YMOYL

Your favorite books and links
Q
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Post by Q »

Probably the start of the revolution, until Jacob's book is out.
I think that we should all comment on what each book, writing, etc does for us as far as having "light bulb" moments.
This section of the Forums would be good a good resource and expand on that post Jacob had (recommended reading list).


jacob
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Post by jacob »

I don't think YMOYL gave me any light bulb moments. RDPD gave me "you can live off your passive income" which was a game changer for me. YMOYL helped me quantify what it would actually take to do so.
The concept of life energy is interesting, but I have actually never seriously applied it consciously.


Q
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Post by Q »

Still haven't read that, but I should...
Post it up so more people can talk about it ;)


Concojones
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Post by Concojones »

My first "Aha" moment was also a book that said "you can live off your passive income." Enter ER.
The second one was Jacob who said: "you can live well on a student budget." Enter ERE.
If you're a big spender, you may need an additional "Aha" moment (before the other 2) and YMOYL can give you that.


Concojones
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Post by Concojones »

Other useful reading for most people would be a good investment book and perhaps a book on what to do after retirement. Personally, I'd like to see more about that last point.


Q
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Post by Q »

I second the "what to do after retirement". Much like Jacob's Day in a Life post. I think Trent did a DiaL post (that's a funny acronym - get "DIAL"ed in!


jacob
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Post by jacob »

See this post.


Marius
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Post by Marius »

I have the book and the CD set. I recommend the CD set. Joe was a very inspiring speaker!

http://www.amazon.com/Transforming-Your ... 1591793742


jacqjolie
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Post by jacqjolie »

When I was accumulating (for other goals or ER), I used to apply the life energy concept constantly. When I used to spend money, I'd think of how many days of retirement it would cost me though (how much longer I would have to work because of this purchase). Sometimes it's worth it, sometimes not. But if you're motivated to retire early, it's an easy method to stop the emotional or habitual buying that some people have.


pbkennedy
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Post by pbkennedy »

I loved their explanation of the danger of "gazingus pins", the things in your life that you think you need more of. Collections. Most people have a gazingus pin. Mine is books. If I own a Harry Potter book, I seem to feel a need to have all Harry Potter books. At least Joe and Vicki make me think about this before buying.


Kevin M
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Post by Kevin M »

The biggest thing for me was realizing I may not have to work full-time for 30+ years to have enough money to live. Not sure if it was YMOYL or ERE or a combo that showed me the light - I started reading both around the same time.


futuredoctor
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Post by futuredoctor »

I just received YMOYL from paperback swap! It has been on my wishlist for a month or two so I was really excited when someone posted it =)
I'll post back when I'm done reading it.


Kevin M
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Post by Kevin M »

YMOYL's Vicki Robin is offering some free classes next week, sorry if this has been posted already.
http://yourmoneyoryourlife.info/


akratic
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Post by akratic »

Thanks for the link Kevin!
I'm really curious what the answer to the "What Should I Do with my Money Now?" class will be.
YMOYL recommending 30yr treasuries when they were yielding more than 10%+ was either really lucky or really smart. I wonder what they will recommend now.
The crossover point is *much* harder to hit making 3% on your investments than it is making 10%+


George the original one
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Post by George the original one »

@akratic - rate of return is helpful, but crossover is still all about the saving rate. 70% saving rate is 5-6 years regardless of return rate (even if it's mildly negative). 50% saving rate is something like 15 years to reach crossover and the return rate begins to matter.


akratic
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Post by akratic »

@George, I think your math is wrong. I'll show you my math, and maybe you can show me yours?
I think years to FI = (1 - savings_rate) / savings_rate * (1/SWR)
In other words, if your SWR (rate of return - inflation) goes from 12% to 3%, getting to FI is going to take FOUR TIMES as long. This is regardless of your savings rate.
This is assuming you start with nothing, and not factoring in income from investments during accumulation. The derivation is:

FI =>
total_savings * SWR = yearly_expenses
years * yearly_income * savings_rate * SWR = yearly_income * (1 - savings_rate)
years * savings_rate * SWR = (1 - savings_rate)
years = (1 - savings_rate)/savings_rate * 1/SWR

Yes, my calculation assumes you live on just the investment income (you don't spend the principal) but I intend to be ERE for a long time, so spending the principal won't fly for long.
This is the crossover point. I don't even understand how the crossover point could possibly be reached with a negative return.


