Your Money or Your Life

Original Mustachian Joe Dominguez

Original Mustachian Joe Dominguez

Want to hear something really weird? All this time, I’ve been writing this blog about financial independence, a term and movement that is often credited to the 1993 book “Your Money or Your Life”. I had been assuming that Mr. Money Mustache himself was at least partly motivated by a long-ago reading of that book as well, and I’ve been recommending it to people for years.

The only thing is: it turned out I had never read it.

I recently got my hands on a copy of this old classic, and read it in detail, expecting a nice refresher course. Absolutely none of it was even remotely familiar. Most of it aligned perfectly with my own philosophy known as Mustachianism, but surprisingly, not all of it.  Many things have changed in the 20 years since that book was written (including the birth of the Internet, the death of Interest rates, and great changes in consumer products and housing). And on top of that, the authors had different tastes in lifestyle and investment, allowing us to come up with the same basic idea from different directions.

So I came out of it more convinced than ever that we’re on to something great here, and with a few new tricks scooped from authors Joe Dominguez and Vicki Robin. Today I’d like to share them with you, in case you too are unfamiliar with the book.


As the Original Early Retiree, Joe Dominguez apparently grew up in the ghetto, made it out to land a great job in the Wall Street financial sector, saved about $70,000 by age 30 in 1969 ($423k inflation-adjusted to today), and never accepted money for any of his work for the rest of his life. Along the way, he met Vicki Robin, and together they founded an oldschool grassroots movement called the New Roadmap Foundation – a huge network of volunteer teachers complete with seminars and even cassette tapes. Without the benefit of the Internet, they educated thousands of people, freeing them from the chains of their spending addictions. Eventually, the efforts coalesced into the book called Your Money or Your Life, which became a big seller and really helped the word start spreading.

Today, there are a number of financial independence blogs and the concept even has its own category on reddit. Many of the terms that get thrown about (like “FI”) are based on things first invented in this book. But while the book itself has changed the lives of millions of people and I agreed with its methods and message, I found it decidedly quirky and antiquated in parts. And while I know it is considered effective by many and I consider its authors to be god-like in their accomplishments, it was clunky reading at times and it took me over a month to get through it.

Thus, I figured that not everyone has read the book in detail, and many of us could benefit from a quick look at the Nine Step Program it presents, contrasting it where appropriate to what we’ve been learning here on MMM:

Step 1: Make Peace with your Past
Add up all the money you’ve earned in your life, then add up your net worth today. How much have you managed to hold onto? How much did you spend? For most people, this yields an unpleasant surprise.. but it’s okay, for there is no sense beating yourself up over past mistakes.

Step 2:  Figure out your Real Earnings and Spending
The idea here is that your real hourly wage is much lower than you think. You can figure it out as follows, and I’ll even put in some plausible figures for a person with a $50,000 annual salary:

Take your total monthly income after federal and state taxes: ($3500)
Then subtract all work-related expenses (commuting, clothes, restaurant lunches, housekeepers, daycare,de-stressing activities etc) ($1500)
Divide this by your total work time (including commuting, dressing up, clothes cleaning, unwinding time, etc.) (248 hours)

The net result is that you take home a lot less than you think, and spend a lot more time doing it. In the example above, the $50k earner ends up bringing home only $8.06 for each hour spent in activities directly related to the job. Thus, when you decide to buy yourself an 8 dollar treat at Starbucks or at the pub, you’ve really just burned off an entire hour of “life energy” which you’ll never get back – you have to add that hour to the end of your work career to achieve financial independence.

Tracking your spending is the easy part – the book recommends you use a notebook to handle everything, whereas I just do all of my spending by credit card, allowing it to be tracked automatically. The key, however, is you should know exactly what you buy each day, and why you decide to buy it. No more unconscious impulse shopping.

3: Create Monthly Reports for Yourself
Keep a table of all income and all spending for each month, break it into categories, and convert the figures into “hours of life energy spent”. Restaurant meals: 20 hours., etc. I find that the “Mint” financial tool does an acceptable job of this for me, but the book recommends you do it in more detail.

4: Three Questions that will Supposedly Transform your Life:
For each of the categories above, ask yourself:

  • Did I receive fulfillment in proportion to the hours of life energy spent?
  • Is this expenditure in alignment with my goals and life purpose?
  • How might this expenditure change if I didn’t have to work for a living? (more, less, same)

5: Keep a prominent (i.e. right on your kitchen wall) graph of income and expenses
You keep doing this for multiple months which will grow into multiple years. The authors report that most people start to see their income grow even as their expenses shrink, since they are now learning to spend more consciously. Although I don’t have anything on my kitchen wall, we do maintain a history of spreadsheet versions and graphs of savings that dates back several years. But if you are a beginner who still wrangles with optional luxury purchases while still in debt, the kitchen wall is a good idea.

6: Learn to Value your Life Energy by Minimizing Spending
This is the meat of anyone’s financial independence – learning to spend your money efficiently on the things you do get true fulfillment from, and not spend it all on the things you don’t.  The book presents 101 tips, most of which have been covered here on this blog at various times.

7: Maximize your Earnings
Adopt a positive attitude about your work and appreciate the earnings as a tool which gets you to financial independence.. rather than feeling like a victim of outside forces like the economy or a recession. Seek to earn more, and don’t be limited to work only in your current field – after all, you’ll be retiring soon anyway, meaning every activity will soon be open to you whether paid or unpaid.

8: Watch for the Crossover Point
This is when your passive income from investments equals your expenses. When you reach that point – DingDing! – you are Financially Independent. However, the authors define this as “Monthly Income = Capital x Current long-term interest rate/12 months”, since they like government bonds as their retirement income vehicle, which currently pay approximately zero after adjusting for inflation. But Mustachians of course have other options, discussed below.

9: Managing your Money
“Become knowledgeable and invest your capital in such a way as to provide an absolutely safe income sufficient to meet your basic needs for life”

Here’s where one of the most significant differences pops up between YMOYL and MMM (and other modern takes on financial independence). In the early 1980s, you could buy 30-year government bonds with a nominal yield of over 12%. Even in the surrounding time periods, yields were well over 7%. The YM authors liked the guaranteed return and decided to use these bonds as a complete income source*.

