Money Books: YMOYL vs. All The Money In The World

There is no real “battle” between the much-acclaimed “Your Money or Your Life (YMoYL)” and the recently published ”All The Money In The World (ATM)”.  In fact, they probably spring from the much of the same philosophy and focus on our relationship with money.  However, I think reading these back-to-back inspired me in completely different ways.

First some background…My natural frugal tendencies is often in conflict with some entreprenuerial impulses.  In general, frugality wins.  It’s not to say I  haven’t ventured out into more entreprenuerial territory but it’s definitely outside my comfort zone.   I have enough on my plate with my full-time job, commute, family, and other priorities in life.  Excuses aside, I sometimes wish I devoted more energy and money to earning more instead of just saving money via sales, negotiating and couponing.

“Your Money or Your Life” resonated with me because it largely supports an ‘alternative’ view of living, one  that is miles away from the rat race.  After finishing this book, I felt strongly that we should move to Italy with our kids.  I am ready for the next phase of my life, whatever that may be.  My husband is tired of life in the U.S. and we have always wanted to raise our kids in Europe, with Italy being the logical location.  While there are many cons, from economic woes to healthcare crisis, we felt that our kids would benefit from Italian culture and heritage.  

“All the Money in the World” appealed to my long dormant entrepreneurial side.   It made me question my choices and wonder if I should have been or become more focus on earning more, even if that means staying in the rat race.  That’s not to say ATM is the opposite of YMoYL.  In fact, ATM’s author is very entrepreneurial and has found her dream career, one that is lucrative enough and flexible for her and her family.  Much like YMoYL, she asks us to re-examine our choices in spending and questions whether our spending is aligned with our values.   The difference, is in the details.  While she cites examples from readers and other sources, I was most struck by examples from her own life.  In the chapter “Ode to a Ziploc bag”, she talks about our tendency to spend more as we get used to higher standards of living.  In one example, she recounts splurging on a $21.99 toy train for her son.  He has more than enough trains just as so many of us have enough shoes, clothes, electronics and other “toys”.   At what point is it enough?  However, what struck me more most about this example was that she could afford to spend that amount.  I want to spend on my kids without worry.  Would we be able to do that if we move to Italy and essentially start over?

My conflicting responses to these two books is probably more indicative of my state of mind than the intended messages.  I think both books have value and will make you examine your own money beliefs.

Book In Progress: All The Money In The World

After finishing “Your Money Or Your Life” (YMOYL), I felt the need to continue my mental shift toward money and decided to read All The Money In The World by Laura Vanderkam.  The author herself was kind enough to email me a PDF of the book despite knowing that I jot down my ongoing thoughts rather than write a full review.  Note to self: I would like to write a wrap-up of my thoughts on YMOYL but that may not be happening soon, or ever!

Here are my random thoughts after reading the first few chapters.

I like her clear, concise writing style.  ”Your Money or Your Life” felt more warm and fuzzy; the tone of this book is more like your most practical best friend.

Chapter 1 “What Else Can That Wedding Ring Buy?” – The author  uses the cost of a wedding ring as a springboard to discuss “opportunity costs”‘; in other words, what can you do with the same amount of money.  Is it more worth while to buy a $5,000 ring but can’t afford cleaning help or date nights when you have kids years later?  Obviously some people can do both, but as someone who is now carefully watching household expenses after kids,  I’m 100% sure that the wiser decision for us was to skip the diamond ring and have the money to get cleaning and nanny/babysitter help!

Chapter 2 “Don’t Scrimp More, Make More” – The main point of this chapter is to illustrate how you can make a bigger difference in your quality of life if you focus on making more money instead of scrimping every penny.  I generally agree, however with huge caveats.    I think go-getters and people who have ”succeeded” often make the assumption that savers have less ambition; if they would only build up their skill set, they could make more money instead of clipping coupons and cutting cable, etc..  While I can see the reason for that assumption, I also think that it’s not the complete picture.  I have good friends in both camps — those who are more natural go-getters/entrepreneurial and those who are not.  While both can have similar educational backgrounds, go-getters are usually more skilled at two very socially-valuable skills: networking and selling themselves.  Time and time again, I see my go-getter friends succeed while the others lose out on jobs, deals, etc… Does this mean you shouldn’t try if you’re not a natural at these socially-valued skills? Of course not. It is very possible to greatly improve at these skills and it is possible to compete and “win” since a variety of factors also come into play in any given situation.

