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Book Review: Your Money Or Your Life

{ 25 comments }

I finally had a chance to read the classic financial independence guide – Your Money or Your Life: 9 steps to transforming your relationship with money and achieving financial independence. This book was originally published in 1992 and had been revised and updated in 2008. This book is a must read for anyone with a goal of Financial Independence.

The book starts off by asking you to examine your relationship with money, work, and life. Basically, you are trading your “life energy” for money, and then trading money for survival, comforts, and luxuries. Why not look at how much life you are trading for luxuries instead? Figure out how much of your life that the new BMW 550i costs (18 months?) and you might think twice about splurging for the cool ride.

fulfillment curve

The fulfillment curve shows the the authors’ view on the conventional American spending pattern and offers a way out of this trap. We need to look inward and systematically figure out what “enough” means to each of us.  “Enough” is the sweet spot where you are most happy and the expenditure is reasonable. The book shows examples of people who cut back once they figured out how much life they are trading for luxuries.  These examples are enlightening.

Basically, the way to financial independence is quite simple and I’ve summarized it below:

  • reduce expenditures,
  • grow income
  • save and invest.

Once your investment income overtakes your expenditure, you have achieved financial independence. The book calls this “the crossover point.” The book gives actionable ways to do this and it will work for some but not for others. I am not meticulous enough to follow the steps closely, so they won’t work for me. The book did get me to think of money in a different way and that was well worth the time spent reading it, even if I didn’t complete all the exercises.

It all comes down to how much you value your time on earth. If you want to be free to do what you want badly enough, then you’ll figure out how to achieve financial independence. Some people reduce spending so drastically that they can live on a reasonably-sized investment. Others focus on building a huge nest egg to cover the bigger expenditures. We are shooting for somewhere in the middle and are pushing hard toward the financial independence dream.

I give this book 3.5* out of 5. There are a few minor problems with the book. The numbers looks like the 90s numbers to me, $1000 expense a month is simply not doable for us. It took me forever to finish this book (almost 2 weeks) so I took half star off for that. Your local library should have it, so what are you waiting for? Have you read Your Money or Your Life and what did you think about it?

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{ 25 comments… add one }
  • Nicole January 21, 2011, 6:32 am

    We think it is paradigm altering. We don’t think of it as a personal finance book but as a book about the meaning of work.

    http://nicoleandmaggie.wordpress.com/2010/07/18/pre-tenure-angst/ is our review.

    • retirebyforty January 21, 2011, 10:05 am

      I checked out your review, it’s great that the book helped so many people. I agree that it could have been written better.

      • Nicole January 21, 2011, 11:52 am

        What’s amazing is how it is so very powerful without being written as masterfully as so many other books.

  • Roshawn @ Watson Inc January 21, 2011, 10:51 am

    I initially wanted to read this book after reading Nicole and Maggie’s review of it. I had heard about it before, but reading about how it affected them was a big selling point for me.

    It’s always funny how some of the best is advice is so simple (re: to the three steps to financial independence).

    • retirebyforty January 21, 2011, 11:29 am

      Did you make any changes after reading the book?
      I think we are already doing a lot of what the authors recommended so we’re not going through the steps.

  • Little House January 21, 2011, 11:14 am

    I just received this book through PaperBackSwap. I look forward to reading it, your review sounds a little bit like it’s more of a philosophy than an actual financial steps book. I’m just finishing Early Retirement Extreme and that’s definitely more of a philosophical view point. Thanks for the info.

    • retirebyforty January 21, 2011, 11:28 am

      This book covers both philosophy and actual actions. They shows specific steps to achieve financial independence that anyone can follow. I don’t know if a lot of people follow though with it though. The steps are very tedious and require organization.

  • Jessica07 January 21, 2011, 11:41 am

    Wow. Great review. I’m checking the book’s availability as we speak… er, as I type.

  • LifeAndMyFinances January 21, 2011, 6:44 pm

    I’ve seen that chart before. A basic time for money exchange. We may experience some fulfillment by spending money, but overspending just will not satisfy us.

    • retirebyforty January 21, 2011, 11:04 pm

      Right! Once you get to a certain point, spending more money is just a momentary high.

  • Moneycone January 21, 2011, 7:16 pm

    I love that phrase “trading your “life energy” for money”! Very interesting perspective!

    • retirebyforty January 21, 2011, 11:10 pm

      @Moneycone, Aloysa, Clay Ivy, Jessica
      You guys definitely need to read this book. It’s illuminating.

  • Aloysa January 21, 2011, 8:24 pm

    I liked its philosophical approach to a potentially boring (somewhat) topic. But I am one of those who likes philosophy… to a certain point. 🙂 Great review by the way!

  • Clay Ivy Finance January 21, 2011, 9:01 pm

    Haven’t read the book yet. Anything helping people toward financial freedom is great. I do like the idea of investment income being more than expenses. It is not enough to have a job that provides more than expenses because you are still depending on the job! Have to have other sources of income.

  • Andrea @ NickelByNickel.com January 21, 2011, 10:38 pm

    One of the best books I’ve ever read. I never did any of the charting and all that ‘fun’ stuff but it got me looking at money in a completely different way, I think YMOYL was the click I needed to make a change. It’s hard to recommend this book though because it is a bit longer and different, it’s NOT short to the point like Dave Ramsey can be but I do think it’s one of the best PF books ever written.

    • retirebyforty January 21, 2011, 11:19 pm

      I agree! We are not going to do all the charting and calculation, but I definitely recommend this book.
      The first few chapters were fun to read, but the second half really slowed down for me.

  • Money Reasons January 22, 2011, 11:11 am

    I was too late for it to affect me, as my path is already set along a similar route. But I did like the fresh perspective and angle of looking at life and finances. Much of the contents I came to on my own, but this book could have definitely have sped up the process for me if I had read it 10 years ago.

    I would recommend this book too! Good to hear that you enjoyed the read!

    • retirebyforty January 23, 2011, 8:28 am

      I don’t know if it would make any difference if I read it 10 years ago. Younger me probably poo poo it.

  • readtoawake January 22, 2012, 8:45 am

    Just wanted to say that I love this site and find it an invaluable resource to my studies! I have read this book “Your Money or Your Life.” You have summarized it very well. Some of the lessons that I have learned from this book are following:-

    1. This book brings you to an interesting journey of your past and encourages you to calculate how much money you have earned in the your life till now.

    2. Then you need to calculate your actual net worth. Your net worth is equal to your total assets minus your total liabilities.

    3. I think this simple exercise can open eyes of many people and bring them back on the road to financial freedom.

    4. Calculate how much money you are earning per hour.

    5. Write down all the expenses you make each day for a few months.This simple exercise will work magically to reduce your expenses.

    6. you need to ask yourself this question before making any acquisition decisions that – Does this acquisition will bring the true fulfillment and satisfaction in my life in proportion to the life energy spent on the work?

    I highly recommend this book to all. Thank you so much for this book review. This article was very helpful.

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