Your Money or Your Life by Joseph R. Dominguez and Vicki Robin Book Notes & Commentary

Your Money or Your Life Reviews at a Glance:


Joe Dominguez reached financial independence at the age of 31, retiring from his 10 year career as a financial analyst and writer on Wall Street. He wasn’t a big-time banker or stock broker. In fact, he made a modest income.

Yet he was able to retire early based on a clear plan. A plan he later explained in this book Your Money or Your Life. This plan is designed to help you too get out of debt, start saving and reach your own financial independence.

If you’ve tried to follow budgets in the past and failed, don’t worry. Budgets usually fail because they are based on self discipline, which is forcing yourself to do something you don’t want to do. Unfortunately, many of us don’t have the iron willpower to succeed at that. This is also the reason most diets fail.

Joe and Vicki teaches a totally different approach to personal finance, starting from the inside-out. They says our financial situation is really a reflection of our inner self and our deepest values and beliefs. Therefore, to change our outer financial situation, we must first change the myths and beliefs we hold about money. We must also understand ourselves and bring consciousness to the way we spend and earn our money.

small green plants growing

1. Savings equal freedom, yet endless debt has become normal in our society.

We’ve stopped saving the way most of our parents did. In the US, the average savings rate fell below zero percent in 2005 and has stayed near zero ever since. The last time people saved this little money was during Great Depression in the 1930s. Yet here we are, living in the richest country in the world and the richest time in history, yet most people can’t save a penny!

This lack of saving comes at a time when savings are more important than ever. The number of defined-benefit pension plans in the US for people working in the private sector has dropped dramatically, from 41% in 1978 to 21% today, according to the U.S. Bureau of Labor Statistics. (These have mostly been replaced with defined-contribution pension plans, which don’t guarantee a certain income after retirement.)

Not only are savings down, but debt is way up. The average American has $38,000 in personal debt not including home mortgages, a recent study found. And people today seem less concerned about their debt, less worried about paying it off quickly, less conscious of the impact it will have on their future plans. People get in debt and stay in it. For example, in my country of Canada, over 50% of new car buyers sign an 84 month loan. That’s 7 years to pay for a car! Not long ago car loans this long were unheard of, now they are normal.

In the book is the story of Nedra, a young lady who recently graduated. For the first time in her life, Nedra had a professional job which gave her lots of disposable income. She thought that becoming an adult member of society meant collecting lots of new possessions, a new wardrobe for her career and new furniture for her new apartment. She went deep into debt, piling credit card debt on top of already high student debt and—like most of her fellow young professionals—she was in no rush to pay it off. She figured she was doing fine if she continued to be able to make the minimum monthly payments.

Our consumerist culture wants to teach us that debt = freedom and it’s succeeding. This kind of idea would fit right into one of George Orwell’s novels, beside the ideas that war = peace and ignorance = strength. Our culture implants the idea that being able to buy what you want now is great, without the pain of waiting weeks or months until you “have” the money.

Debt limits your options

Yet debt is really a prison because once you have loan payments due every week, you’re stuck. Even if you hate your current job, you’re stuck in it because you can’t afford to quit or even take a few weeks off to look for something better.

The truth is that savings equal freedom, not debt. Joe and Vicki recommend having enough savings on hand to cover at least 6 months of living expenses. Having a 6 month savings cushion will give you the freedom to quit your job if you hate it or to not lose your car or home if you’re suddenly laid off. It will give you an enormous feeling of security and peace of mind.

And the end goal of saving money is to reach Financial Independence, which is the ultimate freedom. Financial Independence is when you’re making enough money from sources other than your job to cover all your expenses. In other words, you don’t have to work anymore unless you really want to. Most people see that kind of Financial Independence as an unattainable goal. Almost like a fantasy reserved for lottery winners, millionaires and the very old. Yet by the end, you’ll see that Financial Independence is reachable by anyone by faithfully following the steps in this program.

[key-point]Do you have enough savings to cover 6 months of expenses? This savings cushion will give you a lot of freedom and security. To become free of money worries, we must reject the culture of zero savings and endless debt that most people are imprisoned by.[/key-point]
rainbow hippy van unsplash

2. We all know that “money can’t buy happiness,” but what do our actions say?

Most people endlessly chase money because our culture teaches us that it is the way to happiness. Now it’s time for a hard look in the mirror. What does money mean to you? Most of us would strongly deny that we personally believe in the myth that money buys happiness. Yet the first step to understanding our situation about money is looking not only at what our rational mind tells us, but also what our behaviour reveals to us.

