Your Money or Your Life

Presenters

• Jonathan Allan

• New Road Map Foundation– Speakers Bureau Member

• Practicing the 9 Steps since 1996

The YMOYL Toolbox is NOT:• A get-rich-quick scheme

– If you get monetarily rich, it happens slowly.

• A pyramid scheme– There’s nothing to buy or sell. If anything, it’s about not buying.

• A scam to get you to buy a book– The best place to get this book is at the library: 332.02401 D713y.

• If it’s anything, it is a philosophy with some pragmatic To-Do’s attached; it’s an Idea.– With no intellectual property fees!

“If you have knowledge, let others light their candles from it.” - Anonymous

Transforming Jonathan’s Money Relationship

• Loaned the book 1Q 1996 (Thanks Robbie!)• Paid off our last debt (mortgage) in 2Q 1997• Jonathan quit job in 2Q 1997 to finish M.S.• Jonathan re-employed 2Q 1998• Major house upgrades 1998 - roof/windows• Began saving for FI-3 in 1Q 1999• We expect to reach FI-3 in 2007 - 2013

“If thou wilt make a man happy, add not unto his riches, but take away from his desires.”

- Anonymous

Transforming Jane’s Money Relationship

• Survived 3 lay-offs in 1990s • Read YMOYL book in 2001• Attended this class in 2001 and started tracking

all expenses and income• Reduced work schedule to 32 hours per week in

2003• Paid off my last debt (mortgage) in 2004• FI-3: ?

The Three “FI”s

• FI-1 = Financial Intelligence• When you can look at money flowing through your life and know exactly why it is doing

what it is. Anyone willing to think about their money can do this.

• FI-2 = Financial Integrity• When you can look at your spending and see that money is being spent on items that will

return the same amount of life energy. Anyone that can add/subtract can do this.

• FI-3 = Financial Independence• When you have enough income coming in from your investments that you no longer

need to work for money (you may quit your job or retire). Many people can do this too!

“It’s kind of fun to do the impossible.” - Walt Disney

Slavery to Stuff?

Debt: An ingenious substitute for the chain and whip of the slave-driver. - Ambrose Bierce

The Nine Steps or Tools1. Make Peace with the Past

2. Track your Life Energy

3. Monthly Tabulation

4. The Three Questions

5. Making Life Energy Visible

6. Valuing your Life Energy - Minimizing Spending

7. Valuing your Life Energy - Maximizing Income

8. Capital and the Crossover Point

9. Managing your Capital - Now that you’ve got it, What are you going to do with it?

“If you can’t explain it simply, you don’t understand it well enough.” - Albert Einstein

Doorways To Voluntary Simplicity

• Social Doorways:– Environmental Concerns

– Moral Concerns

– Social Justice

• Personal Doorways:– Personal Finance

– Time Famine

– Debt

– Spirituality

– Retirement

Jobs are Stressful

The function of freedom is to free someone else. - Toni Morrison

Tool 1: Make Peace with the Past• Calculate your Current Financial Net Worth:

– Current Assets - Current Liabilities = Current Financial Net Worth– Current Financial Net Worth is not equal to Self Worth!!!

• No Shame, No Blame• Calculate your lifetime income:

– Personal Earnings and Benefit Estimate Statement from Social Security - comes a few months before your birthday. All IRS earnings

– Add all the money that didn’t get reported to IRS - estimate if needed

– Compare the amount of money you’ve ever owned to your Current Financial

Net Worth. What’s the difference? Where did it all go? • Remember: No Shame, No Blame• Know about it all. Understand where you have been. “It’s never too late to become what you might have been.” - George Elliot

Why Make Peace with the Past?

• Makes your monetary past plainly visible

• Destroy false ideas about yourself & money– “I can always earn lots of money”

– “I can never earn any money”

• Build confidence in your ability to earn

• Sheds light on the “skeletons in your money closet”

Insanity: doing the same thing over and over again and expecting different results.

