For most, the answer is simple: you’d give up the money in a heartbeat if it meant saving your life.  That is the basis for the book Your Money Or Your Life by Joe Dominguez and Vicki Robin.  The authors take it one step further and equate the standard 9-to-5 work life with the evil gunman.  From their perspective, each of us is dying a bit every day, and that process is speeding up thanks to the stress induced by our jobs. 

The key to the philosophy presented in this book is the concept of life energy, the idea that each of us has a finite amount of energy that we can do with as we choose.  Most of us choose to life the “good” life, carrying on with our daily business, racking up credit card balances, trying to save for retirement, and living for either the weekend or that week-long summer vacation.  Dominguez and Robin challenge us each to focus more on finding our true meaning and living out our dreams.  They argue that if we can give up the 9-to-5 job, we will be lead much more fulfilling lives.  We will be able to make the most of our limited life energy by doing what we love best - not what society thinks we should be doing.

Your Money or Your Life presents a useable plan for getting to the point where we can leave our day jobs to live out our dreams.  The basic plan is as follows:

1. Analyze the true cost of your job.  How many hours do you work per week?  How many hours do you spend commuting to and from work?  How much do you pay for that commute (gas, wear and tear on the car, bus tickets, etc.)?  Do you have to wear dressier clothing for your job?  What about meals?  Do you eat out for lunch every day?  Or do you run by that coffee shop in the afternoon as a quick pick-me-up?  Do you have to unwind for an hour every day after work just to function?
2. Determine your true rate of pay based on the figure you found in the first step.  This is typically a frightening step when you figure out just how little you’re actually paid.  This is where the concept of life energy comes in.  Think of all the options that would open up to you if you weren’t tied to that day job!
3. Take stock of where you are right now financially.  Take a couple weeks and watch your spending, tracking the money you take in and the money you let go.  If you start to think in terms of how many hours of work went into purchasing something, chances are good you’ll start to question whether you really want or need what you’re about to purchase.  Again, think of that life energy you’re giving up - is a cup of frou-frou coffee really worth an hour of your life?  (Not that I’m saying you should give up frou-frou coffee - I’m all for the occasional treat…)  
4. Once you get a handle on where you money is coming from and going, make a point of figuring out how you feel about each transaction.  Does spending $100 on a new suit make you feel good?  How about that $1000 you just spent on a pool table?  The answers here are going to depend highly on where you find enjoyment in life.  For instance, someone may feel like they got a great bargain on a $100 suit that makes them look fabulous, while another person may feel it’s just a waste of money.  Similarly with the pool table, it may be worth that $1000 if it means fun get-togethers with your friends for the next several years.
5. Develop a Wall Chart - a graph displaying your income and your expenses by month.  Initially, you may find that the point showing your expenses is higher than the one showing your income.  Eventually though, when you get into the “life energy” mind-set, your expenses will start to drop when you realize that it may not be worth your while to spend that money on something you may not use.  The Wall Chart is an excellent visual resource for showing exactly how you’re doing - and how long it’s going to take to get to the point where you can LEAVE your day job.  I plan to add a page with my Wall Chart to Cheese Everywhere! very soon to show the world how I’m doing - and to keep me motivated to stay on track.  More on that later.
6. Start tracking the gap in your Wall Chart between the expenses and income lines - that’s your rate of savings.  Now, here’s the whole point of Your Money or Your Life:
7. Eventually you’ll start building interest on that savings gap.  At some point in the future (it may be near, it may be far), you’ll be able to live off the interest from your savings.  Dominguez and Robin encourage you to put your savings into bonds directly from the government since those are the safest, most stable sources of income over the short term.
8. Live your life the way you’ve always wanted!  Go for your dreams - if you’ve made it to this point, you’re no longer dependent on anyone else for your survival.  You can continue to work if you so choose - but that’s very different from having to work.  Or maybe you want to work for a non-profit, or even try out teaching…  Whatever the case, you’re now free to do it.

