Saturday, September 20, 2008

Number Crunching 126

Interrupted the regularly schedule weekly check-in and analysis of financial matters (thanks to unreliable power source) to start working through the steps of Your Money or Your Life by Joe Dominguez and Vicki Robin. The book’s background started with the same information shared in church seminars, so like Dave Ramsey, you occasionally have Christian spirituality talk mixed with money talk. The authors have a point that you cannot separate money from the rest of your life—including spirituality/religion. So far, I have made it to chapter three and the quote scriptures from the Bible less than Dave Ramsey. Consider yourselves warned.

The subtitle is the best summary: “Transforming your relationship with money and achieving financial independence.” I read some PF bloggers rave about this book and grabbed it on the shopping trip to Half Price Books while visiting my sister. But I only serious started on it in the beginning of September. Knowing there’s no money in the bank and no power to double check that, it seemed like the perfect time to get back on track. (Much like today, I am being teased with electricity promises unfulfilled.) Anyways, I’d like to transform my attitude about money, stop falling into my bad money habits, get out of debt, and be free to do what I want to do instead of what I have to do.

Dominguez and Robin give a nine-step program to help you achieve financial independence. The first concept they give you to wrap your head around in “Having Enough.” It’s a different monetary amount for everyone, but it exists. Money does not equal fulfillment, but reaching the point of enough “for survival, comforts, and little luxuries; appreciating and fully enjoying what money brings into your life and yet never purchasing anything that isn’t needed and wanted.” (25)

Okay, I’m ALL for that. Onto step 1: Making peace with the past. It has two parts; most steps are multi-parters. Step 1: A). Find out how much money you have earned in your lifetime—the sum total of your gross income, from the first penny you ever earned to your most recent paycheck.

I fudged. I didn’t want to try to remember how many times I babysat as a teenager or what I got as gifts. The gift thing goes against my grain. You didn’t earn it and you can’t depend on it to pay your bills. And babysitting back in the day was not a regular gig. So I started with my first income tax returns independent of my parents. 1996 – 2007 equals $160,117.00. Year-to-date for 2008 equals $24,810.72. So my grand total for lifetime earning equals $184,927.72.

Holy rusted metal, Batman! That’s only 12 years. Evidently, I am capable of earning a nice chunk of change without even selling my writing yet. However, judging by my current bank balance, I am capable of overspending that nice chunk of change.

Step 1: B). Find out your net worth by creating a personal balance sheet of assets and liabilities. I have that now that I have updated NetworthIQ.

Not that I’m terribly surprised by being worth a negative amount. I can’t ever recall being worth a positive amount.

Chapter Two starts with the question what is a universally and consistently true definition of money? And like any good nerd, I came up with the textbook answer: money is an economic tool to exchange goods and services between people.

But the textbook definition isn’t how people deal, feel, or see money, so the authors show four perspectives of money to get to the nonmaterial aspects of money.
Street Level
physical pieces of paper and metal, all financial transactions over a lifetime, jobs, insurance, savings, investing, etc.
emotional/psychological realm; personal thoughts and feelings about money; money myths – money as security, power, social acceptance, evil
cultural realm; history of money; principles of economics, sociology, and anthropology of money. Growth is good, more is better.
personal responsibility and transformation: money is something we choose to trade our life energy for.

When discussing the neighborhood perspective, the authors ask you what your money style is? I fluctuate between impulsive and worrier. The roots of this is usually in how you were raised, and I have studied that dynamic before in detail. They also ask you what your money mythology is. I see money as security. I feel worth more when I’m out of debt or when I know I stand financially, but as soon as I have a positive balance in the checking account, I quit watching. Even knowing I’ll frit it away, I still don’t watch it.

Once we get to the jet-plan level, readers are introduced to the “one consistently true statement we can make about money that will allow us to be clear, masterful, and powerful in our relationship with it? Money is something we choose to trade life energy for.” (54)

Pause for the Keanu Reeves “whoa” moment.

Life energy is our allotted time on Earth. It is finite. It runs out. You pay for money with your time. What does it reflect about your values, commitments, inner self? What does it reveal?

How scary is it to really find out?

This is where the slogan “no blame, no shame” starts coming into play. Because shame is a lousy motivator when compared to inspired. You look at your spending habits, and you decide how much your life energy is really worth.

I’m going to try to do a Step of the program in each of the weekly Budget Catch-Ups. After some blows to the ego getting back on track, I realize I must get out of the money traps for my own peace of mind. Plus it should at least make the next few weeks interesting.

Read Free!
The BookWorm

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