Your Money or Your Life:
Transforming Your Relationship with Money and Achieving Financial Independence

Author:   Joe Dominguez with Vicki Robin
Publisher/Date:   Penguin Books / 1992
ISBN:   0-14-02-8678-0     (paperback, 364 pages)

Let me make this simple:   Your Money or Your Life is elegant and powerful. It isn't a book, really; it's more of a process. When I consider everything I have read in the realm of personal finance, I cannot think of a more effective work than Your Money or Your Life.

There. That's out of the way.

I cannot recall exactly when I first read Your Money or Your Life (YMOYL), but I know that it was fairly early in my financial renaissance — probably sometime in early- or mid-2002. At that point, I'd read maybe four or five other finance primers. I picked up YMOYL because someone had praised it on a message board. Rest assured that once I was ten or twelve pages into YMOYL, I knew I was in for a remarkable read. Even for me, it wasn't difficult to discern:   This book was something special.

It is a book — and there aren't many of these — from which two readings (and you will read it more than once) will net you about five readings' worth of motivation.

In some ways, YMOYL is difficult to categorize. It is about identity — both yours, and that which you assign to your money. It is about navigating all the swirlings of your life, and doing it effectively. It is about weighing your deepest, most stringent desires, and then finding ways to bring the heaviest ones to fruition. It is about valuing time, valuing experiences, and valuing things. It is about discovering that balance which will allow you the most enjoyment from the resources you possess. From the introduction:

The purpose of this book is to transform your relationship with money. That relationship encompasses more than just your earning, spending, debts, and savings; it also includes the time these functions take in your life. In addition, your relationship with money is reflected in the sense of satisfaction and fulfillment that you get from your connection to your family, your community, and the planet.

Dominguez and Robin present us with several concepts which are not typically in step with the norm. One of these — "Financially Independent Thinking" — encourages us to reach outside our basic assumptions about life and money, and to question just where it is that those two things are taking us. "FI thinking is essential for anyone who wants a clear, relaxed relationship with money," they write. "Until you can think independently, you can't be independent."

Without adjusting your "inner road map for money," you will be forever locked in the classic financial traps:

• Spending more than you make.

• Buying high and selling low.

• Working at a job you dislike, but are unable to leave.

• Requiring two paychecks to make ends meet.

• Just when you get the two ends to meet ... you watch someone move the other end.

Of course it is difficult to dodge these traps — our society and culture are largely based upon eager consumption and a striving toward affluence (or at least, the window-dressings of it).

Perhaps we cling to our affluence — even though it isn't working for us or the planet — because of the very nature of our relationship with money. As we shall see, money has become the movie screen on which our lives play out. We project onto money the capacity to fulfill our fantasies, allay our fears, soothe our pain, and send us soaring to the heights. In fact, we moderns 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.

All this leads us to "making a dying," as Dominguez terms it. Our lives are spent — in more ways than one — chasing "more" and "better." We struggle toward a horizon we can never really approach. How might we counter this situation? The bulk of YMOYL outlines Dominguez' nine-step plan to accomplish financial freedom. The difference between his plan and other gurus' offerings? Dominguez writes with detail, depth, and an astute sense of long-range vision. He may come off as overly preachy at times, particularly on environmental topics, but such moments are of slight notice. His voice and direction are strong, and because of this, there is never any doubt as to the benefit of his work for the reader.

The YMOYL Financial Plan

Bear with me here: This is going to get long-worded. Normally I wouldn't spend so much time summarizing an author's "financial plan," but this one is special. It absolutely made me look at my money in an entirely different light.

Step 1: Making Peace with the Past

Components here include tallying up how much money you have earned thus far in your lifetime (thanks to Social Security statements, this can be done with reasonable accuracy), and then performing an honest examination of just what exactly you have to show for it. This requires a computation of your net worth. And despite what society says, there does come a point where a person can attain "enough."