Everyone always says they need “more” money no matter their current income. The authors of this book like to ask people in their financial classes a question: “How much money would make you happy?” Almost everyone says they need 50-100% more than they make now, regardless what their current income is.

From every direction, society teaches us that growth is good. If you don’t have a car, then you need one. If you have one, you need two. If you have three pairs of shoes, then you start feeling the itch to buy a fourth pair. Here’s one of the most profound quotes from Your Money or Your Life:

We have learned to seek external solutions to signals from the mind, heart or soul that something is out of balance. We try to satisfy essentially psychological and spiritual needs with consumption at a physical level.

If the endless chase for “more” were making people happy, then it would be fine, but it doesn’t. For most people it’s an endless rat race, where the finish line is always moving away from you faster than you can run to it. At most, we might feel a momentary relief when we buy something we wanted, but this feeling soon fades. Is it really possible to pull the heroin needle of consumer culture out of our arms, so we can finally be free to live life on our own terms?

Hedonic Adaptation

Scientific studies have shown that after a certain point more money does not add to happiness. Sure, if you make minimum wage then more money will improve your quality of life. You’ll be able to stop worrying about food and shelter and buy a few comforts. Yet once income moves past around $65,000, more money does not contribute to happiness. In fact, after someone passes six figures, average happiness actually goes down a little.

Our brains play a trick on us. Psychologists call it “Hedonic Adaptation” and it means you brain very easily becomes used to a new standard of living. That shiny new car you just signed the lease to? After a couple days of excitement, your brain adapts to it and it becomes your “new normal.” That’s why someone driving a Mercedes Benz doesn’t look any happier than someone in a rusty old hatchback. As far as happiness is concerned, the car has become invisible to them.

Psychologists also call this phenomenon “The Hedonic Threadmill” because we seem to be always running somewhere but never getting anywhere when it comes to consumption and happiness. Wants that are fulfilled do not make us feel fulfilled, rather they are soon replaced by new wants.

Clutter and “Enough”

Another reason buying things doesn’t make people happy is that it leads to clutter. Clutter is all the stuff that takes up your space, time and energy without giving you anything positive in return. Clutter is the pair of jeans you wore twice and forgot about. Clutter is the car or second car you rarely use. We all have clutter in our lives. It distracts us and weighs us down. It brings extra worries and more expensive insurance policies.

The key is to know when you’ve reached the point of “enough.” This is when you have all your needs taken care of, some extra comforts and even a luxury or two… without bringing a lot of clutter into your life that wastes your mental and emotional energy.

But how do you know when you’ve reached the point of “enough” before you drive off the cliff of endless consumption? Later we’ll learn how to determine what your values and life purpose is. Knowing what you truly value in life will allow you to know with certainty whether that new purchase will add to your fulfillment or to negative clutter.

[key-point]Buying something we want does not lead to fulfillment, at best it gives us a temporary satisfaction. On the other hand, most of us have clutter in our homes that causes distraction, worry and stress.[/key-point]
green plants energy

3. Money is life energy.

To most of us money feels abstract, vague and slippery. It’s numbers in our bank account. It’s loose papers in our wallet. It comes and goes seemingly randomly. Let’s end this confusion now.

Money is your life energy. When you work, you are trading a certain amount of your life energy for money. So when you buy something, it’s really your life energy that you are paying with, disguised in the form of money.

For example: if you make $20/hour and you buy $60 jeans, then you’ve traded 3 hours of your life energy for the jeans. Makes sense? In fact, you can do this for fun every time you buy something. Convert the cost of your purchases into how many hours of life energy it’s really costing you. You’ll start to wonder whether these jeans are really worth spending 3 or 6 hours of your life energy on. And that’s totally natural.

After all, if money is our life energy, then doesn’t it make sense that we would treasure it and treat it with care and consciousness? All of us only have a certain amount of life energy available to us. And once we’ve spent an hour of life energy, there’s no getting it back.

