Customer Reviews: Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Ind ependence: Revised and Updated for the 21st Century
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on November 26, 2009
The fundamental premise of this book is pretty good. The idea is as follows: You devote a given amount of time a day into work (say 10 hours). You earn an hourly wage, let's say for argument's sake it is $16 / hour. But there are many hidden costs associated with having a job.

For example, you may spend 30 min. commuting to and from work. After you get back from work, you may spend an additional hour "decompressing" - as in mindlessly watching TV in order to relax. You may also spend maybe another 30 min. or so talking about your work situation to your significant other.

So when you calculate your REAL hourly wages, you have to take all of this extra time into account. After all, you wouldn't be doing all of this stuff if you didn't work at this particular job.

Also, there are monetary costs to working. Such as spending money on nice work clothing. Buying lunch in the afternoon, because it would be too time consuming to prepare lunch every night. If there are things that you might do yourself but don't because of your job (taking care of your lawn, car, house, etc), you have to subtract the monetary costs of outsourcing all of this work.

What the book points out is that your REAL hourly wage is often much less than you think it is. In the example above, $16/hour could easily fall to $10 or $11/ hour.

The book then goes on to argue that when you start looking at stuff to buy - you should think about the cost of a new iPod for example in terms of hours spent working for it, not money. So for example, if you buy a $200 iPod, and you REAL hourly wage is $11/ hour, you've just spent about 18.2 hours of your life working away for that iPod. It really puts things into perspective.

The book does not tell you not to spend, but rather to be conscious of what you are actually spending, which is literally your life energy.

They have a "9 step program" but really it amounts to this:

1) Calculate your REAL net worth. All assets minus all debts. For many people its negative, because they have accumulated so much debt during their lifetime.

2) Become aware of your real hourly wage, and your spending patterns, and you will find that you naturally stop buying frivolous things. They recommend tracking EVERY single cent that you spend on goods. Pretty extreme, but I understand why. People in this program supposedly paid off seemingly large loads of debt in stunningly short time periods.

That's pretty much the gist of the book. The reason why I've given it 3.5 stars is because the manner in which this is all presented is not that great. The writing attempts to make the message seem very profound, when in fact it may not be so deep a truth as all that.

There is also a *LOT* of negative generalization about how everyone lives an over-stressed, under-paid lifestyle and it keeps coming up, over and over again in the book. It's this part that I really don't like. It probably all together takes up maybe 75 pages of the book, and it really only needs to be stated once. I think some brevity could have made this book really amazing, but it is still ok.

Finally, I strongly disagree with the investment chapter at the end of the book, and I think it will lead a lot of people astray. It recommends that you should only invest in long-term US treasury bonds that pay very marginal rates, because they are the only thing 100% guaranteed over time. A slightly "riskier" strategy is to invest in lifecycle funds.

Let me state plainly that to invest in only US treasury bonds would be akin to shooting yourself in the foot. Many things (like your job), are not 100% certain over long periods of time, and by using some common sense and effort you can do MUCH better than treasury bonds by making wise choices with index funds, stocks, bonds, and real estate.

Lifecycle funds are ok, but it is also perfectly ok to invest in stocks if you are willing to invest the time to do a little bit of research. "The Intelligent Investor" is the best book hands down for teaching you about stock selection and bonds, and I'd look there first if you are interested in learning about investing.
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on January 23, 2010
I got this book after reading in several blogs how good this book is. Now I know why. To start with, the nine steps mentioned in this book are:
(1) Making Peace with the Past;
(2) Being in the present - Tracking Your Life Energy;
(3) Where Is It All Going? (The Monthly Tabulation);
(4) Three Questions That Will Transform Your Life;
(5) Making Life Energy Visible;
(6) Valuing Your Life Energy - Minimizing Spending;
(7) Valuing Your Life Energy - Maximixing Income;
(8) Capital and the Crossover Point;
(9) Managing Your Finances.

You really gotta do the steps! Sure the steps take times and discipline to implement, but once I started, I got a lot out of it. Some of the shifts that I experienced:
1. A way of thinking that "money is simply something you trade life energy for".
Because I really want to know how much I trade my life energy for doing my job, I become very discipline in tracking my spending and created many new categories in my Quicken to be able to answer the the 3 Questions in step 4.