George the original one
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Post by George the original one »

@akratic - Your calculation reaches _a_ crossover point, but not necessarily one that people would want to live on. If SWR = (rate of return - inflation), then would you feel comfortable if rate of return was not consistent year-to-year, like the typical market returns have been? Might work fairly well if you had plenty of rental units, but not for a market-based investor.
>I don't even understand how the crossover point could

>possibly be reached with a negative return.
Well... it's a bit of trickery, since if one had a 5% negative return 5 years running, then I assume one would most likely switch to something like CDs & T-bills. Here's how a quick example might go if one is saving 67% of net income (e.g. 2 years saved for every 1 spent):
Year....Years of Savings

1_______1.9 *** lousy investor gets -5% returns

2_______3.7 *** (note how the total keeps building?)

3_______5.4

4_______7.0

5_______8.6

6______10.7 *** Tired of negative returns, CD makes +1%

7______12.8

8______15.0

9______17.1

10_____19.3

11_____21.6

12_____23.8

13_____26.0
At the end of year 13, investor now has enough for classic 4% SWR and can stick in just about any conventional bond/stock investment with a high confidence of outliving the money.

*****

"YMOYL recommending 30yr treasuries when they were yielding more than 10%+ was either really lucky or really smart."
It was smart, not lucky, to make that choice in 1983-1985. Many people, including my mother, did the same thing. Heck, even some of my friends took out 4% student loans and put them in CDs then.
Look at the chart for 10-year treasuries and you'll see what was a once-in-a-lifetime guaranteed income in 1983-1985:

http://finance.yahoo.com/echarts?s=%5ETNX
Also note that inflation was definitely declining during the period of those 10% T-bills:

http://en.wikipedia.org/wiki/File:US_Hi ... lation.svg
By the time the book was published in 1992, the best days for T-bills was past.


RobBennett
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Post by RobBennett »

Reading "Your Money or Your Life" was very much a lightbulb moment for me.
In the 1990s I was in a corporate job that I did not like but could not leave because the money was so good. I sensed that there had to be some solution to my problem but could not figure out what it was. I used to go to the personal finance or economics section at Borders and work my way from book to book, starting at A and working my way to Z, trying to find clues. That's how I found YMOYL. Flipping through it, I sensed something different there.
As I approached the page that talked about "Crossover Point" my heart really was beating faster. It was like watching a suspense movie. I knew where it was going and I couldn't believe how cool it was going to be to get there. Once I reached that page, I just kept talking about it and talking about it and thinking about it and thinking about it.
The only thing in the book that really matters is the Crossover Point, in my view. I don't mean that as any criticism at all. The Crossover Point concept is huge. It is very simple. But the most important ideas are all simple. What matters is getting the fundamentals right. And, if you don't understand the Crossover Point concept, you don't understand the fundamental point of all personal finance planning, in my assessment.
I don't think that people fully appreciate how big this book is even today, after it has sold millions. It will grow bigger in influence. I believe that It will revolutionize the money management field in time (as I believe that Shiller's "Irrational Exuberance" will revolutionize the investing field). These two books are my money bibles.
Rob


5to9
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Re: YMOYL

Post by 5to9 »

I just finished reading YMOYL. I think it lacked in lightbulb moments for me only because I had already finished Jacob's book, which stole a bit of the thunder.

I think the part I got the most value from was the idea of observing your expenses and creating the positive feedback loop by analyzing whether or not the purchases brought you fulfillment. I think for my wife and I, budgeting and "sacrificing" to save money don't work very well. But being conscious about our purchases, and whether or not they bring in value is something I think we can make work. I'd like to get to the place Jacob describes where you simply don't want to make the purchase, instead of just denying it to yourself. Until we get there, ERE isn't really possible for us.

I thought the investing section was very simplistic, but I didn't really read the book for investment advice, so that's OK. I am not in debt, so that took a little of the punch from some of the sections as well.

Overall, a good read, with some good ideas, and I can see why it's so popular especially for those who discover it before ERE.

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