For those who succeeded or are more entrepreneurial, it’s hard to imagine why anyone would “waste time” and scrimp through life.  What I think gets forgotten is that it gets extremely disheartening to be second-choice or third-choice. After a certain number of years, it’s better (for some people) to focus on other things besides job/career/money success and focus on saving money, even it is doing something as mundane as coupon clipping (!) And while I still can’t imagine going to extremes for couponing, saving money is something within everyone’s control and hence more appealing to many.

I do have a tip to add for those who lean towards scrimping. Learn to negotiate!  Negotiate your salary is most important but you can also save when you shop, buy a house, buy a car, on cable bills, on medical expenses, etc.. Doing this often and doing this well will make a bigger difference than cutting coupons.

This book can be helpful to many but I think it’s most useful for those in their 20s/30s with entrepreneurial leanings.  If you find ways to make more money and be smarter with your financial resources, you’ll go a long way and the sooner you learn those lessons the better!

Back to reading…

Financial Independence And Co-Dependence

As I get close to the end of ”Your Money or Your Life”, I alternate between feelings of inspiration and depression, for lack of a better adjective.  Chapter 8 of YMOYL focuses on the cross-over point, when you reach financial independence and reap the rewards.  There are many success stories which are inspiring. Some people quit their jobs to volunteer, spend time with family and friends, and/or travel.  Those are the kinds of stories that I expected to read.  However, many people take a sabbatical and then go back to work.  The point is that choosing to work is very different than having to work. 

At the same time, I get somewhat depressed, or deflated, when I think of taking that next step and the consequences.  The big “What ifs” pop in my head.  I’m ready to move on to the next phase of my life but I can’t imagine feeling so free mentally in regards to finances.  I am used to a steady paycheck with paid vacations;  I imagine that financial worries would seep into my muddled head.  We’ll see how this plays out….

Financial independence is harder to achieve when your spouse is not onboard.  My husband is just not interested in reading or discussing finances.  I have told him about my readings but I doubt he’ll ever read the book himself. 

Like it or not, our financial lives are intertwined.  I don’t believe in separate finances, other than some fun spend money, because it all comes out of the same pot in the end.  When we don’t jointly focus on our household spending now, we both end up spending more.  Luckily he has adjusted to my frugal tendencies over the years even though he thinks I’m a bit obsessed.  Our backgrounds are so different that it’s hard for him to imagine a life where you can’t fall back on your parents as a last resort.  Even when he worries about money, I feel that he believes things will work out.  I don’t think like that.  I imagine worse-case scenarios.

I guess I really need to pay attention to Chapter 9, which talks about managing your finances.  I also lined up another finance/lifestyle book for reinforcement and ideas. Next up: All The Money In The World.. I really hope that I can reach a place where I view money as a tool and not be so paranoid.

Have you crossed over to true financial independence? If so, what’s your story?

Random Bits Of Good Advice

By the time you’re 40ish, or been around long enough, you’ve been on the receiving end of tons of advice — some good, some not so good or at least not applicable to your life.  I thought that I would compile some of the best advice I’ve ever heard.  Maybe you’ll gain something from these “words of wisdom” too.

• “Never get into credit card debt” – My Mom, delivered in such a severe and foreboding tone that I didn’t even ask her why and I never racked up any debt)
• “If your kids fall or bump into something and you know they’re not hurt, just distract them.  ” – Male co-worker.  This tactic also works if they’re fighting over toys or cry for no reason.  You can distract them with funny faces, loud noises or other shiny toys.
• “You can only change your reaction to people.”  – A friend, after hearing me complain one too many times about the same people.
• “Money buys freedom.” – I can’t remember who said this but I think it was a rock musician. 
• “Don’t lean back ahead of time“ – Wandering Scientist, who has written a million good posts about balancing work and motherhood.  Lots of practical tips as well as thoughful posts.  I’ve written about this too and the most important thing is to not feel guilty.
• “Forget balance. Choose Flexibility” – The Happiest Mom blog. This is good advice for anyone with interests outside of work.
• “If someone tries to abduct you, fight back and don’t let them take you away to an isolated place.” – High school teacher, to the whole class.  This stuck with me because it had no context in terms of the school subject.  This teacher was also male and he was so sincere and heartfelt that it made me take more notice for some reason.  I now wonder if he experienced any personal tragedy.
• If you only have a few minutes to clean before guests arrive, clean the bathroom (clean toilet, wipe sink, quick sweep of the floors).  Drop an Alka Seltzer in the toilet bowl.” – Probably a Martha Stewart or Real Simple magazine tip, i.e. clean what people will notice most.
• “To find a good, affordable restaurant in a foreign country, take a peek inside and see if most of the customers are local.  If yes, it’s a good bet the food is authentic and reasonably priced.” — Rick Steves, of the PBS travel series.  That’s not an exact quote but I followed this advice in Europe and it really made a difference in my travel experiences.
• “Focus on your strengths.” I forget where I read this but as someone who tend to focus on improving my weaknesses, this was a bit of a revelation.  While I do continually try to improve myself, I do my best work when I take on projects that play to my strengths.
• “Rock your baby up and down with energy, like this.” – A Nurse, who showed us that many babies prefer a vigorous up-and-down rocking motion rather than the gentle back-and-forth motion.  It sounds strange and sometimes it felt like our babies were hanging on for dear life, but it worked!