- Albert Einstein

Fulfillment Curve - Survival

“More is better is a myth.” - Monica Wood

Fulfillment Curve - Comforts

Possessions, like fat, insulate us from the outside world, building a wall of junk which we can hide behind. - Christy Best

Fulfillment Curve - Luxuries

Affluence has a real cost. Its possibilities demand impossible commitments of time and energy. It fails to discriminate between what is wise and useful and what is merely possible.- Tom Bender

Fulfillment Curve - More

"Non intelligunt homines quam magnum vectigal sit parsimonia." (Cannot people

realize how large an income is thrift?) - Marcus Tullius Cicero

Fulfillment Curve - RIP

“You can never get enough of what you don’t really want.” Sally Forth (Greg Howard)

Fulfillment Curve - Exercise

Fulfillment Curve - Enough

“The US is a consumptive society; as a society we value the bringing of possessions into our lives, not the having of possessions. In some sense, the continued extraneous acquisition of things is the evil we face - not the having and enjoying of things. It’s a struggle [to decide what is enough].” - Jonathan Allan on simpleliving.net

Fulfillment Curve - Participation

“The unexamined life is not worth living.” - Socrates

Tool 2A: What is Money?• Money is something we choose to trade our Life Energy

for.

• Money is something we choose to trade our Life Energy for.

• Life Energy is another name for Time (among other things).

• How much are you trading your Life Energy for?

• Calculate your Real Hourly Wage

• It’s NOT: weekly salary/40 hrs = $.$$/hr!

“Money is our life energy; it takes it’s value not from external definitions but from what we invest in it. Similarly, paid employment takes its only intrinsic value from the fact that we are paid to do it.”

- Joe Dominguez

The Koi Pond

A light suitcase means freedom. - Hope Frommer

Real Hourly Wage - Job CostsCompare this job to not having a job because you have “enough”

• Time Costs:• Job Time -

• Unpaid Overtime -

• Commuting -

• Costuming -

• Bought Meals -

• Decompression -

• Vacations -

• Escape Entertainment -

• Illness -

• Other -

• Total Time Costs:

• Dollar Costs:

• Unpaid job expenses -

• Commuting -

• Costuming -

• Bought Meals -

• Decompression -

• Vacations -

• Escape Entertainment -

• Illness -

• Other -

• Total Dollar Costs:

“You should never confuse your career with your life.” - Dave Berry

Time Famine?

Real Hourly Wage - Calculation

• (Weekly pay - Weekly costs) / Total Hours or• (Monthly pay - Monthly costs) / Total Hours

• Does it cost you money to work? (Is Real Hourly Wage negative?)

• How many minutes (hours?) of work does it take to make a $1?

• Are you surprised at how much/little you actually make per hour?

• How do you feel about the amount you get for your Life Energy?

• Are you sure you want to work this job for that amount?

• Remember: No Shame, No Blame

“Spending money you haven’t earned yet is like using up years you haven’t lived yet.”

- M. Hoppe

Tool 2B: Track Every Cent That Goes Through Your Life

• Goal is to determine - exactly - where your money goes and for what.

• A necessary, transformational, discipline

• No Self-Judgement, Lots of Discernment

• Keep track of every cent that comes into or goes out of your life.

• Keep track of every cent that comes into or goes out of your life.

• Get as close as you can, continuously improve!

“He who knows he has enough is rich.” - Tao Te Ching

Meticulous

Lying to Ourselves

Real happiness is cheap enough, yet how dearly we pay for its counterfeit. - Hosea Ballou

Tool 3: Monthly Tabulation

• Tabulate all your income and expenses, to the penny if possible

• Group expenses (and income if necessary) into categories that make sense to you

• Copy over raw spending numbers to categories

• Total each category

• Divide the total by Real Hourly Wage and note number of hours (amount of Life Energy) for each category

• How do you feel about each category?

• Remember: No Shame, No Blame

“The trouble with being poor is that it takes up all your time.” - Willem de Kooning

Annual Spending Categories

Category Dollars Life EnergyFederal TaxesIncome, FICA, Medicare

$11971.27 792 hrs 50 mins

House Payment $5580.00 369 hrs 32 minsCar Payment $3180.00 210 hrs 30 minsGroceries $2087.31 138 hrs 14 minsHousehold Sup. $442.57 29 hrs 19 minsGardening $268.90 17 hrs 45 mins“ … To realize the value of one hour, ask the lovers who are waiting to meet. To realize the value of one minute, as a person who missed the train. …” - Anonymous

Tool 4: The Three Questions

Q1 - Did I receive fulfillment, satisfaction, and value in proportion to Life Energy spent?