Due to our continued hangover from the financial crisis, the latest figure for the 30-year bonds is about 2.9%. While it is still possible to retire on bonds, I consider an over-50% reduction in investment returns in exchange for “safety” to be too high a price to pay. Safety is just an expensive illusion anyway. So instead of bonds, we focus here on stocks, dividends, owning rental real estate (or its passive cousin REITs), and even a bit of wacky new higher risk/return stuff like peer-to-peer lending. And on top of that, I don’t consider “retirement” to mean “never accepting money for things you do”, so I allow you to do fun things that happen to generate money in retirement as well.

Your Money or Your Life is a wise book, and the authors were clearly motivated by what they saw was a pointless death march of society. Workworkwork, Buybuybuy, TrashDestroyWaste, Die. Even 20 years ago, when the first clunky SUVs were coming to market and trailblazing a path to widespread stupidity, this pattern was already obvious. And Joe and Vicki were wise to it, trying to guide society away from its wasteful ways and vividly aware that our consumption is an ongoing trainwreck of environmental destruction.

The bad news is that we went through some pretty shitty decades since then, when measured by the spread of the very consumer disease the book was fighting against. Cars turned into personal trucks, commutes grew, suburbs sprawled, and China joined the party, building a communist copy of the Great American Smokestack, flooding their own country with asphalt and ours with cheap manufactured goods. Americans kept working more so they could borrow more and buy more, we grew much fatter and less happy, and generally continue to live our lives in the most blind and inefficient way possible on average.

The good news is, the Internet happened. Of course, it spawned an acceleration of technological progress, giving us things like remote working and energy-efficient products. But technology can’t save the world by itself – in the wrong hands, it just allows us to consume more efficiently, which means consuming more. It’s a good tool, but it’s not enough.

The good news comes from the free exchange of ideas. Only now can the ideas of the non-wealthy majority compete equally with the billion-dollar budgets of crusty old companies seeking to prolong over-consumption. Nowadays, even an untrained individual can sit on the couch and type some shit into the computer, and it can reach a wider audience than a successful book might have in the past. So imagine what a big group of people could accomplish, some of them with influence over companies and governments, if they all started grooving on the right message.

The bottom line: I am thankful to Joe Dominguez and Vicki Robin for getting so much of this started, as are countless thousands of other people who are now more free than they could have otherwise been.


*Like me, they were not overly worried about inflation – that measures changes in the Consumer Price Index, which is an approximation of the blind spending patterns of Sucka Consumers rather than flexible and conscious purchasers.

More about the authors of Your Money of Your Life:



  • Anil December 19, 2012, 12:22 am

    Wow, what took you so long to find this book? Better late than never. ;-) I figured being FI proponent and practitioner, you most probably read most FI related literature.

    It is a very good and classic book that I read almost 15 years ago. It was start of my financial education.

    I suggest your readers also consider reading two other classics “Millionaire Next Door” and “Random Walk Down Wall Street.”

    • Mr. Everyday Dollar December 19, 2012, 8:35 am

      YMOYL should be considered the bible for every early retirement or financial independent striver. After reading it I was whipped into a frenzy and became re-committed to the goal of ER/FI.

      One of the best tools I learned from YMOYL was to track income and expenses, and along with tracking investments, it becomes trivial to find the magical crossover point of FI: where investment income covers everyday expenses (if interested, I blogged about this at http://mreverydaydollar.com/tracking-finances/).

      To track this data they recommend a pencil and paper, but in our tech-savvy times it’s easily done in a spreadsheet (I use Google Docs). I have also tried Mint.com, which I like, but prefer a spreadsheet due to its simplicity.

      I think the power lies in visually representing our finances so we see where we currently are, where the goal is, and how we’re doing month to month. It’s a fantastic motivator!

      I also enjoy and recommend the classic “Millionaire Next Door” like another commenter mentioned.

      • Brian December 20, 2012, 7:25 am

        The crossover idea is what blew my mind when I first read the book. Instead of “save enough to get 80% of your income in retirement”, “save a million dollars” “Can I retire yet?”, this method makes it so obvious what you personally need to do. It pointed out areas where I could save, and how much passive income I would eventually need.

        YMORL is the process to help you determine what you want to do. Lots of different strategies once the information is laid out clearly.

      • Mr. FI April 1, 2014, 11:16 am

        I know this is a couple years old, but I came across this comment and clicked the link and it took me to adultfriendfinder.com

        Might want to remedy that.

      • MyFiIntheSky March 5, 2017, 12:09 pm

        My favorite mental strategy is to always earn money twice. The first time is the hard way (with good old fashioned work), and after I use that money to buy an asset, I know I’ll earn money a second (and third, and fourth) time without doing any work. It’s the only way to live like the rich! It’s shocking how many people think that their house is an asset. Sure, it’s not as bad as some purchases–at least it probably won’t depreciate in value–but it won’t build passive income. If you bought actual assets before buying your house, you could have those assets pay for your house. You have to start the snowball somewhere!

        • Mary March 31, 2018, 8:45 pm

          I agree – I definitely don’t add my house in as an asset when looking at how much I need to retire. However, it does help in the fact that it will make my living expenses substantially lower once I have it paid off. But unless you sell it, it can’t really be considered an asset.

    • Mr. Pop December 19, 2012, 11:02 am

      This has been on my reading list as well; glad to see I’m not the only one to miss YMOYL!

      I have read the random walk and MND…perhaps Millionaire Next Door has taken the place of YMOL for generation X and Y?

      Mr. Pop

    • D. A. April 28, 2017, 3:37 pm

      As of today, there was not one copy of this book available to loan at any library in the state of Colorado. My local Evergreen library has 6 copies and a six week wait list to get one. My personal disappointment is far overshadowed by the thrill that this book is so popular.

