"your
money or your life" - book review
by Ramona Creel of OnlineOrganizing.com
What do you think of when you imagine being FINANCIALLY INDEPENDENT?
Living on an island in the South Pacific, drinking tropical drinks
and spending money like there is no tomorrow? Actually, financial
freedom means earning more than you spend, so you don't have to
rely on your PAYCHECK to cover the bills each month. To a lot of
people, this is about as realistic a dream!
But Joe Dominguez and Vicki Robin have put together a practical
and inspiring guide to actually reaching that goal, entitled "Your
Money Or Your Life." And the title says it all -- you have a choice
between focusing all of your time and energy on EARNING money, or
you can spend it living your life. But few of us make a conscious
choice about our spending habits -- we simply do what the rest of
society does (which is generally to get deeply in debt). But Joe
and Vicki will take you on a CONSCIOUSNESS RAISING trip through
your financial past and future -- teaching you how to realign your
attitudes about money so that you can live a life free from financial
worry.
WHERE ARE YOU NOW?
The first step in changing your financial bad habits is understanding
where you stand at this exact moment. For most people, this would
mean tallying up income and expenses, examining your outstanding
debts, and trying to find a way to pay them all off. But Joe and
Vicki ask you to evaluate your FINANCIAL STATUS in a slightly different
way -- one that is intended to provoke a strong gut reaction. First,
you must figure out how much you have earned in your LIFETIME. Now,
look around at your life and ask yourself what you have to SHOW
for it. If you were being really honest, you might say, "Well, I’ve
earned about ($300,000 / $500,000 / three million) dollars in my
life, and I have a house that isn’t anywhere close to paid for,
a car in the same situation, $40,000 in credit card debt and a bunch
of ‘things’ that I never use." That’s about par for the course for
most Americans.
WHAT DOES YOUR SPENDING COST YOU?
Here comes the really sobering part. Joe and Vicki have developed
a method for determining how much LIFE ENERGY each dollar you spend
costs you. Life energy describes the portion of your life you will
have to give up to pay for the items you buy. How much is an HOUR
of your life worth. You might say, "Well, I earn $45 an hour, so
my hour is worth $45." Not so.
How much unpaid overtime do you work? How many hours a week do you
spend commuting back and forth to work? How many of your earned
dollars are devoted to WORK-RELATED EXPENSES -- suits and ties and
briefcases and networking lunches that you wouldn’t otherwise spend
money on if you weren’t working? How much of your life is lost to
work-related STRESS -- evenings when you come home and crash in
front of the TV to recover from a hard day at work, money you spend
on vacations whose only purpose is to help you escape from your
job, dinners out because you are too exhausted to cook?
All of these time and money drains take away from your "hourly rate"
-- and most people find that they really earn about $5-$8 AN HOUR
after factoring in these kinds of expenses. So if your hour is worth
$8, and you buy a $300,000 house, it will take you nearly 37,500
hours of your life to pay off that purchase. Staggering! But let’s
try a more realistic purchase. You spend $600 on a stereo system
-- that will take 75 hours of your life to pay off. Is a stereo
system worth 75 hours of your life energy? When you begin looking
at your expenses in this way, you tend to be a bit more DISCRIMINATING
about what you are willing to essentially "sell your soul" for!
HOW MUCH IS ENOUGH?
So, with this fresh perspective, let’s talk about how you can really
decide if a purchase is worth the life energy you will be trading.
Joe and Vicki suggest that you ask yourself three simple (or not
so simple) questions about all of your expenses. First, "Did I receive
fulfillment, SATISFACTION, and value in proportion to life energy
spent?" If you will not get enough joy out of this purchase to make
up for the chunk of your life that paying it off requires, skip
it.
Second, "Is this expenditure of life energy in alignment with my
VALUES and life purpose?" If spending time with your kids is a priority
-- but you plan to give up a tremendous amount of time paying for
a purchase that will actually take you away from them -- are you
really making a value-centered decision?
And finally, "How might this expenditure change if I didn’t have
to WORK for a living?" This book is about getting you to a point
where you don’t have to work -- at least not full time and not if
you don’t want to. So would you still need the designer clothes,
flashy car, and regular table at that high-end restaurant if you
weren’t trying to impress clients? This is your carrot -- being
able to let go of UNNECESSARY expenses because you don’t have to
work anymore.
WHERE DO YOU WANT TO BE?
Now here’s the fun part -- figuring out what you need to do to reach
your financial goals! As Joe and Vicki point out, there are two
steps you can take to improve your financial situation. The first
is to MAXIMIZE YOUR INCOME -- while you are still working, you should
be earning as much as you possibly can. So look for ways to increase
your salary, hourly rate, or commission. Can you request a raise?
Switch companies? Hike your consulting fees? Can you do any additional
work on the side that will bring in additional income? Try to squeeze
every penny out of your existing work and untapped talents that
you can.
The second step, of course, is to MINIMIZE YOUR SPENDING. The best
way to do this is to track every penny you spend and ask yourself
the three previous questions about each expenditure. After awhile,
you will begin to recognize spending patterns that are counter to
your goals and values -- purchases that merely eat up your money
without giving you a commensurate benefit.
As you are working to increase your income and decrease your expenses,
track your progress on a LINE GRAPH. One line will represent your
TOTAL SPENDING for the month, another will chart your TOTAL INCOME.
At first, your income may be way down at the bottom of your graph,
while your expenses soar near the top. But each month, as you find
ways to improve your financial situation, these lines will begin
to move toward each other. At some point -- when you begin living
exactly at your means -- they will CONVERGE. But your goal is to
have the expense line dip below the income line. At that point,
you are no longer spending every penny you make and you have some
left over for investing, saving, or simply not working -- whatever
you choose. This is the point when you have regained control of
not only your finances, but your destiny!
Ramona
Creel is the founder of OnlineOrganizing.com
-- offering "a world of organizing solutions!"
Visit OnlineOrganizing.com
for organizing products, free tips, a speakers bureau -- and even
get a referral for a Professional Organizer near you. And if you
are interested in becoming a Professional Organizer, we have all
the tools you need to succeed. (Copyright 2000, Ramona Creel)
