A fully revised edition of one of the most influential books ever written on personal finance with more than a million copies sold
“The best book on money. Period.” –Grant Sabatier, founder of “Millennial Money,” on CNBC Make It
"This is a wonderful book. It can really change your life." -Oprah
For more than twenty-five years, Your Money or Your Life has been considered the go-to book for taking back your life by changing your relationship with money. Hundreds of thousands of people have followed this nine-step program, learning to live more deliberately and meaningfully with Vicki Robin’s guidance. This fully revised and updated edition with a foreword by "the Frugal Guru" ( New Yorker) Mr. Money Mustache is the ultimate makeover of this bestselling classic, ensuring that its time-tested wisdom applies to people of all ages and covers modern topics like investing in index funds, managing revenue streams like side hustles and freelancing, tracking your finances online, and having difficult conversations about money.
Whether you’re just beginning your financial life or heading towards retirement, this book will show you how to:
• Get out of debt and develop savings
• Save money through mindfulness and good habits, rather than strict budgeting
• Declutter your life and live well for less
• Invest your savings and begin creating wealth
• Save the planet while saving money
• …and so much more!
"The seminal guide to the new morality of personal money management." - Los Angeles Times
Review
"The best book on money period." -Grant Sabatier, founder of "Millennial Money," on CNBC Make It
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"This is a wonderful book. It can really change your life." -Oprah
"The seminal guide to the new morality of personal money management." -Los Angeles Times
"Vicki Robin wrote the book on retiring happy. Now a whole new generation is taking her advice. [She is] the millenial money whisperer." - Money Magazine
" Your Money or Your Life is a wise book...I am thankful to Joe Dominguez and Vicki Robin for getting so much of this started, as are countless thousands of other people who are now more free than they could have otherwise been." -Mr. Money Moustache
"Now as never before, it's time to stop trying to 'get ahead' in a race that both fixed and futile, and figure out how to organize your life so that it can be your life. Your one precious life, lived for yourself and for your community and for your planet. Your Money or Your Life shows you how to make the shift." -Bill McKibben
"If you want to invest in your financial future and (more importantly) your long-term happiness, I can’t think of a better investment than Your Money or Your Life.” —Brandon Ganch, "Mad Fientist"
“Vicki Robin’s Your Money or Your Life offers readers the gift of meaningful, applicable advice so that they can achieve true financial independence on their terms. It is deservedly one of the most acclaimed and referenced financial advice books of our time and will undoubtedly continue that legacy for generations.” — Farnoosh Torabi, bestselling financial author and host of the award-winning podcast So Money
"[ Your Money or Your Life] changed my life...I started believing that my life controlled my money. I began to see my life without the weight of debt and the need to chase a paycheck because I actually understood the path to get there." -Trent Hamm, "The Simple Dollar"
About the Author
Vicki Robin is a renowned innovator, writer, and speaker. In addition to coauthoring the bestselling Your Money or Your Life, Robin has been at the forefront of the sustainable living movement. She has received awards from Co-Op America and Sustainable Northwest and was profiled in Utne Magazine’s book Visionaries: People and Ideas to Change Your Life. She is also the author of Blessing the Hands That Feed Us: What Eating Closer to Home Can Teach Us About Food, Community and Our Place on Earth. She lives on Whidbey Island in Washington.
Joe Dominguez (1938-1997) was a successful financial analyst on Wall Street before retiring at the age of thirty-one by following the nine-step program he formulated for himself. He taught this formula for many years, and preserved it for future generations in Your Money or Your Life. From 1969 on, he was a full-time volunteer and donated all proceeds from his teaching to transformational projects.
Peter Adeney, better known as Mr. Money Mustache, is an influential financial blogger who retired financially independent shortly after turning thirty, and now writes about how to live a frugal life of leisure.
Dedication
This work is dedicated to my parents, Jose Toussaint (1920-9 7) and Rose Clermont-Toussaint; to Ernest Mandel (1923-95), Marxist activist in word and deed; and to Carl Cesar (age 10) of Muriqui, Rio de Janeiro state, in the hope that he will have both the desire and the right to go to school; and to all those women and men struggling for their emancipation.