Advice is a funny thing. After I wrote down the above list, I realized that most of the advice I take to heart come from strangers or acquaintances (blogs, books, famous people), not people I’m close to in real life.  I don’t know if that’s common or if I’m more dismissive of advice I hear from family and friends, or if most advice given are nothing more than well-meaning clichés. 

Another thing about advice is that timing comes into play.  Sometimes two people can give you the exact same advice, phrased differently, and you just don’t pay attention until you’re ready to hear it.

What are some unforgettable, and good, advice you’ve received or read somewhere?

Inspired by Your Money Or Your Life

I’m reading Chapter 6  of Your Money or Your Life entitled “American Dream on a Shoe String” and I have to say it’s been the most inspiring section for me, so far.  I’ve read a lot about similar topics but it’s nice to see it laid out in one chapter and focusing on the big picture rather than giving tips.  Tips are useful but the author’s point is that this type of information can get very outdated quickly, and you can find tons of good tips on frugality blogs.

I got a lot out of this chapter although for very different reasons.  One reinforce what I’ve known for a long time and the other was a new way of looking at things:

What I’ve known forever is Stop Trying To Impress People.  I’ve written before about keeping up with the Joneses, or the mythic rich couple next door, and it’s a losing battle.  As the writer notes, “If you stop trying to impress other people you will save thousands, perhaps millions, of dollar.”  It’s not just about money and conspicuous consumption.  That’s because the desire to impress can affect all areas of your life from big purchases to career choices.  Unless you dig deep, you may never do anything that really brings you true satisfaction.

The more eye-opening statement for me was Meet Your Needs Differently.  This means that instead of relying on retail therapy or exotic vacations, you find affordable substitutions to satisfy your needs.  For example, a big trip abroad may mean different things for different people.  Maybe you want to a break from routine or want some downtime. Maybe you really like to try new things.  Once you figure out your real need, you can find a frugal substitute that can satisfy that same need.  You can get that break just by staying home from work. You can get downtime by hiring people to clean house and and do your chores for one day.   If you crave something new, you can take a foreign language course online or try out an exotic cuisine.  That’s not to say you should never take that big trip but just make sure you can afford it!

Two of my favorite indulgences are spa days (massages, facials) and traveling.  Both things are not very do-able for me at this time.  However, if I analyze why I love these things, I can probably find frugal substitutes.   For example, if I go to yoga, I get time for my self and relaxation, which are two of reasons I love spa days.  I may have to get better about mimicking the pampering aspects of a spa.  Some things that I can do is take a long bath with lavendar oil,  do a steam/facial at home, buy flowers, drink water with lemonade and play calming music.  

As for traveling, my favorite parts are meeting new people and trying new cuisines, both of which is very do-able in multi-cultural Los Angeles.  I like the feeling of seeing new things and it may be time to explore new neighborhoods.

As I progress with the book, I feel myself more reluctant to spend.  At the same time, I have been rationalizing the purchase of pricier skin products because those are important to me.  My husband made two lunch dates and the old me would have been a bit upset at the increased dining out expenses in the same week (and I had made separate plans too!); however, socializing with friends is a priority for us and I won’t sweat it.

On the other hand, I have been spending way too much on eating out at work. I’m going to make an effort to make simple sandwiches.  One favorite that is easy to make is toasted wheat bagel with sliced tomatoes, arugula and tuna in oil, plus a little mayo (avocado optional).  I just have to watch out for food waste, which negates all my money-saving efforts!

