- How much I’d Recommend: 10/10
- Date finished: 12/31/19
- Your Money or Your Life: recommend borrowing from your local library – everyone should read it as soon as possible.
If you don’t like reading all that much, here’s an easier route. Listen to this almost-TED talk given by one of my favorite Financial Independent “accidental-financial-advisor” Mr. Money Mustache.
Everyone is bad at finances, until they spend the time and put in the hours to learn it. It’s not very hard to learn, you just have to be vigilant about your spending, and put every extra penny you find into an index fund. Ok Vicki does a way better job explaining this in her book.
Some of my friends are not ready to read this book. Others have already sworn by blood that they shall live consciously about their spending. So maybe when you are reading this blog, you are not ready yet. That’s totally ok. Once you are ready, if you are in the future, you can check out this book.
The reason I highly recommend this book yet still encourages you to borrow it from the library is to avoid the paradox of paying for a book that’s suppose to ask you to save money. Otherwise, I’d say, everyone should have a copy and read it like the bible because YOU ARE SELLING YOUR LIFE for money, every single minute that you work.
Some people may say, well I love my work. I became a doctor because I love saving peoples’ lives or whatever. Of course, these altruistic values are absolutely admirable. But you’d be an EVEN better doctor when you don’t need that money (and you know for a fact you don’t need it).
Your Money or Your Life details the entire course of resetting your relationship with money in 9 steps. Personally, I feel the last few chapters kind of blended in together. Here are my simpler version of the steps; let’s see how many steps I can make after drinking Mr. CodeJunkie’s homemade ginger mead.
Step 1: make peace with the past
Emotionally: acknowledging everyone probably has made financial mistakes in the past.
Financially: Figure out how much you have earned in your entire life. Use social security website to log in / register to find out what was reported if you are usually a w-2’er. You will find shockingly you’ve earned so much, and saved so little.
Step 2: figure out your actual hourly wages
Take your take home salary (after tax and deductions), minus all the work related expenses (gas, wardrobe, gifts for coworkers, eating out with coworkers), and use this net amount, divide by the hours spent related to work to calculate your ACTUAL hourly rate, including:
- actual working hours
- hours to unwind and decompress at home
- hours feeling tired because of work
- hours working out to combat stress at work
- hours taking for vacation to relax from work
This will shock you. This is why Vicki is explaining that you are exchanging your life energy for money.
Step 3: set up expense tracking for EVERY SINGLE PENNY
You can do this pretty easily these days with online apps if you mostly use credit cards / debit cards. Most people recommend Personal Capital. I find it more user friendly than Mint, but since I am an accountant, I still use my own fancy google sheet for my expenses. You can find my learnings from tracking my expenses here.
Step 4: Invest all your extra money in a low cost index fund.
Here’s a few to start. Pick one, stick to it, and don’t sell until retirement. Ok this isn’t exactly what the book was recommending, but a summary of many many financial independent podcasts, years of reading Mr. Money Mustache. Or you can always just open a Betterment account, here’s why.
- VTI – vanguard total market
- FSKAX – Fidelity total market
- SWTSX – Schwab total market