      • HK November 5, 2021, 6:16 am

        Hi D.A,

        You can find an online copy at https://archive.org/details/youremybaby00abbo that you can borrow for 14-days at a time. Will require you to sign up for an archive.org account (which is free).

        best of luck,

  • kiwichick December 19, 2012, 12:50 am

    Step one is an interesting idea. I had no idea I’d earned so little in my life until just now! About $200,000 over the last 8 years. Since I’ve managed to hang on to about $40,000, that means over that time I’ve averaged about $25,000 spending per annum – right on the amount I figure I need per year to retire :-)

  • Frau Handlebar December 19, 2012, 2:55 am

    Have you seen the YMOYL revised edition from 2008? Under step 6, they now have “One Sure Way to Save Money” (stop trying to impress other people) and then another “Ten Sure Ways to Save Money”:

    1. Don’t Go Shopping
    2. Live Within Your Means
    3. Take Care of What You Have
    4. Wear It Out
    5. Do It Yourself
    6. Anticipate Your Needs
    7. Research Value, Quality, Durability, Multiple Use and Price
    8. Buy It for Less
    9. Meet Your Needs Differently
    10. Follow the 9 Steps of This Program

    They mention the “101 Sure Ways to Save Money” section from the previous version of the book, saying: “times have changed since then, and some of our tried and true suggestions aren’t so true anymore.” They go on to recommend taking advantage of the wealth of up-to-date information on blogs and websites. That’s you, MMM!

    Any other interesting changes people have noticed in the new edition? I don’t have a copy of the old one, so I was just basing this comment on the content in the above post.

    – FH

    • Kelli December 23, 2012, 9:31 pm

      Yes, Vicky revised the book in 2008 and it is quite different, updated and easier to read than previous versions. Chapters 6 and 9 are both completely different.

      YMOYL changed my life! I cannot recommend it highly enough! I would say that everyone should read it for themselves – they explain why they have developed each of the nine steps and one line description for each (no offense, MMM) doesn’t really paint the full picture.

      The New Roadmap Foundation mentioned in this post hosts the Simple Living Forum where individuals discuss concepts found in YMOYL and around living more simply in general (according to each’s definition). As an avid fan of both sites and realizing that MMM is widely recommended there and I thought it was about time we did the same over here! :)

  • Larry @ DividendIncomeInvesting December 19, 2012, 5:02 am

    Good look at YMOYL. I read it many years ago, and I find that many of the ideas influence my actions even today.

    Consumerism is so damaging for many in our society, however , those of us in the investor class depend on others spending their “life energy” in order to generate our rents, dividends and investment returns.

    Another awesome book is:

    Work Less, Live More: The Way to Semi-Retirement by Bob Clyatt

    Bob covers many important details and strategies for FI and retirement in this book, although some of the investment ideas are a bit dated now.

    I think everyone interested in early retirement should give it a read.


  • Mrs. Pop @ Planting Our Pennies December 19, 2012, 5:03 am

    Step 1: Make Peace With Your Past

    With only 6 years in the workforce so far (most of which has been completely tracked by mint), I feel a monthly spreadsheet coming on with this one… This is sure to be interesting.

    • Mrs PoP @ Planting our Pennies December 19, 2012, 7:59 pm

      Has anyone done step 1 to completion? How did you treat rental income from an investment property? Like dividends that are reinvested in the asset or like regular employment income from day job?

      I’ve got the book reserved for me at the library, but am antsy to get started.

      • KonradD December 23, 2012, 4:11 pm

        Yes I completed step 1 of YMOYL. I retired at age 47 after 20 years in corporate life. Over that time I earned over $4.8 million. Of this I paid an estimated $1.3 million in work-related taxes. I spent over $1.3 million (average over 27 years after graduating collage was about $46,000 per year). I kept over $2.3 million, including my home which I own free and clear.

        I had a rental for a couple of years. I consider the rental income and gain from the sale as income, though all of it went into other investments and is today part of my net worth.

        IMO, YMOYL is one of the greatest books on personal finance and financial independence ever written. For me it was life-changing, as was The Millionaire Next Door.

  • Lance December 19, 2012, 5:18 am

    I’ve heard a lot about the book but haven’t read it yet. I didn’t realize that it was so old so it would make sense that a lot of it would seem dated. I still need to add it to my list though so I can understand exactly what everyone raves about. At least then I, like you do now, would understand where the movement started.

    • Joe @ Retire By 40 December 19, 2012, 10:21 am

      Some of it is dated, but YMYL is still one of my favorite finance book. Bond yield might be low now, but it will go up again at some point. I think working after retirement is perfectly valid as well. A little income after retirement goes a long long way.

    • Kelli December 23, 2012, 9:32 pm

      Make sure to get the 2008 edition!

  • When? December 19, 2012, 5:41 am

    @Anil @
    Joe Dominguez has been dead for 15 years. He died before Mr Money Mustache found his way in life. There is nothing new under the sun. Better to reinvent the wheel than to never find the wheel at all.

  • Justin@TheFrugalPath December 19, 2012, 5:46 am

    I have never heard of this book. It seems very much in line with my own feelings though.
    It would be very interesting to see how he would do things today though with interest rates on treasuries giving a negative return after inflation.

  • lurker December 19, 2012, 5:50 am

    It’s a good book. the key concept is that you need to remember that with any job you are trading your time on the planet for money so it better be worth it and if it isn’t you better be planning an escape to a more fulfilling existence.

  • nicoleandmaggie December 19, 2012, 5:54 am

    The newer edition does care about inflation and talks about Vanguard index funds instead of just T-bonds.

    My father is also very YMoYL but never read the book. He’s more of an ERE guy.

    I love YMoYL because everyone I know who reads it gets something different out of it. And MMM version of FI is only one possible outcome for someone who reads the book– it allows for different versions of “enough”. Underneath it all is maximizing your utility curve subject to a budget constraint, but thinking really hard about what’s in that utility curve so that budget constraint can be as unconstraining as possible.

  • Jane Savers December 19, 2012, 6:01 am

    I have been trying to find a copy of Richest Man In Babylon by George S Clayson. It was published in 1926. Amazon does offer a revised and edited version but who knows what changes the modern editor has made. I want the original version and I don’t want to pay more than one hour of wages for it.