Life energy is all we have. It is precious because it is limited and irretrievable and because our choices about how we use it express the meaning and purpose of our time on Earth.

Why being frugal is a virtue

Being frugal is different than being cheap. People who are cheap will try to spend as little money as they can in every situation. They’ll buy the cheapest car, clothes and food without thinking of quality or how much satisfaction they’re getting in return.

Frugality, on the other hand, is about valuing our life energy. It’s getting the maximum satisfaction from the material world in return for our life energy.

Frugality is not spending less for the sake of spending less, it’s about enjoying what you have to the fullest. For example, if you have 10 pairs of shoes but you wear and get enjoyment out of all of them, then you’re being frugal. However, if you have 5 pairs of shoes but only wear 2 of them, then you’re being wasteful not frugal. Waste does not come from having a lot of possessions, but from spending your life energy on things you don’t use or enjoy.

[key-point]At work, we trade life energy for money. Since all of us have but a limited amount of life energy, doesn’t it make sense to not waste it? Frugality is treating your life energy with care and consciousness, so you get the maximum satisfaction from the material world in return.[/key-point]

4. Look at how your financial life has gone so far, with no shame and no blame.

Here’s the first big practical step in this program. You’ll be finding out exactly how much money you’ve earned in your lifetime and your net worth. Before we can improve our financial situation, we have to see it accurately and make peace with our past. First we’ll calculate…

a) What are your total lifetime earnings?

This is how much life energy has flowed into your life. This is an important first step because it clears the mental fog many of us have around money. Although this may seem time-consuming, it’s an important test of your commitment to this program. Do you really want to get your financial life straightened out? If so, then let’s get started!

Create as honest and accurate a picture as you can of your total lifetime earnings. Everything from that first lemonade you sold when you were 5 to your most recent paycheck. Dig out your old tax returns and paystubs. Remember any side jobs, family gifts, tips and other sources of money. In the US, you can contact Social Security and ask for a statement of earnings which will give you a lot of this information too. 

b) What’s your net worth?

The second step is to find out what is the total value of all the things you own. (Also called your net worth.) Make a big list of everything in the world you own. Write down the name and value of it, then add it all up. The list should include everything from the cash in your wallet, to money in the bank and any investments you’ve made. Your physical possessions should also be accounted for, including cars, furniture, clothes, gadgets, books and so on. Estimate how much they would be worth if you sold them today.

Your loans and debts are also important, these should be subtracted from your net worth. If you are in major debt, then it’s totally possible you could have a negative net worth.

“No shame, no blame.”

While you’re doing this exercise, feelings of shame or guilt may come up. If you’ve accumulated a lot of things you don’t need or use, then this step can be a painful reminder. If this happens, a useful phrase to say to yourself is “No shame, no blame.” Repeat this to yourself like a spiritual mantra.

The numbers that you end up are not good or bad, they’re just numbers. They don’t make you a good or bad person. They can’t be too high or low. The numbers are just here to help us gain clarity and awareness around our past. Remember: no shame, no blame.

When you have calculated your total lifetime earnings, the authors want you to look at that number and ask yourself a question: “What have I got to show for it?” Sounds harsh, but remember we’re bringing a new level of consciousness to our financial life. What have you got to show for all the life energy you’ve given?

[key-point]Add up all the money you’ve made in your lifetime, then add up the value of everything you own. This is your financial life up to now in a nutshell. What have you got to show for a lifetime of life energy given? Remember no shame, no blame.[/key-point]
colorful holi

5. Stop feeling pressured by outside expectations through getting in touch with your inner values.

Now we know money is life energy. The sad fact is that most of us waste our life energy. We waste it on short term pleasures and looking good to other people, neither of which makes us feel good in the long term. Why do we do that?

Well, when we’ve lost touch with our own values, then we substitute it with looking good to others, trying to live up to their values. We don’t feel good about ourselves and don’t know where our life is going, but maybe a new iPhone or red convertible can make us feel better because other people will look at us differently. Of course, most people find this approach to life is not a path to fulfillment, but an endless rat race. Worst of all, your neighbours are so busy trying to look good to you they will either not notice your efforts or they will resent you for one-upping them.

