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Author: tutone Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 756600  
Subject: Your Money or Your Life Date: 7/25/2000 7:44 PM
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I'm about half way through this book. Interesting read. They have a perspective that obviously appeals to the mindset on this board. I have a question though, for those of you who have read the book. The exercises strike me as a major time sink. I'm wondering how many of you did them, and what your impressions were. Did you / do you track every penny you spend? Have you calculated how much money you've made over the course of your life, or your total net worth to the penny? If so how much time does it take?

Tutone
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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13734 of 756600
Subject: Re: Your Money or Your Life Date: 7/25/2000 8:19 PM
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tutone asks,

I'm about half way through this book. Interesting read. They have a perspective that obviously appeals to the mindset on this board. I have a question though, for those of you who have read the book. The exercises strike me as a major time sink. I'm wondering how many of you did them, and what your impressions were. Did you / do you track every penny you spend? Have you calculated how much money you've made over the course of your life, or your total net worth to the penny? If so how much time does it take?

I read "Your Money or Your Life" (YMOYL) in 1996, two years after I retired. As it happened, I actually had done most of the things Dominguez outlines in the book, but not to the level of detail he recommends. For instance, I just tracked major expense items that I payed by check (i.e., rent, utility bills, credit card card bills (paid in full each month)) and I had a "misc. cash" category that probably accounted for 15% to 20% of my spending (i.e. grocery shopping, restaurant meals, etc. that I didn't pay by credit card.) As long as my percentage of gross pay saved kept rising, I didn't see any need to track each category down to the last penny. (I was saving about 50% of my gross salary the last 2 or 3 years I was working.)

I didn't make an attempt to calculate "how much money you've made over your life" until 1998 when I decided to fill out the Social Security Personal Earnings and Benefit Estimate Statement which had my earnings from age 16 to age 38 (when I retired.) After adding in the extra earnings I had in the later years beyond the FICA limits (for 2000 the FICA limit is $74,000), I discovered that my retirement portfolio had grown more in 1998 than the sum total of all my lifetime earnings.

A pretty bad advertisement for the theory that "work" is rewarded. <grin>

intercst



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Author: 1HappyFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13735 of 756600
Subject: Re: Your Money or Your Life Date: 7/25/2000 8:28 PM
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I have a question though, for those of you who have read the book. The exercises strike me as a major time sink. I'm wondering how many of you did them, and what your impressions were. Did you / do you track every penny you spend? Have you calculated how much money you've made over the course of your life, or your total net worth to the penny? If so how much time does it take?

I didn't do the exercises because I didn't need to. I discovered the book, TMF and REHP at about the time when I had "enough". It would have been pointless to plot a line towards independence day when I was already there. Still, the book was useful to me because it supported the conclusions I had already made and it helped my wife to understand the true cost of continuing my career and our consumerist habits.

We had always been LBOM and we had "enough", but we needed to move away from a good job market to be able to transcend to the next level (ER). Uprooting was/is traumatic, but well worth it.

I think one thing that made it less necessary for me to track expenses and all the ancient history was that we have already had a working budget for many years. We were aware of where our money was going and only needed to understand what impact our spending habits were having on the survivability or our portfolio.

1HappyFool

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Author: arrete Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13736 of 756600
Subject: Re: Your Money or Your Life Date: 7/25/2000 8:37 PM
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Did you / do you track every penny you spend?

I did and I do. Before I retired, I tracked the pennies to see how much money I would need for retirement. Quite the eye-opener - no more high-priced mochas. I even tracked when I was overseas, and it's harder to do in krona!

Now I track because I'm not completely sure I've got spending down right. I'll probably stop pretty soon, 'cause I sure know where my money is going, and now I have a feel for it.

I figured out my "real wage" once - that was kind of interesting. Didn't do the rest of the stuff.

arrete

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Author: dantes One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13737 of 756600
Subject: Re: Your Money or Your Life Date: 7/25/2000 9:22 PM
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I also did most of the YMOYL exercises, though not to the penny. This was about two years before I retired, and I could see the light at the end of the tunnel already. My wife and I are naturally frugal, and our four kids help keep us reminded of that fact, so we didn't track spending to the penny for very long. It was sufficient to add up the ATM withdrawals and checks written each month to be able to plot monthly spending.
-Dantes

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Author: peteyperson Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13740 of 756600
Subject: Re: Your Money or Your Life Date: 7/25/2000 9:48 PM
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Geez, how does someone retire at 38.