Acknowledgements
My heartfelt thanks to Denise Comanne, without whom this work would not have been possible. I also wish to thank the following people for their help, their criticism and their encouragement, under standing and patience: Ivan, Tristan and Jose Toussaint; Rose Clermont-Toussaint; Frans Maggio; France Arets; Annick Honorez; Pierre Galand; Didier Brissa; Brigitte and Isabelle Ponet; Dalhia Luksenburg; Anne-Marie Raison; Luc Pire; Philippe Tombal; Roland Pfefferkorn (Universite de Strasbourg); Michel Chossudovsky (Universite d'Ottawa); Patricia Camacho (Mexico); Bruno and Nadji Linhares (Brazil); Gustavo Codas (CUT-Brazil); Ernesto Herrera, Aldo Gili and Marita Silvera (Uruguay); Alejandro Olmos (Argentina); Pierre Cours-Salies (Universite de Paris VIII); Christian de Brie (Le Monde diplomatique); Michel Husson (IRES); Jacques Bournay, Gus Massiah (AITEC); Bernard Teissier (ENSSIB, Lyon I); Florian Rochat (CETIM-Switzerland); Robert Went (University of Amsterdam and IIRE); Samir Amin and Amady Ali Dieng (Forum Tiers Monde, Dakar); BintaSarr(APROFES-Senegal); friends at the AIRS (Algeria); and the entire team at COCAD (Belgium). This project was assisted by the CEDGVIII/B2. This institution is in no way responsible for the ideas expressed by the author.
Introduction
A growing number of the planet's inhabitants have access to little more than the strict minimum necessary for survival. They are cut off from knowledge and excluded from social life, denying them the most basic form of human dignity. As a result, they lack selfconfidence and self-respect, they have little confidence in and respect for others. It is very difficult to capture such things statistically, but it would be no exaggeration to say that one billion people live in such a state. A state that destroys all hope, a sub-human state. An unac ceptable state of affairs. I am haunted by the memory of the 'street children' of Cartagena de las Indias in Colombia. At the crack of dawn, dressed in their rags, having spent the night sleeping on the ground 'protected' only by a piece of cardboard, they wake to begin their search for glue to sniff. I encountered them in 19 9 2, they were between the ages of seven and eleven. They had no right to food, to decent clothing, to a roof over their heads, to healthcare, to education, to affection. These children, and thousands like them, had sunk to sniffing glue in order to quell the pangs of hunger that they felt day and night. What can the word 'break-fast' possibly mean to them? They have no breakfast, no lunch, no dinner.
Globalisation and the Neo-Liberal Offensive
THE DETERIORATION IN LIVING CONDITIONS: EMPLOYMENT AND WAGES During the 19 70s, the world economy began a long wave of slow growth. This stood in stark contrast to the nearly 30 years of rapid postwar economic growth that had come immediately before (Mandel, 1972, 1978, 1982; Husson, 1996; Montes, 1996; Went, 1996). During the period 1960-73, before the beginning of the long wave of slow growth, the average annual rate of growth in the European Union (known as the Common Market at the time) was 4.7 per cent, in the United States 3.9 per cent and in Japan 9.6 per cent. Between 1982 and 1994, the respective growth rates were 2.1 per cent, 2.4 percent and 3.6 per cent (Montes, 1996). The crisis that began in Southeast Asia will lead to even lower growth rates in 1998. At the very best, the Japanese and South Korean economies will grow by 1 per cent. The head of the US Federal Reserve, Alan Greenspan, wondered if 'deflation might now be a possibility' (Le Monde, 12 January 1998 and International Herald Tribune, 9 January 1998). If this possibility were to become fact, there could well be a simultaneous fall in prices, wages, household consumption and industrial production. A new round of massive dismissals in industry and services could take place the world over. Even if such a sequence of events does not occur, it seems highly unlikely that high levels of growth will be reached in the short term.
The Concentration of Capital
A WAVE OF CORPORATE MERGERS AND TAKEOVERS AND THE CONCENTRATION OF CAPITAL Since the second half of the 1980s, there has been a large number of corporate mergers and takeovers the world over. This wave has been helped along by the neo-llberal policies described in Chapter 1. These policies have meant privatisation and the elimination of government controls on the acquisition of domestic firms by foreign capital. This wave of mergers/takeovers can best be gauged by the rapid increase in foreign direct investment (FDI) (see glossary). Between 1985 and 1991, total FDI rose three times more quickly than global trade. The vast majority of these investments have gone into corporation takeovers and mergers. They have only been responsible for a very small increase in productive capacity; usually they involve property changing hands, leading to greater concen tration of capital on an international level (Chesnais, 1994). Table 2.1 shows that, in terms of value, foreign investment in the United States has gone much more into buying up existing companies than into creating new ones. A study carried out by the US Federal Reserve has revealed that more than a third of companies acquired between 1984 and 1989 were resold during the same period. Table 2.2 shows that in a great number of economic sectors, a handful of multinational corporations control the large part of production (called a situation of oligopoly; see glossary). Though oligopolies existed before, they have become much more common since the 1980s.
