درسنامه تفسیری

Money or Life – Commentary

Hello, this is AJ, welcome to the commentary for this months’ lesson.

There I was, on a cold winter night, the temperature was negative -7 degrees. I was under my sleeping bag, inside my van. Next to me was my dog, and she was under a blanket too. We were sleeping together on this cold winter night. At first we were both cold. I shivered a little bit. I was shaking a little bit underneath my sleeping bag. But gradually, I got warmer and warmer as the sleeping bag did its job. I looked over and my dog also looked warmer and happier.

That night we slept well and we awoke the next morning feeling brisk and alert, and alive. And I also felt proud, because we had survived the coldest winter night in Georgia for the whole winter, living in my van. In fact, I lived in that van for one full year, through a very cold winter, through the summer and of course, the spring and the fall. I did it to be frugal. I did it because I wanted financial independence. I wanted to be free financially. For me, that meant I wanted to have most of my time during the day to do what I wanted to do. I was tired of working full-time for jobs that I didn’t like, for bosses that I didn’t really like, doing things that I didn’t really enjoy.

I was tired of it and so I decided to be extremely frugal, to cut my expenditures as low as possible. I was quite extreme. I was quite strong about this desire, so I even decided to cut my rent so I would not need to pay rent, and that’s why I lived in my van for a full year. Now, is this a little crazy? Maybe it was a little crazy, I don’t live in a van now, but I did it because I realized that for me, frugality was the easiest path to financial independence.

When you think about it, financial freedom, financial independence, it’s really quite simple. As I said in the video there’s really just two parts…

Make more money.

Or

Spend less.

Or

Best of all, do both make more money and spend less.

So making more and being frugal that’s the very simple formula for financial independence. It’s simple but not often easy. As you can see from my story, sometimes to be frugal, to spend less requires some very big actions, some very big changes. See, in that time in my life I was not making much money. My income was low, so to have a lot of extra money I had to cut my expenses super low.

What about you? I believe still that for most people, not everyone, but for most people, frugality is the must easier part of that formula. Frugality is the best approach for acquiring, for getting financial independence. I believe that cutting your spending, being frugal is easier for most people than making a lot more money, and if you can do both even better.

For example, now I make much more money than I did when I was living in my van and no, I’m not living in a van now, but I am still quite frugal. My wife and I, both are still quite frugal. That time in my life, living in my van, it taught me the practice of frugality. It taught me how to enjoy every little thing I had, to enjoy all of my expenditures. It taught me to be much more careful about my expenditures. It taught me to enjoy simple things in life and to not need to buy things for status, to show high status or to show I was winning or conquering. I learned all of that, so now, even with much more money I’m still frugal and that’s the best combination. I have more money, but I’m still spending quite low and so the gap, the difference is now very large for me, which gives me a lot of financial independence, financial freedom. That’s what you want too.

The reason you want it is that it gives you freedom. It gives you the freedom to do what you want with your time, right. You can still choose to work if you want to. You can still continue working at the same job if you love it, it doesn’t matter. The point is you have choices when you are financially independent. If you’re not financially independent then the jobs control you, you have to work for money and for many people they get stuck in jobs they don’t like and so 40-50 hours or more they’re doing something they don’t enjoy. They’re away from their family. They’re away from their friends and that’s not a good situation. I had that situation for many, many, many years so I know it’s very tough sometimes, so I’m trying to help you find your way out.

Now in this book, Your Money or Your Life, they have an interesting definition of money. They describe money as life energy. They tell you to think of money as life energy. Why? That’s interesting. Why? Well because, for example, to get money, to earn money for most people you have to spend energy. You have to spend some of your life energy. You spend your time and we all have limited time. You have to maybe spend your physical energy doing physical work or you have to spend and use mental and emotional energy, right? So if you have a job, you go to the job, you’re spending your time that’s some of your life energy, you’ll never get that time back.

So let’s say you go and then you have to do, let’s say you’re working in an office so then you have to use also your mental and emotional energy to do the work at the office and to deal with the problems and the difficulties, even just driving to the office in traffic, that spends a lot of energy, in fact, for some people they have a very long commute, a very long drive or a very long train ride to and from their job. And for many people in big cities this is very unpleasant. It takes a lot of energy just to get there to the job and to get home, so they feel very, very tired. So to get money, to make more money you have to spend more of your energy.