2. The attitude of "no shame no blame" when evaluating what one had done with one's finance. The book mentioned many times this mantra that helped whenever I felt bad about my previous decision, I would tell myself "no shame no blame" and no regret (my own addition).

3. The hope of being financial independence. The step of charting and making life energy visible were very helpful. I am looking forward to the time when my monthly investment income crosses over with my monthly spending. The book gave examples of people who successfully crossed over this point which are very motivating. It is also realistic in saying that we may have set back because there is nothing guaranteed with investment, but if we are conditioned to have control over our spending and income, we would be more confident in handling the setback.

This book is not an investment technique book, so if you are looking at a more technical way of managing your finance such as Asset Allocation by Gibson, you will not get it. This is also not like Needleman's book (Money and the Meaning of Life) that is philosophical. This book I would classify it as a hybrid between the psychology of money and the pragmatic ways of managing money so that you can reach financial independence. For me, the shift in thinking that I got from reading this book, made this book very very worth it.
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on February 7, 2011
Your Money or Your Life is one of the best books I've ever read on personal money management.

In Your Money or Your Life, money is introduced from a refreshingly new perspective. The book argues that you are currently making a "dying", as opposed to making a "living". A 9-step process is introduced to get you back on track toward living a fulfilled life through smart spending and financial independence.

The basic premise of Your Money or Your Life is that life is too valuable to waste away working 40+ hours every week, one week at a time for the rest of your life... Just so you can have enough money to buy all those material possessions to keep up with the Jones's.

The book goes on to make an eye-opening connection between money and your personal life. Basically, you only have so many hours of life - which the book refers to as Life Energy - and the fulfillment we get out of life depends on how we spend those precious few hours. Most people trade a significant amount of their Life Energy in exchange for money to buy things - unimportant, unfulfilling, and at times even wasteful things.

Your Money or Your Life goes through the exercise of having us determine the number of hours each of us has to work in order to make a purchase. The book doesn't suggest budgeting, but instead uses the connection to force us to make conscious decisions about how we spend our money. You're actually encouraged to spend money on the things that are meaningful and fulfilling to you. On the flip side, the book argues that you should reduce your spending as much as possible on the things that are meaningless to you. Any money you save from reducing your meaningless expenses should be invested toward early retirement.

We are caught in a never ending trap... A sort of self-induced slavery. We go to work everyday to "earn" money, which we then trade for the possessions in our lives. Since our materialistic society has us brainwashed into always wanting more, we gladly accept a mediocre existence of wage slavery in exchange. The more money we make, the more we buy - more cars, bigger houses, bigger TVs, more cable channels, etc. And the more we buy, the tighter the chains becomes. It's no wonder that we go through life in a walking daze.

In summary, you trade Life Energy for dollars, which you then use to buy things. If you buy the things that are fulfilling to you, and minimize wasteful spending, your life will almost immediately become more enriched. More fulfilled.

There is much more to this book than I've described, and it's well worth the money. I believe this book is a must read for anybody who is serious about becoming financially independent and living a fulfilled life.

Your Money or Your Life. I chose Life.
-James Ryan, PostponedLife com
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VINE VOICEon May 11, 2015
I have had this book on my reading list for a very long time, and I was really looking forward to it. I was very disappointed.

The one big idea of the book is this: when you earn money through your own labor, you are literally trading your life for money. The classic job is an exchange of some portion of your "life energy" (the authors' term) for financial compensation. Once you realize this, you can: reprioritize your behavior by finding employment that maximizes your return on your time and matches your values; but only things that matter; come up with a sense of purpose; and, ultimately, attain financial independence, being able to support yourself without working for a living.

This one idea plays out in nine steps. The book takes far too long to explain each step, and some of them --- like figuring out your total lifetime earnings to date down to the dollar --- seem utterly pointless to me.

The rest of the book is mostly a lot of filler, and I mean a LOT. There are countless stories from readers, most of which I found uninteresting and uninformative. They are also extremely difficult to skip when reading on a Kindle or Kindle app. There's also a surprisingly huge amount of the authors' opinions on environmental issues, social issues, "socially responsible investing," and the like. These things may have their places, but they just serve to make this book even longer.

