YMOYL Chapter 6: Valuing Your Life Energy By Minimizing Spending

Reminder for new readers: This is an in-depth, chapter by chapter review and analysis of the book Your Money Or Your Life that we're running throughout the month of January. Join us! You can buy YMOYL here, and you can find the first post in the series here.

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Meet your needs differently.

This is the central idea of Chapter 6 and one of the most important ideas in the entire book.

Are you the kind of person who's interested in truly creative solutions for managing your expenses? Can you determine honestly and objectively whether a purchase is a real need, or if that "need" is based on mere social conditioning or status seeking?

Can you look beyond that thing you think you want, and instead seek to satisfy the core need beneath that want? Do you even have to buy something to satisfy that core need? Very few of our needs are material.

Sincere YMOYL readers will systematically ask these questions about all of their expenses with one goal in mind: to get your costs down--way down--so you can accelerate your progress toward financial independence.

If at this point you're asking "How? How do I get my costs down?" that's for you to decide, and it depends on how creatively you choose to address this challenge. Are you the kind of person who demands money-saving tips to come to you, but then shoots most of them down? Or do you actively choose to seek out ideas to save money--and actually apply them? After all, tips and ideas are everywhere: the internet is filled with personal finance blogs offering advice and solutions on how to save more.

I think that might be one of the reasons the authors radically revised this chapter in the current edition. In older editions, Chapter 6 contained a huge 23-page section called "101 Sure Ways To Save Money" that was loaded with all kinds of specific money-saving tips. In the 2008 edition, they cut out that section and refocused the chapter on more thematic savings advice. After all, YMOYL is less about offering specific individualized advice and more about helping readers think differently. I'm guessing the authors would prefer to create enterprising, solution-minded readers who will seek out their own answers to getting their costs down. Teach a man to fish, in other words. It's implied that readers must seek out their own solutions for their own specific needs.

That one tip that sets you off
Of course, any list of ideas for saving money--it doesn't matter whether they're in "specific tip" form or "general theme" form--will have both hits and misses for any given reader. Some will resonate with you, some won't. Some will sound smart, some will sound stupid.

And some ideas will make some readers so angry that they'll literally give up on the book.

Laura and I have an acquaintance who literally quit reading YMOYL right here, in this chapter. Why? Because she stumbled onto a tip to cut your own hair, and for whatever reason, that tip literally set her off. She even wrote an angry email to me about it, saying she couldn't believe this book would suggest this--and no WAY was she ever, ever going to cut her own hair.

So she put the book down and stopped reading.

There are two layers of tragedy here. First (and worst) is how her reaction to a tiny (and irrelevant) part of the book caused her to reject the entire body of work. It shouldn't surprise readers that this acquaintance has made zero financial progress since. Which raises a personal question I'd like to ask readers: Do you really seek solutions as you work on your financial situation? Or are you waiting, just waiting, for the first sentence that pisses you off and gives you a "reason" to throw the book across the room?

The second layer of tragedy was that our acquaintance never attempted to explore her visceral reaction. Why did she put down the book? What was it about this specific tip that made her throw the baby out with the bathwater, that triggered her to spontaneously reject an entire ecology of insights on how to improve one's financial situation?

When you read something that makes you out-of-proportion mad (and money-related topics tend to do this to lots of us) it usually means you're scratching at some important inner truths. That trigger, that feeling, that emotion... there's almost always something there, if you're willing to explore it. There might be an insight into a problem, or a solution to a mental block, or you might have uncovered an unconscious mental script in your mind that's somehow holding you back. Dig, and find out what's going on there. I'm betting that mental script impacts other areas of your life too, and you'll be glad you uncovered it.

On impressing others: Let's spend a moment on the theme of impressing people, because it also has two layers: an obvious layer and a not-so-obvious layer.

As the book says, if you stop trying to impress other people, you will save thousands, perhaps millions, of dollars. Obvious. And yet when I look back on my Wall Street career, I can think of many, many well-educated, thoughtful and extremely bright people who spent enormous amounts of money impressing others.

Why? Well, in most cases they somehow managed to convince themselves they weren't trying to impress other people--while they bought stuff to impress other people.

Which takes us to the not-so-obvious part. Your ego will always try to convince you that you never try to impress people. After all, that's something only an insecure person would do. You (it will reassuringly tell you) being the confident and highly self-aware person that you are, would never do anything that shallow. Right? Right?? Yep, that's your ego talking.