    I have read bits of it online. Here are a few quotes.

    Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.

    Gold cometh gladly and in increasing quantities to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family

    I understand that this was an incredbly popular book in its day.

    • Squeakywheel December 19, 2012, 8:46 am

      When I graduated from high school, my grandparents gave me a copy of this book. Definitely had an impact on my life.

    • MAMIL December 19, 2012, 9:39 am

      The entire book is available in .pdf in multiple places on the Internet.
      Here is one of them:

    • Tracy December 19, 2012, 7:15 pm

      Amazing book. Bought it off amazon for me and friends.

  • James December 19, 2012, 6:08 am

    For me, the book was a great read primarily for the philosophical aspects of it when talking of the money = life energy point of view. It harped all too often on tracking every penny, among other things which I refuse to do. It’s not that I don’t see the good that such activities can have, but that I, in my life, don’t need to do that. I don’t make a fortune, but I do make enough, and I spend so little that I feel that doing that isn’t useful enough for me. I didn’t need to read the book, I did because I was vetting the material and then decided to give it to my friend, because he needs help.

    I don’t find tracking every penny a useful activity for most people. For those that are at the beginning of their journey to mustachianism/FI, they will find the activity enlightening, and will learn a lot as they come to grips with their consumerist lifestyle that they held before. For me, their would be no substantial change in spending habits gained by doing so. No valuable insights gleaned from the data that I didn’t already have floating in my head at the time of purchase(is this worth x hours of my life? Y/N is the only thing). And no enjoyment from the activity itself. I don’t care to track every penny or even every dollar I spend because whatever I do spend it on, I had already made the value decision on the purchase at the time of purchase.

    Lastly, their search of the crossover point, I feel that in light of recent developments(2000 recession, 2008 financial crisis) as well as the falling of the American star, as well as structural changes to employment that will only get worse as robots and A.I. continue to advance(“That used to be us” by Thomas L. Friedman, the short story Manna by Marshall Brain http://marshallbrain.com/manna1.htm), the crossover point isn’t what we should stop at. I myself have no intention of stopping, my current high rate of savings is driven by two things: my current disdain for my job, and my lack of want for anything around me. Hopefully after I graduate college I will find jobs that I enjoy doing, but unfortunately in today’s society I see that jobs that I might enjoy doing closed off because of my lack of a degree. If I should find a job that I enjoy doing, then I will relax. If not, then I will save even harder until it no longer matters.

    • Matt December 19, 2012, 12:55 pm

      I might be able to get away not tracking all my finances to the penny if my financial picture was extremely simplistic, but I have far too much going on to keep it all straight in my head. The best example is the credit card: my wife and I both use the same credit card to purchase everything that doesn’t require cash. I have the CC account setup to automatically pay the statement balance every month. The problem is, if I don’t track things, it’s too easy for fraudulent charges to be added. Granted, I don’t have to *track* finances, only closely review the statement to catch these kinds of things. But it’s a trivial amount of extra work to load all those CC transactions into my tracking program (GnuCash), and review them as I categorize them.

      If you have a rental property (I do), you have to at least track all business-related transactions for tax purposes. Then there’s other investments in multiple accounts (taxable, roth and traditional IRAs, 401ks, 529 plans)…

      I’m not saying someone can’t keep all that in their head, but I certainly can’t. :)

      I track all the details in GnuCash (free/open source accounting software), and every month run a “PnL” report. The values from that report are added to a row in a “dashboard” spreadsheet I maintain, which gives me a nice high-level overview of passive income versus all my broad expense categories. It’s my tweaked version of YMoYL step 5.

    • Lindsey December 19, 2012, 12:56 pm

      For me, keeping daily track is a good motivator. Sometimes I don’t buy something just because I want to see this year’s final tally be lower than last year’s total in the same category. It is a lot like weighing myself…SOme folks are just motivated by different techniques. I like visual accountability, but if not doing that works for you then don’t feel pushed to change.

    • KonradD December 23, 2012, 4:14 pm

      I tracked my spending by category by month for over 10 years using an excel spreadsheet. For me it was the pathway to financial independence. I agree that tracking every penny might be counterproductive for some people, and putting the graph on the wall might be asking too much, but I believe budgeting carefully over time provides a roadmap to the end goal as well as a great motivator to spend less. Very eye opening.

    • Kelli December 23, 2012, 9:40 pm

      I tracked very faithfully for a couple of years, then slowly let it go, but am itching to get back to it. I took the same tack you suggest, James – asking the questions at the point of purchase – but ultimately, I find that I’m spending more than I want. This has largely happened since my Real Hourly Wage (something I’ve continued to calculate every year) has risen into the $30/hour range. Pretty much any purchase seems worth it when examined individually. “Dinner out is only 1 hour of life energy? Half an hour when I figure my hubby is eating too, so it’s some of his life energy as well? Well, heck, that’s worth it!” But when I add up 10 dinners out, suddenly they don’t seem so worth it. So that’s where we are now – trying to get back to tracking. We’ll never be to-the-penny people, but it’s better than only deciding on each purchase for us, anyway.

      I’m especially looking forward to utilizing the 3 questions again.

      • Ralph December 26, 2015, 4:39 am

        Kelli, late to this subject. I use a spread sheet and track heavily for a few months. Then knowing my spending pattern, I allow that amount for a period. If the total spending seems to be rising I go back and record everything for a while.

        works well.

  • Matt G December 19, 2012, 6:11 am

    After I read this book, I thought it was the MMM bible. I’m surprised to hear you JUST read it. The life energy concept was a real eye opener for me. How much time does everything cost.

  • Goldeneer December 19, 2012, 6:17 am

    There’s always something new that I learn. I’ve reached the “crossover point” this year and it feels like all this hard financial work has finally paid off. There is still much work to be done before I can fully retire in the next 5 years such as paying off my mortgage.

    Lesson number #2 of figuring out your real earnings and spending is something I should calculate. Over the years, I’ve learned that spending money is always a compromise regardless of how much I make. Calculating my real earning and spending can put my variable expenses in a better perspective.