Seeking short term pleasure is a similar story. Let me share with you the experience of Viktor Frankl, an important psychologist who wrote about his experiences in the concentration camps of WW2 in his book Man’s Search For Meaning. Frankl said life inside the camps was a daily struggle for survival. The only people who survived the terrible conditions had something in their lives to look forward to which gave meaning to their suffering. For example, Frankl knew he had to survive to finish his important book about psychology because nobody in the world could write that book except him. Other prisoners kept hoping they would reunite with their families and nobody could take their place as husband or father.

But when one of the prisoners had lost the hope and meaning in their life, there was always one clear sign. They wouldn’t be able to get out of bed and they would inevitably pull out a cigarette. Cigarettes were used like money in the camps and could be traded for more soup or warmer clothes. Yet when a prisoner became hopeless, they lit up their cigarette rather than saving it. Frankl said when life loses its meaning, humans resort to short-term pleasure seeking.

How to find your values

To avoid the traps of short term pleasure and living up to other people’s expectations, we must get in touch with our values. This is developing your own sense of what is right and wrong. This is using your own internal measuring stick to judge what is good or bad, rather than relying on external approval.

What exactly are “values”? They’re the ideas/principles you believe are important and positive. For example, parents often talk about teaching their kids “values”, which might mean exposing them to positive heroes and ideals. That could be Jesus who taught about kindness and peace or it could be Spiderman, who sacrifices his own safety to save innocent people and getting no riches or fame in return.

To find our personal values we need to dig a little with some questions. These questions will sound simple, but answering them is an important first step to break our old patterns and get us thinking in different ways:

If you didn’t have to work for a living, what would you do with your time?

What have you done with your life that you are really proud of?

How would you spend the next year if you knew it was the last year of your life?

Your answers to these questions will tell you a lot about what you truly value.

Another good exercise is to think of anybody you want to emulate. It could be a funny coworker, a charismatic Youtuber or Elon Musk. Then ask yourself, “Why do I admire or respect this person?” Your answers will point you to your values.

Are you following your visions?

“Follow your dreams” is the cliche advice offered by nausea-inducing self help books and uncreative relatives. But is it really bad advice? Let’s take a closer look at it.

People who have purpose and meaning in their life always seem to have a direction they are moving in. Purpose implies direction. And what are they moving towards? Usually a vision they have of a better life in the future. In other words, their dreams. When Bill Gates is getting rid of diseases in Africa, he can see a vision of a future world where kids don’t suffer needlessly, his dream.

Ironically, most kids have a better idea of their dreams than most adults. Ask a kid what they want to be when they grow up and they’ll give you a clear answer. Ask an adult what they want to be doing in 10 years and they’ll look at you confused. The truth is, most of us have long ago whittled down our dreams in order to “be practical” and pay the bills. An old dream of being a novel writer is slowly whittled down to writing advertising copy.

So many of us have whittled away at our uniqueness so that we could be square pegs in square holes that it seems slightly self-indulgent to wonder what kind of hole we would be inclined to carve for ourselves.

Our dreams are often pushed down and forgotten because they seem to be impractical. What does it matter if we truly wanted to be a landscape painter when the electric bill is due and the house needs a new roof? Yet you may find your dream is more practical than you expected after we shine a light on where our life energy is truly going. More on this later…

[key-point]When we’re disconnected from our values, it’s easy to get distracted seeking short term pleasures or approval from others. The way out of these traps is to stop thinking “practically” for once. What are your dreams? What job would you do for free? Who do you most admire? Your answers will point you to your values, which are the compass that leads you to lasting fulfillment.[/key-point]

6. What’s the true cost of your job and your “real hourly wage”?

How much money do you earn when you work? Most of us would say whatever number is on our paycheck, whether that’s $20/hour or $500/week. As you’ll soon see, that number is often misleading.

With this exercise you’ll find out your “real hourly wage” is. This is how much money you’re really trading each hour of life energy for, when all costs are accounted for. After this exercise, many people see they are getting paid much less than they thought. They thought they were making $20 per hour, when they were really only making $15 or $10 per hour after all the extra hours and costs are included.