Self-aware Porsche owner (photo by Michael Goldsman).

Your ego, which understandably wants you to have a good self-image, will therefore work very hard to convince you that you need that gazingus pin. Or Lamborghini. Remember this the next time you try and tell yourself you're not trying to impress others.

A final word before we get to the Appendix/Side Thoughts. I'd love to hear your creative and unusual ideas to save money as you work through this book. I'm looking for all kinds of ideas, because you never know what might help--or set off!--another reader who reads this series in the future. It could be anything: how you eliminated your car and started using Zipcar, ways you've creatively reduced your housing costs, creative bartering or job-exchanging arrangements with friends or neighbors, how you rethought family entertainment, baby-sitting, how you used Couchsurfing on your last vacation, and so on.

If you've got a creative idea from your life that's lowered your expenses and helped you meet your needs differently, share it in the comments!

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Appendix/Side Thoughts:
1) Finding "quick wins" for saving money: There's no reason getting your costs down has to be unnecessarily difficult, so start by looking for steps you can take quickly and efficiently. Better yet, look for steps that serve you in multiple ways. A few examples: reducing the amount of meat in your diet, and you'll improve your health and save money on food. Using an inexpensive bicycle can help you save on gas, commuting costs, gym memberships and future medical bills. Buying a smaller home will save you tens (or hey, hundreds) of thousands of dollars on mortgage costs, energy costs and taxes. And so on.

2) On insurance: I could easily write a full post on insurance [Edit: hey, I did write a full post on insurance!], but for now, let me just make this point: As you get out of debt and on your way towards financial independence, you will find you don't need the insurance you thought you did. Once you have several thousand--or even tens of thousands--of dollars sitting in the bank, you will be able to significantly increase your deductibles on things like auto and health insurance. This saves you hundreds or even thousands of dollars of per year in insurance premiums.

You'll also increasingly realize you don't even need to insure for many types of losses. Now that you're flush with liquidity--thanks to all the money you're regularly saving--what used to be a "catastrophic" loss simply isn't that catastrophic anymore. (PS: For more on this, I recommend Charles Givens' excellent books Wealth Without Risk and More Wealth Without Risk.)

3) Apply the "wear it out" concept to big-ticket items and save boatloads of money: Wearing a shirt for 30% longer might save you a few bucks, which is nice but not meaningful. But driving a car 30% longer (or heck, 100% longer) can drive gigantic financial results. Get your big ticket decisions done right and the smaller expenses don't matter so much.

4) Impulse purchases: According to the book, half of our purchases are spur of the moment (PS: I've found this clearly holds true with grocery shopping). This is awesome, because it opens up an enormous savings opportunity: by applying just a few minor techniques to minimize impulse-related purchases, you can slash your spending in half. This tip is a lot less obvious than it sounds.

5) Cost of children: There's a consensus out there that child-rearing simply has to be insanely expensive, which is one of the reasons behind this well-known joke about kids:

Q: How much money does it take to raise children?
A: All of it.

And yet if there's one thing my years on Wall Street taught me, it's that the consensus is often wrong. Often grievously wrong. With that in mind, I found it particularly interesting to read (on page 189) about how one couple applied the Fulfillment Curve to save tons of money on gift-giving for their children. Granted, Laura and I don't have kids, so I'm clearly out of my depth here--but I'd love to hear readers' views and ideas on creative ways to save money when raising children. And don't tell me there's no solutions out there.

6) Gift-giving: One more thought on gifts: one of the greatest days of my life was when my family changed our holiday gift-giving routine from "everybody buys everybody a gift" to "we put all our names in a hat and each person draws one name."

Instantly, Christmas became one tenth as expensive and a million times less stressful. Recently, we took it one step further and dispensed with gifts altogether. Hey, the holidays aren't about gifts, they're about getting together with loved ones. Why not focus on that? What does your family do about gift-giving during holiday time?

7) On environmental stewardship and saving money: It goes without saying that the less you can consume, the better it is for the environment. From page 193:

Anything you buy and don't use, anything you throw away, anything you consume and don't enjoy is money down the drain, wasting your life energy and wasting the finite resources of the planet.

That said, don't let your concern for the environment make you into an easy mark for marketers. Keep in mind that "green" is slowly but surely being twisted into another aspirational market segment designed to persuade you to spend more money. Don't be deceived: Should I buy a new one? is the wrong question. Do I need to buy this at all? is the correct question to ask.