Q2 - Is this expenditure of Life Energy in alignment with my values and life purpose?

Q3 - How would this expenditure change if I did not have to work for a living?

Jonathan’s 1999 QuestionsCategory Dollars Life Energy Q1 Q2 Q3

Clothing $51.42 3 hrs 25 mins 0 0 -Comics $70.47 4 hrs 40 mins + 0 0Professional Exp. $306.72 20 hrs 19 mins - - -Hand Tools $5.33 0 hrs 21 mins + + +Computer Toys $297.27 19 hrs 41 mins + 0 0Magazines $63.63 4 hrs 13 mins + 0 -

Q1 - Did I receive fulfillment, satisfaction, and value in proportion to Life Energy spent?Q2 - Is this expenditure of Life Energy in alignment with my values and life purpose?Q3 - How would this expenditure change if I did not have to work for a living?

Pam’s 2000 QuestionsCategory Dollars Life Energy Q1 Q2 Q3

Clothing $1059.48 105 hrs 57 mins - - -Shoes $196.90 19 hrs 41 mins 0 - -Books $723.91 72 hrs 23 mins 0 0 -Magazines $100.82 10 hrs 5 mins 0 0 -Crafts $121.38 12 hrs 8 mins 0 0 +Gifts $172.76 17 hrs 17 mins + 0 +

Q1 - Did I receive fulfillment, satisfaction, and value in proportion to Life Energy spent?Q2 - Is this expenditure of Life Energy in alignment with my values and life purpose?Q3 - How would this expenditure change if I did not have to work for a living?

Jane’s 2003 Questions

Category Dollars Life Energy Q1 Q2 Q3

Work Clothes $572 45 hrs 46 mins - - -Gasoline $394 31 hrs 31 mins - - 0Education $202 16 hrs 12 mins 0 0 -Travel $559 44 hrs 46 mins + 0 +Gifts $210 16 hrs 48 mins + + 0Gardening $143 11 hrs 26 mins + + +

Q1 - Did I receive fulfillment, satisfaction and value in proportion to Life Energy spent?Q2 - Is this expenditure of Life Energy in alignment with my values and life purpose?Q3 - How would this expenditure change if I did not have to work for a living?

Getting Back to Enough• This is how we get back to Enough - the peak of the

Fulfillment Curve - by looking at the Monthly Tabulation regularly (At least monthly! )

• Identify Clutter - those categories with “-” in them

• Ask yourself the three questions before every purchase as well as these:– Which category is this purchase in?

– Are items in this category clutter?

– Is there some other way I can deal with this issue without buying?

“You may have a serious junk problem if you live in fear that someone you respect may someday open one of your closets.” - Don Aslett, Clutter’s Last Stand, pg. 83

Frugality

• Frugality is deriving maximum fulfillment (joy, value, etc.) from every thing we own or use.

• Simplicity is the ethic (idea), Frugality is the technique

• Clutter is the failure to enjoy every thing we own

“Def: Frugal Living - systematically reducing stuff that gets in the way of a joyful life.”

- Joseph Beckenbach

Clutter = Decorative Cellulite???

With respect to luxuries and comforts, the wisest have even lived a more simple and meagre life than the poor. - Thoreau

Qualities of “Enough”

• Accountable to Self - FI-1 & FI-2– Knowing how money flows in your life is basic to FI-1

– FI-2, Integrity, is on the line every time you buy: am I spending to my values?

• Internal Yardstick for Fulfillment– Can’t ever have enough if others determine what is enough: advertisers, Joneses.

• Known Purpose in Life– Is there a higher purpose in life than just getting every thing we want?

• Responsibility– Each of us is “Response - Able” - remove the knee-jerk spending response.

“The real measure of your wealth is how much you’d be worth if you lost all your money.”

- Anonymous

Tool 5: Making Your Life Energy Visible

• Make a wall chart on Graph paper

• Vertical scale is money or dollars

• Horizontal scale is time or months

• Graph Income and Expense points

• Connect the dots

• Can also do this with software, but a PC is NOT necessary!