The Bottom Line

Your Money or Your Life is an excellent book that provides the motivation you need to see your in future the life you’ve always wanted.  As I mentioned earlier, I believe whole-heartedly in the concept of the Wall Chart and plan to post my own on this site to share my experience with everyone and to help keep me motivated.  The more often I see the chart, the more likely I am to question whether my life energy is worth everything I’m spending to get by.  If I can lower my expenses even more, I should be able to get to the point where I can live off the interest of my savings even faster. 

Just to show how much I loved this book, I may even go buy it so that I’ll have it at my disposal to re-read any time…  I originally borrowed it from the library, but this one would be worth the cost to purchase!

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I’d like to add to #10: Use “But”. Instead of adding “But”, try using “And”.  It’s a tip straight from How to Win Friends & Influence People by Dale Carnegie - and an excellent one at that.  It’ll change the overall feeling from negative to positive, just with that one word change.  “I’d like to do that, but I can’t” suddenly becomes “I’d like to, and maybe we could also do this”.  Rather than sticking with the permanent no-way-can-I-do-that, you’re presented with the possibility that it could work out - and you’re given even more options to investigate.

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One of the best moves we made through this whole process was putting together a list of characteristics we were looking for in our ideal home.  Having that in place, we knew just what we wanted and were able to put in an offer when we found a place we both loved that suited our needs perfectly.  To get you started on the right track, here’s a sample of what we came up with:

• 3-4 bedrooms: the master bedroom for us, a bedroom for my boyfriend’s daughter, and a guest room.  If we ended up with 4 bedrooms, we’d have a bonus home office.  If we have 3 bedrooms, ideally we’d also have a finished basement.
• 2+ bathrooms: No one wants to try to share a bathroom with a teenage girl.  Trust me.  We may be several years away from that, but since we’re planning on staying in this house for a looong time, we might as well plan ahead for it.
• A small-sized patio/deck: small = less time devoted to up-keep.
• Public water (no septic tank): just heard too many horror stories about septic tanks.
• North/South-facing house: Odd, yes, but we both grew up in North/South-facing homes and things just seem to jive better.  The biggest benefit seems to be that you get fairly even warmth throughout the day in the main parts of the house.  Shifts in temperature shouldn’t be as great as when the front of your house faces east & gets a bit warmer in the morning, but then the back of your house bakes in the evening.  It’s tough to use a west-facing deck in the summer because it’s just too darn hot.
• No lines on the street: This may be a bit extreme, but we both grew up on quiet streets.  The only way to make sure it would be a quiet street would be to find a side street somewhere - that has no lines painted on it.
• Lot size of <1/3 acre: again, small = less time devoted to up-keep.
• No chain-link fence: Not a deal-breaker by any means.  They’re easy enough to remove.  They’re just ugly as sin (from my perspective).  Someday we’ll probably install an invisible fence for the puppy the doesn’t yet exist, but chain-link is out.
• Trees: Another left-over from childhood, it just wouldn’t seem like home without a good number of big trees in the yard.
• Price: obviously needed to be within our budget.  We could certainly have afforded more, but we’re of the school of thought that you’re better off purchasing a more affordable home and paying it off sooner than drowning in mortgage debt for the rest of your life.

In the end, the only thing we had to give up from our list was the small lot size.  The home we chose is on 1/2 an acre of land, but other than that, we nailed each of the items on our list.  I would highly recommend putting together a similar list if you’re contemplating purchasing a new home.  It becomes much easier to figure out if a home will suit your life!

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After having our offer accepted on the new house, we set out to find the best financing deal.  I used a mortgage broker when purchasing my first place, and I wasn’t entirely convinced I had gotten the best deal possible.  Sure, I hadn’t put down 20% on the house - it just wasn’t feasible as I was still in school and had very little money to work with.  Still, it seemed like I could have done better than 6.5% on a 30-year loan.  So I went into this particular transaction a wee bit more cautiously.  I took it upon myself to do some research and found any number of posts by people who have had bad experiences with mortgage brokers.  They each recommended never again dealing with a broker; their basic advice was “go straight to a credit union, they’re much more trustworthy”.  The major issues with mortgage brokers:

