As I mentioned on Friday’s post, I was reading a new book. The book was Your Money or Your Life by Joe Dominguez and Vicki Robin and I have to say this should be mandatory reading for anyone looking at early retirement or financial independence.
The authors start out with overhauling your ideas about money and all the emotions we have around it. They introduce the concept that money is exchanged for a part of your life energy (or the time you have on this earth). Then they get you to calculate your ‘real’ hourly wage by getting you to deduct your work related expenses from what you earn and then include the extra time it takes you to commute to work and unwind from work in your hours worked. This significantly drops your hourly wage and makes sure if your job is actually earning more than $4/hour.
The one concept they introduced that I really enjoyed was the Fulfillment Curve. This explained to me something I always knew, but could never really explain. It explains why people who buy every new gadget and toy are never happy. In a brief summary, you get your requirements for survival and have a small measure of fulfillment, but as you get past comfort items and into luxuries you hit a point of optimum fulfillment. If you keep buying stuff you actually start to have your fulfillment level go down. The trick to riding the curve is to know when you have enough and stop near the top, which they cover in another chapter.
A great section for anyone trying to reduce your cost of living is chapter 6 where they present 101 ideas on saving money, which I figure I’m already using over half of them.
I actually enjoyed almost the entire book. My only problem with the book was the last chapter where they suggest your entire early retirement nest egg should be in long term government bonds, which might be an option for someone living in the US (since they can be tax free), but a completely useless one for those living in Canada (since we get taxed at our marginal rate).
Overall I still felt it was a great read and suggest you find a copy from your local library.