8) "I'm enoughing" I love this expression and I'm going to start using it. Honey, I'm not going to buy that Fabergé Egg after all. I'm enoughing.

9) Lateral Thinking: One more book recommendation: Lateral Thinking: Creativity Step by Step by Edward De Bono. This book has heavily influenced my thinking on brainstorming, idea generation and looking at problems in different ways. Most of the ideas I've dreamed up on how to "meet my needs differently" have come from using principles in De Bono's book.


Next Week: Chapter 7: Redefining Work











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 5: Your Wall Chart

Reminder for new readers: This is an in-depth, chapter by chapter review and analysis of the book Your Money Or Your Life that we're running throughout the month of January. Join us! You can buy YMOYL here, and you can find the first post in the series here.

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Chapter 5 gives us yet another easy exercise that backdoors readers into a state of higher financial consciousness: the Wall Chart. Or the Closet Chart, depending on how much of a financial exhibitionist you are.

The Wall Chart is just a simple, graphical representation of your financial status. And mark my words: if you maintain it religiously, it will be a representation of stunning improvement in your financial status. Just wait a couple of years. You'll see.

The thing is, a weird things happens when you maintain a Wall Chart. Your expenses just... decline. From the book:

Those who get past the three-month hump will find their expenses leveling out at about 20 percent less than where they started--painlessly. These people report no feelings of deprivation, no struggling to keep a budget, just a natural decline. Knowing that you are not getting satisfaction proportional to the expenditure of life energy in a given subcategory of spending generates an automatic, self-protective reversal of your spending habits.

When you consciously consider your spending decisions--and when you know you're going to record them on a chart--all of your pointless, valueless spending simply goes out the window. You may see occasional spikes and month-to-month noise in your spending, but the overall trend of your expenses will be in one direction. Down.

What happens next, though, is far more powerful. All of that saved money can now go towards paying down debt (which lowers your expenses still more, see below) or towards funding income-generating investments (which raises your income, enabling still more savings). We'll cover this in future chapters, but for now, just trust the process and watch it work.

Imagine if you could transport yourself two or three years into the future. Imagine if you could know now what your Wall Chart will look like then. This is why you shouldn't laugh incredulously when our authors make the following statement:

As outrageous as this may sound at the moment, you should probably allow enough space at the top [of your chart] for your income to double.

Yes, it will take time to transform your relationship with money, and it won't be easy. But it will happen. Just keep recording the information on your Wall Chart and stay patient.

Your wall chart as regular reminder, feedback system and source of inspiration: Don't underestimate the value of having your chart visible to you every day. That's why it's an effective tool. It's not like you can cover your eyes and pretend it's not there.

Once again, this is how YMOYL makes ignorance of your now-improving financial situation literally impossible. It gives you consistent feedback so you can make adjustments. You'll see the impact of your actions right there in black and white (or whatever colors you're using on your chart). And it's hard to cheat the process when you're constantly facing such a visible and tangible reminder of your current (and improving) fiscal status.

On unusual expenses: The book gives you the option to take large, one-time expenses and pro-rate them over the course of a year. We don't do this. When an expense occurs, we pay it and book it. We don't prorate anything. It seems like every month has an unusual expense anyway, so this is the cleanest, simplest process for us. Readers, what are your key unusual expenses and how do you account for them?

Regarding different types of income: We're building our wall chart as I write this post, and we are planning to break out our income into two categories: active income (Laura's paycheck from part time work and my writing income) and passive income (our dividend and interest income from investments). [Edit: Obviously I originally wrote this in 2012. Today, after nearly five years of tracking our numbers this way I can confidently say this way of categorizing income works, and it works well.] We'll go much deeper into the discussion of investment income later in YMOYL.

Revealing your wall chart to others? Readers, would you ever show your personal wall chart to others? Would you leave it on your wall where friends and neighbors could see it? Would you share it as part of a YMOYL support group? The quote from the book about "Ivy" is instructive:

Her income was just her income. She could tell it to someone as easily as she could tell someone the color of her living room couch.

I mean, can you imagine having that wall chart out in your living room the next time you have a dinner party? Laura and I--well, we just couldn't. And this is in spite of the fact that I'm relatively open and candid about money. Part of the problem is when you bring your money situation out into the open, it's not just about the baggage you have about money, it's about the baggage others have about money. Readers, where do you stand on this?

