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April 9, 2018Written By Paula Pant

Your Money? Or Your Life?

Your Money or Your Life Book 2

There’s a scene in a classic 1950’s TV show, The Jack Benny Program, in which a mugger points a gun at the title character.

“Your money or your life,” the mugger says.

Jack Benny is silent.

“I said, your money or your life!” the mugger repeats.

“I’m thinking it over!,” Jack replies.

The scene is funny because it’s absurd. When we face a choice between our money or our life, of course we’d rather live.

But day-to-day, most of us exchange our precious hours for a paycheck. We prioritize money over our life. And in that regard, the scene is also funny because it’s true.



In the early 1960’s, a scrawny New Yorker named Joe Dominguez decided to opt out of the rat race.

Joe grew up in Harlem, raised in a bilingual household that received “welfare cheese.”

“He was a runty guy, and wicked smart,” says his partner, Vicki Robin. “He couldn’t use brawn to survive, so he became the brains of his gang.”

Although he never graduated from college, he maneuvered his way into a Wall Street firm, where he developed some of the finest technical analysis tools of the early 1960’s. Joe held the singular goal of retiring by age 30.

He retired at age 31 with a nest egg of about $100,000, according to his obituary in the New York Times. (That’s around $697,600 in today’s dollars.) He lived on $6,000 per year, equivalent to $40,700 in today’s dollars.

In the early 1970’s, Joe met Vicki, and a lifelong partnership began. Vicki had graduated with honors from Brown University and was working in New York when the two of them crossed paths. They discovered that their purposes and direction were well-matched, and they started teaching, writing and speaking about the concept of financial independence, or “FI.”

In 1992, they co-authored the book Your Money or Your Life, the culmination of their decades-long collaboration. The book sold more than one million copies and laid the groundwork for the modern FI movement.

Joe died of cancer in 1997, at age 58. Two days before he passed away, he wrote cards for his family and friends that said: “Joe Dominguez has been given a clean bill of death. Please direct your attention to the living and to the things that need to be done.”

Vicki, now 72 and herself a recent cancer survivor, continues to do exactly that.


Your Money or Your Life is not a book about managing money. It’s a book about transforming your relationship with money.

Vicki and Joe start by examining the concept of money:

  • Material: Money is cash, credit cards, the stuff of daily transactions.
  • Psychological: Money represents our fears and desires.
  • Cultural: Money represents our beliefs about our self-worth, about good and bad, winners and losers.
  • Life energy: Money is the concept for which you trade your time.

“Money is like a mirror that allows us to see ourselves,” the authors write.

Next, they introduce the concept of enough.

The Fulfillment Curve - Enough - Your Money or Your Life

Society teaches us that more = better, but the truth is that after a tipping point, more = clutter, distraction and noise.

“Some people would say that once we’re above the survival level,” the book says, “the difference between prosperity and poverty lies simply in our degree of gratitude.”

How much is enough? Vicki and Joe describe four components of enough:

  1. Accountability: Understand how much money is flowing in and out of your life.
  2. Yardstick: Find an internal yardstick of fulfillment that reflects your values, not social pressures and expectations.
  3. Purpose: Develop a purpose in life that involves contribution, rather than acquisition.
  4. Responsibility: Extend love and care into the world, and you’ll realize that having “enough” is closer than it may appear.

They outline 9 steps towards achieving financial independence:

Step 1: Make peace with your past.

First, find out how much money you’ve earned in your lifetime. (They describe in-depth strategies for unearthing this figure, but as a shortcut, you can check your lifetime earnings at ssa.gov).

Find your net worth. (They describe in-depth strategies for calculating this, but as a shortcut, you can use this free net worth tracker.)

Finally, view your lifetime earnings compared to your net worth. What do you have to show for the money you’ve made?

If you’ve invested well, your net worth might be higher than your lifetime earnings. If you’ve endured debt, your net worth might be lower than your lifetime earnings. No matter what your answer — no shame, no blame. Don’t judge yourself. Start with an honest understanding of where you are today.

Step 2: Calculate your real hourly wage.

Find out how much you earn per hour. (Here’s a shortcut: knock three zero’s off your annual salary, then divide by 2. If you earn $80,000 per year, you make $40 per hour.)

That’s your theoretical hourly wage.

Next, subtract the costs of working, including commuting, buying office clothes, coffee and meals on-the-go, decompressing with happy hour specials or escapist entertainment, and paying for job-related illnesses.

