Saturday, May 21, 2005

Book Summary: Your Money Or Your Life

Book Summary: Your Money Or Your Life

Your Money or Your Life

Joe Dominguez and Vicki Robin

  1. Figure out your earnings and net worth. The idea is to figure out how much money has flowed into and out of your life.

  2. Figure out your current cash flow
    1. Figure out your real hourly wage by adding into work hours all the work-related
      time outside the office (commuting, working from home, cost of meals.
    2. Keep track of all the money coming into and out of your life on a monthly
      basis (for me, approximate using bank and credit card statements)

  3. Create a table of income and expenses, in broad categories. Convert the dollars spent in each category into “hours of life energy” spent. Think of purchases and other expenses in
    terms of the amount of life given up to earn the needed money.

  4. For each spending category, ask the following questions
    1. Did I receive fulfillment, satisfaction, and value in proportion to life
      energy spent?
    2. Is life energy spending in alignment with my values and purpose?
    3. How might this expenditure change if I didn’t have to work for a living?

  5. Create a chart plotting total monthly income and total monthly expenses, and put
    it somewhere you will see it every day.

  6. Value life energy by minimizing spending. Beyond a certain point on the fulfillment curve, spending more will bring less fulfillment, so you are not giving up happiness.

  7. Value life energy by maximizing real income. Work and wages are not the same; wages are simply the money you trade your life energy for.

  8. Post monthly investment income on the wall chart. As monthly investment income curves upward, at some point, it will cross over the monthly expenses line. This crossover point represents the time when you can stop working for pay.

    1. Note taker’s note: This should probably be adjusted for real returns

    2. You only need to work for pay for a finite period of time—focus on that goal
      and make that period of time as short as possible. When you no longer need to work for pay, you are Financially Independent.

  9. Invest your capital to provide safe investment income, with 6 months of cash
    cushion. Surplus funds can be reinvested, donated, or otherwise used.

    1. Note taker’s note: While Joe Dominguez focuses solely on buying U.S.
      Treasuries, it would probably be wisest to pursue a balanced investment
      strategy with an equity component.

Final thoughts: As with “The Millionaire Next Door,” the emphasis is on “playing defense,” or controlling spending. What YMOYL does is to put controlling spending into a larger context of maximizing fulfillment, minimizing waste, and pursuing a higher purpose.

Friday, May 20, 2005

We're # 1

We're # 1
Coyote Blog posted about how the teachers of one school district in California decided not to select a teacher of the year as a protest against the Governator's push to link teacher pay to merit.

I won't even get into how wrong-headed it is to oppose merit-based pay (I thought that pay by seniority went out with Perry Como). To refuse to recognize and reward excellence is even worse.

Coyote Blog quotes Bill Gates:

"Your school may have done away with winners and losers, but life has not. In some schools they have abolished failing grades; they'll give you as many times as you want to get the right answer. This doesn't bear the slightest resemblance to ANYTHING in real life."

The sad part is that this approach hugely underestimates and harms the children it is designed to help. Not to get all Ayn Rand on their asses, but anyone who thinks that kids don't know who's the best in their school is dreaming.

Even in the 3rd grade, I could tell that Randy Antin and Josh Lansky were the best kickball players, and that I sucked in comparison. I didn't need a "Kickball Player of the Year" award to figure this out, I just had to use my eyes. Similarly, I could tell that Masi Oka and Kaneez Munjee were better than me at math, and everyone could tell that I was the champ when it came to reading.

In short, pretending that some people aren't better than others isn't a solution.

Thursday, May 19, 2005

You Might Be An Entrepreneur If...

You Might Be An Entrepreneur If...

Tom Evslin lists the Top 10 ways to tell if you or a loved one is an entrepreneur.

The one thing that's missing is the classic reality distortion field...

Wednesday, May 18, 2005

Spanish Adultery, Star Wars and Leonardo Da Vinci, You Know You Read Too Many Blogs When....

Spanish Adultery, Star Wars and Leonardo Da Vinci, You Know You Read Too Many Blogs When....

Another potpourri post. Apologies for the lack of time.