Bold step to think you are financial secure and will remain so.

Was the gain due to the market jumping by so much?

Pete

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Author: AliFool Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13741 of 756600
Subject: Re: Your Money or Your Life Date: 7/25/2000 9:58 PM
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I'm torn between all the different ways to save. I'm looking for a fee-only financial advisor to help with taxation and other issues facing a couple about to combine assets (and debts... and LIVES!), but in the meantime, perhaps you're willing to advise:

Me: maxing 401K and get match, maxing ESPP, have old IRA from former jobs, paying monthly on econo-car and small student loan, no cc debt. Tiny 1-stock DRIP but not contributing more. Own tiny amount of stock outside retirement accounts. Have some cash, but not much -- saving for downpayment on modest home w/ no immediate plan to buy but strong desire.

Fiance: A bit to 401K but no match, no ESPP, no Roth (but has old IRA from former jobs), paid off car, paid a small amount for early exercise of company stock (to minimize future taxes), paying off ccs very aggressively, but there's still significant debt there.

We don't live very extravagantly, but we also don't put EVERY cent away for ER. We go to weddings (travel and gift costs), cultural events, movies, dinners out, etc. We try to maximize value and minimize cost in these areas. Most dinners and movies are at half-off, etc. We shop sales, etc.

Any advice for fine-tuning?

Thanks. You are my heros!

--AF

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Author: yolita Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13743 of 756600
Subject: Re: Your Money or Your Life Date: 7/25/2000 10:00 PM
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I did some of the exercises in the book, but found the tracking of expenses and plotting of portfolio growth the most valuable. It takes a little time to track expenses (I just get receipts everywhere and add it up later), but it's really useful in understanding where the money goes. It's also great for budgeting or deciding what those RE expenses will look like. It also helps you identify if you are spending money on the important things.



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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13746 of 756600
Subject: Re: Your Money or Your Life Date: 7/25/2000 10:13 PM
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peteyperson writes,

Geez, how does someone retire at 38.

Bold step to think you are financial secure and will remain so.


Not really. Once you get to where you can live on a 4% of assets inflation adjusted withdrawal, you're "100% safe" as far as running out of money.

If you haven't seen it already, take a look at "Career Advice for Budding Early Retirees" see link:

http://home.earthlink.net/~intercst/careeradv.html

Was the gain due to the market jumping by so much?

Yes. Particularly two individual stocks in my IRA, Dell and Pfizer. But that didn't happen until after I'd been retired for three years.

intercst



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Author: retin10 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13759 of 756600
Subject: Re: Your Money or Your Life Date: 7/26/2000 1:00 AM
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for those of you who have read the book. The exercises strike me as a major time sink. I'm wondering how many of you did them, and what your impressions were.

I've worked my way through some of the steps as follows:

1) Total Lifetime Earnings: This was pretty easy for me, as I kept all my W2's way back to when I was sixteen years old and worked part time at Jack-in-the-Box! It was interesting to see where I came from ($1.75 an hour back then), how much I made now and what I had to show for it (not much).

2) Compute Your Real Hourly Wage: Because I don't have a long commute and can dress casually, etc. my real hourly wage is close to what I earn. But for some, especially a parent wanting to stay at home with the kids, this step is a real eye opener. It can actually cost a lot of money to work (clothing, transportation, meals, taxes on second income,child care expense, etc).

3) Keeping track of every cent that comes into and goes out of your life: I have been doing this for 3 years now and it has become such a habit that it is almost second nature. It's very interesting to see how you spend your money. It also begins to make you conscious of things you may not have been aware of before. For example, I used to spend a lot of money buying junk food from the vending machines at work. Once I saw the pattern, I had to ask myself why am I doing this? What I finally realized was that I was eating out of boredom and the habit gave me a "legitimate" excuse to get out of the chair, go visit the machines and goof off for a few minutes. Now, I give myself permission to go for a walk when I need to without a stop at the machines. I also realized, through tracking expenses, that I was a book buying junkie. Now I get my fix at the library.

4) The Wall Chart: This is really neat because it makes visible your income, expenses and capital. If you can keep the expense line below the income line, it feels great. It may be psychological, but looking at the wall chart, making plans, thinking about the future has helped to form new habits. I don't like to see the expense line cross the income line and now I'm more inclined to make sure it doesn't.