In short, this is a book that presents only one idea that is likely to be new to most readers, but it is hundreds of pages long, anyway. I found it extremely tedious and a huge disappointment. Instead of this book, I would recommend Financial Peace Revisited by Dave Ramsey. I wish I could recommend this, but I really can't.
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on December 28, 2010
My husband and I read this book in the early 1990's and took it to heart. Consequently at ages 50 & 52, we have a home that is paid for, I work 16 hours a week, he works 24 hours week, and we have more than enough for anything we want. Of course, we don't want much, realizing the blessings we have in free time to enjoy the gorgeous outdoors in Montana without having to worry about being able to pay our bills. The hardest part was figuring out the medical insurance thing, but even that is addressed for now. So many are suffering from "affluenza" they don't even know why they are unhappy. This book has to potential to change your relationship with money for the best. Read it with an open heart and as more than just another finance book... Take what works for you and leave the rest, but it can make all the difference!
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on January 23, 2012
I first read this book years ago and followed each of the steps. It changed my financial life. It spells out the steps that one needs to take to educate oneself about one's own finances and to improve those finances. This improvement comes about simply by making better choices. It is not all about guilt-tripping yourself into following a strict budget. It is instead about wisely spending time to get money and wisely spending money to get value. This book is also about self-discovery and simplicity--the idea that you can choose how fancy your life will be and can live life at that level while increasing your wealth and investments. That is, every improvement in income need not lead to a more expensive lifestyle. This is a choice and good choices are based on good information. The steps in this book are all about getting and using that information.

Ten years later I am still following the steps, still evaluating my spending in terms of both value received and my personal values, and am well on my way to a comfortable retirement. This book is not the best investment guide in the world, but it does have good basic information. What it is is a great program for spending and saving wisely. The challenge is that one needs to do the work to get the benefit. Anyone who wants quick, simple answers and easy solutions should avoid this book. If, however, you are willing to make a long-term commitment to financial intelligence and financial independence, you should seriously consider this book.

I bought this book again, for the 4th or 5th time, because I gave away my copy if it. I also wanted to read the updated chapters, which I liked.
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on February 12, 2012
This book does not talk only about money, it is a book that explains about the relationship of your life energy and your money. This book is for those people who has difficulty in earning and saving enough money and for those people who want a clear, relaxed and happy relationship with money.

This book is not like those other books who tell you get-rich-quick schemes or tell you ways that can make you a millionaire, instead this book tells you about the true values of your money and your life. Most people work longer hours on the job they hate most to earn more money. This book will encourage you to find a job that you really enjoy doing. Some of the key points of this book are following:-

How Much Have You Earned In Your Life?

The first chapter brings you to an interesting journey of your past and encourages you to calculate how much money you have earned in the your life till now. You must count each and every dollar you have earned since you started working.

The second step - Now you need to Calculate your actual net worth. Your net worth equals to your total assets minus your total liabilities. Your assets can be your home, car, bank balance, cash, stocks, bonds, mutual funds and life insurance. Your liabilities can be home mortgage, unpaid bills, car and college loans and all other debts. I think this simple exercise can open your eyes and bring you back on the road to financial freedom.

How Much Are You Trading Your Life Energy For?

Once you have calculated your net worth, you need to calculate how much money you are earning per hour. You need to watch your recent monthly wage statement to find out how many hours you have worked in that month and how much you have earned. Now from your monthly income subtract all the expenses like the taxes, the clothes you buy for work, the car fuel and time you consume going and returning from work and the cost of having lunch .

Now to calculate how much you earn per hour, you need to divide your monthly income (after subtracting all the expenses) with total number of hours you worked in that month. For example if you worked 200 hours and received a paycheck of $2500 after taxes, now subtract the amount of money you spent on clothes for work, car-fuel, lunch and other expenses that are let's say $500 per month. So by dividing your monthly income after expenses ($2,000) with total number of hours (200 hours), you will get $10 per hour wage. This simple exercise will tell you how much life energy (in Hours) you are trading for how much money(in Dollars) and how much you are actually getting paid?

Where Is Your Money Going ?

This chapter tells you to keep track of every single dollar that comes in and goes out of your pocket for next few months. Write down all the expenses you make each day for a few months. This simple exercise will work magically to reduce your expenses. The authors inspire you that before you buy anything you need to figure out how many hours you would have to work to buy that product. For example if your net hourly wage is $10 and you want to buy a new computer that costs you $400 it means, the computer will cost you 40 hours of work.