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Appendix/Side Thoughts:
1) On feelings of deprivation: Recall this quote from above:

Those who get past the three-month hump will find their expenses leveling out at about 20 percent less than where they started--painlessly. These people report no feelings of deprivation, no struggling to keep a budget, just a natural decline.

Okay. You can save 20% of your expenses at the pitifully small cost of a minute or two of observation and thought per day--and even better, you won't feel deprived. But just think for a minute. What about those feelings of deprivation you used to feel when you attempted to cut your spending in years past? Why did you experience them then--but not now? What was the basis for those feelings, really?

2) "That gap has a name. It's called savings." This quote, on the middle of page 152, literally made us laugh out loud. We live in a culture where so few people know what it's like to save money--where so few people know what savings actually is--that the authors felt it necessary to define the word for readers.

3) The value of getting out of debt and accumulating savings: One significant source of savings for many readers will be debt costs. The expense reductions you'll achieve simply by embracing YMOYL's process will free up significant cash, and you can use that cash to aggressively pay down all debts. Obviously, paying down your debts drives your costs down still further, and that merely frees up still more excess cash flow.

The critical insight here is that most people just obediently make their payments when they're told, and they have no idea how much their various debts actually cost them. If they did know, they'd instantly recognize that those debts are misaligned with their goals and principles. Do you obediently do what you're told? Or do you do what's aligned with your goals?

4) On rethinking fulfillment: Haven't you always wanted to be less materialistic? Less shallow? Less caught up in owning stuff and advertising your superiority through the things you own? Pages 143-147 contain a ton of insights on these concepts, including this gem of a quote:

Now that the link between spending money and getting fulfillment is in place, a gazingus pin no longer automatically means satisfaction--quite the opposite.

Many of us used to define "giving up your gazingus pins" as denying yourself, being cheap, or as a form of punishment for wayward financial behavior. Now you know differently: there's nothing to give up. You're actually avoiding a waste of time and life energy. After reframing gazingus pin-like purchases, it's a lot easier to realize what they really are: an exchange of future hours of work and life energy for a brief flash of faux-fulfillment now. That's a crappy trade.

Not buying a gazingus pin now becomes a source of fulfillment because you yourself have determined that gazingus pins don't bring you fulfillment.

Now, you can see more clearly how you can both increase your fulfillment and spend less money. Now, you've broken the last of your robotic consumption patterns, and your spending is now in alignment with your true goals. Congratulations.


Next: Chapter 6: Valuing Your Life Energy By Minimizing Spending





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: Interlude: What We've Done So Far

Reminder for new readers: This is an in-depth, chapter by chapter review and analysis of the book Your Money Or Your Life that we're running throughout the month of January. Join us! You can buy YMOYL here, and you can find the first post in the series here.

Finally, if you're enjoying and getting value from this series, spread the word! Share your thoughts on YMOYL on your site, or link back to the various posts here. As always, I'm grateful for your support.

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In this week's installment of our in-depth review of Your Money Or Your Life, we're going to take a quick look back. We may have read only four chapters and 136 pages, but believe it or not, we've covered a ton of ground.

At this point, I wonder if readers see the same thing I see: this innocent little book is way sneakier than it appears.

Here's how it ropes you in. First, in the Prologue, it asks all sorts of provocative questions about modern consumerist life. Of course, anybody picking up the book will drawn in by that. Then, in Chapter 1, the book has you do the easy task of calculating your lifetime income--a sneakily encouraging exercise that shows readers they've actually earned quite a bit more money than they thought.

Next, in Chapter 2, you do another easy and seemingly innocent task: calculating your true hourly wage. The thing is, once you arrive at your number, you have little choice but to accept that your workaday life--in terms of both money and time--is far more costly than you thought.

What's next? In the second half of Chapter 2, you're assigned the job of tracking every penny you spend. This is the first exercise that sounds suspiciously like real work, and some readers may bump up against internal resistance (or even an intransigent spouse) at this point. But in reality, this step is just as easy as any of the others. Fast forward a few weeks, and you've tracked a month's worth of expenses before you know what hit you.

Hmmm. Now that all your spending information is sitting right there in front of you, it's no big deal to categorize it and organize it a little, right? Well, that's Chapter 3. And then, you take just one more teensy incremental step in Chapter 4 and put a few plus signs and minus signs next to your categories. Easy.