And, once you have the money then and you go buy something it’s like you spent the energy to get the money, now you have to give the money away right, to buy something. So in a way you’re spending your energy to buy something. If you need a new car, well, first you have to spend energy, give away your energy to make the money and then you buy the car. So the money is like a unit, like it’s storage for your life energy. That’s how they want you to think about it, so that you think about the true cost of buying things, the true cost of making money. You’re spending away a little bit of your life energy.

The book, they also say that to be frugal means getting good value every time you spend money. By good value they mean maximum benefit, maximum enjoyment and I like this definition, right. It means that being frugal does not mean to be miserly, to be a penny pincher, to be unhappy, like that story a Christmas Carol’s Scrooge, right. Eh, he’s super unhappy… we have this idea, this image of penny pinchers that they’re really unhappy and indeed many times they are they can’t enjoy anything.

On one hand they’re not spending money. That can be good, they’re very careful with their money but the problem is they don’t enjoy their life. When they do spend money they don’t enjoy it. In fact, they feel terrible because they’re spending money. Even if they buy food they always buy the worst food or the cheapest food and then they don’t enjoy the food. That’s being a penny pincher but that’s not frugal, that’s not what we’re talking about, that’s not what I’m talking about.

For example, when I lived in my van for that year I was not miserable I was happy. I enjoyed the experience. For me it was an adventure, it was an interesting adventure. That was my mindset when I decided to do it, that I wanted to do it as an adventure, as an experiment. So I decided I’m not going to be miserable and unhappy. I’m not going to think about this as some kind of suffering, but instead as an adventure in being more free. Living in my van I could drive around, I could park anywhere in the town and sleep at night. And I could drive to other towns and sleep anywhere I wanted to, so I kind of enjoyed that freedom. There were some things about living in the van that were difficult, but there were also many things that were quite fun and interesting, especially for just a year.

So being frugal means complete enjoyment of what you have and what you spend that’s the ideal. So being frugal is about being wise, not about being unhappy.

Finally, the best way to be frugal and this is what I want you to think about this month, is to just look at all of your expenditures, all of the ways you spend money, and you can classify them in three ways, in other words, you can label them in three ways.

1.The best expenditures

2.Good expenditures

3.Bad expenditures

Let’s talk about each category.

The best expenditures – what are the best expenditures, the best things you spend money on?

The best spending is when you get a return. In other words, you get more life energy back than you spent. That’s a great expenditure. That’s what we call an investment, right, when you spend, let’s say if we’re just talking about money, if you spend $10, you buy something for $10 but later, that thing gives you $12 back. That’s an investment. That’s a very great expenditure. That’s the best kind. You get more back than you put in. Those are the ones we really want, we want a lot of those.

Of course, you can look at this just with money, so let’s say you buy a stock and it goes up and then you sell it, so you spent $100 but then you get back $200. That is a very great expenditure, it’s fantastic. Of course, stocks have risks and you can actually lose money too, but we can think about these kind of expenditures, we can think about them in terms of energy, not just the money, not just a number but life energy. Think of it more as life energy.

For example, a great expenditure might be very healthy food. If you buy very, very healthy food, maybe you have to spend a little extra money for that food, but you get something back from the food you get life energy, you get health, you feel stronger, you feel better, you feel wonderful. You’ve got more energy and you can use that energy to do other things. You can use that energy to make more money. You can use that energy just to enjoy your life. So you’re spending money on the healthy food, but the healthy food is then giving you energy back, so that’s a great expenditure. That’s the best kind, it’s an investment.

Another kind of great expenditure, great investment is education, learning, training, because again, if you get more education and more learning maybe you spend money for that, but then later that learning, that education might help you get a better job for example, making more money, so you get more back than you put in. Or maybe you just learn things that you enjoy so much it gives you so much happiness and it really gives you more happiness than you had to spend to get that money. So again that’s a great investment, learning, education, healthy food.

Another health example, a gym membership. You have to spend money, spend some money to join a gym. Now, if you use the gym then you will grow stronger and more energetic as you work out and go to the gym every day. If you don’t use the gym then it’s a bad expenditure, because you’re wasting the money, but if you go to the gym then it can be again, an investment, one of the best expenditures.