I highly recommend this book if you think you are not financially fit and if you want to become financially intelligent about the true values that money can bring to your life. One important thing I want to share with you is that this book is not an investing book. For investing there are a lot of other good books available. This book is a pure money-saving book. I rate this book very high, it will change your financial life and the way you spend your money.
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on October 5, 2011
When I first read this book back in the 90's, It just didn't sink in. I probably wasn't ready for it. Years later, after reading a really in depth review and glowing commentary from Trent at (...) I decided to read it again, and this time it sunk in. It has done more to help me be at peace with money and finances than any other book I have ever read.

This is not a get rich book, in fact I don't think there is a single "do this" statement in the book. There are some things others have done in the back, but they are more inspirational than anything. What it attempts to do is change your mindset, let you step outside of yourself and reexamine your own truths about money and finances. Kind of like a guide book to Paris, we could both take the book to Paris and select the restaurants we wanted to eat in, the sites we wanted to see, and while they may be completely different and we may never cross paths, we both had a wonderful time. It helps you to define your relationship with money, not mine or anyone else's, just yours.

Other commenters have reflected negatively on the authors investment choices of treasury bills. I think they are missing the point, if your relationship with money allows more risk, then take it, theirs did not. I will agree that the "save the planet" speechs do tend to be overly done, I chose to skip them instead of missing the larger message of the book.

In the last 2 years, I have purchased 20 copies of this book and given them all away except the one I keep to read. I can't say that about any other book I've ever read.
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on February 15, 2016
Some of the most useful investment/priority setting information I've ever read. Following the advice in this book granted me the moral courage to live by my values - they're actually worth living by - and setting my mission in life. Not necessarily easy to follow unless you're ready to make some lifestyle changes. Like anything worth doing, living your life is worth doing well. This book helped me re-prioritize, scrap what hadn't been working for me as far as having the life I wanted for myself. There are good questions to answer, things to ponder, and guidance that is clear and straightforward and not gobbledy-gook. If you're serious about wanting to spend your time wisely and not waste your precious earned income on temporary feel good stuff, this book can help you. If you want to learn how to budget your money, which you're exchanging your limited time on earth earning, this book can help you. It's more moral awakening and strategy than lecturing and scolding. Well worth reading.
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on September 4, 2013
Note that the four stars are for the 2007 revised edition, the original 1992 version would get 5 stars.

The book that has made the biggest impact in the way I think about money is "Your Money or Your Life : 9 steps to transforming your relationship with money and achieving financial independence" (a.k.a. YMOYL) by Joe Dominquez and Vicki Robin. Although I didn't follow all of the 9 steps as meticulously as described in the book, the lessons did stick. Well, maybe with the exception of the last step, managing your finances. Basically, Joe Dominguez suggested keeping a six month reserve of cash and investing the remainder in long term government bonds. There's more to it than that but perhaps that chapter created so much dissent in the retirement forums, book reviews and opinions expressed by financial planners that when the book was revised and updated in 2007 that final chapter was mostly rewritten. Was this a good move? In my opinion, no. What separated YMOYL from other books on investing or personal finance or retirement or personal growth or self help (YMOYL was all of these) was the concept of going all in on government bonds. I must admit that until recently I thought that putting all your eggs in one asset class, especially treasuries, was not a great idea but the more I studied retirement planning, it became clear to me that this is what made YMOYL stand apart from other authors who claim to show you the most secure path to financial independence. If you want to read, or re-read YMOYL I suggest finding a copy before the 2007 revision. At the very least, skip chapter 9 and read that chapter from original version, fortunately is it archived online. If you'd like to get a bit more personal with Joe you can hear him lecture on the audio series that preceded the book, "Transforming Your Relationship With Money" which is still available. The audio series are recordings from Joe's lectures that preceded the book, the message is presented differently than the book and works well on its own.

A while back I wrote a multi-part article on investment lessons for one of my nephews and although I recommended YMOYL, I don't think Joe would have approved of the advice I was offering. As unconventional as his methods may seem at first, he had some very compelling reasons to do what he did and suggest that the reader do the same.

Before getting into to it, a disclaimer. Nothing in this review is to be construed as investment advice.

