Is It Money, or Is It Life?
Your money or your life: Exploring financial freedom
We spend the first half of our lives trading our time for money. We work, we save, and we look forward to the day when we can stop. But as we enter our third act, the equation shifts. We realize that while we can (hopefully) always make a little more money, we cannot manufacture more time.
I recently revisited a classic book that tackles this exact dilemma: Your Money or Your Life by Vicki Robin and Joe Dominguez. While often cited by young people wanting to retire at 30, the core message hits even harder when you are 55 or older.
Spotlight: The Wall Street Analyst Who Walked Away
To truly understand the book’s power, you have to understand Joe Dominguez. He wasn’t just a theorist; he lived this philosophy to the extreme.
Joe retired in 1969 at the ripe old age of 31. He had worked on Wall Street as a technical stock analyst, but unlike his peers who were chasing endless wealth, Joe had a specific “enough” point. He walked away with a nest egg of just $70,000 (about $600,000 in today’s dollars) and lived comfortably on the investment income, roughly $6,000 a year, for the rest of his life.
Even more strikingly, he didn’t write the book to get rich. In fact, he and co-author Vicki Robin donated all the proceeds to their non-profit, the New Road Map Foundation, to promote sustainable living. Check out Vicki’s Substack.
However, I was disappointed to learn that Joe passed away quite young, in his late 50s. It is a sobering reminder that the goal isn’t just to have a pile of cash at the end. The goal is to ensure the time we have left is spent on what truly matters.
The Core Concept: Life Energy
The book posits a fundamental truth: Money is something you trade your life energy for.
Joe and Vicki believed that modern conveniences, especially credit cards, created a screen that separated us from this reality. We stopped seeing money as the “sweat of our brow” and started seeing it as plastic magic.
When you buy a new car or a second home, you aren’t just paying dollars. You are paying with the hours, days, and years you spent working to earn those dollars. At our stage in life, this calculation becomes critical. If you are thinking of working for another year to pay for a luxury renovation, ask yourself: Is that renovation worth another 2,000 hours of your limited time on Earth?
Financial Corner: The Rates Have Changed, The Principle Hasn’t
It is important to note a key difference between Joe’s era and ours. In the 1980s, Joe could invest in Treasury bonds yielding over 10%, sometimes as high as 15%. Today, those rates are significantly lower, fluctuating closer to 4% or 5%.
This means we can’t just rely on high-interest bonds like Joe did, but the principle of widening the gap between income and expenses remains rock solid.
The Strategy:
Identify “Enough”: The book introduces the “Fulfillment Curve.” Spending money increases happiness only up to a point (survival, comfort, modest luxury). Beyond that point, more spending actually decreases fulfillment because of the stress of managing “stuff”.
The 4% Rule: The book touches on the “safe withdrawal rate.” Generally, if you can live on 4% of your total investments annually, your money should last 30 years. We’ll revisit this in depth in a later post.
Action Step: Calculate Your Real Hourly Wage
If you are still working, or perhaps working a “retirement job,” try this exercise from the book.
Don’t just look at your salary. Subtract the costs of working: commuting, professional clothes (aka costuming), convenience meals because you are too tired to cook, and the decompression time you need after a stressful day.
You might find that your “high paying” job effectively pays very little per hour once you factor in the costs. This might give you the courage to downshift, work part-time, or fully retire sooner than you thought.
As Joe Dominguez famously said, we have to ask ourselves: “Do I want to use these hours of my life just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?”
Make sure you are enjoying the time you bought.
Best,
Art