Update: I took a peek at the Madewell website.  I am so tempted…so many cute dresses, sweaters and tops on sale!  I don’t need anything but I do want a summery canvas bag, which of course is not on sale.  Help!

YMOYL: I Hate Charts

I’ve been sharing my general impressions of “Your Money Or Your Life” (YMOYL) on my journey as a book club of one.  Part of me feels like I should have started the online book club but I would not have been as thorough as minhus and a bout of flu would have killed any enthusiasm.  And as you can see from my distaste for doing the actual exercises, I can’t lead a club if I am doing the minimum to get through the book! 

As I mentioned earlier, I did finally come up with my real wage.  According to YMOYL, this is your hourly income AFTER you add in your commuting time and subtract all work-related expenses from childcare to work wardrobe to lunches.  I think my number is on the low side but I’m sticking to it for now and using that as a mental yardstick to rein in my purchases.  This is working so far and I highly recommend this step!

In Chapter 5, you’re also supposed to figure out your monthly income and expenses, then create an awesome chart so that you can have a visual reminder of your spending habits.  I haven’t take the step of tracking my real-world expenses.  However, I did an estimate which takes my gross income minus health insurance, taxes, and regular monthly expenses.  I looked at my previous year’s expenses for auto insurance, auto repairs and renter’s insurance and divided it by 12 to come up with a monthly amount.  End result: I have a $300 buffer each month.

It’s a bit of a relief to know that I even have a buffer.  At the same time, I’m not sure how/why we have a buffer considering that a few years ago, I estimated that we had about $100 left over after expenses.  Since then, expenses have generally gone up while wages have been stagnant.

Possible reasons for this mysterious buffer are:

• Grossly under-estimated expenses: In other words, I really should track expenses.
• Lower taxes due to child credits? 
• Lower bills for cable, DSL and phones: I re-negotiate expenses all the time but this year, I was able to really trim these bills by reducing cable channels and getting $40-50/month discount off my DSL/phone.  Most years, the rep offers a $5 – $10 discount if I threaten to cancel.  As I learned this year, the offer can vary greatly depending on timing and the customer service representative you talk to!

I may have to suck it up and chart expenses and/or go over old credit card statements to get more accurate numbers.  Part of me thinks that this buffer is real. I included as many variable expenses as possible from gifts to auto insurance.  I also estimated on the higher side for stuff like household goods and toiletries.    However, nothing beats a real estimate based on actual tracking of expenses!

Your Money Or Your Life: Stuck on Chapter 4

Chapter 4 of “Your Money or Your Life” focuses on fulfillment.  The questions asked are:

1. What did you want to be when you grow up?
2. What have you always wanted to do that you haven’t done yet?
3. What have you done in your life that you’re really proud of?
4. If you knew you were going to die in a year, how would you spend that year?
5. What brings your the most fulfillment – and how is that related to money?
6. If you didn’t have to work for a living, what would you do with your time?

I am stuck. I have no answers or rather my answers change depending on my day and mood.  I think one of the big problems is that my proudest accomplishments are related to my current line of work, yet I’m not sure that I want to be in this job or field for the rest of my life.

With this in mind, here’s my attempt at answering those questions:

1. I wanted to be a dancer at some point but I can’t dance well.
2. Don’t know.
3. All related to my work, or just that fact that I had kids.
4.  Travel, or live in a foreign land for a year.
5. I love living in foreign places and getting to know a city or place. I love learning new things and challenging my mind.  I also find it very fulfilling when I help other people even if it’s simply giving advice or support in an online forum.
6. I would live in a beautiful natural environment, work in a garden, exercise, eat well, spend time with my family, and read / write blogs.  I would do something to make a difference…not sure what.

I have no idea how these answers can shape my life.  Maybe it’s because I skipped some exercises in earlier chapters?  Help…

Although this wasn’t addressed, I do want a somewhat comfortable life.  Everyone’s definition of comfort is different.  For me, that means money in the bank to take care of emergencies, fly and visit family members, take care of my family’s health from braces to major medical care, get cleaning help sometimes, and to buy some pretty clothes every so often.

I also don’t want to be too dependent on the kindness of others.  At least among my friends and family, I’ve often noticed that the poorest members get tons of hand-outs from small favors to plane tickets.   I’m sure others are glad to help but I would worry that my livelihood is dependent upon someone else having to work the grind so to speak.  (If I am ever in that situation, I would make sure to return the favor in other ways via my time but so many people just seem to get used to receiving and not giving help, in my opinion).

So the bigger question is what is enough?