Your Money Or Your Life: The Full Archive

Readers, here's a complete archive with links to every one of the posts on our series on Your Money Or Your Life.

Thanks as always for reading, and apologies in advance as I take a break from posting for the next few weeks. I'll be back with some new articles here at Casual Kitchen shortly.

And finally, I'd be truly grateful if you would share this series with anyone who you think might benefit from it. Thank you!
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A Reprise of Your Money Or Your Life

Intro, Prologue and Preliminaries

Chapter 1: The Money Trap

Chapter 2, Part 1: Calculating Your Real Hourly Wage

Chapter 2, Part 2: Keeping Your Daily Money Log

Chapter 3: Where Is It All Going?

Chapter 4: Answering The Three Transformative Questions

Interlude: What We've Done So Far

Chapter 5: Your Wall Chart

Chapter 6: Valuing Your Life Energy By Minimizing Spending

Chapter 7: Redefining Work

Chapter 8: The Crossover Point

Chapter 9, Part 1: The Fatal Problem with Chapter 9

Chapter 9, Part 2: What To Do With Your Money: Alternatives to Treasury Bonds

Chapter 9, Part 3: Capital, Cushion and Cache

Becoming Sophisticated Investor: Six Steps

The Official "Your Money Or Your Life" Reading List

Your Money Or Your Life: The Ultimate, Final Review

Your Money Or Your Life: The Ultimate, Final Review

Readers! This is the final installment of our in-depth, chapter-by-chapter analysis of You can buy YMOYL here, and you can find the first post in the series here.

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Consider this hypothetical situation: What if you could easily surmount all your current financial challenges--and begin a surprisingly rapid journey towards financial independence--if you agreed to do just two things:

1) Carefully read a book and execute nine simple steps of financial awareness.
2) Spend 2-3 minutes each day tracking your spending, and 5-10 minutes each month putting some marks on a chart.

Would you then do these two things? Would most people do these things?

I can't predict what you (or any specific reader) will do, but I can speak to the average person's general tendencies. And those tendencies are not good. My anecdotal experience suggests that less than half of the readers who pick up a copy of Your Money Or Your Life will actually do all the steps. A meaningful percentage won't do any of the steps. Sad, but true.

Then again, I didn't write this series for the average person. I didn't write it for someone who would pick up one of the most important personal finance books of all time and not bother to follow the advice in it.

On the contrary, I wrote this series for readers with a sincere desire to get on top of their financial challenges, who have an anti-excuse mentality, and who are willing to identify and overcome any limiting beliefs and mental blocks standing in their way.

These readers will choose a mindset of financial awareness and consciousness. If they feel a bit little silly tracking expenses or calculating their real hourly wage, they quickly get over themselves. And they make sincere efforts to apply tips and advice, rather than concocting phony reasons why that advice can't work for them. Most importantly, they recognize and stop all ego-defending behavior, because they understand that our egos often make psychologically convenient rationalizations at the expense of our financial health.

To those of you willing to dedicate your attention to this book, who put time and effort into executing each of the nine steps, and who are willing to go beyond the book and read most (or preferably all) of my Post-YMOYL reading list, I offer you a solemn promise: you will all become rich--in the best and broadest sense of the word. And it will happen sooner than you think.

More importantly, you will have profoundly rethought the entire nature of personal fulfillment. I sincerely hope by now that you realize this book is about more--much more--than just money.

I've said this before and I'll say it again. People pay thousands of dollars--even tens of thousands of dollars--on financial workshops, on debt counselling and on financial planning fees to learn a fraction of the things you learned from a ten dollar book. From the bottom of my heart, I congratulate you for what you've done.

Now get back to your Wall Chart!

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A Postscript
I'd like to offer readers a grateful thank you for indulging me over the course of this long series. Correction: over the course of this preposterously long series.

It was by far the most challenging thing I've ever done here at CK--partly because I wrote everything on short deadlines, partly because it's a new and different subject for me, and partly because there's a whole lot to say about all of the various issues that arise in the world of personal finance.

When people discuss money, spending, saving and investing, all sorts of emotions come into play, both above and below the conscious level. That's why these posts often delved into psychology, limiting beliefs, self-fulfilling prophesies, and our unending battles with our egos (an aside: for me as a writer, this was one of the most interesting and challenging aspects of this series). And of course there was also plenty to say about the various day-to-day mechanics of managing and executing each of Your Money or Your Life's various steps.

That's why these posts were long, some well over 2,000 words. Once you add everything up, the series in total easily exceeded 25,000 words. And this isn't exactly easy reading: some of these posts are densely written, many contain difficult and challenging subjects, and a few will probably make readers downright angry and defensive.

