Your+Money+or+Your+Life

__ Your Money or Your Life __ John Crockett 12/10/2008   A.P. Macroeconomics 3rd Period For most people money is a constant worry and stress that they have to deal with. There is so much pressure in our society to be the one with the best things and the most money that it often leads to debt, greed, and wasting away your whole life trying to make a living. In __Your Money or Your Life__, Joe Dominguez and Vicki Robin Present a program designed to change the way people use their money, and in effect change their lifestyle so that they can live a more fulfilling life. Their idea that the key to achieving financial success, whether that means climbing your way up out of debt or retiring to the beach at age 40, is to spend your money intelligently and efficiently. The path to financial freedom is presented in a very logical and very applicable nine step process. The first step is to look back at your life and add up all the money you have ever made. Then from that total find out how much of that money you still have today, either in the bank, an investment or some other form of asset. The second step of the book introduces on of the key ideas of the book, “life energy”: “Our life energy is our allotment of time here on earth, the hours of precious life available to us. When we go to our jobs we are trading our life energy for money. This truth, while simple, is profound. Less obvious but equally true, when we go to the welfare office, we are trading our life energy for money....So, while money has no intrinsic reality, our life energy does-at least to us. It's tangible, and it's finite. Life energy is all we have. It is precious because it is limited and irretrievable and because our choices about how we use it express the meaning and purpose of our time here on earth.” The second step is to determine how much money you truly make at your job, considering that you have to spend money on travel clothes food and various other expenses at your job. Keep track of every bit of money you make based on this idea. The third step is to put all of your expenses into categories. Then you are to add up the total amount of expenses in each category. Convert these totals into “life energy”, or how much of your life does it take up for you to pay for each of these different categories of spending. In step four, Dominguez and Robin tell you to determine using your expense categories, how much of what you spend your “life energy” on actually works towards your life goal. The key to this step is determining what you consider your life’s purpose to be. Then, you should determine how the “life energy” you use in each category, if you theoretically did not have to work to earn a living, would be different. In the fifth step, the authors tell you to create a chart to keep track of your monthly expenses and income, and keeping this chart updated on a month to month basis. They suggest to the reader to put the chart in a place were it is very visible and can be updated and referenced easily, like posting it on a wall or on the refrigerator. That way, it helps you stay focused on the process of working toward your life’s goal. The sixth step is the step of action. It teaches the reader how to be frugal with their money, spending it on what they truly need, and “living within your means”. This concludes saving money on pointless spending like shopping sprees, and avoiding buying replacement goods for what you have before it is truly necessary. For instance don’t buy a new cell phone because it becomes popular with your friends, when the one you have still has the ability to serve its primary purpose of making calls. This means that you have to take care of the things that you already have so you do not have to spend your money on buying replacement goods, and save money buy doing whatever you can to keep these goods working properly and not using your money to have someone else fix them or buying a new one. Do research before you buy so you can make choices and select products that will be reliable, durable and less expensive. Also try and buy goods that can serve multiple purposes, for example instead of buying a new TV and a new DVD player find a TV that has a DVD player built in, “killing two birds with one stone” and saving you money. Try to but whatever you can used, because as long as you make sure to get the used product in solid condition, it is much cheaper than buying it new. Step seven is to search for ways to increase your income buy taking value in the “life energy” that you use to earn it. Use your time and your money more efficiently, carpool to work or bring your own lunch to avoid spending money in the same place you work to earn it. The eighth step is to get the reader to the point at which they can live off investment income alone without needing any active income from their job to pay for their expenses. This allows you to put your “life energy” to better use. Another main focus of this step and one of the most interesting parts of the book is realizing the true importance of using your life energy in a positive ways. The authors advise the reader of the fulfillment you can get by helping improve the world you live in. They suggest becoming involved in community service, volunteer work, environment friendly ways of living, and other ways to better the world around you. The goal of these things is in no way financially motivated, it is to get the reader to a point of fulfillment and purpose in life that can be reached through making money. The ninth and final step is to help you learn to make smart and efficient long term investments to help manage your finances down the road so that your “life energy” can be used on things other than working. The authors explain to the reader that the key is making investment that are not only smart and reliable, but that will provide a steady and sufficient revenue stream to support your life. The nine steps that Joe Dominguez and Vicki Robin have created in __Your Money or Your Life__ for improving your financial well being, and finding fulfillment in you life, is a very practical and well laid out process that if followed will undoubtedly help the reader accomplish their goals. Their true idea is that the best way to keep on track in reaching your purpose in life is to value the “life energy” that you have and make sure that you spend as much of it as possible in life achieving your goal.