Joe Dominguez died on January 11, 1997 at age 58 which is coincidentally the same age that I am today. Joe quit his job and never returned to work, at least not for money, when he was only 31 years old. Obviously Joe knew a lot more about investing than I do and probably a hell of a lot more than most retirement experts. He worked as a stock analyst until 1969 saving $100,000 that provided him with a steady income of $6,000 per year. There are reports about how Joe lived an extremely frugal lifestyle yet gave away a small fortune to charities. At the time of his death his nest egg had grown to more than that original amount though I could not confirm his final balance. All this despite having major medical expenses on cancer treatment towards the end of his life.

Many people reading the original YMOYL would think that what Joe accomplished in 1969 was unique to that era and funding your retirement these days requires exposure to equities and a risk managed approach to investing. I disagree.

How much is enough?

When the book was published in 1992 and I was single I could get along just fine on $20,000 a year, now that I'm married and have a more upscale lifestyle (two can't really live as cheaply as one) let's double it up to $40,000 per year. Mind you this is a big downsize considering that this is closer to my yearly tax bill rather than my current salary.

I got these figures using the steps outlined in YMOYL, not the advice given by retirement experts saying you'll need 70% of your pre-retirement income. The figures are based on my somewhat frugal lifestyle and are pretty close to my actual expenses while I'm still working. For more on frugality as defined by Joe refer to chapter 6 of the original YMOYL archived online.

Who are you going to trust?

If I were to ask a retirement expert for advice the expert would most likely run a few calculations and recommend that I invest $1 million in a balanced portfolio made up of a balance of stock and bond index mutual funds or electronic transfer funds (ETF's) along with an annuity for good measure in order to withdraw 4% annually and increase my withdrawal in subsequent years by the Cost of Living Index (CPI) in order to keep up with inflation. This plan should give me a steady cash flow for the next 30 years or until I'm dead, whichever comes first. If you have researched retirement planning this will sound very familiar to you.

Joe doesn't recommend going to a financial planner or a stock broker or to buy mutual funds. To quote Joe directly:

Step 9 is about empowering yourself to make wise financial choices, and your first lesson involves educating yourself so as not to fall prey to unscrupulous brokers, financial planners and salespeople who want to put you into all manner of investment vehicles that pay them handsome commissions.

He also doesn't suggest you try to figure out what the next hot investment will be or to listen to economists:

There is an old saying, "If you get ten economists together, you will get fifteen different opinions."

The more I think about it the more it seems that Joe was one of the few people making sense of the confusing world of personal finance. When the book was revised the book's original co-author, Vicki Robins along with her new collaborator, Monique Tilford, sought out advice from Mark Zaifman, a fee-only financial planner (his company is [...]), Tom Trimbath, a stock trader (author of Dream. Invest. Live.) and others that were probably more knowledgeable in the products and services that they were selling rather than the philosophy behind Joe's investing strategy.

Here are Joe's words:

One of our primary missions in this book is empowerment-allowing you to take back the power that you have inadvertently given over to money. As we will see later, this includes the power you have turned over to various financial "experts" to external circumstances and to financial beliefs and concepts.
Becoming "knowledgeable and sophisticated" does mean learning enough so that you can free yourself from the fear and confusion (or pride and prejudice) that pervade the realm of personal investments. The principles and financial strategies outlined in this chapter are safe, sensible and simple. They are also very inexpensive to implement and do not require extensive financial management or expertise.

Compare that to this passage in the revised edition:

However, there are independent financial consultants who work for a fee, not for commissions on products. Be sure to hire a "fee only" consultant. This is the only way you can be sure that your advisor will never benefit financially from any of the specific investments she/he recommends to you. (You can find a list of them at [...]) Also, try to find a consultant that supports the principles in this book. Otherwise, your planner is likely to recommend higher-risk investments that are not in alignment with a typical FIer's* investment objectives.

* FI can mean Financial Integrity, Financial Intelligence or Financial Independence something that was disambiguated in the revised edition by using FI1, FI2 and FI3, though I find it more confusing than helpful.

According to Joe, his methods are safe, sensible, simple and free from fear and confusion. So why seek out an advisor that will charge you a fee and will most certainly instill some fear, add risk, confusion and throw in a little greed--after all if the advisor can't get you a better return than Joe, what's the point in hiring an advisor?

