadness, grief,nostalgia, hope, guilt, shame, embarrassment, anger. A dispassionate and compassionate attitude cango a long way toward making this step truly enlightening — and making you able to lighten the physicaland emotional loads you’ve been toting around for years. Step 2: Being In The Present — Tracking YourLife Energy What is one consistently true statement we can make about money that will allow us to beclear, masterful and powerful in our relationship with it? Money is something we choose to tradeour life energy for. Our life energy is our allotment of time here on earth, the hours of precious lifeavailable to us. When we go to our jobs we are trading our life energy for money. You could even say thatmoney equals our life energy. So, while money has no intrinsic reality, our life energy does — at least tous. It’s tangible, and it’s finite. It is precious because it is limited and irretrievable and because ourchoices about how we use it express the meaning and purpose of our time here on earth. Money issomething you consider valuable enough to spend easily a quarter of your allotted time here on earthgetting, spending, worrying about, fantasising about or in some other way reacting to. A: How muchare you trading your life energy for? Establish the actual cost in time and money requiredto maintain your job, and compute your real hourly wage. How:

Deduct from your weekly income the costs of getting to and from work; the costof the clothes you buy to wear at work; the extra cost of atwork meals; theamount spent to relax and wind down after the stress of a work day; jobrelatedillness; and all other expenses associated with maintaining you on the job.Add to your work week the hours spent in preparing yourself for work, travel toand from work, the time taken to wind down at home after work, recreationneed after work as a means of winding down, shopping to make you feel bettersince your job feels lousy, and all other hours linked with maintaining your job.Divide the new, reduced weekly dollar figure by the new, increased weekly hourfigure;this is your real hourly wage.Individuals with variable incomes can get creative — take monthly averages, atypical week, whatever works for you.

Most people look at this lifeenergy/earnings ratio in an unrealistic way: ‘I can earn $440 a week, Iwork 40 hours a week, so I trade one hour of my life energy for $11.’ It is not likely to be that simple.Think of all the monetary expenses that are directly associated with your job. In other words, if youdidn’t need that moneyearning job, what time expenditures and monetary expenses would disappearfrom your life. Why:

This is a very basic, fundamental practice for any business — and you are abusiness.You are in the business of selling the most precious resource in existence — yourlife energy. You had better know how much you are selling it for.The number that results from this step — your real hourly wage — willbecome a vital ingredient in transforming your relationship with money.

The book offers examples of the cost and hours we spend that are directly related to having a job:Travelling to and from work could cost $50 a week and take you 7.5 hours.Annual cost of clothing for work, divided by 50 weeks, $15 a week.Time per week dressing and preparing for work, 1.5 hours.

Cost of work related meals, coffee breaks, lunches, $20 a week.



Cost of work related meals, coffee breaks, lunches, $20 a week.Time per week of meals and breaks at work, 5 hours.Many people arrive home tired and drained, it takes many people about an houra day to relax after they get home, so per week, 5 hours.

In addition, there is the cost of escape entertainment, job related illness as well as vacations to recoverfrom work. The book offers the following example showing the effect of work related expenses on anordinary 40 hour / $440 week.

Life Energy vs. Earnings: What Is Your Real Hourly Wage?

Basic job Hours/Week Dollars/Week Dollars/Hour

(before adjustments) 40 440 11

Adjustments

Commuting +7.5 50

Costuming +1.5 15

Meals +5 20

Relaxing at home +5 20

Escape entertainment +5 20

Vacation +5 20

Jobrelated illness +1 15

Time and money spent on maintaining job(total adjustments)

Job, with adjustments

(actual total) 70 280 4

This chart shows how a 40 hour working week can actually take up 70 hours of one’s time. And alsohow a wage of $440 can be reduced by work related expenses of$160 to leave only $280 for 70 hours ofwork related time or $4 an hour or $1 every 15 minutes. So now you can understand that other thanwork related expenses, every dollar spent can represent 15 minutes of life energy for the person in thisexample. B: Keep track of every cent that comes into or out of your life. So far we haveestablished that money equals life energy, and we have learned to compute just how many hours of lifeenergy we exchange for each dollar. Now we need to become conscious of the movement of that form ofenergy called money in every moment of our lives — we need to keep track of our income by keeping aDaily Money Log. Religions, ancient and modern, and the personal growth workshops of the humanpotential movement all have techniques for training the mind to be here now, ‘in the moment’. These



techniques take many forms and include such seemingly diverse techniques as counting breaths,keeping the attention on each incoming or outgoing breath, repeating a phrase over and over again inorder to focus the wandering mind. To this list we add another discipline to sharpen awareness — onethat is indispensable to the financial program and perhaps more easily accepted by our grounded,materialistic Western mentality that some of the more ‘esoteric’ practices. Instead of watching yourbreath, you watch your money. This practice is simple: Keep track of every cent that comes into orgoes out of your life. How:

Devise a recordkeeping system that works for you (such as a pocket sized memobook). Record daily expenditures accurately. Record all income.

