Your Money or Your Life by Vicki Robin & Joe Dominguez
Chapter 5: Getting It Out in the Open
Notes by Roshan A. Loungani, CFP® CRPC®
Retirement Specialist
To listen to the podcast follow this link: https://anchor.fm/roshan-a-loungani/episodes/FI005--Your-Money-or-Your-Life-Chapter-5-Review-e54skq
Notes on the podcast:
The first month will show you how money has been spent for no good reason. This can be intimidating and make people want to quit. If you persist, you may find dramatic reductions in spending in month 2.
Consciousness goes a long way.
It takes willpower to stay the course.
How to motivate yourself?
Make it a habit rather than a choice, you do it whether you want to or not.
Be accountable to someone else.
Chart Keeping track does wonders for quelling the urge to splurge.
Making Your Wall Chart (Prepare it for 3-5 Years of Data)
Chart Income and Expenses every month
Typical outcomes Month 1 – Spend more than you make Month 2 – Cut back on everything and see a steep decline in spending. - This kind of austerity isn’t sustainable Month 3 – Expenses go back up to make up for the 2nd months deprivation
Keys to Making It Work - Start and Keep Going
Those who get past the 3-month hump find their expenses drop by about 20% without feeling deprived, or struggling to keep a budget. - Not buying certain things now becomes a source of fulfillment.
How The Three Questions Can Save You Money (From Chapter 4)
Did I receive fulfillment, satisfaction and value in proportion to the life energy spent? - Asking this question every month make you more conscious of your spending. Which leads to an automatic reduction in spending.
Ivy U. Story
Grew up poor. Spent a lot on clothing to feel as though she escaped poverty.
Why are you spending money on things that don’t bring you happiness?
Her spending was justified by the compliments she received. Every compliment made her feel farther away from poverty.
Alignment and Personal Integrity
Expenses go down by asking question 2 – Is this expenditure of life energy in alignment with my values and life purpose?
Elaine H. searching for her life purpose saved her money.
What About Unusual Months
Prorate annual expenses. Assume all months are unusual. Do whatever lets you know where you are going on the wall chart.
Getting Your Finances Out In The Open
Keep the chart somewhere you can see it.
Discuss it with friends or others on the same journey. It can be anonymous via a blog.
Support group like Margaret P.
Financial Independence – having a choice of what you do with your time because you have an income sufficient for your basic needs and comforts from a source other than employment.
Financial Independence is Getting Out of Debt
A house with a 30 year mortgage will cost 2-3 times the purchase price over the life of the mortgage.
People spend more when using a credit card vs. cash.
We no longer buy based on what we can afford, we buy based on what we hope to earn in the future.
Retiring your debt returns you to the freedom to choose.
Becoming a Super Saver
Your savings rate is one of the most important factors for achieving Financial Independence.
The more you save the sooner you are Financially Independent.
Most Americans are two paychecks away from homelessness.
How would you spend your time if you could take a year off with pay?
Money Talk Questions
How much money do you need to be happy?
What or who can help you change your relationship with money?
What might change if you could know what others -friends, date, boss, stranger – earn?
What motivates you to save?
What helps you save money?
Bibliography
Robin, Vicki. Dominguez, Joe. Your Money or Your Life. New York: Penguin Books, 2018, pp 136-163