Globalisation and Exclusion: the Marginalisation of the Third World and the Strengthening of the Triad
INTRA-TRIAD INVESTMENT US multinationals have been behind a number of mergers and takeovers - in Western Europe, above all, but also in Japan. They would have liked to go further in Japan, but there are strict limits on foreign acquisitions of Japanese companies. The multinationals of the different EU countries have been involved in a great many takeovers and fusions within what is now the Single Market, on the one hand, and in North America, on the other. They have had even less success than the Americans in acquiring Japanese companies. Since 1989-90, German multinationals have bought up a number of companies in the former Soviet Bloc, especially in countries with whom Germany shares a border. Japanese multinationals have invested in North America, Europe and their zone of influence in Asia. Japanese companies have thus outstripped their competitors by penetrating key markets while protecting their own with government backing. US multinationals have topped the Europeans thanks to backing from their powerful government. As a result of this process of fusion and acquisition, the international character of the main multinationals has been given a boost, as has their domination of the world market (Andreff, 1996; Chesnais, 1994; Clairmont, 1997).
STRENGTHENING OF THE TRIAD In the area of global trade, too, the relative weight of the Triad has been increased while most of the Third World has been further mar ginalised.
Financial Globalisation
INCREASE IN THE FINANCIAL ASSETS OF INDUSTRIAL MNCs Multinational corporations have adapted remarkably well to the new global financial realities. No surprise, really, given their own increased involvement in financial operations that are often far removed from their largely industrial origins. A number of tradition ally industrial companies now come closer to resembling financial outfits that make ongoing decisions based on the profitability of investments made in their various subsidiaries and sectors of activity. To all intents and purposes, they are financial houses with an industrial focus. In such a situation, even the biggest industrial concerns see their productive operations as one among many forms of capital valorisa tion. The term 'global' is used to characterise the strategy of multinational corporations; in the present context, it has two com plementary meanings. On the one hand, it corresponds to the planetary (even if largely concentrated in the US-Europe-Japan Triad) scope of corporate activity. On the other hand, it reflects the fact that corporate strategy is ever more clearly based on asset val orisation - of both a financial and industrial nature, in broadly equal parts (Serfati, 1996). Most industrial houses have set up enterprise banks and credit establishments that handle their financial operations. According to a study carried out by the MacKinsey firm on 3 25 multinational corporations, such banks have been gateways to success for those that have set them up.
Glossary
AUTHOR'S NOTE In this book the following terms are used interchangeably: Third World, (the countries of) the South, the periphery, the developing countries. These terms are generally used in contrast to: the Triad, the main industrialised countries, (the countries of) the North, the centre, the imperialist countries - also considered as synonymous. BIS (THE BANK OF INTERNATIONAL SETTLEMENTS) Founded at Basel as a public company in 1930 to handle German reparations after the First World War. The BIS manages part of the foreign currency reserves of the central banks. Its capital of 1.5 billion francs-or is divided into 600,000 shares mainly underwritten by European central banks, with the remainder held by private investors who are entitled to dividends but not votes. The governors of the affiliated central banks, mainly those of the Group of Ten, meet regularly to promote good communication and close cooperation. The federal banks of New York, Canada and Japan regularly send observers. The BIS plays an important role in gathering data on inter national banking transactions, published in a quarterly report since the early 1980s. It is responsible for handling financial risks associated with the liberalisation of money markets. It also carries out banking transactions, receiving gold and currency deposits mainly from the central banks, selling the currency on the markets and granting loans to certain central banks. Little research has been done on the BIS, least of all in relation to the IMF.
DEBT
Multilateral Debt Debts due to the World Bank, the IMF, the regional development banks such as the ADB (African Development Bank), and other multi lateral institutions such as the European Development Fund.
Private Debt Loans contracted by private borrowers, regardless of the lender.
Public Debt All loans contracted by public borrowers.
Rescheduling Modification of the terms of a debt, for example by modifying the due dates or by postponing repayment of the capital sum and/or the interest.
Debt-Servicing Repayment of interest plus amortisement of the capital sum.
Net Financial Transfer This refers to the subtraction of debt servicing (yearly payments interest + capital sum - to the industrialised countries) from the year's gross payments (loans) made by the creditors. The net financial transfer is said to be positive when the country or continent concerned receives more (in loans) than it pays out. It is negative if the sums repaid are greater than the sums lent to the country or continent concerned. Since the mid- 1980s, the IMF earns more from sub-Saharan Africa than it lends it. The net financial transfer is thus negative in this region of the world.