It was at this exact point of the book that Laura and I realized we'd been back-doored into a state of higher financial consciousness. In four chapters and a few simple exercises, this book literally vaporizes your ignorance about what's happening with your money. Four chapters.

Even more importantly, you're now entirely steeped in both the language and the perceptual framework of YMOYL. The dumb things that you used to waste money on are now "gazingus pins." Money isn't money anymore: it's now "life energy." You're now carefully measuring your expenses--and more importantly, objectively considering the value those expenses bring you.

By the time you've hit Chapter 4, you've had several irreversible flashes of financial insight. You simply can't go back. Whether you intended it or not, you now have a sophisticated awareness about your spending and your income--and how both fit in with your values.

Sometimes I think about what this book helps readers do in a mere 136 pages and I simply can't believe it.

One final thought: People pay thousands of dollars for debt counseling, financial consulting, therapy, classes and workshops to learn the things that you now know. And you're not even halfway through the book. Well done.


Next in the series: Chapter 5: Your Wall Chart





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 4: Answering The Three Transformative Questions

A quick programming note for new readers: This is an in-depth, chapter by chapter review and analysis of the book Your Money Or Your Life. If you haven't yet read the book, you're going to need to read along to know what I'm talking about. Join us! You can buy YMOYL here, and you can find the first post in the series here.

Finally, if you're enjoying and getting value from this series, spread the word! Share your thoughts on YMOYL on your site, or link back to the various posts here. As always, I'm grateful for your support.

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At last, a chapter of YMOYL that has us do some real work. In Chapter 4, we'll take a careful look at the spending and financial information we've gathered so far, and we'll apply some sincere and ego-free value judgments to it.

A quick review of the process: First, take the spending categories and subcategories you created in Chapter 3. Add up the money spent on each. Then calculate the hours of life energy spent, by taking the total cost of each category and dividing it by your real hourly wage. Not too complicated, right?

The next step, however, is the most involved--and by far the most important. We're going to evaluate each of our spending categories with the following three questions:

1) Did I receive fulfillment and value in proportion to life energy spent?
2) Is this life energy expenditure in alignment with my values and purpose?
3) How might this expenditure change if I didn't have to work for a living?


Under each of your spending categories, then, you'll assign a box for each of these questions, and in that box you'll put a plus sign, a minus sign or a zero.

For example, with question #1, a plus sign in a given category means you did receive fulfillment in proportion to life energy spent--in fact, you received so much fulfillment that you'd consider increasing spending on this category. A minus sign, however, would indicate you didn't feel your spending in this category was worth the life energy cost. With question #2, a zero means you're okay with the match between that spending category and your values, but a minus sign means that this spending category doesn't match your values, and should thus be reduced. And so on.

There's a basic example of this exercise on pages 110-111, and then some personalized and more complex examples on pages 127-130. Laura and I found these example charts to be extremely useful--they helped us organize our spending categories, and they gave us good ideas for how to organize the format of our chart.

Remember, this is your tool to use as you see fit. You can take it to a high degree of detail and evaluate literally every single spending event with the three questions, or you can be less detailed and just focus on broader spending categories. Your choice. Do what helps you be more conscious about your spending and your values.

The only specific recommendation I'll make to readers is this: don't blow off this step. Chapter 4 in general--and the three questions in particular--is where the proverbial rubber meets the road in YMOYL. It's a powerful framework that helps you see where your spending matches, or doesn't match, your goals. If you want to get maximum value from this book, don't skip any exercises. But most of all, don't skip this one.

Finally, if you see a lot of minus signs on your chart, don't be upset with yourself. Be grateful. You're simply making a long-overdue, honest analysis of how you spend your life energy.

Which takes us to the last and most important step: Use those minus signs to start making adjustments. Think about where you can change your spending so that you can replace those minus signs with 0s or +1s. It's time to start allocating your life energy in the way you choose, and make sure your purchases and your behavior are truly conscious and consistent with your goals.

Readers, when you completed this exercise, what did you see? Were you happy or unhappy with the distribution of plus signs and minus signs? What adjustments do you plan to make?

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Appendix/Side Thoughts:
1) The most important question: All three of the "transformative questions" are important, but in many ways Question #3 is the most important. Why? Because once you realize how you might increase (or decrease) an expenditure if you weren't working, why not make that change now? Essentially, Question #3 gives you your roadmap for living your ideal life today, rather than at some undetermined point in the future. This is mind-opening stuff. (PS: For more on this subject, I recommend the book A Year to Live by Stephen Levine.)