In my opinion a better update to the last chapter would have been to tell the reader to forgo advisers and brokerage firms altogether and simply open an online account with Treasury Direct where you can buy treasury notes bills and bonds in denominations as low as $100 without paying any fees whatsoever. There's quite a few choices at Treasury Direct including I Bonds and Treasury Inflation-Protected Securities (TIPS) for those who fear inflation but Joe's favorite would probably be the longest term (30 year) bonds.

Is investing in treasuries still a viable option?

If I would have invested in long term bonds when I first started saving and kept at it I would have caught the record high yields of the 80's, peaking out at over 15%, and the average return of my portfolio would be in the vicinity of 7%. The value of the bonds rise as interest rates fall (and vice versa) so most of the older high yield bonds would be worth more than their face value. This didn't matter to Joe because he recommended holding them to maturity, though this is something even he admits that he hasn't always followed.

Sure, that's all well and good but bond yields are low and what if they drop even lower? Let's go to the extreme and say that I don't trust the government so I stuffed that $1 million into my mattress. According to Joe, "mattresses produce income for only a small part of the population" and in fact the best I can do is to draw that $40,000 per year for 25 years without any cost of living increases or just under 19 years with 3% yearly increases at which point it will be depleted. Mind you this mattress strategy will cannibalize the investment, a.k.a. capital, but then again that's what you do with a portfolio of stock and bond mutual funds. The only upside to the mattress method over collecting interest is that I won't have to pay income taxes. Think about it though, provided that I don't tell anyone that I've got $1 million in my mattress, there isn't much risk. Though this isn't something any sane person would do, how terrible can it be? In my case I would only need to fully rely on my mattress money for the next 12 years until I am obligated to apply for Social Security at age 70 and receive monthly checks, with yearly cost of living increases, for the rest of my life. In addition I'll be receiving a pension from work. Include my wife's benefits into the equation and that's two Social Security and pension payments that will amount to substantially more than $40,000 per year. So I should be doing fine even after my mattress money is spent and that's without any interest. Treasuries pay interest, maybe it isn't much right now but at least it is more than the mattress.

Alas, I don't hold any treasury bonds and I'm not a young lad that might be able to catch the next rise in interest rates. As I write this the yield on 30 year treasury bonds are at 3.7% so if I drop that entire $1 million nest egg the financial advisor told me I needed on long term bonds I would be getting $37,000 per year in interest payments albeit without cost of living increases but with a government guarantee and I'll get the $1 million that I invested back when I'm 88 years old. The hit is only 0.3% less than the 4% quoted by the advisor. Investing in treasury bonds would most likely make up this difference because U.S. treasuries are exempt from state and local income taxes while other investments may not be as tax efficient. Now a government guarantee might not seem very secure these days, but ask people who have lost money in the stock market or real estate what a guarantee of getting back their original investment is worth.

What about inflation?

Sure, we've all heard stories of how Social Security will go bust, the government will default on its debt and inflation will take what's left of your pension and savings but how likely is that, really? The first two haven't happened yet so let's look at inflation.

Joe believed that our fears of inflation were inflated. Indeed he made it through years of double digit inflation. The most common measure of inflation is the Consumer Price Index (CPI) which is a list of items weighted by consumer preference. According to Joe the CPI isn't a cost of living index. You don't buy a refrigerator every year and if cold weather makes the price of orange juice skyrocket while simultaneously a bumper crop of apples makes the price of apple juice plummet a financially intelligent shopper switches to apple juice.

He listed the 1970 prices of several items that have remained the same or even decreased by 1990. Now in 2013 several of his examples are still valid. In his example of a family of 4 going to a movie was $15 to $20 in 1970 while in 1990 it was only $4 including the drive, popcorn and soda, I suppose he was referring to being able to rent a video in the 90's. Today a Netflix or similar subscription is only $8 per month and you don't need to drive, the trimmings can be bought at a discount and practically every night can be a movie night. When I was in the Navy in the 70's I had a Volkswagen fastback that cost $5 to fill up for a week of driving around San Diego. Now I use a Vespa to get around the neighborhood where I work and can get everything I need in a smaller geographic area. Though gas prices seemed high in the '70's they are much higher now yet I can fill the tiny Vespa tank for about $5 and it lasts me nearly a month. Joe's usual lunch in the '70's costs around $2 while his '90's lunch was only $.60. He didn't elaborate on what was on his menu but I sometimes buy a 10 pound bag of potatoes for $2 which lasts me over a week, I simply microwave them at work so I don't even spend anything to cook them. If you fancy something more interesting Ellen Jaffe Jones wrote a recipe book titled "Eat Vegan on $4 a Day" and Dr. McDougall claims that you can get by fine on just $3 per day.