Why:Because it’s the best way to become conscious of how much money actuallycomes and goes in your life as opposed to how you think it comes and goes. Yourcommitment to clearing up your relationship with money is really tested here. Inmost of us there is a penchant for giving ourselves leeway and latitude. One ofthe keys to success in this program (and in life) is a shift in attitude from one oflaxity and leeway to one of accuracy, precision and impeccability.

Step 3: Where Is It All Going? (The Monthly Tabulation) Don’t worry. Relax. This programis not about budgeting. Budgets, like diets, don’t work. They don’t work because they deal withthe symptoms and not the cause. The cause of fat is not really the calories in the food, its the desires inour mind.

Every month create a table of all income and all expenses withincategories generated by your own unique spending pattern.Balance your monthly income and outgo totals.Convert ‘dollars’ spent in each category to ‘hours of life energy,’using your real hourly wage as computed in step 2.

How:Simple arithmetic. A computer home accounting program may be useful.

(A computer is not essential as both authors achieved Financial Independence without usingcomputers.) Why:

This monthly tabulation will be an accurate portrait of how you are actuallyliving and provide a foundation for the rest of the program.

The book offers examples of categories of spending and sample worksheets. Step 4: Three QuestionsThat Will Transform Your Life On your monthly tabulation, ask three questions of each ofyour category totals expressed as hours of life energy and record your responses:1. Did I receive fulfillment, satisfaction and value in proportion to life energy spent?2. Is this expenditure of life energy in alignment with my values and life purpose?3. How might this expenditure change if I didn’t have to work for a living.

At the bottom of each category, make one of the following marks: Mark a minus [] or a down arrow ifyou did not receive fulfillment proportional to the hours of life energy you spent in acquiring the goodsand services in that category, or if that expenditure wasn’t in full alignment with your values andpurpose or if you could see expenses in that category diminishing after Financial Independence. Mark aplus sign [+] or an up arrow if you believe that upping this expenditure would increase fulfillment,would demonstrate greater personal alignment or would increase after Financial Independence. Markzero [0] if that category is just fine on all counts. How:

With total honesty.

Why:This is the core of the program.These questions will clarify and integrate your earning, your spending, yourvalues, your purpose, your sense of fulfillment and your integrity.This will help you discover what is enough for you.



Asking yourself, month in, month out, whether you actually got fulfillment in proportion to life energyspent in each subcategory awakens the natural sense of knowing when enough is enough. Just say ‘yes’to being conscious. This program is built on consciousness, fulfillment and choice, not on budgetingand deprivation. It’s about identifying, for yourself, what you need as opposed to what you want, whatpurchases or types of purchases actually bring you fulfillment, what represents ‘enough’ for you andwhat you actually spend money on. You learn to make your financial choices independently of whatadvertising and industry have decided what would be good for their business. You are free of thehumiliation of being manipulated into spending your life energy on things that don’t bring youfulfillment. It is a form of Financial Independence to ‘just say no’ to unconscious spending. And the TaoTe Ching, the ancient Chinese book of wisdom, puts it this way: ‘He who knows he has enough is rich.’Financial Intelligence is knowing that if you spend your life energy on stuff that brings only passingfulfillment and doesn’t support your values, you end up with less life. This step is not about budgeting,not about selfcondemnation and not about depriving yourself. It is about honoring and valuing thatlimited resource called your life energy. It’s about using this high selfesteem to bring about greaterfulfillment, greater satisfaction and a greater sense of wholeness, alignment and integrity. You do thisby becoming more conscious of your unexamined and unrewarding spending patterns — painlessly.Step 5: Making Life Energy Visible Create a large Wall Chart plotting your total monthlyincome and total monthly expenses from your monthly tabulation. Put it where you willsee it every day. How:

Get a large sheet of graph paper, and choose a scale that allows plenty of roomabove your highest projected monthly expenses or monthly income. Usedifferent colored lines for monthly expenses and monthly income.

