What Have I Done?
I have completely adopted the Your Money or Your Life program and am actively working on steps 2-7 (for more information see my review on the book). The core of the "program" is really steps 2-4 because it makes you look at your purchases and determine whether you were able to really get value out of the money (life energy). I have created an Excel spreadsheet to track my expenses and create my "Life Energy Chart".
Note: There are other options out there such as Quicken, Wesabe, Mint, and many other tools out there to help you track and budget your money.My family used to joke around with me that I was so frugal with my money. I somewhat resented it because I believed that financial stability is very important and that I shouldn't just spend everything that I earned. In my opinion there is a fine, yet significant difference between "frugal" and "cheap". Cheap means that you will save money no matter what at the expense of yourself and other people. Frugal however, means that you will use your life energy wisely according to your values and only spend money that will give you and your friends/family real happiness.
Once I graduated and started my job, I had a sudden influx of money. I lost sight of my previous values and thought that I should "live up" to my income and get nicer things. I got caught up in the whirlwind of consumerism and I almost bought a $1000 projector on a whim. However, I'm glad that I didn't. Although it might have been appropriate for some, I only watch TV about 2 hours a week. I definitely wouldn't have received fulfillment proportionate with the amount of money that the projector cost.
I was feeling unhappy with the amount of money I was spending on life and decided I had to do something about it. That is when I read Your Money or Your Life. In the next section I detail some of the things that I've learned as a result of following the 9 Steps Towards Financial Independence.
What Have I Learned?
At the end of October (after I had finished my first month of tracking expenses) I saw many disturbing numbers. First, my food and clothing expenses were more than $400 and $300 a month respectively! It wasn't until I started tracking my expenses that I realized how much money was going to each of these categories.
I think it is important worth repeating, but the authors don't set any guidelines on "how much you should spend". This is important, because each person is unique and will place different values on different expenditures. You are encouraged to determine what seems appropriate based on your values and if you will fulfillment proportionate to the amount of life energy you spend. For me, $700/month on food and clothing was WAY too much.
My food expenses have gone from $400>$300>$270>$230 within a period of four months. I accomplished this mainly by limiting how often I went out to eat and eating fewer processed foods, which in turn has been healthier for me. Many will think "well it's a good time to socialize with friends" and I completely agree with them. I will still go out with my friends and enjoy that time. It's just I don't have to do that at the trendiest restaurant or 3-4 times a week.
Also, my clothing budget has gone down significantly from about $400 to under $100 (projected) for January. I must admit that the clothing budget might have been somewhat artificially inflated by the fact that I had to start my wardrobe from scratch because I lost 30 lbs over the period of 3-4 months (See my post My Decision to Become a Vegatarian for more information about my shift towards a plant based diet). However, the purchases I have made this month have been at an outlet mall and a used clothing store.
The second major thing I noticed was how much money I spent on my "hobbies" in October and November: ZERO. How could I spend so much on food and clothes and completely ignore my hobbies? I changed that immediately and diverted some of the money previously used on food/clothing into the hobbies category and I am definitely happier as a result.
My Budget
Although the book doesn't explicitly recommend creating a budget, I thought making one would be best for me. It is still under review, but I currently have 35% of my pre-tax income going towards savings/retirement with a healthy amount still going towards my hobbies, clothing, and vacations. If I am able to stay with this budget I will be happy with myself. However the program is ongoing and I will always be looking at ways to find other sources of income and continuing to find the correct balance of spending.
My Values
Through this program, I realized that I had forgotten about my passion for reading books, watching documentaries, and trying to educate people about issues. Before I mostly talked to my friends at school and told them about the newest documentary I had watched and that they should also check it out. However, you can only reach so many people that way. I needed to find a way to reach more people and create something that people can access at any moment. Thus, that is the primary reason I created the "Meaningful Issues" blog.
The second reason I chose to do this blog is that I wanted to see if I could provide a source of income in addition to my current job. Step 7 is the step where you "Maximize your Income". If you can increase your income, you can increase the amount you save. Naturally, the more you save the faster you can become financially independent. Using some conservative assumptions, I projected that I could definitely become financially independent by 40 and possibly as soon as 35. This knowledge has motivated me to keep the longterm goal in sight.
I don't expect this blog to become an appreciable source of income unless I get a tremendous boost in traffic. However, all my time and effort put into this is still worthwhile as long as people continue to read this and take action.
Personal Finance Posts
You might wonder why I am posting about personal finance where all of the other issues are much larger issues such as climate change, peak oil, and media. There are tons of other personal finance sites out there that discuss Roth IRA's, 401(k)'s, "snowballing debt", and many other topics but I don't intend to turn this blog into one of those.
The main focus on this blog will be on Meaningful Issues and on creating awareness on these issues. I believe that if you are able to take control of your personal finances and use your life energy wisely, that you will have more tie to focus on "your cause". This can be activism, blogging, donating, or volunteering for your cause. No matter what, you are making a difference for what you believe is right.
Again, if you haven't read the book, I highly suggest picking up a copy of Your Money or Your Life by Vicki Robin and Joe Dominguez. Do it before you choose your money over your life.
Related Links:
Recommended Books:
- Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence
- Joe Dominguez, Vicki Robin
- Affluenza: The All-Consuming Epidemic (Bk Currents)
- John de Graff
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