• Brokers are typically paid by the banks.  Here’s your standard conflict of interest argument.  The broker is supposedly working for you, trying to get you the best rate possible.  But… in most cases, the broker is paid by the bank.  If one bank is willing to give a 10% cut (ok, that’s a bit excessive, but I’m just trying to make a point) while another only gives the broker 0.5%, which bank do you think the broker is going to try to convince you to go with?  Lately Upfront Mortgage Brokers are becoming much more popular for just this reason.  Instead of being paid by the bank, an upfront broker is paid a fee by the customer.
• Yield Spread Premium: This is a “bonus” paid to the mortgage broker for convincing a client to accept a rate higher than they qualify for.  Brokers are required to disclose this fee, but many home buyers don’t realize exactly what it is and therefore don’t understand that they can get a better rate.
• Sneaky fees may be added to the closing costs.  Even though it’s not ethical or even legal, mortgage lenders have been known to add certain fees in multiple times.  This usually happens more so when you go with a mortgage broker, and you are more critical of the process and continue to watch what’s going on.  The broker is banking on the fact that you get the HUD-1 form only a day before closing and you don’t have the time or energy to go over each line item with a fine-tooth comb.

That all said, I was leary of going with a mortgage broker again.  If we did decide to go the broker route, I was going to pay very close attention to what exactly what happening with the housing market and the closing costs.

I contacted the broker I had worked with for my first home purchase, and - wonder of wonders - he was thrilled to hear from me!  I met with him, and got a Good Faith Estimate.  Everything seemed to be reasonable, but I was still unsure.  So I checked with the local banks and credit unions.  The rate offered by the broker was very close to the lowest rate I could find at the time, which was offered by a credit union.  When it all came down to making a decision about which way to go, I decided on the mortgage broker.  Here’s why:

• As a return customer, he waived the initial fees.  This could be something I’ll end up paying for on the day of closing, but for now, it means I’ve got a few hundred dollars “extra” in my pocket.
• If the rate decreases, we switch to a new bank (free of charge) and get that new, LOWER rate.  This was the main deciding factor.  When we initially locked in, the rate was set at 6.375% with 20% down.  That same day, the credit union was offering 6.25%.  I took a chance and guessed that the market is pretty bad off right now, and the rates should be dropping.  Had I locked in with the credit union, I would have been stuck with 6.25% - unless I wanted to pay another $400 to lock in the new rate. 

At this point, going with the mortgage broker appears to have been the right way to go.  I got a call not too long ago from him saying that the rates had dropped quite a bit.  We were able to lock in 5.75% on a 30-year loan!  I’ll report back on the closing cost issues in a couple weeks…

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Not exactly a common thing to hear, but it struck a chord with me.  Working for a fairly young company, many of us are right now caught up in some of the largest life changes we’ll ever experience: finishing school and getting out into the real world, starting our first job (or new job), getting married, etc., which also means we’re quite possibly handling the biggest financial transactions we’ll come across.  In addition to the low average age in the company, our business just happens to be billing and customer care - which means our work lives revolve around money and customer service related to that money.  Needless to say, we tend to be a bit obsessive.

The person who made the comment purchased a new home back in December, not long after she had purchased a new car for cash.  The home purchase was the first time she had ever taken on any debt.  She had been saving for the car, then once that was taken care of, focused on the down payment for her own place.  So now what?

Even though I’m essentially in her same position, I wasn’t quite sure how to answer.  The only options I could come up with were the obvious:

1. Retirement
2. Kids
3. Home improvements
4. Travel
5. Toys 

From my previous job, I had it beaten into me that you should save as much as humanly possibly - and as early as possible - for retirement.  As important as it is, it’s still hard for anyone in their twenties to get overly excited about saving for retirement, that magical time 30-40 years from now.  I personally enjoy saving simply because I enjoy math and games with numbers and odds.  But how do you impress upon someone has only just taken on debt (and good debt, at that) that saving has benefits?

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 Whatever the case, if you’ve ever been the least bit inclined to give running a shot, pop on over to CoolRunning.  They’ve got one of the best active communities online, with people who are more than willing to answer even your silliest questions.  On top of that, they’ve got the ultimate beginner’s program: the Couch-To-5K program.  It’s a self-paced program that allows you to progress when you’re ready.  You can either run for time or distance.  As a super-lame ridiculously-slow “runner” (hey - I can at least pretend, right?), I started out running only for time since I apparently ran slower than what they consider to be a beginner’s pace. 