Add the hours that you spend on all of the above — commuting in bumper-to-bumper traffic, ironing your pants, polishing your wingtip loafers, picking up the dry-cleaning.

Readjust your numbers. You may work 40 hours a week, plus spend 15 hours per week commuting / dry-cleaning / meal-prepping / ironing. That’s a 55-hour work-related week.

You might earn $80,000 annually, but spend $5,000 per year on vehicle wear-and-tear, gasoline, office outfits, lunches and carpal tunnel treatment.

Now calculate your real hourly wage:

Time: 55 hours/week * 50 weeks/year = 2,750 hours per year
Money:  $80,000 income – $5,000 job-related costs = $75,000 income
Real Hourly Wage: $75,000 / 2,750 = $27.27 per hour

Next time you’re tempted to drop $30 on a round of martinis, ask yourself if it’s worth an hour of your life.

(I explore this exercise in my free e-book, Escape.)

Psst. If you’ve already reduced your commute, or work from home, you can save even more. Check out Metromile – car insurance that starts at $29/month + a few cents for every mile that you drive. Get a free quote – it’s risk-free. Only available in CA, VA, WA, OR, IL, PA, NJ, and AZ. 

Step 3: Track your expenses, then convert into hours.

You can track your income and expenses in a few ways:

If You Prefer Cash: You could practice the “envelope system,” in which you spend cash from envelopes that you fill at the start of each month. Alternately, you could write your expenses in a notebook, or track it through an app like Evernote.

If You Prefer Credit or Debit Cards: Pay for everything with a credit or debit card, and link your account to an online program like Mint or Personal Capital that will sort it into categories.

Next — and this is critical! — convert your expenses into the hours of your life energy that it consumed.

If you spent $350 at restaurants last month, and your real hourly wage is $27.27, those fancy dinners cost nearly 13 hours of your life.

Ouch.

Remember — no shame, no blame. The goal is to face reality, not chastise ourselves.

Your money or your life Vicki Robin and Paula Pant

Step 4: Ask yourself three questions.

Next, figure out if you’re spending money in a way that’s aligned with your values. To arrive at a deeper understanding of this, ask yourself three questions:

1: Did I receive fulfillment, satisfaction and value in proportion to life energy spent?

2: Is this expense of life energy aligned with my values and purpose?

3: How might this change if I didn’t have to work for money?

Step 5: Chart your money.

Create a visual chart of your total monthly income and expenses. Hang this in a prominent spot, where you’ll see it everyday. Pay attention to the gap between these two lines.

Expenses Income and Savings - Your Money or Your Life

Step 6: Spend less.

“Frugality is enjoying the virtue of getting good value for every minute of your life energy and from everything you have use of,” the authors write. “Frugality means enjoying what we have … waste lies not in the number of possessions but in the failure to enjoy them. Your success at being frugal is measured not by your penny-pinching but by your degree of enjoyment of the material world.”

In other words, gratitude is the antidote to want.

Step 7: Redefine work.

“Our jobs now serve the function that traditionally belonged to religion,” the authors write. “They are the place where we seek answers to the perennial questions ‘Who am I?’ and ‘Why am I here?’ And ‘What’s it all for?'”

Redefine work. Your work is survival and income, yes, and it’s also your contribution to humanity, and it’s also the enjoyment of your free time.

Work is not always income-producing. Work includes the effort you invest into your health, your relationships and your community.

Value your time and life energy. Don’t sell yourself short. Ask yourself probing questions, such as “how could I double my income without compromising my health or integrity?”

Step 8: Find your crossover point.

Your “crossover point” is the point at which the income from your capital is enough to cover your expenses.

The authors give the following formula:

[capital x current long-term interest rate] divided by 12 = monthly investment income

For example:

[$1,500 x 4%] / 12 = $5 monthly investment income

You can invert this to find out how much money you’ll need to cover your expenses. For example, if your expenses are $3,000 per month:

[$3,000 x 12] / 4% = $900,000 total assets

You’ll reach the crossover point (financial independence) when your investment income covers your basic expenses.

The Crossover Point - Your Money or Your Life

(Note: This merits a longer discussion about interest rates, and other types of investments. If you want to learn more about investing, read this or this.)

Step 9: Invest

You can earn investment income in five ways, the authors write:

  • Interest
  • Dividends
  • Capital gains
  • Rents
  • Royalties

Vicki has multiple income streams: socially responsible index funds, bonds, rental properties, Social Security, local lending, and her “side hustle” as an author.