Your “real hourly wage” is the actual price you are selling every hour of your life energy for. Here are the 4 steps to calculate it:

  1. Write down how many hours and how much money you make “on paper” each week.
  2. Add up how many extra hours your job costs you each week, outside of work. Altogether, it wouldn’t be surprising if you spent 10+ hours or more per week here. Add this number to your weekly hours worked. This is not paid overtime, but includes unpaid activities like:
    • Your commuting time.
    • The time you work at home without being paid, like “catching up with your emails.”
    • Also the time you need to “decompress” after work before you can do anything else. If you didn’t need to work, then you would have that extra hour too, right?
  3. Add up all the extra expenses that are caused by your job. How much money do you spend because you work? For many of us, it could easily be over two hundred dollars per week. Subtract these expenses from your weekly wage to find how much money your job is actually netting you each week. These include:
    • Commuting expenses. All the car, train or bus payments. Extra gas, oil and maintenance for your car because of all those miles.
    • Outfit expenses. How much money do you spend to maintain a professional appearance? All the suits, dresses, high heels, extra haircuts and salon visits. For non-office workers, this can be a uniform, work boots etc.
    • Food and drink. Everything from morning coffee and doughnuts to lunches. Not to mention the restaurant and take-out dinners you buy more often because you’re too tired from your job to cook.
    • “Escape entertainment” which is money spent to escape the reality of a job we hate. This includes everything from movies, cable TV, video games… to buying a boat, blowing money in bars, going to Vegas, etc.
    • Extra indulgences we buy to make up for our work. Everything from extra lattes to massages or a new toy. How many purchases do we justify by saying, “It was a rough week and I deserve it.”
    • Household expenses which we’re too busy or distracted to take care of ourselves like housekeeping, gardening and plumbing. Without your job, you’d probably have more time and energy to do these things yourself. This also includes babysitting and daycare expenses for kids.
  4. Now you can find your “real” hourly wage by including the additional hours and expenses we just discovered.

Now that you know your real hourly wage, does it make you feel depressed? That’s normal, but there’s also a positive benefit: Your eyes are now opened to reality of what your current job is giving you. It’s probably less than you thought. This opens up the possibility that going down a different path might actually cost you less than you imagined. Working part time, working closer to home or pursuing that “unlucrative” dream career might now be good options.

Here’s a story from the book to illustrate this: Larry G. was a construction project manager for 10 years living in a big city. He was unhappy with his job, but it was just enough to cover the bills so he felt like he didn’t have a choice. Then he followed this program, learned how to track his expenses and was shocked because almost half his spending went to the job he hated! Driving his own car around different work sites meant a lot of gas, oil and maintenance. And there were all the business lunches and small daily expenses which together added up to a lot of money.

That’s when Larry had a big insight: he could work close to home part-time making half the money he used to and actually save more money! Larry was excited to realize he really could quit his job and pursue his dreams. At first, only working part time, him and his wife finally payed off all their credit cards. Then they realized they could live fine on only his wife’s salary (she was a teacher for the handicapped who loved her job) so Larry went back to school to train for his dream career as a counsellor and therapist.

[key-point]What does your job really pay you? When you take into account the secondary expenses and extra hours that your job costs you, your “real hourly wage” may be lower than you think! For example, most people commute, which costs both time and money.[/key-point]
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7. Keep a Daily Money Log to become conscious of the movement of your life energy.

Now you’ll learn an exercise which is at the core of this program. It’s called the Daily Money Log and it’s about keeping a written record of every cent that you receive or spend.  Make it your new habit to record any movement of money in your life. Write down the precise amount and reason for the movement. After about a week, this habit should become automatic after any purchase you make or money you receive. You can either carry a little paper notepad or use one of the many mobile apps available.

This exercise will bring a floodlight of awareness into your relationship with money, which might not always be comfortable. Be warned: this exercise is simple, but for most it is definitely not easy. Your Daily Money Log will create a clear mirror of your actual life and expose many unconscious spending patterns which you are not yet aware of. This step will test your commitment to financial integrity like nothing else. If you are serious about clearing up your relationship with money, then this exercise will challenge you to bring a new attitude of accuracy and truth to an area of life where most of us are careless and unconscious.