Review from goodreads :-
Emily R. rated (5/5)
Recommends it for: anyone with debt or doubtI could and will read and re-read this book, not for its literary value but for its simple explanations of concrete ways to observe your own connection with the material world. Whether or not you fully practice its program, it is the sanest and most convincing account of the importance of financial savvy for those of us who proclaimed, "Money and fancy material things don't matter to me - so why should I try to manage my finances?" Its message from ten years ago rings truer today than it did now, and I think my own generation will even more appreciate its message. I’m not a big self-help book reader. Yet, just the act of seriously studying this book and hence becoming intentional with my finances has relieved me of debt, anxiety about money, made me more in touch with what is really valuable and joyful to me, and inspired me to look toward a career as a financial counselor. I would recommend this book to all my friends for it surely has lessons for everyone!
Geof rated (5/3)
"This book's most popular Amazon review is surprisingly negative: 3/5 stars. I agree more with the 5-star Goodreads evangelists. That said, I have a few qualms with the book. It's dated and frequently redundant. Like most personal finance books, it's full of suspicious stories. The Epilogue summarizes in 9 pages what has been beaten to death in the previous 327!
At one point, the author talks about being financially secure whether the Dow is under 1000 or above 4000. When the book was copyrighted in 1992, 1000 was a crash and 4000 was ambitious. As of 1/16/2015, the Dow stands at 17,511.57, up about 450% since 1992 so the book's stock market wariness is exaggerated. Also, its advice to buy long-term US treasury bonds is terrible. The present interest rates on those bonds is pathetic: 2.69% on a *30-year* bond! Read in 2015, Chapter 9, which describes 6% US treasury bonds, reads like a quaint historical document.
The other chapters, though they occasionally make redundant arguments, are valuable. In essence, the book advocates extreme thrift in an effort to get off the consumerist treadmill. The goal is to live modestly and be time-rich, rather than to "live large" and be time-poor. It makes the compelling case that to always want something better is a recipe for perpetual unhappiness. To quote Lao Tzu, "He who knows he has enough is rich."
The book is sort of like an early 90s version of Mr. Money Mustache, who actually posted an excellent review of the book: http://www.mrmoneymustache.com/2012/1...
"Your Money or Your Life" proposes a nine-step program:
Step 1) Tally up all the money you ever made, look around you and see what you have to show for it.
This is sort of dispiriting step because you don't have anything to show for paying the rent!
2) Recalculate your salary to show how much "life energy" is devoted to your job. Track every cent you spend.
This is a useful step showing how commuting (time and money), buying work clothes, and eating out add to the cost of working for a living. It's also helpful in showing where all the money goes!
3) Tabulate your findings. Show spending in terms of "life energy" spent.
An illuminating step.
4) Did you like what you bought?
The book uses the phrase "gazingus pin" as a term for something you enjoy buying, but don't need.
My "gazingus pins" are Legos and DVDs. Who knows how many unopened "cheap" DVDs I've bought! "Your Money or Your Life" would argue "DVDs you don't open aren't worth your life energy. You only have a finite amount of time on the planet."
5) Make a large line graph with your findings so you can't deny your income and your expenses.
6) Value your life energy, minimize spending!
As Elizabeth Warren observed in "The Two-Income Trap," this is easier said than done.
7) Value your life energy, maximize income!
I suspect this step is easier said than done as well!
8) This step covers "Capital and the crossover point": when does your money start earning more than your job?
9) What to do with your money - outdated advice about how great US treasury bonds are.
To a certain extent, I enjoy savings more than spending so "Your Money or Your Life" is preaching to the converted for me. I think cost-tracking is essential when it comes to saving money and that Target and the mall are about the worst places on earth to pass time.
However, kids throw a thought-provoking monkey wrench into "Your Money or Your Life's" strategies. When you talk about extreme thrift, surely you can put art classes, play, basketball, Little League, mini-soccer, ice skating, and skiing on the chopping block. However, you only live once. In that life, how do you balance fun with saving? How much should you sacrifice for your children? One of the few child-related anecdotes in "Your Money or Your Life" involves a man whose parents paid for his college, but decides his kids are on their own. With dilemmas like that, you get into the thorny question of values: What do you want your kids to expect out of life? At the same time, as a parent, it's your life too.
With that in mind, I've heard MMM's and "Your Money or Your Life"'s strategies derided as "Live like you're poor now so you can live like your poor later."
There's the rub. "Your Money or Life" notes that you only live once, you don't want to spend your life working a job you hate to buy stuff you don't need. But you could also say you only live once, you don't want to live like a pauper and die with $1 million in the bank. How you strike that balance depends on your goals and values"
"Land practice intelligent use of your life energy (money) which will result in lowering your expenses and increasing your savings. This will create greater fulfillment, integrity and alignment in your life.🙂"
Happy reading:)