Why:It will show you the trend in your financial situation and will give you a sense ofprogress over time, and the transformation of your relationship with money willbe obvious.You will see your expense line go down as your fulfillment goes up — the resultof ‘instinctive,’ automatic lowering of expenses in those categories you labelledwith a minus.This Wall Chart will become the picture of your progress toward full financialindependence, and you will use it for the rest of the program. It will provideinspiration, stimulus, support and gentle chiding.

When you do this step the first month, you have a snapshot — a very revealing one — of your habitsaround money. But the real learning, and the real fun, comes as you plot the figures month by month,year by year. Your wall chart will take the two dimensional world of your monthly tabulation and addthe dynamic dimension of time. It reminds us that transforming our relationship with money takes timeand patience. Impatience, denial and greed are actually part of what is being transformed. The bookcontains sample wall charts and guidelines for creating your own. Step 6: Valuing Your Life Energy —Minimizing Spending Learn and practice intelligent use of your life energy (money) whichwill result in lowering your expenses and increasing your savings. This will create greaterfulfillment, integrity and alignment in your life. How:

Ask the three questions in Step 4 every month.Learn to define your true needs.Be conscious in your spending.Master the techniques of wise purchasing. Research value, quality anddurability.

Why:You are spending your most precious commodity — your life energy. You haveonly a finite amount left.‘Quality of life’ often goes down as ‘standard of living’ goes up.

The wealth we enjoy today is the result of centuries of frugality of most of our citizens. Frugality meanswe are to enjoy what we have. If you have ten dresses but still feel you have nothing to wear, you are



probably a spendthrift. But if you have ten dresses and have enjoyed wearing them for years, you arefrugal. Waste lies not in the number of possessions but in the failure to enjoy them. Step 7: Valuing YourLife Energy — Maximizing Income Respect the life energy you are putting into your job. Moneyis simply something you trade your life energy for. Trade it with purpose and integrity forincreased earnings. How well are you using your energy both on and off the job? Is your job‘consuming’ (using up, destroying, wasting) your life? Do you love your life, using each hour — on andoff the job — with care? Our fulfillment as human beings lies not in our jobs but in the whole picture ofour lives — in our inner sense of what life is about, our connectedness with others, and our yearning formeaning and purpose. You may love your paid employment or you may hate it; it doesn’t matter. But youdon’t want to recognize that the purpose of your paid employment is getting paid and your real ‘work’may be far bigger than this one job. There is nothing in your life that is more valuable than your time.

Age and average remaining life expectancy

Average remaining life expectancy

Age Years Hours

20 56.3 493,526

25 51.6 452,326

30 46.9 411,125

35 42.2 369,925

40 37.6 329,601

45 33.0 289,278

50 28.6 250,708

55 24.4 213,890

60 20.5 179,703

65 16.9 148,145

70 13.6 119,218

75 10.7 93,796

Source: Data taken from US National Centre for Health Statistics, Vital Statistics of the UnitedStates

How:Ask yourself: Am I making a living or a dying?Examine your purposes for paid employment.

Why:You have only X number of hours left in your life. Determine how you want tospend those remaining hours.



spend those remaining hours.Breaking the link between who you are and what you do for a ‘living’ will freeyou to make more fulfilling choices.

Checklist: Think Before You SpendDon’t shop.Live within your means.Take care of what you have.Wear it out.Do it yourself.Anticipate your needs.Research value, quality, durability, and multiple use.Get it for less.Buy used.Follow the steps of this program.

Step 8: Capital And The Crossover Point By doing steps 1 through 7, you will move towards FI. WithStep 8 the possibility of Financial Independence opens up. Step 8 shows you how you can perhaps leavepaid employment a lot sooner that you would have ever thought possible. What you should begin to seein your wall chart is a growing gap between income and expenses — that is, savings. Before FI thinkingtakes over, a ‘normal’ person might regard those savings as earmarked for a splurge. But FI thinkingsees those savings in a different light. FI thinking calls that gap ‘capital’. Capital is money thatmakes more money. It keeps working for you and produces an income as surely as your job producesincome. When you put capital in a bank or other interestbearing instrument it is an investment. Aninvestment is the conversion of capital into some form of wealth other than cash with the expectation ofderiving income. The income you receive from your capital of a different nature than your job income. Itcomes in whether or not you go to work. Instead of simply lumping it in with your total monthly income,you will be entering it separately on your wall chart according to the formula given below. Each monthapply the following equation to your total accumulated capital, and post the monthlyindependence income as a separate line on your Wall Chart:

capital X current longterm interest rate 12 months = monthly investment income

How:Find the longterm interest rate by looking at the interest of the 30year treasurybonds in the treasury bond table of The Wall Street Journal or a bigcitynewspaper. After a number of months on the program, your total monthlyexpense line will have established a much smaller zigzag pattern at a muchlower level than when you started. With a light pencil line, project the totalmonthly expense line into the future on your chart.