In other words, this is one of the most ambitious writing projects I've ever taken on. And at the risk of sounding like an arrogant douche, I'm really proud of it. There are a whole lot of insights and information here that you simply won't find anywhere else in the world of personal finance.

One last thought, a humbling one, about the readership and pageview patterns of the YMOYL series. Normally when a new post goes live here at Casual Kitchen, there's a burst of pageviews on day one and day two after publication, followed by a gradual decline. By now, readers here know pretty much what to expect with my editorial schedule: a post every Tuesday, a Weekly Links post every Friday and--once in a while--a bonus post some other day during the week.

But the YMOYL posts had a completely different readership pattern. The pageviews were much lower in the first few days after publication, running at less than half my normal level. Sometimes way less than half.

In fact, in the fourth or fifth week of this series I was really getting depressed with the entire project. I was spending mountains of time pounding out these posts each week, but as far as I could tell, nobody seemed to care. [PS: A special and gigantic thanks to Laura for bucking me up during those discouraging weeks with an always-well-timed "Keep writing Daniel, your stuff is good. Keep putting it out there."]

Well, it turned out that these posts just had a delayed readership pattern, and in the three or four weeks following publication, pageviews began growing dramatically. Perhaps readers were saving the posts for later (especially the longer, denser posts), or perhaps readers needed to get their hands on a copy of the book first before they could get started. Whatever the reason, I'm thankful so many readers took interest.

As always, keep those comments, emails and tweets coming. And if you have any lingering questions, issues, complaints or subjects you'd like to see addressed, I want to hear about it! Once again, I'm profoundly grateful to my readers.

One final, final, FINAL word: Our in-depth series on Your Money Or Your Life attracted a ton of new readers, but I feel like this post series is a powerful resource that should get in front of still more people. I'd be truly grateful if you would link to this series, or if you would share it with anyone who you believe might benefit from reading it. Thank you!

Coming Up: Your Money Or Your Life: The Full Archive





How can I support Casual Kitchen?
If you enjoy reading Casual Kitchen, tell a friend and spread the word! You can also support me by purchasing items from Amazon.com via links on this site, or by linking to me or subscribing to my RSS feed. Finally, you can consider submitting this article, or any other article you particularly enjoyed here, to bookmarking sites like del.icio.us, digg or stumbleupon. Thank you for your support!

The Official "Your Money Or Your Life" Reading List

We're almost done with our series on the book Your Money Or Your Life, just a couple of posts to go. Join us! You can buy YMOYL here, and you can find the first post in the series here.

We'll return to our more typical food and health-related content later in February. As always, thank you, readers, for your time and attention!


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Readers, this reading list contains two sections. Part 1 contains a two-part list of what I consider required reading for anyone interested in becoming a more knowledgeable investor. (And if you closely read every investing book below, you'll be better educated than the majority of investment professionals on Wall Street. Don't think for a minute that I'm joking.) Note also, I've added and subtracted a book or two from this list since we last ran this series five years ago!

Part 2 is a bonus reading list based on the philosophies of Your Money or Your Life. It's for readers seeking additional ideas and strategies for living a simpler, happier and less consumerist life.

PART 1: Recommended investing books:

The Investor's Manifesto by William J. Bernstein
Common Sense on Mutual Funds by Jack Bogle
Stocks for the Long Run by Jeremy Siegel
One Up On Wall Street by Peter Lynch
Real Money: Sane Investing in an Insane World by Jim Cramer
The Dhandho Investor by Mohnish Pabrai

For intermediate/advanced investors:

The Essays of Warren Buffett (free, public domain PDF)
Common Stocks and Uncommon Profits by Philip Fisher
The Intelligent Investor by Benjamin Graham


PART 2: Executing the strategies of YMOYL... and going beyond:

Early Retirement Extreme by Jacob Lund Fisker
How to Retire Happy, Wild, and Free by Ernie Zelinski
The Complete Tightwad Gazette by Amy Dacyczyn
Getting a Life: Strategies for Simple Living Based on "Your Money or Your Life" by Jacqueline Blix and David Heitmiller

Anti-consumerism and simple living:

Simple Living: One Couple's Search for a Better Life by Wanda Urbanska
Work Less, Live More: The Way to Semi-Retirement by Bob Clyatt
Affluenza by John DeGraaf and Thomas Naylor
Voluntary Simplicity by Duane Elgin
Radical Simplicity by Jim Merkel
The Overspent American by Juliet Schor
Living Simply with Children by Marie Sherlock


A final (self-promotional) word: Let me mention once more that one of the easiest ways you can support Casual Kitchen is by making any (or preferably all!) of your Amazon purchases via affiliate links on this site. The price you pay at Amazon is the same, but if you use the links here at CK, I receive a modest commission based on the cost of your purchases. In other words, if you're already planning on a purchase at Amazon, consider stopping here first and then going to Amazon's site via the affiliate links here. This is a great way to support Casual Kitchen at zero incremental cost to you.