2) Uh-oh, that pesky ego again: When we're on the verge of great personal insights, our egos tend to push back--hard. People can become hyper-sensitive and even irrational when asked to question the things they've always done and the spending habits they've always borne. Yes, I can see I have a big minus sign under "shoes" but I deserve them. It's my money, and I don't want to deny myself.

But what are you denying yourself, exactly? Are you denying that those minus signs are sitting right there, in black and white, written in your own handwriting? Stop denying, and start reallocating your life energy so it truly meets your needs.

3) "In fact, no one is even listening" Although it's sort of a throw-away phrase on page 112, this quote is an excellent one to re-read if you feel your own ego cropping up in response to a poorly allocated expenditure.

Think about it. When someone else tells us to cut our spending, of course our egos rear up. But no one is telling you to do anything. No one is trying to take your gazingus pins away from you. In fact, no one is even listening. It's just you, alone, seeing with total clarity and finality the misallocation of your own life energy. Now, the real truth starts to become clear: Your gazingus pins are booby prizes.

4) Don't get wrapped around the axle defining fulfillment--let the book show you: In some ways, I think the authors made a mistake by starting off Chapter 4 with all of those questions about dreams and fulfillment. As an example, my blogging colleague Oil and Garlic, who's working through YMOYL on her own blog, got stuck on all the fulfillment questions at the beginning of Chapter 4. So did we.

But it's okay if you don't know exactly what fulfills you right away. Instead, use this chapter as a tool to help figure it out. At the very least, it will direct you away from activities that squander your life energy and lead you away from fulfillment. And at best, you might have the same result Oil and Garlic had: after a few weeks of rumination, she actually did arrive at some compelling goals and dreams. Let the book help you along on your process of self-discovery and you may very well surprise yourself.

5) Giving short shrift to Chapter 4: Here comes another confession. I warned readers above that skipping exercises would cost them both value and insights. Trust me: I know of what I speak. Laura and I gave short shrift to Chapter 4 when we first read YMOYL ten years ago. It was a mistake.

We carefully did the expense tracking as well as the other exercises in the first three chapters of the book. But in this chapter, we dropped the ball setting up our expense categories and applying the three questions. Essentially, we read the chapter, but we didn't do the chapter. It was our loss, and we missed out on some big opportunities for insight.

I'll give a quick example of what I mean by missed insights: Since 2008, I've been retired from full-time work, so I'm now asking Question #3 of myself in an unusually literal way. I'm literally "not working for a living" right now... and I'm finding that I don't have good answers for how my expenditures should change! I would have been much better prepared had I thought through these questions before I had retired--and I missed an opportunity to do so when we read this book for the first time in 2002. It was my mistake and I regret it.

I'm not going to repeat this mistake. This time, we're making a deliberate effort to follow every chapter to the letter.


Next Post: Interlude: A Look Back At What We've Done So Far





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 3: Where Is It All Going?

A quick programming note for new readers: This is an in-depth, chapter by chapter review and analysis of the book Your Money Or Your Life. If you haven't yet read the book, you're going to need to read along to know what I'm talking about. Join us! You can buy YMOYL here, and you can find the first post in the series here.

Finally, if you're enjoying and getting value from this series, spread the word! Share your thoughts on YMOYL on your site, or link back to the various posts here. As always, I'm grateful for your support.

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Chapter 3 of Your Money Or Your Life is all about organizing and understanding the information you gathered in Chapter 2. You've already written down all of your spending during the prior month. Now it's time to wrap your mind around it.

This is a complete inversion of the idea of budgeting, and it's far more sensible than the typical crapola financial advice, which says to create a budget first and then live under it.

Face it: most budgets are exercises in idealization. We usually fill them with overestimated savings goals and underestimated expenses. And then when the inevitable happens and we can't stick to our budget, most of us get discouraged and quit. Or worse, we quit and protect our egos by saying things like yeah, I tried budgeting, but I'm just not that preoccupied with money.

Instead, YMOYL does everything in reverse, and our intrepid authors are really onto something here. Rather than starting with some dumb budget that we spend hours creating and obeying, we start with real spending information we've already gathered. We take last month's money log, take the actual spending items that are in it, and then categorize them. Boom, you've got your budget--and it's 100% factual, not idealized.

Best of all, you now have a powerful tool to measure and manage your spending according to your priorities. Once again, what gets measured gets controlled.