Step 2: Money Ain't What It Used to Be —
And Never Was

Here Dominguez introduces the integral concept of Life Energy. "Our life energy is our allotment of time here on earth, the hours of precious life available to us," he writes. "When we go to our jobs, we are trading our life energy for money." He walks the reader through the process of calculating exactly how much your life energy is worth; i.e., how much life energy you are trading for how much money. (It's called computing your "Real Hourly Wage," and it's not as simple as you might think.)

Following that, Dominguez next advises readers to begin keeping track of every cent that enters and leaves their lives. When one month's worth of spending data has been recorded (remember — no fudging!), the process moves to Step 3.

Step 3: Where Is It All Going?

Now we must begin relating to our life energy as our core means of exchange. We trade life energy for money; we trade money for products and services; so it follows that we trade life energy for products and services. Now . . . how much life energy does that new DVD player cost, anyway? How about your eat-out lunches every workday?

"Since money has a direct correlation to your life energy," he asks, "why not respect that precious commodity, your life energy, enough to become conscious of how it is spent?"

Dominguez walks the reader through the process of categorizing his or her spending (food, clothing, transportation, etc.) and refining this spending into subcategories. This is where money "becomes real."

The fact that you may spend, let's say, 88 pieces of paper on magazines does not have any direct relevance to your experience of life. However, remembering that money is something you trade life energy for, you can now translate that $88 into something that is real for you — your life energy. ... Now you can measure your growing pile of all the wonderful (yet unread) magazines in your bathroom against something real — 22 unredeemable hours on your one-way journey from cradle to grave. Those magazines may drain your energy three times over: once in earning the money to buy them, again in staying up late to read them, and finally in feeling guilty when you haven't finished them by the time the next issue arrives (to say nothing of having to store or dispose of them). ... Notice that translating dollars into hours of your life reveals the real trade-offs you are making for your style of living.

We are now well on our way toward a much more tangible form of financial awareness.

Step 4: How Much is Enough?
The Nature of Fulfillment

"To have fulfillment in a larger sense," says Dominguez, "to have a fulfilled life, you need to have a sense of purpose, a dream of what a good life might be."

He advises readers to reflect upon their dreams, and to do it honestly. We are evaluating priorities here, allowing our minds and hearts to voice some opinion about realities in which we might otherwise shut them out. Once this is done, we are to evaluate our current spending, and spending categories, against the following three questions:

  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?

Be on the lookout not only for areas in which your expenditures were in excess of value received, but also for areas wherein you found great fulfillment but were too eager to pinch pennies. Here YMOYL expounds nicely upon such buzzwords as "values," "purpose," and "mission." Charts are presented which help to guide readers to making changes in their spending so as to bring it more in line with true desires.

Step 5: Seeing Progress

Get ready to create a wall chart.

Step 5 encourages us to "make life energy visible." What we're doing, essentially, is graphing our monthly expenses versus our monthly income. The graph is necessary because it makes visible and tangible the changes we're undertaking: We are working to limit our "unfulfilling" expenses, working to possibly increase our incomes, and working to increase our savings (which provide further income). In the graph, you get to see your finances in beautiful simplicity: There are only two lines, and they're either going up or going down.

"There is no right way to do this accounting," they write. "You need to choose the way that gives you the information you need so that as you glance at your Wall Chart, you know where you are and where you're going."

It might be surprising to note that YMOYL spends very little time discussing the importance of getting out of debt. Perhaps this is because if readers can grasp the "big picture" of Dominguez' work, then zeroing-out debt becomes a matter of course. There is simply no other way.

Step 6: Valuing Your Life Energy —
Minimizing Spending

Here the authors push expense-cutting a bit further: "This step is about the intelligent use of your life energy (money) and the conscious lowering or eliminating of expenses. Think before you spend."

Listed are "Ten Sure Ways to Save Money," although perhaps the most prescient (and necessary) money-saving advice is found not even in that list: Stop trying to impress other people. Do just this, the authors tell us, and we will save thousands of dollars. Conspicuous consumption, while obviously a tenet which resides at the very heart of our culture, makes saving — and thus, financial independence — futile.