And if you know someone who might benefit from one or more of these books, consider making a gift purchase. Help someone get on top of their financial game while supporting my work here!

Up Next: YMOYL: The Ultimate, Final Review


How can I support Casual Kitchen?
If you enjoy reading Casual Kitchen, tell a friend and spread the word! You can also support me by purchasing items from Amazon.com via links on this site, or by linking to me or subscribing to my RSS feed. Finally, you can consider submitting this article, or any other article you particularly enjoyed here, to bookmarking sites like del.icio.us, digg or stumbleupon. Thank you for your support!

Becoming a Sophisticated Investor: Six Steps

We're almost done with our chapter-by-chapter series on the book Your Money Or Your Life, just a couple of posts to go! You can buy YMOYL here, and you can find the first post in the series here.

We'll return to our more typical food and health-related content later in February.

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Here are six key elements that I believe are absolutely central to becoming a knowledgeable, savvy and sophisticated investor:

1) Understand that the worst lie ever told is "the stock market has a 10 percent average annual return."
Everything about this quote is a lie, including a and the. The days of putting our money into stocks and having it magically double and double and double are gone. The 1990s are over. And the first step towards being a sophisticated investor is to have humility about your investment expectations.

2) Never give your power away to financial advisors, brokers or "experts."
Never allow yourself to be sold investment products by someone else. Instead, choose your own investments, do your own research and have your own reasons.

Note that this doesn't mean a financial advisor can't be useful to you as a source of investment ideas to consider, or as a resource to assist you in properly diversifying your investments. In fact, I've even offered my services on a fee-per-hour basis to help people figure out how to structure their investments and make the most out of their capital. However, you are still responsible for your own money. Know enough to measure your advisors, and never put your financial fate into someone else's hands. To borrow a quote from Your Money Or Your Life: you and you alone are responsible for investing your money since no one cares about the outcome more than you.

3) Get your investing costs down. And keep them down.
Know exactly what fees and commissions you pay at all times and seek to minimize them. Shun complex products where the fee structure isn't obvious. And never pay an up-front sales load to buy into a mutual fund. Ever. Instead, find an index fund or exchange traded fund that invests in the same asset class and pocket the difference in fees.

PS: Read at least one or two books by Jack Bogle in order to wrap your mind around the various pitfalls of the mutual fund industry. Start with Common Sense on Mutual Funds.

4) Never, ever reach for yield.
We all want income from our investments. Duh. But please keep in mind an important Wall Street saying: More money has been lost reaching for yield than at the point of a gun. A big part of being a savvy and sophisticated investor is building an understanding of what types of investments should generate what types of yields. Understand what makes a yield attractive, and what makes a yield too good to be true.

5) Don't be greedy or materialistic with investing, just like you shouldn't be greedy or materialistic with your consumption decisions.
Don't presume that you're some secret king who's going to find the next Cisco, Microsoft or Apple. Forget all that. This is simply not an intelligent philosophy of investing, and investors using this "strategy" are on a fast road to lossville.

Instead, keep things simple: find investments that pay you reasonable income in the form of dividends or interest payments, stay diversified, and patiently build your holdings.

6) Stay liquid. Have more cash available than you think you need. At all times.
This means you will never be forced to sell during a down market or when your investments are deeply out of favor. Instead, you'll have the resources to stand there and buy when everyone else is selling in a panic.

Think back to the 2008-2009 market correction. The market gave you tremendous "opportunities" to panic and sell, and if you were insufficiently liquid during this period, you were most likely blown out of the market--right at the bottom. However, if you had plenty of cash at the ready, you were able acquire amazing income-producing investments at incredible discounts.

Final Thoughts
No single blog post can, by itself, make you into a sophisticated investor. You'll have to do a lot more reading, and you'll have to take ownership and responsibility for developing your own expertise. For those readers who are ready to take the next step towards becoming savvy and advanced investors, I'll prepare an investment reading list to assist you. Stay tuned for our next post.

Finally, readers, what would you add to this list? I want to know.


Next: The Official "Your Money Or Your Life" Reading List





How can I support Casual Kitchen?
If you enjoy reading Casual Kitchen, tell a friend and spread the word! You can also support me by purchasing items from Amazon.com via links on this site, or by linking to me or subscribing to my RSS feed. Finally, you can consider submitting this article, or any other article you particularly enjoyed here, to bookmarking sites like del.icio.us, digg or stumbleupon. Thank you for your support!