I don't ask the questions about my spending (i.e., is this expenditure in alignment with my values, etc.) as suggested in the book but I do begin to see patterns and then try to determine if there needs to be a change. Overall, I think I did benefit from going through these steps.




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Author: hairyfoot Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13763 of 756600
Subject: Re: Your Money or Your Life Date: 7/26/2000 1:51 AM
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The exercises strike me as a major time sink. I'm wondering how many of you did them, and what your impressions were. Did you / do you track every penny you spend? Have you calculated how much money you've made over the course of your life, or your total net worth to the penny? If so how much time does it take?

I read YMOYL shortly after it came out but really didn't apply any of it until I began to think about early retirement.

I've done most of the exercises to one degree or another at one time or another. One spring, I happened to run across several large boxes stuffed with old pay stubs and tax returns while cleaning out an attic so figuring approx. what I'd earned was fairly quick. Later, had to provide an inventory of our valuble items for insurance purposes so while I was going room-by-room anyway, video taped and cataloged all the contents. That took the time (done over two weeks) as we had lots of stuff (neatly) packed into every nook of the house, garage, and barn. It was all so neat and tidy, though, that I probably wouldn't have realized just how much stuff was there if I hadn't done the inventory. It was quite an eye-opener to see how much money we had tied up in stuff (quite nice, most of it) that we didn't even see from one year to the next, much less use. I'd say that was the most beneficial exercise, personally, than figuring out how much money had passed through my hands.

I'd always tracked broad categories of expenses but I've never tracked expenses in the kind of detail that Domingues and Robin suggest. Might be useful. Just too fiddley for me.

Harry

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13767 of 756600
Subject: Re: Your Money or Your Life Date: 7/26/2000 2:17 AM
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<<I'm about half way through this book. Interesting read. They have a perspective that obviously appeals to the mindset on this board. I have a question though, for those of you who have read the book. The exercises strike me as a major time sink. I'm wondering how many of you did them, and what your impressions were. Did you / do you track every penny you spend? Have you calculated how much money you've made over the course of your life, or your total net worth to the penny? If so how much time does it take?

>>


Quicken tracks net worth and income/expenses to an accuracy I am satisfied with.

I should have hung onto the Social Security system report on lifetime earned income --that was interesting.

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Author: lkfrey Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13775 of 756600
Subject: Re: Your Money or Your Life Date: 7/26/2000 7:33 AM
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I just read the book. I liked it very much and recommend it.

No I didn't do the exercises, however some of them, such as tracking all expenses, are things I have done on my own at times in the past. For almost twenty years I tracked all of the office's expenses and income. One of the nice things about retirement will be the sharp decrease in the number of small pieces of paper I will need to keep, sort and file each month. <grin>

If I felt that overspending without a sense of where my money was going was a personal problem, as it is for some folks, I would consider doing the exercises.

I loved the happiness curve that they had early in the book: showing happiness peaking out when comfort and the used and enjoyed luxuries were achieved, and then falling back down again as the clutter and excess began to accumulate.

Laura, still sorting the STUFF, and very concerned with clutter at this time.


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Author: seattlerecruiter One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13796 of 756600
Subject: Re: Your Money or Your Life Date: 7/26/2000 11:48 AM
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The exercises strike me as a major time sink. I'm wondering how many of you did them, and what your impressions were.

.......

I found the book to be interesting from a philosophy standpoint, but the exercises were only sem- useful if you are already putting a good deal of money away and doing some good budgeting.

I've always used Quicken to track every penny, so that part was a wash. I did not bother to track my lifetime income. I did compute the "real hourly wage", but it was by no means shocking.

In short, I think if you are already sticking to a well thought out budget, the book has limited usefulness. There is not too much shock in finding you spend 100 a month on eating out if you are already planning to do so. If anything, do the real wage computation. It's nice to be able to say, "I had to work X hours to purchase this product", it gives you good perspective when shopping for discretionary goods.

Hope this helps.

SR.

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Author: terrynor One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13798 of 756600
Subject: Re: Your Money or Your Life Date: 7/26/2000 12:15 PM
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Pete wrote:
Geez, how does someone retire at 38.

Let me save intercst some typing...

How does one work until age 65?

or better yet...

Why work until age 65 when you don't have to?

See his home page by following the FAQ link at the top of this page.

cheers,
terrynor




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Author: terrynor One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13799 of 756600
Subject: Re: Your Money or Your Life Date: 7/26/2000 12:45 PM
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I continue to do the exercises in YMOYL today.