Just so you understand where I’m coming from, I went through the C25K program about two years ago.  Around a year ago, I was forced to stop running because of an injury (due to tennis, not running).  Prior to that injury, oddly enough, I actually enjoyed running.  Even I find it hard to believe that I could enjoy running.  I would always dread going to gym class in school and I never considered myself an athlete.  Ever.  I never thought I’d say it, but I actually came to look forward to my runs.  So… Now that I’m capable again, I plan to build back up to a 5k run by repeating the C25K program.  I’m planning on building up to a half-marathon this fall, but for now, let’s start easy…  a min of running here and there, and then work on building up. 

 If you’ve ever considered running (or even just starting an exercise program) but don’t know how to begin, trust me - the CoolRunning folks have been through it all, and know just what you need to start, improve, and stay motivated!

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As a newbie to the world of social bookmarking not too long ago, I was pretty confused about what it all was.  I wasn’t quite sure what to make of all the rankings and what exactly it meant to me.  There were the stumble this’s, the digg that’s, the reddit’s, the ma.gnolia’s, and what’s so del.icio.us about a website?

Maybe I’m off-base here, but I’m guessing there are others out there who could use some help too.  In essence, social bookmarking sites let you keep track of stuff you come across that you may want to check out at a later time.  They allow you to save those sites to your own account, and they allow you to check out others who may have similar interests.  Now, without further ado, here are the basics of each of the big ones:

• Digg: A great place to keep up with current events, Digg.com lets you see what’s big news these days.  Posts to digg can be anything and everything, from entire websites to blog posts to articles and videos.  Members have the ability to “digg” posts to bump them up in the popularity ranks, as well as the ability to “bury” posts.  These days, there’s a strong political leaning to the posts, but you can also find a variety of other goodies if you look around.  The interface is excellent for learning your way around social networking sites: getting to the posts, voting posts up or down, and commenting are all easy to handle.
• Del.icio.us: On first glance, del.icio.us seems a bit bland.  White backgrounds, black and blue lettering, and that’s about it.  Now that I’ve been playing with it for a while, it’s actually become one of my favorites.  It’s can be a great surprise when you click on a link since there’s no real indication of what you’re about to see, aside from what others have written as descriptions or tags.  Some members leave detailed descriptions of what the websites are about, but typically people just save the link with a few words to help them remember why they were interested in the first place.  I’ve gotten to the point where I like to see what’s popular, and just start saving links that may be of interest to me - then checking them out later on when I actually have time.
• Ma.gnolia: Ma.gnolia.com is similar to del.icio.us, but has the added bonus of a large community where you can create groups and save contacts.  Members are encouraged to discuss what they’ve found via forums.  The groups are helpful to keep track of what everyone else is up to.  The load time of pages is a bit slow, but it’s nice to be able to associate people with pictures (or avatars, if they so choose).
• Reddit: Reddit is another one with a less-than-spectacular interface for viewing, but again, it lets you know what’s hot and what’s not these days.  Similar to digg, it allows members to vote stories up and down.  Reddit tends to have a technical leaning to it, with many articles on programming and gaming.  There are some other fliers though - like right now, there are links to free South Park episodes, an article about the economic stimulus checks, and some medical articles.
• StumbleUpon: These days, I always feel like I’m promoting StumbleUpon.  I enjoy wandering the internet for anything and everything, and make off-handled comments about how I “stumbled upon so-and-so today”.  What a brilliant marketing ploy!  StumbleUpon has a nice combination of website thumbnails to go along with the links so you have an idea of what you’re getting yourself into.  StumbleUpon lets you check out websites, people, and videos.  You can send someone a message straight through their own personalized StumbleUpon page (which you also get when you sign up).  Stumble seems to be a combination of del.icio.us and ma.gnolia, and gives you a great place to start building up your online community.

Hopefully I’ve managed to get the big ones.  If you have any thoughts or questions, give me a holler!