YMOYL Chapter 9, Part 3: Capital, Cushion and Cache

Reminder! Casual Kitchen is running an in-depth, chapter by chapter review and analysis of the book Your Money Or Your Life throughout the month of January. Join us! You can buy YMOYL here, and you can find the first post in the series here.

We'll return to our more typical food and health-related content later in February. As always, thank you for your time and attention as we re-run this series!


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This week, we'll finally (finally!) tie up the last few loose ends of Chapter 9 with an analysis of Capital, Cushion and Cache. First a quick review:

* Capital is the primary nest egg that you'll use to generate investment income. This income will supplement--and eventually replace--your work income.
* Cushion is a separate account that contains a minimum six month cash reserve.
* Cache is a source of still more investment capital--beyond Capital and Cushion--that provides yet another layer of financial protection.

We've already discussed Capital, so we won't spend time on it here. After all, if you've been diligently following the YMOYL process like you should, then you've been tracking and aggressively adding to your Capital since Chapters 3 and 4.

Cushion
Your Cushion is essentially a garden-variety emergency fund. Everybody should have an emergency fund. This is an elementary concept of personal finance. The question isn't whether to have one, the question is how many months' worth of expenses should I hold?

YMOYL's authors (as well as many personal finance experts) recommend six months. Laura and I keep one full year of expenses in our Cushion. For some, perhaps 18 or even 24 months might be appropriate. You'll have to decide what's right for you given the nature of your work, the reliability of your income, and what resonates with your personal sense of financial safety. I'd argue that six months of expenses is an absolute minimum, nine months is better and--for us, at least--twelve months is optimal.

It's probably best to keep your Cushion completely separate from your regular bank account, especially if you have a tendency to spend money that's too easy to get at. You may even want to set down, in writing, a list of clear and strict rules for when you would use this money. What kinds of emergencies is it for, specifically? Under what circumstances will you tap into this account?

Yes, I know. We've all sworn off gazingus pins by now. Still, it's only sensible to make it extra, extra difficult to spend your Cushion on something it was never intended for.

Finally, think about the tradeoffs you make by having a big versus a small emergency fund. Are you sacrificing money that could be prudently invested in your Capital account, earning passive income? Or is the peace of mind from having twelve (or more) months of cash sitting safely somewhere worth more than a small amount of foregone investment income? As always, it's up to you to decide, and there are no hard and fast rules here. But please remember: most people do not have emergency funds at all. You have a high-class problem just by virtue of the fact that you're deciding how big yours should be.

Cache
Now, onto Cache: First, a caveat: Cache is something you'll focus on much more after you reach the Crossover Point. If you're only just beginning your road to financial independence, don't worry about this concept yet. Just keep your head down, keep managing your Wall Chart and keep making income-generating investments.

Second, the authors do a suckola job describing the concept of Cache--no surprise given all the other problems with Chapter 9. It's almost funny how the book briefly introduces the idea on page 271, then drops it, and then randomly picks it up again twenty pages later. It's a sad oversight, because the concept is extremely useful.

Hmmm. I guess that's why I'm writing this series.

Here's how to think about Cache. Imagine yourself in your post-Crossover Point life. You're not working (or at least you're in a financial position where you don't need to work), and you're funding your expenses with income-generating investments in your Capital account. Sounds pretty good, doesn't it?

Well, unless you spontaneously forget all the principles of YMOYL, you'll still be living within your means after you've reached the Crossover Point. You'll still want to be sure your spending decisions are appropriate expenditures of your life energy.

Moreover, once you leave full time work, your monthly expenses are likely to go lower--possibly much lower. Remember all of those disturbingly high job-related costs you listed back in Chapter 2? Buh-bye.

There's more: it's highly plausible that you'll earn some side income from time to time. Maybe you'll start up a high-traffic food blog that earns you a few hundred bucks a month (*cough*). Maybe you'll do some consulting in your spare time for a local business. Maybe you'll learn a new profession and take on some part-time work just for fun.

Finally, you might on occasion receive windfalls like a bigger-than-expected tax refund. Remember, the tax code treats most forms of passive income far more favorably than regular salary income, so your post-Crossover Point tax expenses are likely to decline too.

All of this suggests you'll most likely continue to save and accumulate money even after you've stopped working. This money's gonna add up, and it's going to generate still more passive income. That's your Cache. That's why you don't need to worry unnecessarily about longer term issues like inflation, and that's how you'll protect yourself from any unexpected big-ticket expenses. You've inoculated yourself against these risks with extra Cache.