“While writing a book is an elephant of a side hustle,” she says, “it also fits here because it’s episodic, snugs into my diverse life activities, and could disappear without crashing my financial independence.”

Learn about long-term, income-producing investments, she says, and choose the ones that align with your values.


Most financial advice is based on the idea that more-is-better. Your Money or Your Life is based on the idea that enough is enough.

This was a radical idea in 1992, when Vicki and Joe published the first edition of their groundbreaking book. This radical idea continues to thrive today — and fortunately, the idea is spreading further and faster.

Vicki joined me as a guest on the Afford Anything podcast to talk about the next evolution — moving from financial independence to financial interdependence. I recommend spending an hour of your life listening to this episode.

But first, answer one question:
Your money? Or your life?

Jack Benny needed to think about the answer. We all need to think about the answer. Because implicit within this question is a hidden, second layer:

How much is enough?

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Posted in: FIRETagged in: enough money, financial independence, trading time for money, vicki robin, your money or your life

31 Comments
Leave a Comment
  1. MarciaB

    # April 9, 2018 at 10:55 am

    I read this book in the 90s and started tracking my monthly expenses and putting them on a graph (starting in October 1994) and have done that monthly every since. Eye opening!

    Reply ↓
    • Paula Pant

      # April 9, 2018 at 1:23 pm

      What are some of the biggest things you’ve discovered since you started doing that?

      Reply ↓
  2. Kenneth

    # April 9, 2018 at 12:01 pm

    I’m so glad you got to meet Vicki, Paula! She and Joe were my heroes many years ago when I first read their book. It took me decades to finally get it, but with the help of you, Mr. Money Mustache, Go Curry Cracker, Jim Collins and many others, I finally did, at age 57, with a pile of mortgage debt, car debt, home equity debt and credit card debt. Can you believe it. I started brown bagging my lunch to work, cut our dining out budget to $100/mo, and drove old cars. 8 years later, I retired at 65, owing absolutely nothing to anyone, and our home was free and clear. Now in retirement, I’m fortunate enough to still be saving money, and investing, and we have been traveling the world. All it takes a change in your mindset, as Vicki and Joe so eloquently wrote about.

    Reply ↓
    • Paula Pant

      # April 9, 2018 at 1:23 pm

      That’s awesome, Kenneth!! Congratulations on your financial turn-around!! You made a huge 180 degree turn that created a lot of peace in your life and an enjoyable retirement. That’s amazing. Congrats!

      Reply ↓
  3. Stephen A. Schullo

    # April 9, 2018 at 2:51 pm

    I was extremely lucky that I was naturally frugal because I never really earned enough money to save for retirement until I was in my late 30s in dead-end jobs. I read their previous version and wrote a review on Amazon: https://www.amazon.com/gp/customer-reviews/R34XCX7436D7ZK/ref=cm_cr_arp_d_rvw_ttl?ie=UTF8&ASIN=0143115766. Gave it 4 stars because of the outdated investments when interests rates were 17% and you could earn a decent return on CDs and bond funds. But as we all know those days are gone. The book is great because it lays out the steps to changing your mind and therefore your relationship with money. OMG, as I said in my review most people cannot do this alone, they will need help with those extremely demanding steps. Demanding is GOOD and their steps are spot on, don’t get me wrong, but people’s attitude on just about anything is very difficult to change. Lucky for me, I already had the frugal bug all of my life and was able to retire at 61.

    Reply ↓
    • Paula Pant

      # April 9, 2018 at 4:43 pm

      Congrats on retiring at 61!

      The latest version of the book (the 2018 edition), fortunately, makes updates to the bond returns / other projected investment returns, as the investment landscape today is very different than the landscape in the 1980s and 1990s. The latest edition also talks about side hustles, which I think is great. 🙂

      Reply ↓
    • David @ VapeHabitat

      # July 26, 2018 at 2:35 pm

      The movie scene is hilarious! Now that you reminded me of that movie I need to watch all over again

      Reply ↓
  4. The Curious Frugal

    # April 9, 2018 at 3:53 pm

    I read this book ten years ago and it was mindset – changing. When I want to buy something non-essential I often still figure out in my head how much time I would have to work to cover the item. This stuff stays with you :-).