Keep in mind the mantra of “No shame, no blame.” The purpose of this exercise is to help us see where we’re spending money, not to make us feel bad about spending money. That’s an important difference. While you are filling out your Money Log, if you feel any shame or guilt arise, watch the feelings with your awareness. In itself, this can be a powerful spiritual practice. The key to success with this program is to have as much self acceptance and as little self judgement as you can. As the great psychologist Carl Rogers said:

The curious paradox is that when I accept myself just as I am, then I can change.

[key-point]Writing down every cent that you earn or spend daily will uncover all your unconscious patterns around money.[/key-point]

8. Do a Monthly Tabulation to keep your spending in alignment with your values.

Now we’ve started keeping track of our daily expenses. What are we going to do with all that new information? Once a month, we’re going to take that Daily Money Log and create a Monthly Tabulation. Don’t worry, this is easier than it probably sounds. Here’s how to do it in 4 steps:

  1. Identify a few categories for your spending this month. For example: groceries, gas, eating out, etc. Create a table, either on paper or a spreadsheet program, and put each category name in the first column.
  2. Add up how much you spent in each category this month and put the amount into the second column. This will mean going through your Daily Money Log and sorting everything.
  3. Convert the dollars you spent in each category into hours of life energy and put this into the third column. To do this, you’ll need to use the “real hourly wage” we discovered earlier. For example, if you spent $30 on cafés this month and your real hourly wage is $10/hour, then write down that it cost you 3 hours. This step is important because it puts your spending into the context of life energy.
  4. For each category, ask yourself these 3 questions. You’ll need to create 3 more columns for your answers. Write your answers down as a + (positive), – (negative) or 0 (neutral). Here are the questions:
    1. “Did I get enough satisfaction from this category, considering the hours of life energy exchanged?”
    2. “Does this spending line up with what I value and my life purpose?”
    3. “If I didn’t need to work for money, how might spending in this category change?”

This Monthly Tabulation is a powerful exercise because it makes you aware of where you are spending money in a way that doesn’t bring proportional fulfillment. On the other hand, you may find that you should spend MORE money in certain categories that bring you a lot of satisfaction.

Joe and Vicki says he’s seen it happen many times. When one of his students becomes aware of where spending isn’t serving them, it creates an automatic self-protective response. Spending naturally shifts away from those categories that consistently receive minuses in response to the three questions.

This financial program is different from others because it’s not telling us where we should spend less money. It’s also not about guilt, deprivation or starvation. It’s about aligning our spending with our values and using our limited life energy in a way that brings us maximum fulfillment and satisfaction.

[key-point]Categorize all your expenses every month. Are you spending too much money in categories that bring you little satisfaction? Are you spending too little for things that bring you a lot of satisfaction? This exercise will make you aware of this.[/key-point]

9. Create a Monthly Wall Chart to stay on track towards total freedom.

This will be a simple monthly chart with only two lines: one line is your income, the second line is your expenses. Every month you’ll instantly see if your expenses went up, down or stayed the same. As you continue to follow this program, your expenses line will slowly drop.

After looking at hundreds of [reader’s] Wall Charts we can say that those who get past the three-month hump will find their expenses levelling out at about 20 percent less than where they started—painlessly. These people report no feelings of deprivation, no struggling to keep to a budget, just a natural decline.

Seeing the wall chart in front of you every day will keep your new intention to take care of your life energy at the top of your mind, so you’re more likely to make positive daily choices. When your friends and family see the chart, they can provide you with both support and social accountability because they’ll be cheering you on.

As your expenses become lower than your income, that gap between the two lines is called your savings. When you have that gap, the first thing to do is create a savings cushion. Like we said at the beginning, savings equal freedom. So put aside enough money to cover at least 6 months of living expenses and you’ll soon feel more secure and confident with your finances than ever before. After you have this 6 month cushion, you’ll want to begin turning any additional monthly savings into “Capital.”

[key-point]Draw a simple chart with two lines: one for your monthly income and one for your expenses. Seeing the chart every day on your wall will keep your new intention to take care of your life energy at the top of your mind.[/key-point]

10. How to put your savings to work for you, creating a second income.

“Capital” is money that makes you more money. It provides you a monthly income just as surely as your job does. How? Through that often-misunderstood thing called “investing.”

At first your income from capital will be low, maybe a few dollars every month. That doesn’t matter. Put this income from capital on your Wall Chart too, on a new third line. This is a very important line because when this line rises to touch your expenses line, it means you’re making enough income from capital to cover all your needs. That means you don’t have to work unless you want to. You can do whatever you want with your time. The authors call this “The Crossover Point.”