  • P-Money December 19, 2012, 6:42 am

    Yes to keeping a chart with your budget (or net worth) visable for everyone in the household to see! One of the biggest reasons people overspend is that their money is some sort of imaginary thing. By putting it in a chart with your direct performance visable for all to see, you are getting right up in their face.

    This is one of the core concepts in Performance Leadership.

    You should check out the book “Bringing out the Best in People” by Aubrey Daniels.

    This revolutionized my work life.

  • Shawn December 19, 2012, 6:55 am

    May I suggest you publish a book? Obviously your content is easily accessible to readers via the web but a book seems to stamp something as real (whatever real is.)

  • lurker December 19, 2012, 7:03 am

    An e-book is best IMHO. no trees need to die and the old-school publishers can’t control distribution and marketing….

  • rjack December 19, 2012, 7:22 am

    FYI…here is a youtube interview of Vicki Robin made in 2010:


  • Headed Home December 19, 2012, 7:29 am

    I second the e-book idea. It could be a compilation of your best posts – or just the ones that focus on Mustachianism. How many other personal finance books swear and chide to get results and cement ideas?

  • Noel December 19, 2012, 7:43 am

    How serendipitous. I had this book on hold at the library and it came in yesterday. I look forward to reading it.

  • firefighterjeff December 19, 2012, 8:14 am

    I read that book years ago; I’m sure that it seems dated by now. It’s a good book as the general principals are dead-on and it really makes you appreciate what your true costs of working and living actually are. Like others, I can’t believe you hadn’t read it by now.

    I bought the book for my sister and her husband probably ten years ago as a Christmas gift in a vain attempt to change some of their behavior. I don’t think either one of them read the first page. Oh well.

  • Doug December 19, 2012, 8:53 am

    I also read this book many years ago and recommend it to anyone who is mustachian or wishes to be. Other good books are How to Survive Without a Salary by Charles Long, and any books by Derek Foster, a guy who has a wife and kids and still managed to retire at age 34. His website is http://www.stopworking.ca .

    • Lisa December 29, 2012, 1:12 pm

      I really enjoyed How to Survive Without a Salary, and initially found Derek Foster interesting if somewhat self aggrandizing, but when he sold his stocks as the market bottomed out, I didn’t think that he was a particularly good role model and almost a hypocrite.

      • Bullseye January 5, 2013, 6:08 am

        How to Survive Without a Salary is Charles Long, not Derek Foster! The latter wrote Stop Working!

        Both books are Canadian, and probably unfamiliar to non-Canadians, but both are worth reading! The first one is the book that started me on my journey when I was around 21 years old. I still go back and re-read it every year or so.

  • Johnny @ Our Freaking Budget December 19, 2012, 9:15 am

    Looks like I’ll be adding another book to my “Seriously, I’ll read these this year, unlike last year… and the year before ” list.

    For as long as I’ve earned money, I’ve been a “how many work hours is this X worth?” buyer. But that’s always been calculated off the gross wage. Step 2 looks to completely revolutionize this line of thinking in my head. It will undoubtedly depress me out of purchasing just about anything (save Junior Bacon Cheeseburgers).

    • susabo December 19, 2012, 8:27 pm

      Yes, I borrowed YMOYL a couple weeks ago from the library and so far the idea of using “Life Units” to measure how much things cost has really helped me figure out which things are worth my time and which aren’t. It’s also interesting to see how much you really make when you factor in the costs of working.

  • mmmfan December 19, 2012, 9:17 am

    MMM…..small typo….30yr US Treasuries yield 2.9% not 3.9%! yikes.

    • Mr. Money Mustache December 19, 2012, 10:36 am

      Thanks Fan, that was a pretty big typo I made, just fixed it in the article.

  • Eschewing Debt December 19, 2012, 9:25 am

    Sounds like a great read! I think I’m doing most of those steps, but I always like to get a “refresher course” and a fresh look at things I’m trying to accomplish. I’ll have to head to the library. And, as a side note, I had to laugh that you thought you had read the book but had actually never had- I’ve done that before, too!

  • Debbie M December 19, 2012, 9:56 am

    I first read this book long ago and although I liked it, it was not revolutionary to me because I didn’t really get that I could/should save a large percentage of my smallish income. My income didn’t go up like in their sample charts (maybe 3% per year, in the good years). My investment income was infinitesimal. I did not get good ideas on how to reduce my expenditures more. Over time, I was able to pay off my student loans early, achieve car and home ownership, become debt-free, and greatly increase my charitable expenditures and retirement savings, all while earning much less than my friends did, but it wasn’t at mustachian speeds. And even maxing out a Roth IRA doesn’t add up very quickly. I should have gone a little more wacky with housing, at least for a little while, than just having a housemate, but I didn’t really get that I could. Just like I didn’t get that buying a 10-year-old reliable model of car was smarter (and cheaper) than a 2-year-old mediocre model car until my second car.

    My real hourly salary was actually depressing in the opposite way than was expected: it was much greater than my official hourly salary. I spent no extra time dealing with my job (I had to get dressed anyway and I read during the bus commute), I spent virtually no extra money dealing with my job (still made my lunch usually, free bus commute, business casual clothes cost the same at thrift stores as other clothes, no day care needed), and I got loads of benefits (free health insurance, free access to university library, fabulous pension, free bus use). So the numbers instead warned me that quitting would be expensive.

    I didn’t enjoy their crossover chart when I had to use my own numbers (made up of practically parallel lines), but I did make other, more fun charts such as principal remaining on my house versus the principal that would be remaining if I’d made the minimum payment; IRA value versus what the value would have been with an 8% or 11% growth rate; and now how much longer I have to work before I can finance my wait until my pension using a) regular savings and b) regular savings + IRA contributions.

    Mint doesn’t work for me, so I still do the record keeping by hand (well, on a computer spreadsheet). But this has become wonderfully sophisticated over the years and I really like that it is totally under my control.

    And I am going beyond bonds with multiple investments [index funds (US/foreign/bonds/REITs), I-bonds, dividend stocks, and a paid-off house, not to mention frugality skills and habits].

