Review of Your Money or Your LifeThe 1992 book Your Money or Your Life by Vicki Robin and Joe Dominguez (a.k.a. YMOYL) is considered by many in the financial independence space to be one of the most influential bodies of work in this realm. Joe at Retire by 40 reviewed the book back in 2011. Mr. Money Mustache wrote about the book in 2012. More recently in 2016, Coach Carson shared his thoughts on the pivotal paperback.
Your Money or Your Life? Both, Please.The subtitle of this book is “9 Steps to Transforming Your Relationship With Money and Achieving Financial Independence.” I would say the target audience is the reader in a financial rut, living paycheck to paycheck, and wondering how to somehow get ahead or why it’s important to do so. In other words, the target audience is not me. And if you’re well on your way to financial independence, or you’ve already achieved financial freedom, it’s not you, either. While this book was first published in 1992, it’s roots are in the 1970s, which helps explain the new-age vibe that survived the more recent update. The co-author, Joe Dominguez, who sadly lost a battle with cancer in 1997 at age 58, actually retired at age 31 from his job as a financial analyst in Manhattan. He was Mr. Money Mustache before Mr. Money Mustache was born. And yes, he had a mustache. Not long after Joe retired as a young man, he and Vicki Robin teamed up to help others learn to think about money and life in a new way. They put on seminars, recorded cassettes, and eventually published YMOYL after about 20 years of teaching, changing lives, and raising money for their non-profit, the New Road Map Foundation. The premise of the book is to examine your relationship with money and answer the question of what’s more important: your money or your life? Assuming you choose life, the book goes through the nine steps to help you achieve financial independence for yourself. I won’t detail the individual steps — that was done well in some of the reviews linked in the introduction, but I will share some of what I learned, what I liked, and what I didn’t like in the newly revised 2018 version of YMOYL. It’s only fair to point out that when it comes to either your money or your life, the book doesn’t really force you to choose one or the other. In fact, on page 4, you’ll find:
There is a way to live an authentic, productive, meaninful life–and have all the material comforts you want or need. There is a way to balance your inner and outer lives, to have your job self be on good terms with our family self and your deeper self. There is a way to go about the task of making a living so that you end up more alive. There is a way to approach life so that when asked, “Your money or your life?” you say, “I’ll take both, thank you.”What I Learned from Your Money or Your Life
|Avg. Life Rating||2.81||2.77||2.84||2.86||2.63|
adapted from Figure 1-1, YMOYLA related fact is that those who complete the 9 steps report reducing their spending by an average of about 25%. In spite of the lower “standard of living,” most feel happier and find their relationships with family and partners improve. Do you see how there might be a disconnect between happiness and money? From Vickie and Joe, “These results astounded us. They told us that not only are most people habitually unhappy, but they can be unhappy no matter how much money they make. Even people who are doing well financially are not necessarily fulfilled.” Sadly, we’re a sad lot, and according to YMOYL, the number of people who describe themselves as very happy in the United States has been steadily declining for the last 6 decades.
What I Liked About Your Money or Your Life
“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. The conclusion is that economically we have a boundless field before us; that there are new wants which will make way endlessly for newer wants, as fast as they are satisfied… Our situation is fortunate, our momentum is remarkable.”That was written nearly 90 years ago, and it holds true to this day. It’s only become truer as time has marched on. In another oldie-but-goodie quote, we have a 1955 quote from retailing analyst Victor Lebow:
“Our enormously productive economy… demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption… We need things consumed, burned up, worn out, replaced, and discarded at an ever-increasing rate.”The revised edition also cleverly incorporated lessons from books published in the interim, including one of my favorites, The Millionaire Next Door. She mentions how Drs. Stanley and Danko noted that “people who have achieved a high net worth relative to income know how much they are spending on clothes, travel, housing, transportation, and so on, and those who don’t achieve high net worth relative to income have no idea how much they spend. It’s a stark contrast.” The movie The Matrix also gets some love. After quoting Morpheus describing The Matrix to Neo, including the excerpt “You take the red pill–you stay in Wonderland, and I show you how deep the rabbit hole goes.” She says that understanding that money is life energy is the equivalent of taking the red pill. You can see your choices and their consequences more clearly. Taking the blue pill would be akin to maintaining a work, consume, replace, repeat sort of existence where you carry on without intention or financial progress. I also like the fact that the final step, Where to Stash Your Cash for Long-Term Financial Freedom, was updated. When Vicki and Joe were traveling the country giving seminars, treasury bonds offered high-single-digit to low-double-digit returns. The 1992 book pointed to them as an easy way to have guaranteed income. Today, you’d be lucky to find guaranteed returns that can keep up with anticipated inflation. In the 2018 revision, low-cost passive index funds are touted as one of several viable options to place in your portfolio. The Bogleheads get a well-deserved shoutout. She also discusses the benefit of DIY investing and fee-only advisors, spends a few pages on real estate, and touches on socially responsible investing. Finally, I’ll mention that I liked the real-life examples sprinkled throughout the book. Vicki and Joe touched many thousands of lives, and they’ve clearly got ample stories to use to demonstrate a dilemma or success story from any angle imaginable.