“The gods only laugh when people ask them for money.” - Japanese saying

Sample Wall Chart

Why do a Wall Chart?• Gets your spending out in front of you regularly

• Put it somewhere you’ll see it every day: inside closet door

• As you begin to see the patterns in your spending, modify your spending to be more in line with your values (FI-2)

• If overspending, you will see it quickly and can adjust

• Eventually, you’ll see a trend down in the spending line

• Your income will probably rise over time too

• The difference between the two lines is called “Capital”– Not “Savings” or “Disposable Income”

• Capital the beginning of FI-3 - Financial Independence

• Learning to invest Capital is FI-1 - Financial Intelligence

“What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?” - Adam Smith

Tool 6: Minimizing Spending• As you spend with integrity, you’ll find your spending goes down

painlessly – Usually 20% or more

– No deprivation is needed - just a continual focus on spending integrity

• No budgeting needed - just consciousness of spending Life Energy (budgets are like diets, they don’t work)

• Buying your way out of life’s problems will become less attractive - it becomes more fun to be “frugal”

• When you need less money, you can work less, freeing up Life Energy (time/juice) for more important (to you) things

• If you can arrange for an income stream equal to your new, lower expenses, you can quit working if you want (FI-3)

“I never realized that my life would grow when I was focussed on reducing!! All I wanted was sanity and some peace. I like increasing my choices too!!” - Lori on slnet

Keeping up with Bob

Do you think the Joneses care if you're keeping up with them or not? Joe Dominguez

Tool 7: Maximizing Your IncomeYour Real Hourly Wage may spur you to re-evaluate

your employment situation:– You may change the way you handle your current job

and its’ associated expenses

– You may become more motivated to rise to the next challenge and level at your current employer

– You may change jobs to make more money without selling out your values

– You may quit your job (negative Real Hourly Wage)

– You may discover you don’t need a job after all (FI-3)“If time is money, there’s got to be a better exchange rate than this.”

- Frank (Bob Thaves, Frank and Ernest)

Tool 8 - Crossover Point• Happens as you invest capital that returns interest• Plot a monthly average of investment income• Average monthly investment income eventually

crosses average monthly expenses• It takes a finite period of time• Traditional Definition of Financial Independence

(FI-3): no more need to work, expenses are covered by investment income

It is only when we forget all our learning that we begin to know. --Henry David Thoreau

Sample Wall Chart

Tool 9 - Learn about Investments

• Looking for investments that are safe (to you)• Looking for investments that do not require work

to maintain (maybe)• Often interpreted as only government bonds are

acceptable investments for achieving FI-3:– Not true: depends on your unique situation, investment

skill, and interest in investing

– Also depends on your income level, willingness to work at income-producing ventures, and risk tolerance

To Sum It Up1. Make Peace with the Past - No shame, no blame

2. Track your Life Energy - Real hourly wage

3. Do the Monthly Tabulation - Your personal categories

4. Ask three questions w/every purchase - Fulfillment curve

5. Make Life Energy Visible - Wall chart

6. Value your Life Energy - Minimize spending to enough

7. Value your Life Energy - Maximize income w/o selling out

8. Cross Over Point - You could quit if you want to

9. Learn About Investments - Guide your capital growth

Pick the step that makes the most sense and get started. When you get good at that one, pick the next one that makes the most sense.

Do NOT try to do them all at once!!!!!

“Oh no! Not ANOTHER learning experience!” - Anonymous

Additional Resources• Your Money or Your Life - Joe Dominguez & Vicki Robin

• New Road Map Foundation - www.NewRoadMap.org

• Center for the New American Dream - www.NewDream.org

• On-line book store, discussion forums, information databases: www.SimpleLiving.net (.com and .org exist too, but are unrelated )

• Library - RPL has excellent financial section - dig in!

• Transforming Your Relationship with Money - Tape Course

• Contact us: Jonathan & Pam - email: AllanJ@LL.net

• This presentation available to other groups - contact us

• Study groups can be set up to explore these ideas in depth

• Web search words: “Voluntary Simplicity”

• www.LiveSimplyInTheCity.com - Jonathan’s Book

“Tears may get you sympathy, but sweat will get you gain.” - Jesse Jackson