Outside the United States, this information can be found in national daily newspapers, and financialweb sites. For this particular section of the program, and for more information, please refer to thebook.

After a number of months on the program, your monthly investment incomeline will have begun to move up from the lower edge of the chart. (If you haveactually been investing this money as outlined in Step 9, the line willbe curving upward — the result of the magic of compound interest.) With alight pencil line, project the monthly investment income into the future. At somepoint in the future it will cross over the total monthly expenses line. That isthe Crossover Point.



Why:At the Crossover Point you will be financially independent. The monthly incomefrom your investment capital will be equal to your actual monthly expenses.You will have enough.Your options will be wide open.Celebrate.

Step 9: Managing Your Finances The final step to financial independence: become knowledgeable andsophisticated about long term incomeproducing investments. Invest your capital in such a way as toprovide an absolutely safe income, sufficient to meet your basic needs for the rest of your life. Step 9 isabout empowering yourself to make wise financial choices, and your first lesson involves educatingyourself so as not to fall prey to unscrupulous brokers, financial planners and sales people who want toput you in all manner of investment vehicles that pay handsome commissions. Whether we are defining‘financial independence’ as being out of debt, with enough savings to withstand economic downturns,or as a fullfledged ‘early retirement’ that makes it possible to devote yourself fulltime to whatever ismost meaningful to you, the following criteria developed by Joe Dominguez apply to whatever you dowith your capita (though each person will weight each criteria differently)l:1. Your capital must produce income.2. Your capital must be absolutely safe.3. Your capital must be in totally liquid investment. you must be able to convert it into cash at amoment’s notice, to handles emergencies.

4. Your capital must not be diminished at the time of investment by unnecessary commissions, orother expenses.

5. Your income must be absolutely safe.6. Your income must not fluctuate. You must know exactly what your income will be next month, nextyear and 20 years from now.

7. Your income must be payable to you, in cash, at regular intervals.8. Your income must not be diminished by charges, management fees or redemption fees.9. The investment must produce this regular, fixed known income without any further involvement orexpense on your part. It must not require maintenance, management, geographic presence orattention due to ‘acts of God’.

How:Empower yourself to make your own investment decisions by narrowing thefocus to the safest nonspeculative, long duration fixed income securities, suchas US treasury bond and US government agency bonds (or other conservativeinvestments). Temper the prevailing irrational fears about inflation with clearthinking and increased consciousness.

Step Nine in the Updated and Revised for the 21st Century expands thecriteria for investing to include very conservative and balanced use ofmutual funds, real estate and other investment vehicles, though Joe’soriginal ultraconservative approach is still valid. Indeed, people whofollowed it are unaffected in large part by the current recession.Outside the United States, there are several similar longterm investmentopportunities that correspond to the principles of this program.

Cut out high expenses, fees and commissions of middlemen and popularlymarketed investment products.Set up a financial plan using the three pillars:

Capital: The incomeproducing core of your Financial Independence. Cushion: Enough ready cash,earning bank interest, to cover six months of expenses. Cache: The surplus funds resulting from yourcontinued practice of the nine steps. May be used to finance your service work, reinvested to produce anendowment fund, used to replace high cost items, used to compensate for occasional inroads ofinflation, given away, etc. Why:

There is more to life than ninetofive.



IN CONCLUSION You are well on your way to taking back the power you have given over to money —and to money experts. You are ready to become a conscientious, loving and knowledgeable steward ofyour life energy. Our greatest hope is that you will apply these steps to your own finances and apply yourlife energy to the challenges that face our species and our planet. We wish you great success.

Trackbacks and Pingbacks:

1. Your Money or Your Life – the $34 Wardrobe | For the Love of Beauty and the Beauty of Love August 31, 2014

[…] talked about how the book “Your Money or Your Life” has helped me simplify mylife in the last few decades since I first read it. As Vicki […]

Name*

Email*

Website

Comment

Notify me of followup comments via email

Leave a Reply

Text formatting is available via select HTML.

Post Comment

http://vickirobin.com/books/summary-of-your-money-or-your-life/

http://dominiquehurleyart.wordpress.com/2014/08/31/your-money-or-your-life-the-34-wardrobe/



© 2016 Vicki Robin

Notify me of new posts by email.

Notify me of new posts by email.

http://vickirobin.com/

Documents

Summary of Your Money or Your Life