    Reading older books really underlines how much financial instruments change over time, so even if you have the perfect setup for now, you need to keep educating yourself. As you mentioned, people don’t want to save up enough to be able to live off 30-year bonds anymore, though it worked perfectly for Joe Dominguez. And we don’t just invest in railroad stocks like 100 years ago. Even in my lifetime, I’ve changed how I save my cash—from savings accounts to CDs (that “substantial penalty for early withdrawal” is not usually very substantial) to online high-interest savings accounts. And index funds, I-bonds, Roth IRAs, and Roth 401Ks have been invented during my adulthood. I’m learning that early adapters of financial instruments are often greatly rewarded (look at the first interest rates on I-bonds and the early interest rates at online savings accounts). Target is still giving back 5% on all purchases for their check cards—how long will that last? Of course some new financial instruments stink, so I’m still a little bit of a chicken, but the internet does let me quickly learn from other, braver folk.

    • Kuz December 20, 2012, 5:12 pm

      I had a similar realization when I calculated my actual earnings per hour. I ended up making a lot more than my ‘per hour rate’. I work for a public university that includes free classes (even phd ones), free bus passes, discount sports tickets, cheap health care, and crazy matches on IRA contributions. I also have less than 5 min bike commute and can wear anything to work.

  • RichUncle EL December 19, 2012, 9:58 am

    Thanks for sharing the nine steps made popular by the book, I had seen the steps before, but you provided a unique twist to them. I always enjoy a mustachian point of view.

  • Shilpan December 19, 2012, 10:12 am

    In nutshell, FI is about developing two brains between your two ears. One to motivate you to earn more early on in your life so that you can put that money to work for you, and second to not know how much you make so that you can live simply. Your life will be at FI crossroad sooner than you think,

  • 5inatrailer December 19, 2012, 10:13 am

    It always amazes me how closely this blog parallels my life (the timing anyway not the FI). Putting in a garden door? Well yes I am. Thinking of buying a truck? well yes I am (and bought a trailer instead).

    My Wife and I had this conversation yesterday as a lucrative opportunity came up to work up north for easy $$. The only thing it would cost me is time. Unfortunately, TIME IS THE MOST VALUABLE COMMODITY IN THE WORLD.

    As parents of 3, there’s only so many hours you can combine to put in a week. If one person works more, the other works less (unless she’s on mat leave, then I work 2 jobs and she parents every day:(

    Now that we’ve learned to live with less, what to do with this opportunity…

    Would it be worth it to do up north and make easy $$?
    Would we spend it wisely (pay down long term debt or winter holiday)?

    It’s nice to have options but I’d rather enjoy the ride than bust my a$$ hating every day and then quitting early (I’m a FFJeff too dude!)
    Somewhere out there is a happy medium.
    Keep up the great posts MMM. I look forward to them every day.

  • Holly@ClubThrifty December 19, 2012, 10:18 am

    YMOYL was one of the first books I read when I began my journey out of debt. There is nothing ground breaking in it. Yet, it made me think completely differently about and money that I spent. That lesson really stuck with me as I continue to try to spend as little as possible and save/invest as much as possible.

  • RetiredAt42 December 19, 2012, 12:48 pm

    My husband and I read YMOYL around age 30. We followed very few of the steps, mostly just the philosophy. Six years later, we paid off our mortgage, and about 12 years later, we retired from our corporate jobs. My only regret is that I did not buy 30 year T-bills when they were paying 7% or more; however, life is goooood.

  • Joe December 19, 2012, 12:53 pm

    Love this book! Like many others, it was my first FI book and provided the spark that lit the fire for me to start the FI journey.

    The opening paragraph of this post has a statement that’s confusing to me:

    “I had been assuming that Mr. Money Mustache himself was at least partly motivated by a long-ago reading of that book as well, and I’ve been recommending it to people for years.”

    Did someone else write that, or are you talking in the third-person? Or am I totally on crack and the meaning of the sentence has gone over my head?

    • Matt December 19, 2012, 1:05 pm

      I had the same problem with that sentence. I thought it was a guest post at first.

      • No Name Guy December 19, 2012, 2:29 pm

        Clearly (IMO) talking as a 3rd person.

  • Freeyourchains December 19, 2012, 2:27 pm

    A few modern video games are dwelling into passive income options in game and in real life.

    The newest Simcity coming to PC in March will blow everyone’s mind, very complex city simulator more focused on sustainable financial society fun and exploring different city business models.

    Games like the Fable Series, have you buy houses you adventure past and rent them out for passive income as you adventure on to kill baddies from town to town. You can even get married and have children and buy a castle at the end.

  • reader from the rockies December 19, 2012, 2:32 pm

    I have never read the book either but I generally agree with your comments. You would have to have too much of the recently legalized pot to buy the 30 year treasury bond. Not only in the interest rate ridiculous, but as interest rates rise, the value of your bond on the bond market is going to take a huge hit. Considering where interest rates are, there is really no place to go but up.

    Why is inflation nothing to worry about? At the rate the fed is printing dollars, inflation will raise its ugly head. This is a huge tax on the middle class. If food goes up in price at a rate of, say, 15% per year, why would that not affect people’s cost of living? Not to mention rising energy cost or the increase in property tax because the “value” of your home goes up.

    • victoria January 2, 2013, 10:18 am

      Their take is basically that, while the average prices you’ll get if you just wander into the supermarket or a department store and buy things will tend to go up, careful shopping (buying loss leaders or perennially inexpensive staples at the grocery; buying used when possible and waiting for sales when a new product is the right one; carefully considering the pros and cons of hobbies that require expensive equipment) can mitigate a lot of the rises. Their book shows a list of prices for CPI items they could find in catalogs and newspaper circulars from thirty years prior and the prices they were able to get that year on the same items, and most weren’t more expensive.

  • Matt December 19, 2012, 4:00 pm

    I really liked the book and most of its viewpoints. But when trying to find out more about Joe Dominguez’s life, I couldn’t get over one sentence in his obituary:

    “Officials said he was survived by no close relatives.”