Coyote Blog points out that the Spanish stock exchange is going to require company directors to declare any extramarital affiars that they are having.

Love the Star Wars version of Leonardo's "The Last Supper."

You know that you read too many blogs when you recognize and laugh at all the authors in Jason Kottke's humor piece on how to order dinner--without ever reading any of their books. Of course, I'm known for my encyclopedic knowledge of movies despite the fact that I never watch them. I just read the reviews.

Tuesday, May 17, 2005

Organization Man

Organization Man

Just got off the phone with Bill Grosso, who shared with me his simple trick for organizing his work.

He has a three column Excel spreadsheet. In Column 1, he lists the project. In Column 2, he lists the person. In Column 3, he lists his quick thoughts.

When he needs to talk about a project, or he is about to meet with a person, he simply sorts on the appropriate column, and all the relevant information is right there.

We both agree that this is a 37Signals product waiting to happen!

Publishing is the new Entrepreneurship

Publishing is the new Entrepreneurship

I've been saying it for a while (okay at least a couple of weeks), but publishing is going to be the next big thing in entrepreneurship. Blogging is just the tip of the iceberg. Even dead-tree blogs are in.

Monday, May 16, 2005

Quote of the Day

Quote of the Day

In case you didn't see it in the comments of my previous post on Paul Graham's latest, Matt Josefowicz chimes in with the quote of the day:

"Entrepreneurialism is one thing that can never be outsourced."

I did a Google check and nothing came up, so you heard it here first!

Kids Love Robots

Kids Love Robots

As part of my continuing coverage of the steady evolution of robots into ruthless killing machines, I'm linking to this story of how the Roomba can help parents get their kids to clean their rooms and go to bed.

I have got to get me one of those!

Sunday, May 15, 2005

Weekend Roundup: Guns, Blood, and Micro-publishing

Weekend Roundup: Guns, Blood, and Micro-publishing

No time for long posts, so I'll just lay it on you.

Amazing stuff on what might be the next generation of projectile weapon.

"Imagine a gun with no recoil, no sound, no heat, no gunpowder, no visible firing signature (muzzle flash), and no stoppages or jams of any kind. Now imagine that this gun could fire .308 caliber and .50 caliber metal projectiles accurately at up to 8,000 fps (feet-per-second), featured an infinitely variable/programmable cyclic rate-of-fire (as high as 120,000 rounds-per-minute), and were capable of laying down a 360-degree field of fire."

I haven't watched the video yet, but I intend to.

Japanese researchers have developed a fuel cell that runs on blood. Down the road, we might be able to implant these suckers in our bodies to power artificial hearts and other such devices. This could be a milestone in extending human life. Of course, the Slashdot page has about 5 jillion Matrix jokes.

I keep saying that publishing is the new face of entrepreneurship. Blogging is just the tip of the iceberg. Seth Godin writes about a guy who has created the Winery Web Site Report, which rates over 2,400 winery Web sites, and then sells copies for $500 apiece. If just 10% buy a copy, that's $120,000. Not too shabby.

Of course, this kind of publishing explosion will also create a need for better content searching....

Paul Graham and the Implications of Frictionless Entrepreneurship

Paul Graham and the Implications of Frictionless Entrepreneurship
The always interesting Paul Graham has a new essay out about why undergrads who want to be entrepreneurs should start companies rather than pursuing the traditional path of working for someone else.

In summary, his point is that entrepreneurship is cheaper than ever (if not easier), and that because entry-level jobs all pay pretty much the same, the job market undervalues the truly talented new graduates. Instead, those budding entrepreneurs should just go and start a company (bearing in mind the critical goal of building something that people will use and pay for). If they fail, they'll have learned a lot (I know that I sure did) and probably be more attractive to potential employers.

This is an example of how a more dedicated blogger than I can draw subtler connections. While I have written about the declining friction of entrepreneurship (as have others like Bill Grosso), it takes a guy like Paul to draw the non-obvious conclusion that this trend tips the balance in favor of starting companies when you're 21, rather than waiting a couple of years.