The bottom line: You are likely to have higher income and lower expenses than you expect once you reach your Crossover Point. Simply add that money to your financial resources, put it to work, and you'll have yet another layer of financial security.

Structuring your Capital, Cushion and Cache accounts
I'll close this week's post with some thoughts on different ways you can structure your Capital, Cushion and Cache accounts. As with most things, simple tends to be superior, so with that in mind I'll share a laughably simple model you can consider for your finances:

* A checking account to pay monthly expenses,
* A savings account to hold your Cushion/Emergency Fund,
* A brokerage account, containing your income-generating Capital,
* A separate brokerage account, where you can put any additional Cache.

I'm often asked what I think about IRAs and 401(k) accounts, or purpose-specific accounts like educational IRAs. My stock response is to tell people to take advantage of the things they want to take advantage of. If your company provides a generous 401(k) match, by all means take it. If you think setting up a separate educational IRA will really help you fund your kids' education, go for it. Do what works.

But my general view is complexity is the enemy. You will have only so much bandwidth to manage so many accounts. So it's probably best to keep things simple: keep a minimum of accounts and try to make the bulk of your income-generating investments in one primary investment account.

One final thought for readers regarding IRAs, Roth IRAs and 401(k)s. Don't get me wrong: these standard retirement account types have their advantages. However, recognize that by following this book, you are embracing a highly non-standard approach towards retirement. Depending on your age and how diligently you follow the YMOYL process, you may very well reach your Crossover Point years before you can enjoy penalty-free access to assets sitting in these standard retirement accounts.

Keep this in the front of your mind as you allocate and invest your Capital.

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Appendix/Side Thoughts:
1) On the concept of enough: Readers, what is "enough" to you? I've seen estimates that Joe Dominguez reached his personal Crossover Point on a $300,000 investment portfolio. For him, three hundred grand was "enough." And if any of you have ever read Early Retirement Extreme (I've periodically linked to it in my Friday Links posts), that blog's author, Jacob, reached his crossover point on just $150,000.

Jacob's and Joe's ideas of "enough" may seem laughably low to you. But then again, I know people from my former career who don't feel they have "enough" even though they're sitting on nest eggs in the double-digit millions. If anything, this is just proof that the principles of Your Money Or Your Life can be effective across a truly vast range of income and net worth levels. But the principles will only work if you're willing to make them work.

2) The various personal anecdotes in Chapter 9 are worth rereading: Every reader will find something to identify with, or an example to learn from, in each of the anecdotes in the Chapter 9. Everyone has different ways of processing the emotions, risks and personal issues that emerge at each of the various stages of enlightenment with money.

"Rosemary," for example, recognized that she's ultra-conservative with money, so she chose to keep extra Cushion in place to assuage her concerns. "Clair and Mike" are going to have a real problem when their existing Treasury bonds mature--they will face the same reinvestment risk we discussed two posts ago. "Carl" postponed leaving work until he learned to be more self-sufficient around the home. After all, he didn't want to waste life energy paying others for things he could do himself. "Ted and Martha" created an itemized list of every long-term liability they could think of and inoculated each expense with long term bond investments. "Alan and Tricia" took the most idiosyncratic path of all: they returned to work and then became FI all over again. And so on. There's an unlimited number of ways to walk the path of YMOYL.

3) For further reading on Cushion and Cache: Let me recommend yet another book I found extremely useful (despite its get-rich-quick-sounding title): The Buckets of Money Retirement Solution by Ray Lucia. This book teaches a surprisingly elegant system of setting out various buckets (or Caches, if you will) of capital to meet all of your financial needs. Very much worth a read.

4) Yes-butting and you: Note the quote on page 277 that says Watch out for those "Yes, but..." conversations in your head. Oh, how that warms my heart. I think I can say with total confidence that no one reading this series will allow themselves to get sucked into a yes-but conversation. Not on my watch.

5) Finally, some gratitude: It's vaguely embarrassing that it took me three posts to cover Chapter 9. But there's a lot to discuss here, including plenty of material that should be in this chapter but regrettably isn't. I'm grateful for my regular readers' patience with this series, and even more grateful to see so many new readers visiting these posts here at CK... despite their length. As always, thank you for your attention and interest.

Coming Up! Becoming a Sophisticated Investor: Six Steps








How can I support Casual Kitchen?
If you enjoy reading Casual Kitchen, tell a friend and spread the word! You can also support me by purchasing items from Amazon.com via links on this site, or by linking to me or subscribing to my RSS feed. Finally, you can consider submitting this article, or any other article you particularly enjoyed here, to bookmarking sites like del.icio.us, digg or stumbleupon. Thank you for your support!