    Maybe he did love the path he’d chosen, but deep down every time I see something about this book it makes me wonder: Did he sacrifice too much? Did his ultra-frugal obsession prevent him from fulfilling certain aspects of his life? Guess that’s just the cynic in me.


    • Matt December 19, 2012, 4:16 pm

      So on this, and many other points, I declare MMM > Joe Dominguez

      I’m not sure that stating “I’ll never work again for money” at the age of 30 makes sense to me. It strikes me that MMM is frugal, while Joe was cheap. Frugality, and the smart use of money always wins in my book.

    • Gerard December 19, 2012, 4:44 pm

      I’m not sure that being survived by no close relatives (just a partner and a whole lot of friends) is great evidence that a low-cost life leaves one unfulfilled. Seems like the guy was pretty plugged into the idea of loving others:

      • Matt December 19, 2012, 6:57 pm

        Agreed, and sort of bummed there isn’t more on his personal life out there. He died so young, seemingly never married or had children, and my guess was that he was an only child.

        It is totally conceivable he had a great life. That one sentence just haunts me for some reason…

        • Mr. Money Mustache December 19, 2012, 7:54 pm

          I’ve never talked to either Joe D or Vicki Robin, but from her own writing on their home life, I get the feeling that he had a pretty kickass life, living to the fullest right until he died. Apparently they had a steady stream of houseguests that he loved to host and help out. It must have been quite a thrill for him, starting that movement and rolling it along for so long.

          • aspiringyogini December 21, 2012, 5:36 am

            I used this program to become financially independent in my mid-thirties and over the years read a lot about these two. I also did some audio course with them that had more details about their life together. I remember when Joe died at 59 of throat or thyroid cancer and I did wonder about his early death like Matt, but I do agree with MMM that his life was awesome and he wasn’t afraid to put out contrary thoughts and opinion in his day.

            I never read that Vicki and Joe ever married, but that they considered themselves partners until his death. Maybe I missed that info. They lived communally (remember the 70’s though, you couldn’t say those things — sounds like communism!) with others in a co-owned house in Seattle until he died. One of their housemates before FI had a shoe fetish and she straightened out when she was diagnosed with an incurable illness; I wish I could remember her name. I listened to an audio tape from her too. Joe and Vicki also were into house construction for a time and would see old houses, contact the owners and get permission to live in them for free while fixing them up. Then they would move on. Vicki now lives on an island near Seattle and travels very little — maybe this was in rjack’s video that she went on a travel “fast”.

            I never thought of Joe as cheap. I thought he just was comfortable living on less and was aware that there were infinitely possibilities of ways to live in our society; to trade your time for the things that you value seemed to be more important that using money to do this. Also, I felt like he might have really understood what corruption was going on in his Wall St. career and thought that with respect to investing, you should get comfortable with investing at a most basic level (sound like index funds now?). Also at such a low earning level, he probably never paid income taxes and little property taxes after becoming FI.


  • Ultros1234 December 19, 2012, 4:52 pm

    Just a quick observation about the Consumer Price Index: You may want to take it more seriously in the future. As a part of the fiscal cliff negotiations, the federal government is almost certainly going to use chained CPI for calculating future benefits.

    Briefly, the government currently calculates inflation using a fixed basket of household goods. The price of apples increases by X%, which weighed together with a gillion other goods, tells you that inflation was X%. But if apples get more expensive but pears do not, people will buy more pears and fewer apples. Chained CPI accounts for that substitution and therefore results in a more conservative estimate of inflation.

    Or in other words, the government is going to assume that people are a little more mustachian in their decision-making in the future.


  • Andy Hough December 19, 2012, 5:32 pm

    I have been a big fan of YMOYL ever since it came out. If I would have actually implemented all the ideas from the book I would have retired years ago. Even so the book has allowed me to stretch a meager income.

    There was a revised version of the book that came out in 2008. One of my biggest thrills of blogging was when one of the authors contacted me out of the blue to do an interview for my site.

  • Jen December 19, 2012, 10:32 pm

    Funny – I read YMOYL years ago – it had a huge impact on me – it was the first time that it ever occurred to me that I had a choice other than ‘work til 65 then reture’…

    But last week the hourly wage piece completely clarified a situation for me. I lost my primary car key. The spare was a car key with a seperate fob to lock/unlock the doors. To get a new key that had both features 9and would slim down the bulk on my keychain) is about $200. I could easily pay with cash on hand and not notice the difference.Then it occurred to me that if someone told me I could have a new key fob if I came in to work on saturday for 4. hours – I would laugh – my time is too important to me to spend it at work on a Saturday just to skinny down the key fob…. I went from thinking I should get a new key fob – no big deal – to absolutely no way would I trade 4.5 hours of my own time for this…. Classis YMOYL…

  • ben December 20, 2012, 2:12 am

    yes its a great book on the lifestyle/philosophy side but largely useless on the investing side

    no-one is going to reach FI on a diet of 100% gilts.

    I would disagree on your stance on inflation. I think for long term planning, e.g. thinking about pensions and the like, only a fool decides that inflation doesn’t apply to them

    • Mr. Money Mustache December 20, 2012, 11:23 pm

      Just to be clear – I still plan for inflation and make sure income keeps up with it. I am just finding that spending decisions are so arbitrary that your choices have a much bigger effect than the underlying price of CPI goods. But this might be because the MMM family currently has a very spendy lifestyle, with more than 50% of our spending being on optional luxury stuff (like this trip we’re on now). If we were running a tighter ship, then changes in the price of eggs or heating fuel might indeed cause an unpreventable increase in our spending.

      The larger your safety margin in retirement, the more things get lost in the noise.

      • ben December 21, 2012, 4:30 am

        yeh I think of CPI/RPI as a reminder that inflation exists rather than as a useful number to plan anything around. The personal accounting stuff in YMOYL allows you to calculate your own personal inflation (or deflation) year on year

  • Rev December 20, 2012, 8:41 am

    Your inflation comment got me thinking…. Has anyone ever done an “inflation as it would affect mustachians/very basic standard of living”? I would agree that CPI has probably grow disproportionally to what *I* consume, but I cannot believe it simply will not be a factor.