If you want to get to financial integrity/independence as fast as possible, I would strongly recommend following the steps.

The exercises should not be thought of as "math problems" where the goal is to get the proper answer. Rather the goal is to shift one's thinking about money and how it flows in and out of his/her life.

One of the most revealing steps was inventorying everything I own. When completed, I was ashamed at how much "stuff" I had acquired. The spreadsheet I created has been valuable for tracking the complexity of my life. For me, less stuff lowers the complexity of my life.

Although I have always lived well below my means, the expense tracking showed me how incredibly complex my financial life was. I was letting money slip out of my hands in small ways I had not expected. If I cut spending, I had less stuff to post and track!

I like some of the side benefits of the changes I made. Even though $60 per month was a small amount for fast food compared to most, when I eliminated it by planning better, my body weight dropped back to where it should be.

I think that following the steps develops some strong disciplines which allows me to truly minimize my expenses and maximize my savings.

The process of monitoring and reflecting on my expenses in detail has probably accelerated my retirement date by two years in only four years of using the program.

On the whole, the YMOYL steps add about 40 minutes to my financial paperwork tasks a month. Since I was already using Microsoft Money, I track all my expenses on computer. I spent several hours developing custom reports to give me some of the tracking information I need. I developed an Excel spreadsheet which tracks my lifetime earnings, projected savings, FI date (now past), post retirement expenses, and investment income.

I did not follow Joe & Vicki's recommendation on investments. (The plan was originally developed when Treasuries yield near 10% -- a great deal in today's world.) The rapid growth of my investments has been due to growth in stock and real estate.

cheers,
terrynor





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Author: tutone Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13801 of 756600
Subject: Re: Your Money or Your Life Date: 7/26/2000 1:00 PM
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Thanks for all the responses. I think I'll finish reading the entire book, and then circle back to the exercises that will provide the most insight. Nice to hear that it helped so many of you. BTW, I got the book at half.com for $5.00. That puts me about $7.00 closer to ER. :)

Tutone

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Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13811 of 756600
Subject: Re: Your Money or Your Life Date: 7/26/2000 2:01 PM
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If you haven't seen it already, take a look at "Career Advice for Budding Early Retirees" see link:

http://home.earthlink.net/~intercst/careeradv.html


Intercst, I loved this article you wrote. I see working for Exxon was not much different than the oil company I used to work for.

Hmm, maybe this is why the petroleum industry is having so many problems.

Much better now,

InParadise

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Author: trailerdwlr Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13868 of 756600
Subject: Re: Your Money or Your Life Date: 7/26/2000 11:29 PM
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I concur with Terrynor (#13799) re: my experience of the value of doing the exercises, however I'm a latecomer to this computer stuff, so I've kept my figures in the "Ideal Family Tax Record" budgeting book for over 15 years, and made my "what if" projections using a hand calculator and many pencils and yellow tablets. Even so, I figure once I set it up, I probably spend one hour a month keeping track of 99.99% of the money, and another hour once every three months keeping track of my net worth (usually a pleasant experience).

The calculation of how much money I made over the course of my life allowed me to recognize that some of the early funds were gifts, and to thank the givers while they were still alive. That was worth every minute.

Once I calculated a years worth of expenses to the penny, and compared the actual figures to those given by rounding off to the nearest dollar. (The rule I used was: $0.49 +<, round down, $0.50 +>, round up) The difference was $0.23 from some $60,000+. YMMV

Those who have more interest in following the steps can find lots of discussion over at www.simpleliving.net on the Nine Steps Discussion Board.

RE since 1998


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Author: zebug One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16482 of 756600
Subject: Re: Your Money or Your Life Date: 8/28/2000 10:15 PM
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Still tracking. Just ignore the part where they say to invest in bonds/treasuries only.

The time sink is not as great as you would think. Much less time as you make it a habit.

The first step was easy, fun, and very revealing. I feel much better now :). That's where you calculate your lifetime income and net worth. Umm, mostly to the penny except I didnt' go round up all my spare change and count it.

Timewise? Maybe took me about a couple of months since I keep all papers but got out of the habit of filing everthing back in 1996. I had a lot of catch up filing to gather what I needed to do part one. I've still got tons of filing to do to even get to the organized state I was in before 1996.

This disorganized state has turned me into a buy and hold investor because in order to sell, I need to gather information on my costs ...

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