Ignorance is now impossible. Once you've taken a sincere and honest look at a month or more of your daily money log, typical personal finance newbie statements like "Where does it all go? I hardly spend anything!" are now literally impossible for you to make. Impossible. You know where all your money goes.

This knowledge is an incredible trade-off for reading three chapters of a book and spending 30 seconds a day writing down your spending. And this act of self-discovery should feel immensely empowering to you. No longer does money just pass through your hands and through your life. No longer do you have a vague sense of where your life energy goes. You know exactly where it goes.

Is it worth it? Okay. Now that you're looking at your true spending activity over the course of a month or more, what do you see? Do you like where your money's going? Which categories get the resources they should, and which get resources they shouldn't? Remember, every dollar spent is a unit of life energy you'll never get back.

You have to ask yourself the most important question of all--is it worth it?--on each of your key spending categories. If you have a noteworthy budget item like a big car lease, an oversize rent or mortgage payment, credit card debt, dinners out that you vaguely remember, and so on, do the math on how many hours of life energy that spending costs you. Is it worth it? You willingly engaged in this activity, you willingly documented it as a spending category, and now you have the power to decide whether to sustain this spending. This is the essence of conscious money management. We'll get deeper into this in Chapter 4.

No shame, no blame: By now, I think I've got a good group of conscious readers participating in this series, so I probably don't need to say this--but I'm going to say it anyway just in case: Remember, no shame, and no blame.

Do you hate the things you see on your daily money log and in your spending categories? Then be grateful, and consider yourself lucky. You had the courage to look honestly at the data, and now you have the opportunity to make life energy-creating decisions based on real facts. Give yourself a serious pat on the back for what you've done. After just a few short chapters and a few hours of work, you've taken a closer and more informed look at your finances than 99% of the people around you. And it's already paying off.

Once again, if you see a big source of life energy waste in your spending, be grateful that you've found it. That's an obvious place where you can start making powerful and substantial changes. Make them.

Now, let's talk about our next steps. What has this process taught you? What actions are you going to take as a result? And where can you create more life energy for yourself? Share your thoughts below.

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Appendix/Side Thoughts:
1) "Is this going to be what I do with my life? Is this what it's all going to be about?" This quote from page 79, where "Anita" has a sudden attack of consciousness about her shopping addiction, captures in two sentences the complete hollowness of consumerism. I'm not sure whether the anecdotes in YMOYL are real, fictitious, or a mix of both, but I thought this one really captured the truth.

2) For further reading: I'd like to suggest a companion book to YMOYL that readers should find helpful and inspiring: How to Want What You Have by Timothy Miller. Miller's book focuses on the ideas of attention, gratitude and compassion, all of which play a huge role in your personal happiness and satisfaction, and all of which are mental states that you can learn to cultivate, exercise and strengthen.

It was pure coincidence, but Laura and I happened to read How to Want What You Have at about the same time we read YMOYL, and the books turned out to surprisingly complementary resources. We found that How to Want What You Have took many of the key ideas of YMOYL beyond just the arena of money. I highly, highly recommend it.

3) "In fact, it's fun!" Permit me to take a quick break from compassion and gratitude... so I can enjoy a little sarcasm. Because I was laughing out loud at the "it's fun!" quote on page 79, and I was shrieking with laughter at unintentionally funny quote on page 84, where the authors tell us that perfecting your spending categories is "a lot of fun" and "better than most card, TV and board games all rolled into one."

4) Applying the 80/20 Rule: Finally, one thing I'd add to this chapter would be a brief discussion of the 80/20 Rule. The key implication of 80/20 thinking is that you can usually make gigantic improvements the output of a system with minor changes to a small number of inputs.

Let's put this in daily money log terms. Once we've completed the exercise of logging and categorizing our expenses, most of us will find one or two disproportionately large sources of life energy waste. The beauty of the exercises in Chapters 2 and 3 is that they'll clearly expose your biggest sources "not worth it" spending. Start there. Wrap your mind around the life energy costs of these spending categories. You may find that a few consciously-made changes could drive enormous improvements to your personal bottom line.

Long-time CK readers know all about my fetish for applying the 80/20 Rule to everything. 80/20 really does work, and it's particularly effective in the financial arena. What examples of 80/20 were you able to turn up while doing this exercise?


Next: YMOYL Chapter 4: The Three Transformative Questions





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