  • Carolina on My Mind December 20, 2012, 9:39 am

    I read YMoYL about 15 years ago, and it really changed my thinking about spending and consumption. But the thing that has really stuck with me all this time is that Joe Dominguez died when he was only 58. Imagine if he had been on the standard retirement path — he never would have gotten there. But instead, he retired early and then spent almost 30 years doing whatever he wanted, enjoying life, and in the process helping thousands of people. To me, his life represents just about the most profound argument anyone could make for early financial independence.

  • Brian December 20, 2012, 10:20 am

    MMM, 80% of the mind blowing part of this book is that you can put the information in front of you in a way that allows you to align your money plan with your ideal strategy. As simple as this is, I had never thought about it before reading the book.

    20% of the mind blowing is what you do with your money to get you to your strategy. Bonds, stocks, real estate, etc.

    Perhaps because you are so indoctrinated with the 80% part, that is not as amazing to you anymore. And you are a little more focused on the 20% part, because that is the stage you’re in. But it was life changing for me.

    Once you go through the process, there are so many possibilities, and I agree with the earlier post that you are just one path. Vicki says in that youtube clip that it isn’t necessarily retiring early, it could be doing your same job with more confidence, etc. Anyways, to me, the investments part is really interesting, but it’s the initial idea that you can create a plan that is the gold.

  • The Accumulator December 20, 2012, 1:07 pm

    YMOYL focuses a lot on how the journey to FI enables you to live a life more in tune with your values. As opposed to working for ‘da man’ just to pay the bills. It’s a book about freedom as much as it is about money.

    The concept of measuring consumption in terms of ‘the time you have left on this Earth’ i.e. life energy is critical. Knick knacks lose their lustre when you calculate the cost in terms of a life not led.

    And the case studies demonstrate that people from all walks of life, ordinary and extraordinary, can make FI. They add humanity to the tale.

    It’s a very good book. I read it late but for someone just starting out it could be a revelation.

  • Jenny December 20, 2012, 6:31 pm

    This book changed my life in my early 20s. Loved it. Still feel it defines my views on money and love to reread it every couple years and see how far I’ve come.

  • KingZ December 20, 2012, 8:25 pm

    Long time reader 1st comment, booyah! YMOYL was the 1st FI book I read, and put my misguided/unstructured financial intentions/goals on the right path…too bad it wasn’t earlier:). I have always been frugal and tracked expenses, but never had a real plan. Now I do and it feels great.

    I read YMOYL one month before the birth of our first child, while I was freaking out about supporting my family (March 2011). I also read the version talking about modern day blogs being a good resource, and it so happen to be good timing with MMM. I think MMM is right in sayiing most of the principals are talked about here. It’s nice to see certain topics talked about in more detail in the article/blog format (and the comments make for added ideas).

    Thanks Joe, Vicki, & MMM.

  • Iforonwy December 22, 2012, 4:26 am

    I purchased this book after reading about Vikki Robin in an old copy of Woman’s Day. I was attracted by her name as I was researching the Robin side of my DH’s family.

    I loved the way that she travelled around visiting with folk rather than staying in hotels. We travel a lot and often stay with friends and family – we also reciprocate as we live in a very touristy area.

    Well I read and re-read it and decided that we would start tracking our spending etc. I had my first computer in 2000 and still have the spreadsheets from back then. We now have a range of them for Grocery shopping, fuel, utilities you name it we track it! Folk say “Get a Life” sorry we DO have a life because we live well within our means!

    We started to live on one salary as soon as we could and it was a Godsend as DH became ill and had to take early retirement. We were very fortunate with inheritances that we did not expect and downsized our home. We had about 4 years where we lived just on DH’s pensions before mine kicked in but it was all do-able. Thanks to YMOYL. I have loaned my copy to friends but it comes back in a day or two as I think they feel it is too onerous for them to follow. Maybe the current financial climate will make them more likely to think.

    I came to MMM via the Simple Living website – I have frequented that site since first reading YMOYL.

  • Brooke December 26, 2012, 2:57 pm

    Glad you finally got a chance to read this book. The exercise on life energy is so eye opening and especially great for tailoring a budget to your own values which is not as restrictive as using a standard template so in some ways I think it helps keep you motivated. I think another great aspect of the book was that intial tracking journal because it makes you realize how much we recieve that we usually do take for granted be it gifts, samples, coupon savings, etc. Once you add that savings into your chart you see that your networth is actually much greater, even as much as it can be reduced by long commutes, etc.

  • Sherri December 27, 2012, 12:56 pm

    I also read this book when it first came out and LOVED it. I even got the cassette tapes of their seminar. I don’t know if this was mentioned in the other comments, but one point that Joe made (I think on the cassette) was on the argument of “not contributing to the economy” by living frugally. His response was that by walking to the seminar he only used shoe leather. He could have contributed a lot more to the economy by getting in a terrible car crash on the way, thus keeping ambulance drivers, doctors, insurance agents, car manufacturers,etc. in business. It was just an interesting point that stuck with me.

  • pachipres December 31, 2012, 1:31 pm

    I loved YMOYL when I first read it in 2000. Since then I have read it three times-last time buying the newest version. It helped me so much. I tracked for four full years and became extremely frugal which was a good thing because after having our fifth child, my dh lost his job and spent the next year unemployed. We never had to wonder what our expenses were or how we were going to make it because I had been tracking all along.

  • Darrow @ CanIRetireYet? January 2, 2013, 8:39 am

    Thanks for the great synopsis of a book that has been on my reading list forever. I too internalized most of these lessons, even quoted from the book, but never read it!

    Other important ideas for financial independence from both YMOYL and MMM: awareness of spending and net worth is fundamental, you can’t realistically achieve early retirement using only “safe” investments, there is nothing wrong with getting money for “working” in retirement as long as it’s what you love doing, official inflation (and taxation) metrics are bugaboos created by various powerful interests. Frugal, perceptive early retirees are minimally impacted by either.

    Thanks again for a thought provoking and very useful post! Much of what anybody needs to know about financial independence is condensed right here!


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