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Basics of Stickk 

In the Stickk world, you set up a contract and put money on it.  Along the path towards your final goal, you have check-ins where you have to record your success or failure.  Depending on that check-in, the money associated with the contract will either go back to you if you succeed or will go to a specified recipient should you fail.  That recipient can be a charity (United Way, UNICEF, Doctors Without Borders, etc.), or if you’re really daring, an anti-charity (NRA, Educational Fund to Stop Gun Violence, etc.). 

As a test, I decided to open a contract to lose 15 lbs by June 10th, which works out to a pound a week.  When you open a weight loss contract, the most they will allow you to lose is two lbs per week.  They’ve set it up so that your weekly target adapts to your previous weigh-in if you miss your target.  For instance, if I gained a pound one week, I would not then have to lose an extra pound to make up for it the next week.  However, if I lose five pounds one week, I could then potentially gain back three the following week and still be ok since I would still have a net two-pound loss over those two weeks.

My experience at Stickk so far:

• Goal: Lose a total of 15 pounds by 6/10/08
• Contract Amount: $30 ($2 per weekly weigh-in)
• Start Date: 2/24/08
• Total weight loss as of 3/23: 4 lbs.

Some Areas for Improvement

Stickk is a great concept, and could potentially help many people.  In my opinion, though, there are a few opportunities for improvement:

• Larger, More Accessible Community: It’s probably a function of the new-ness of the website, but the community needs to be built up.  It would be nice to have more people to chat with about goals. (wink, wink, nudge, nudge!)
• Add the Ability to Specify a Charity: I would have liked to have been able to specify exactly which charity my money will go to if I don’t succeed.  Instead, though, they randomly select the charity themselves.  If you go with an anti-charity, however, you can choose exactly which one gets the money.
• Increase the Anti-Charity Options: The anti-charities (from my perspective) are not exactly “anti”.  I’m sure there are people out there who would not want to donate money to organizations like the Nature Conservancy or the Pro-Choice America Foundation, but I for one would be OK with it.  In fact, there’s only one anti-charity in the list that I would personally ever select.

The Bottom Line

All in all, I’m pro-Stickk.  It’s an excellent chance to really put yourself to the test.  It’s helped me to stay focused on my goal, which, in the long run, will help improve my quality of life.  Besides, if all it takes is a little money riding on the deal to help you achieve your goals, why not give it a shot?

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In the meantime, here’s a fun little quiz to find out just how you rank on the optimism scale.  It’s not the same quiz they mentioned patients having taken on the news; that one is more geared toward heart patients.  This one covers all aspects of life.  It’s only 15 questions, but it sure gives you a good idea of how perky optimistic people can be!

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When you find yourself thinking “I want to be able to ____”, stop right there.  It’s great to dream and in the long run, that’s what we all need to do if we’re ever going to improve in any way. In the short run, however, we need some way of getting to those dreams. What are the steps to get to that dream? How are you going to accomplish the goal? 

The most important thing to remember when defining a goal is that you need a measurable target. It can be either the final goal, or smaller sub-goals - but either way, you need to be able to define exactly what it means to accomplish that goal. If, say, you come up with a goal of “saving money”, what exactly does that mean? For some people, it may be finishing out a month with a positive balance in their checking account; for others, it may be depositing the maximum amount of $5000 into their Roth IRA; still others may have even more impressive goals. The question here is: how are you going to know what you’re working towards if you don’t have an exact target to aim towards? Chances are good unless you have a specific goal to strive for, you’ll probably just wander off the path and go about your merry way without ever having succeeded.

Once you’ve got that goal, you have a great starting point. Then the question becomes: how do you get there? Back to our example of “saving money”. Are you going to track precisely what you spend? Maybe create a budget to try to stay focused? Or maybe it would be easiest to open a separate savings account that automatically withdrawals a set amount each month. Whatever the case, once you’ve got that measurable goal to work with, you’re well on your way to accomplishing it. Keep in mind that as much of a hassle as it may seem to be right now to ask all these questions, you’ll benefit down the line when you know exactly what you’re working to accomplish.

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