Your Money or Your Life by Vicki Robin

  • 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
  • commute
  • 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

Is Solar Panel Worth It?

The Ice Queen is MELTING

After many researches and calculations, here’s the basics understanding of solar panel and its financial impact. I have set up a calculation to show you how many years it will take to break even, and you can use this to decide whether it is worth it.

1. Figuring out how many kwatt you will need

You can use this estimate tool PVWatts. After entering your zip code, you should be able to see ​”SOLAR RESOURCE DATA” on the next page. Click on “go to system info” on the right hand side and get more details on your zip code. 

Based on this analysis, I use 5,665 kwatt a year, and a solar panel producing 4 kwatt will be sufficient cost cutting. Installing enough solar panels for 5 kwatt may be harvesting more electricity than I use and result in me helping the utility company collect energy for free as the utility company only “return” how much is used and does not give you cash for collecting extra energy in a year.  Side note: this analysis is surprisingly accurate based on my monthly electric bills.

2.How much does it cost to put in solar panels?

Mr. Money Mustache built his systems around $1.08 per watt – which is super cheap.  By his dollar per watt ratio, I should be looking at spending at least $1.08 * 4,000 watts = $4,320. 

But reality check hits me like a giant frying pan on the head. I called one of the local companies here, and they gave me a quote of a wapping $21,000 for a 4 kwatt system, claiming that I only have to pay $87 a month and pay it off in 25 years. WOW! Maybe they think I am made of money, or stupid, or BOTH! 25 years of paying the solar company instead of the utility company? Why would I ever do this and dig myself a giant hole and be buried in debt?

I followed Mr. Money Mustache’s link to a DIY website where you can purchase the solar panel kits and install it yourself. The panels for 4 Kwatt is $6,300 and I am estimating labor cost (of hiring a handyman to install this panel with me) will probably cost me between $500 – $2,000 which brings my dollar per watt close to $1.50. 

($6,300 + $500 installation) * 70% (tax break 2019*) = $4,760 / 4,000 watts = $1.19 per watt

($6,300 + $2,000 installation) * 70% (tax break 2019*) = $5,810 / 4,000 watts = $1.45 per watt

*Pro tip: There is a tax credit of 30% of the solar credit. IRS form 5695 for residential energy credit. This credit will be phasing out from 2020 onward. Tax credits are “dollar for dollar” off the tax bill you owe to the IRS, so it is correct to think that 30% of the solar installation and material costs per IRS instructions.  

How many years of using solar panel would break-even

This is where the important part of calculation comes in to decide whether it is worth it for you.

Cost of the system / annual electricity bill = Break-even years

In my example, it will break even in $5,810 / $908 = ~6.4 years.

6.4 years to earn the money back I spent on the solar panel sounds reasonable to an average household planning on spending 10+ years. Since I am not planning on staying in this area for more than 3 years, it is not likely I will benefit from the solar panels.  Once this house becomes rental property, the tenant will be responsible for the utilities. Therefore, I would be investing this money into saving someone else’s utility bills. 

Of course, the house you buy may be a permanent resident of yours. In that case, I think solar panels are a great idea this year considering the tax credit is phasing out. 

There are other steps to be considered if you decide to make this a DIY project (and it will be cheaper and more rewarding I am sure). Here’s more details from MMM on obtaining a permit, and you may need to hire an electrician at the end to connect the power harvested by solar panels back to the city grid.

Overall solar panels are a great way to reduce electricity bills (just electricity, nothing else!). There are many other ways to conduct an audit of electricity usage in a house.  It is not the only way to save money and conserve energy. By just looking at my electricity bill trend, it is very easy to notice that I have spikes in the summer and winter for using my A/C and Furnace. If we set the thermostat a little lower in the winter and a little higher in the summer, it will also save utilities.

After the calculations above, I realized that solar panels aren’t for me at the moment, even with the enticing tax credit in 2019. It certainly is a great way to long-term energy efficiency. It makes me happy to go green and save the planet, but for now, I will stick with my space heaters and recycling efforts.

For the rest of you who are considering installing a solar panel, I hope this is helpful to evaluate whether solar panels are right for you. And happy sunbathing 🙂