The thing about the best expenditures is that they create an upward spiral. You spend some money on them, or you spend some energy on them, but then they give you back more and then you can take the extra and spend it again on that same thing and then you get back even more, and even more so it just goes up, up, up, up, up. You spend some but you get more back. Then you can spend a little more then you get even more back. That’s the great thing about investments, about the best kinds of expenditures. So, you want to use those, do those as much as possible those are great expenditures.

The next category, a good expenditure – that’s something that gives you a lot of happiness or usefulness, maybe not more than you spent but at least equal. So, for example, a good expenditure might be a nice warm jacket that you use and you wear it for many, many, many years. It keeps you warm in the winter for many, many long years, so it’s very useful. Maybe it doesn’t make you super happy but it’s useful, it keeps you warm in the winter, it lasts for a long time, that’s a good expenditure.

Another example of a good expenditure might be a great family vacation. If you take a great family vacation and it creates a very happy memory for your family and helps to bring all of you closer, have a better connection that could also be a very good expenditure. It might even be an investment. It might even give you back even more, but at least it’s a good one. So, good expenditures also, it means you’re enjoying what you spent your money on, what you bought.

Finally, the third category that we want to avoid as much as possible, bad expenditures – bad expenditures are wasteful. They give you only a very small amount of pleasure or a very short pleasure, or they can even cause you long-term pain.

For example, junk food. Junk food may give you pleasure in the short-term right? Immediately, it might taste good, something really sugary. So it gives you a little small pleasure, a short lasting pleasure, but long-term, it will cause you pain. Long-term it will cause you to gain weight, to get more fat which means your energy will get lower and lower. If you keep eating that junk food, spending money on junk food long-term you might start getting diseases and feeling quite miserable. That’s a bad, bad, bad expenditure. Junk food is a very bad thing to spend money on.

Another example would be luxuries that you get bored with very quickly. In the book Your Money or Your Life, in the essay, they talked about buying, for example, an expensive car just for high status. You go out and you buy a BMW or something and the reason you buy it, you want to try to show everybody that you’re successful and maybe in the beginning, in the first month or first few months you feel ah great, I have this BMW. But then very quickly, you just don’t care anymore you get bored with it and you start wanting another luxury. That’s also a bad expenditure because it costs a lot, you have to spend a lot of money, spend a lot of your energy to get it, but it gives you only a little bit of pleasure for a short time.

Finally, anything that you buy that you just don’t use, we do this all the time. We buy things, it gives us a little pleasure at the moment when we first buy it, but then quickly we put it to the side and we forget about it. I mean, I do this still sometimes, we all do it. But those are bad expenditures because you’re wasting the money, you’re buying something and then not even using it.

So your homework for this month, what shall you do? It’s actually very simple.

Step one – I want you to track, to record every expenditure this month, every cent, every penny, every single thing you spend money on. If you have online banking that’s easy because the bank will do it for you. But if not, you’ll look at your bank statements. If you paid cash for something then write it in a notebook, what did you buy, how much was it?

Everything, even something very, very small I want you to write it down. Record and track just for one month, every single expenditure.

Step two – at the end of the month, I want you to review each and every expenditure, every one, every single one, even five cents, even something very, very tiny. And for each expenditure give it a rating, a label, either best, an investment, something that will give back to you a lot or good, something that’s useful, generally makes you happy for a while or bad, something that was wasteful or eventually harmful.

I don’t want you to get upset about it, it doesn’t matter. Okay, so you’re gonna do these labels for each expenditure but don’t worry if you have a lot of bad ones or, you don’t need to feel super excited if you have a lot of the best ones. I just want you to become more aware. This is the first step of being frugal. The first step of getting to financial independence is just too really be aware of your spending and to be aware, how many of your expenditures are investments, really great ones? How many are good, fairly useful, long-term? And how many are wasteful or bad?

So, no need to get upset about it or emotional about it, just write down every single thing or track, record every single thing you spend money on and then at the end of the month give every expenditure a rating… best, good or bad. Review it and then you can tell me about it on Twitter. Contact me on Twitter and tell me the result that you have mostly best, mostly best and good or mostly bad, maybe. It doesn’t matter, but just see where you are. This will be your first step to financial independence.

All right. I will see you next time. Have a great month.

Bye for now.