    Reply ↓
    • Paula Pant

      # April 9, 2018 at 4:41 pm

      When you think of costs in terms of time, rather than dollars, your spending decisions change! 🙂

      Reply ↓
  5. Gopika Rao

    # April 9, 2018 at 6:44 pm

    What an article Paula! You have been my inspiration ever since I saw your blog of afford anything. I was having my Maternity break that time. After 4 years of work break I will be starting a new chapter in my life from tomorrow having a new job, but with different money mindset. I’m geared completely now after reading this blog to retire early and do the work I enjoy,post that. Many thanks.

    Reply ↓
    • Paula Pant

      # April 14, 2018 at 2:37 pm

      Your money mindset makes all the difference. I’m happy you’re starting your new job with a new mindset. You’ll probably see very different results from the way you handle your income from this new career. 🙂

      Reply ↓
  6. Jennifer D.

    # April 10, 2018 at 2:32 pm

    Fantastic article, Paula! I’ve been thinking about this exact concept for some time now and the formulas you provided are just what I needed to figure out “How much is enough?” for myself.
    I work for a non-profit that provides good job satisfaction but have found that all too often, I neglect my own mental and physical health in lieu of helping others and trying to “get ahead” by way of promotions. This has caused me to forget to factor in how much I’m really making per hour when overall life energy consumption is taken into account.
    Striving for FIRE while working full-time, going to school full-time (student loan free, thankfully!), AND trying to fit in a little “back to nature” time for mental clarity is rough, to say the least.
    Anyway, I’m getting off track now but suffice it to say that this article was just what I needed to crunch the numbers, pursue what I’m really passionate about (financial literacy), and start living a purposeful life again. Thank you!

    Now, to see if my local library has a copy of ‘Your Money or Your Life’…:-)

    Reply ↓
    • Paula Pant

      # April 12, 2018 at 3:21 am

      I’ve noticed that a lot of people who are helpers, or givers, often tend to give until it hurts — to the point, as you said, where you’re hurting your mental and physical health in the process. Don’t forget to take care of yourself and set (and enforce) strong boundaries. You’ll be better for it, and you’ll ultimately have more to give and more to contribute because of it. 🙂

      xoxo

      Reply ↓
  7. Kara@provincialtable

    # April 10, 2018 at 2:38 pm

    I read this book several years ago and it changed how I thought about all things money. There was one particular concept that I’ve always remembered, “Money represents our fears and desires,” and you highlighted it in this article too. That is a powerful idea and so true. How we spend money is so often based on our fears and desires, which fuels all kinds of poorly thought out behaviors: fear of not being accepted, looking successful, identity, comparison, envy, security, easing depression…and on it goes. For me, being aware of the motivations has been key in changing to a much more intentional course.

    The idea of spending life energy on things that don’t add true value to my life was a great cure for spending mindlessly. That Starbucks coffee, pair of shoes, or dinner out no longer tempted me like it did before.

    This book was one of the first financial books I ever read and I’m so thankful that it was. At the beginning of my financial journey, it gave me great direction for using and saving money as it should be. It made me think hard about WHY I was making past and present choices and truly changed my direction. Thanks so much for writing about it Paula! (sorry for the long-winded comment!)

    Reply ↓
    • Paula Pant

      # April 12, 2018 at 3:28 am

      I’m glad it connected with you!! You’re right in that fear and desire drive most of our financial choices. People like to think they’re rational, but in most cases, that usually means they’re not conscious or aware of the underlying emotions driving their choices. That’s true not just in finance but in many aspects of behavior.

      Happy to hear that you’re connecting every dollar with a ‘why’ … which is one of the best frameworks for improving your relationship with money.

      Reply ↓
  8. Ryan

    # April 10, 2018 at 4:16 pm

    Very interesting article. The book sounds very interesting and I would like to get a copy of it. I make good money, but the amount of time I put in to the job is ridiculous. I would much rather be doing something like you Paula. I had a website and blog going but it was too much to keep up with, alongside my full time job. Hopefully I can get back to that soon.

    Reply ↓
    • Paula Pant

      # April 12, 2018 at 3:25 am

      Make a plan to reach FI and keep tracking your progress. Change happens a day at a time …

      Reply ↓
  9. Bob at The Frugal Fellow

    # April 10, 2018 at 9:20 pm

    I am so on board with this. I listened to Vicki’s interview on the ChooseFI podcast. She has some really good insights and definitely solidified even further my desire to achieve FI. Now to make that a reality!

    Reply ↓
  10. Mr. Income Master

    # April 11, 2018 at 7:15 pm

    I listened to Vicki’s interview on the ChooseFI podcast yesterday and it was a great discussion. Looking forward to her blog as she would be able to provide some really insightful content.