Be assured that the "Ten Sure Ways to Save Money" are simple and prim. They are common-sense. And, if you buy into the hopes and goals which unfold from the pages of YMOYL, then they are also immutable.

Step 7: Valuing Your Life Energy —
Work and Income

What are you doing when you are working? Are you spending your life doing something which merits its accompanying expense of life energy? Are the rewards commensurate?

Does your job "consume" your life?

These are among the important questions asked in Step 7. Usually these uneasy questions usher in uneasy answers; so many times we do what we do today simply because it's what we did yesterday.

Our jobs are important: We look to them not only as a provider for needs and wants, but also for senses of identity and status, respect and power. And a myriad of other things. But where does this leave us, really?

We are so wedded to what we do to "make a living" that we perpetuate, without thinking, the confusion of doing with being. Indeed, in terms of sheer hours, we may be more wedded to our jobs than to our mates. The vows for better or worse, richer or poorer, in sickness and in health — and often till death do us part — may be better applied to our jobs than our wives or husbands. No wonder we introduce ourselves as nurses or contractors rather than as parents or friends.

In Step 5 we saw that getting out of debt and accumulating savings would allow unemployment to become a golden opportunity for discovery, learning, and renewal. But what if you think that who you are is what you do to make money? No amount of savings would keep you from that loss of purpose and self-esteem. As we'll see, who you are is far greater than what you do for money, and you true work is far greater than your paid employment. Our focus on money and materialism may have robbed us of the pride we can and should feel in who we are as people and the many ways we contribute to the well-being of others. Our task now is to retrieve that birthright of knowing ourselves as human beings rather than as human doings or human earnings.

We must learn to redefine work. We must learn to use paid work as a tool to free us from itself. Do everything necessary to increase your income, exchanging it "... for the highest pay consistent with your health and integrity." You are doing this not out of greed or competition, but to speed the process of Financial Independence. Cut expenses; increase income; increase savings; increase life. Yet we are also instructed to always keep in mind one thing:

"Your worth as a person does not come from what you are paid," Dominguez and Robin assert. "It comes from who you are and what you give."

Step 8: The Crossover Point

By this point, you know how much you have, how much you spend, and how well you have aligned your spending and saving with your values and dreams. "The Crossover Point" occurs when you have not only "savings" (money put aside and kept unexpended) but also "capital" (money that keeps working for you, producing an income) and when that capital generates sufficient income to cover your monthly expenses.

Why work so hard at decreasing expenses and increasing income? The chart above is why.

"Take a moment to think about what would happen if you knew that you would have to work for money for a limited, forseeable length of time," Dominguez writes, "instead of that vague limbo of working until traditional retirement."

You must intensively earn money, and intensively save money . . . for a limited period of time. That is the goal of all this: to have the freedom to choose what you do and do what you choose.

Step 9: Managing Your Finances

This step covers long-term investing of your capital. It is not about "making a killing" with your money. Rather, the goal is simply to attain a safe, steady, and sufficient income for the rest of your life.

In fact, YMOYL leads us to one investment that meets this criteria, and one investment only: U.S. treasury and U.S. government agency bonds. How realistic this is, I honestly doubt. But one need not follow the YMOYL investment advice to the letter; in fact, perusing the message boards at shows that most folks do not.

It also advocates cutting out the majority of all of the usual fees, expenses, and commissions usually related to "investment products." Difficult to do, certainly, if not impossible. But the point here is the same as in earlier steps: to have the least amount of expenses possible and still retain the things you value most in life.

YMOYL finishes with an epilogue that summarizes the nine steps quite well. The beauty, however, is in the magnificent delivery provided in the rest of the book. In my case — I bought the paperback edition brand new — it was well worth twice the price I actually paid.

Thanks, Joe and Vicki. Your Money or Your Life is a financial masterpiece.

Michael • April, 2005

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