I've read studies that show as people get older they tend to spend less. They must have studied healthy old people because medical expenses have most definitely increased. According to Joe you can lower your medical costs with proper lifestyle choices. Indeed one of the top causes of death today is misuse of prescription drugs so avoiding doctors as much as possible might even increase your longevity.

It may seem that Joe was recommending not to factor in inflation but that's not really the case. He did make a point not to fear inflation but one of his mantras was "enough and then some." By living below his means, even on interest payments alone, he was able to keep buying treasury bonds and increase his income. Going back to my example of needing $40,000 per year income, Joe's method at determining the Crossover Point to financial independence was to base it on your total expenses while working. In another step he had you ask, "How might this expenditure change if I didn't have to work for a living?" So if I could raise my investments to $1,081,081 to make my goal income with a 3.7% bond yield but really end up getting by just fine on $37,000, the $3,000 surplus is invested back into bonds and provided I can keep living below my income the surplus will continue to compound and the investment income will increase every year.

So that's all there is to it, just put all your money in treasury bonds?

There's more to it than that. Joe recommends having at least a 6 month cash reserve put aside for emergencies. He recommends the following criteria to whatever you do with your capital:

1. Your capital must produce income.
2. Your capital must be absolutely safe.
3. Your capital must be in a totally liquid investment. You must be able to convert it into cash at a moment's notice, to handle emergencies.
4. Your capital must not be diminished at the time of investment by unnecessary commissions, "loads," "promotional" or "distribution" expenses (often called "12b-1 fees"), management fees or expense fees.
5. Your income must be absolutely safe.
6. Your income must not fluctuate. You must know exactly what your income will be next month, next year and twenty years from now.
7. Your income must be payable to you, in cash, at regular intervals; it must not be accrued, deferred, automatically reinvested, etc. You want complete control.
8. Your income must not be diminished by charges, management fees, redemption fees, etc.
9. The investment must produce this regular, fixed, known income without any further involvement or expense on your part. It must not require maintenance, management, geographic presence or attention due to "acts of God."

If Joe is right does that mean that all of the financial experts are wrong?

Though there are lots of people claiming to be experts, most are just adding to the noise of confusion. When I did my research I looked up scholarly papers and what I found was very scary.

In their paper, "The 4% Rule is Not Safe in a Low-Yield World," authors Michael Finke, Ph.D., CFP®, Wade D. Pfau, Ph.D., CFA and David M. Blanchett, CFA, CFP® claimed that withdrawing 4% from a typical balanced stock/bond investment portfolio is too optimistic. Considering that the 4% rule was a worse case scenario that has gone through exhaustive regression tests, that's a grim outlook.

Books on investing have almost universally pointed out that stocks have always outperformed bonds in the long run and nobody can predict the future. That isn't quite true. Long term treasury bonds were the best investment during the several years of the Great Depression and most recently they have once again outperformed stocks. Low interest rates and a stagnant stock market can last for decades like what happened in Japan since the 1990's. As far as predicting the stock market's future, it is possible to look 10 years forward with a fair amount of certainty. In the paper, "Can We Predict the Sustainable Withdrawal Rate for New Retirees?" Wade Donald Pfau of the National Graduate Institute for Policy Studies (GRIPS) presented a formula that predicted the Maximum Sustainable Withdrawal Rates (MWR) and back tested it to 1883. The paper contains a graph that not only shows you how closely it tracked the actual MWR, but it shows a frighting prediction of where we're headed. That 60% stock, 40% bond balanced portfolio will have a predicted MWR of less than 2%. In addition, the pessimistic side of the 96% Confidence Interval curve on the graph hit rock bottom so it could be much worse.

Of course there are some studies that show a more cheerful future but even at today's 3.7% long term treasury rates, a relatively comfortable and worry free retirement is possible using Joe's treasury bond investment strategy.

What will I do?

I'm not really sure but re-reading the original YMOYL is a good start.
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