    Reply ↓
  11. Millionaire Immigrant

    # April 15, 2018 at 1:28 pm

    I love those graphs. Reminds me of my high school and college lab classes. 🙂 The wisdom is so simple and so great. It never gets old. I have only known of Vicky since last year, but she seems so passionate about spreading the FI culture. She feels like it is her duty to spread the knowledge. Thanks, Paula for bringing her back.

    Reply ↓
  12. Troy Bombardia @ Bull Market

    # April 16, 2018 at 5:53 am

    I really like the idea of the fulfillment curve. Past a certain point, making more money is just stressful and doesn’t really add to your quality of life.

    Reply ↓
  13. Codrut Turcanu

    # April 17, 2018 at 8:23 am

    Awesome post! I love this idea ‘Money represents our fears and desires.’ — it is so true.

    Warm regards from Bucharest, Romania 🙂

    Reply ↓
  14. Financial Sloth

    # April 19, 2018 at 1:09 am

    Hi Paula. I’m a newcomer to your blog, but I can tell I’m gonna like it.

    I am putting this book in my que. It will be a nice turn from my most recent two, Rich Dad, Poor Dad and The Intelligent Investor.

    I want to explore the concept of enough is enough. Measured against our necessities, we have reached FI, but we have young kids and we enjoy investing so I like to use a target number that will allow for considerable savings. By that measure, I estimate we have another 10yrs or so. Not bad, but I have noticed that the more we accumulate, the safer we want to be. I’ve read this other places as well, but it’s funny how, very often, the more you have, the more frugal you become.

    Anyway, great post and I’ll be back again for more!

    FS

    Reply ↓
  15. Wally

    # April 28, 2018 at 8:34 pm

    I absolutely love this book! its a must read.. I have started tracking my expenses on a monthly basis now too. I’d say I’m quite frugal already, but I can see there are some places that I can improve! Great post!

    Reply ↓
  16. Debt Free DDS

    # June 8, 2018 at 12:34 am

    I’m 3/4 of the way completed with this fantastic book. I plan on taking many of the pearls and putting together a lesson for my Sunday School class regarding “contentment.”

    After becoming debt-free with MORE than enough, reading this book “hit” home on just how important that time/life energy is vs. all of the junk we spend our money on working jobs that most don’t want to be at to impress others that don’t really care about us anyway!

    Reply ↓
  17. Milton

    # June 16, 2018 at 12:28 am

    After being fired I was determined to get to a point where I’d never work again. But a few months later, back in the office. At least now I’m focused on an exit plan. But even with savings it’s hard to cut the cord until you’ve got a decent stream of passive income.

    Reply ↓
  18. DeShena Woodard

    # June 25, 2018 at 4:33 pm

    Hi Paula,
    I love the whole message of how much do we value our time. And are the things we spend money on worth the time it took to earn them. Very thought-provoking.

    Reply ↓
  19. George

    # August 29, 2018 at 6:50 am

    Wow! Calculating the hourly wage is a real eye-opener. Suddenly, that glass of martini doesn’t sound refreshing if it means spending your 1-hour earnings or even more.

    Reply ↓
  20. Andres

    # January 5, 2020 at 6:55 am

    This was a great recap of the book. I need to calculate my real hourly wage and finish my wall chart in January 2020. Thanks for the motivation!

    Reply ↓
  21. Ed Dogan

    # January 27, 2020 at 7:03 am

    About 9 months ago I was fired from the company I worked for 6 years. I was lucky enough to had a plan B if things went south. About a year before getting fired, I was already working on my company/website. I knew I wasn’t about to earn nearly as much as my job was paying me but I thought the freedom I’d get would be priceless.

    As soon as I got fired, I went on traveling in South East Asia where I met like-minded people Prior to that, I didn’t really understand people who value money too much and it became their sole priority. This article explains the situation so well that I wish all these people have a chance to read it.

    Thanks again for sharing Paula!

    Ed

    Reply ↓
  22. yogi

    # October 24, 2020 at 7:54 am

    I am from India. Read this book 11 years ago. Changed my mindset completely. Followed most steps listed with diligence: tracking networth, income and expenses, monthly tabulation. Even made the graph in excel and updated it for years.
    Now I am fast approaching the cross-over point, and living my life consciously.
    Making this comment to say that the philosophy of the book is applicable anywhere in the world.

    Thanks to Ms. Robin and thanks for sharing Paula!

    Reply ↓

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