Book Reference #2: Your Money or Your Life

This may be the first book that defined wealth in terms of the ability to buy time to pursue happiness, or as this book defines happiness, a purposeful existence in the world.

Free From Corporate America
References and Book Recommendations, Part Two: Your Money or Your Life

Editor Jennifer Gabrielle assisted with the compilation and write up of these book references.

Jon Reed’s Intro: When I wrote Free From Corporate America, I intentionally kept any references and academic-style footnotes out of the text. My goal was to keep the ideas simple and to flow from chapter to chapter. My plan was to use the web site to provide more background on particular chapters as needed. Over time, I hope to add more links from the chapters themselves to other sources of information. For example, the assumption that more white collar work is being outsourced globally is widely accepted, but I hope to link to more studies that explore that assumption.

But for now, what I’d like to do is to share a few of the books that were most influential to my own. Most of the ideas in Free From Corporate America are not unique to me; the only thing that may be original is how I have brought together different perspectives into a methodology that is my own. So, now is the chance to pay tribute to some key influences and also point readers to different resources to further their own thinking.

With that said, here is the second entry in my list of key resources:

Book Title: Your Money or Your Life

Authors: Joe Dominguez and Vicki Robin

Reason for Selection: Your Money or Your Life is one of the most important books about money ever published. It contrasts strongly against the sloppy thinking of the “do what you love and the money will follow” crowd. As far as I know, this may be the first book that defined wealth in terms of the ability to buy time to pursue happiness, or as this book defines happiness, a purposeful existence in the world. This may sound like a simple distinction, but it’s not. If the purpose of accumulating wealth is to buy time, then each of us have a certain hourly level of money that we need to account for in order to purchase our lives back.

Your Money or Your Life is refreshing in its acknowledgement that many of us are not ever going to turn work into a source of fulfillment, and that pursuing so-called “fulfilling work” can actually be self-defeating, tying us to low-paying, idealistic jobs that don’t further our longer-term dreams. And since the problem of buying time involves both revenues and expenses, this book helps us to make useful assessments of how to lower our expenses in order to reduce our cost of living, thereby empowering us to buy more time with less money.

The other big lightning-bolt-level insight from Your Money or Your Life is that saving dutifully for our retirement, that arbitrary time in the future where we might truly live our dream, is a hugely flawed approach. Authors Dominguez and Robin point out that if your income from investments meets the amount of money you need from your current employment, at that point, you’re at a “crossover” where you can actually focus on any type of pursuit you want, because you’ll have enough cash flow to cover.

The book contains many true stories of people who downshifted their lifestyles, sold off a few heirlooms, and found a way to move into a happier lifestyle sooner rather than later, focused on the work they want to do. Once you have bought your time back, you can spend it however you wish, and that beats working your tail off for some hypothetical retirement any day. Perhaps my favorite aspect of this book is its brash willingness to “fall behind” and not bother spending time and money to keep up with the Joneses, which is mocked as a hamster wheel approach to work.

The concepts in this book are sophisticated and not easily summarized; those who are curious should go to the source. I do have some problems with the authors’ methods, however. One bone of contention: even though their “lean and thrifty” mentality is one I can appreciate, it does seem like they are advocating one set of values in their book (think liberal/progressive/green). I am convinced that people who don’t share all of my values can still benefit from my ideas, so in my book, I have attempted to do a better job of separating the two, and, hopefully, not being as heavy-handed, something I also admittedly have some trouble with. I also find the budgeting process advocated in Your Money or Your Life tedious and archaic; the same goals can be achieved through online banking without the fussiness of writing down every pack of chewing gum you buy into a ledger. My book explains how that’s done.

I’m also not crazy about how the authors classify certain things as “assets” that I don’t consider to be assets, and this can affect the all-important calculations of when your crossover point is, so if you’re curious about that key distinction, read the financial chapters in my own book. Another criticism: while being thrifty is an important strategy, the bottom line is that modern life is expensive. I don’t think the authors did nearly enough to focus on the revenue-generating tactics needed to boost income levels, nor are they able to consider the increasing instability of white collar work, a trend that took hold largely after this book was first published in 1992.

Finally, the authors’ obsession with government treasury bonds as the investment vehicle of choice is almost cult-like. Having said that, my own book could not have been written without the theoretical landmark of Your Money or Your Life. I think it’s interesting that the two references that influenced my book the most, Kiyosaki and Dominguez/Robin, serve as kind of a corrective to each other. I suggest reading both.

Related Web Sites and Discussion Threads:

Free From Corporate America

A Tactical Guide to Success on Your Own Terms

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