Investing is how we actually put our money to work for us. Most of us carry a lot of false ideas about investing that have been cobbled together from a lot of bad sources like news scaremongering, movies that feature dudes yelling on Wall Street and the advice we got from our bankrupt uncle. Let’s forget all that and start with the basics.

There are two types of investing:

  1. Speculation is buying something in hopes that it will become more valuable in the future and we can make a profit. This includes stocks and real estate.
  2. Debt instruments are basically loans we give. You loan your money to someone else for a set period of time and receive interest income in return for them being able to use your money. At the end of the loan, you’ll get your money back. Two popular examples are savings accounts and bonds.


The original creator of this program Joe Domingues, used an investing strategy that relied on bonds. Remember he was able to retire at 31 years old with this strategy. So what are bonds exactly?

When you buy a bond, you are loaning money to a trusted institution like the federal government, a city government or a large corporation. The bond is a guarantee that you’ll get your money (also called your principle) back after a certain length of time and they will pay you interest on top. Bonds can last anywhere from 1 year to 30 years.

Generally, bonds issued by the federal government are the safest and are often called “risk-free” investments. There’s virtually no chance the US government will collapse so your money is pretty safe. Bonds issues by city governments are a little riskier because although it’s very rare, cities have gone bankrupt before like Detroit. Bonds issued by corporations are much riskier because big companies fail all the time.

The riskier a bond is, the more money you can usually make with interest. For example, corporations need to offer a higher return so people buy their bonds instead of the safer government-backed bonds.

Back in the 1960s when Joe retired he chose to invest in bonds because he wanted maximum safety for his money and a very stable income. Keep in mind the strategy Joe used back then is not the right one for most people today. Times change. 50 years ago when Joe retired, US treasury bonds had a 6.5% interest rate and inflation was below 3%, so his money would have grown by 3.5% every year. Today the interest rate on the same bonds is 4.5%, yet inflation is 5.5%, so your money would actually shrink 1% every year because inflation is now growing faster than your money!

So where should you put your money today?

When most people think of investing, they think of “picking stocks.” Yes, stocks are a way to invest that can make you more money than bonds, but stocks can also be one of the riskier types of investing.

You see, with traditional stock investing, you’re basically placing “bets” on different companies, hoping the ones you pick will do well. Mutual funds are almost the same thing, except you’re paying someone else to pick the stocks for you, hoping their expertise will give you a good return. If the companies you have invested in fail, then you will also lose your money.

So the authors of this book, along with many other modern personal finance books, recommend you put your money into index funds instead.

Index funds are much more secure and reliable and easy than traditional stock investing. When you use index funds, you’re actually investing a small piece of your money into EVERY stock on the market. Instead of one company, you pick them all! This means if one company goes bankrupt, it won’t really affect you. And since the stock market in general rises over time, your money will rise with it.

Index funds are also usually better than mutual funds because of the very low fees. Mutual funds charge 1-2% fees, which doesn’t sound like much, but those fees will eat up a large part of your retirement earnings over 20 years. Yet most financial advisors will want to talk to you more about mutual funds. Why? Because they are getting paid a sales commission for selling them! Advisors don’t make much money when you buy index funds because they have low fees and therefore low profits and commissions. (When you do talk to a financial advisor/planner, make sure they are “fee only” or “fee based,” this means they advise you for a flat fee, rather than getting paid commission based on what they sell you.)

If you want to learn more about growing your money and creating a stable financial foundation for your life, then I recommend you check out my summary of the book Unshakeable by Tony Robbins. It goes into a lot more detail about investing for beginners, using index funds and much more.

[key-point]Use index funds as the foundation of your investing plan. The original author of this book used bonds exclusively, but those have a low return today.[/key-point]


Good job making it to the end! The tools shown in this book will make a huge difference in your financial life when you put them to use. Tools like the Daily Money Log, Monthly Tabulation and Monthly Wall Chart can make us a lot more conscious about where our life energy is going. Yet I think the most important lessons were that money is life energy, that it’s important to find your values and become aware of what makes you truly feel fulfilled.

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