'Your Money or Your Life': The Title Says it All

Review of YOUR MONEY OR YOUR LIFE (Penguin Books 2008)
Author, Vicki Robin & Joe Dominguez (with Monique Tilford)

For those who are struggling to save or just get a better understanding of how to handle money, YOUR MONEY OR YOUR LIFE may seem like more than you need to know.

The book was actually written with debt-saddled people in mind--seriously debt-saddled, that is. The nine-step program within it (developed by the late Joe Dominguez) provides what I would describe as a holistic approach to financial planning.

Dominguez and Vicki Robin co-authored this book (which has just been updated with an assist from Monique Tilford) based on the program originally offered in seminars. Without going through all the nine steps (three fewer than twelve!), I think the message essentially boils down to this: your money has value, but it represents more than the value placed on it by the marketplace. When you consider what you make at your job, then subtract out how much it costs to do your job (your commute, dry cleaning, lunch, etc.), you may end up with net pay of much less than your official salary. Then add in the fact that you're not only expending money to keep a job, you're also expending time. Therefore, the money you're making not only represents a net value of earnings minus job-related costs--it also represents the life you've sacrificed to maintain that job.

Once you understand that money actually represents time in your life, you can start to view spending differently. You find yourself asking, "Is this sweater (or car or vacation) really worth the two hours (or four hours or forty hours) it's costing my life?"

There's also the concept of having enough--just enough so your needs and wants are met, but not too much. A Goldilocks view of acquisition. Because, as the book points out, simply buying things won't make us happy. Going into debt to buy things you don't need will make you less happy still. I love the term the authors use to describe people who work non-stop to support excessive lifestyles. Instead of "making a living," they call it "making a dying."

Finally, the authors tell you that their program will not only get you out of debt and keep you there, but will help you build savings and, ultimately, lead you to financial independence or FI (the state of having enough money so it will work for you, so you won't have to work for it).

Like I said, this book was based on seminars offered for people in debt, but I think it's useful for anyone who's trying to use and invest their money wisely. Sometimes the writing feels a tad repetitive. At least one discussion related to long-term care struck me as a bit simplistic. But mostly the ideas made sense to me.

The book has a boatload of success stories. Each person who's completed the program has different values, different risk tolerances, and so each has chosen a slightly different path toward becoming FI. They illustrate how the program can work for different people in different ways.

And how do you know when you've got enough? How do you determine what your money is really worth in terms of your life? And just how do you become FI? Three words: read the book.