Saturday, March 17, 2012

YMOYL Book Club: Being in the Present - Tracking Your Life Energy (Step 2)

Today we begin week two of the Your Money or Your Life Online Book Club, where we are tackling the nine steps of the YMOYL program over next nine weeks. Get more background info. and a complete list of the steps here.

with all the warm weather we've been having the daffodils are blooming
like crazy. This lovely patch is my neighbor's.

Wow, I'm really impressed with our first week! Thanks to each of you for sharing your experiences and observations.

Chapter two starts out by asking us to examine our own personal definitions of money. How do you answer the question, money is _________________ ? Do you believe that money is security (guilty), power, social acceptance, or evil? YMOYL advises us to really examine our money personality in order to master money and grow.

Even if you haven't read Your Money or Your Life, you may have heard that the authors define money as "something we choose to trade our life energy for." It is one of the key and most enlightening themes of the book.

The authors also ask us to examine what financial independence means to us.

"Financial independence has nothing to do with rich. Financial Independence is the experience of having enough--and then some....Financial independence is an experience of freedom at a psychological level. You are free from the slavery  to unconsciously held assumptions about money, and free from the guilt, resentment, envy, frustration and despair you may have felt about money issues...."

Week 2 Activity 

In step two, we are to examine how much of our life energy is passing through our hands. There are two parts to this step:
A. Establish the actual costs in time and money required to maintain your job, and computer your real hourly wage.
B. Keep track of every cent that comes into or goes out of your life.

A. Establish the actual costs in time and money required to maintain your job, and computer your real hourly wage.  In this step we are to calculate "an accurate, reality-based and useful definition of money is based on how much every dollar actually costs you in terms of the time needed to earn it. Once you know your real hourly wage, you will know how much “life energy” you are exchanging for each dollar you spend."

Your Real Hourly Wage (RHW) = Adjusted income ÷ Adjusted job hours 

Adjusted Income = wages/salary plus value of job benefits received

Adjusted job hours = the expenses you have because you work (gas or transit fares, income taxes, work clothes, and others) actual amount of time spent on the job plus the time you spend on activities necessary to maintain the job (time spent commuting to work, shopping for clothes for the job, doing work or reading at home, etc.)

The book further advises us to consider other expenses that we might not otherwise, such as daily decompression, escape entertainment, vacations, job-related illnesses, food expenses, hiring help to complete chores and other tasks you don't have time for, etc.


B. Keep track of every cent that comes into or goes out of your life.
Part B is pretty straightforward, simply keep track of all the money (down to the very cent!) that comes into or goes out of your life. As the book says, this is simple, but not necessarily easy to do.

Source: Financial Integrity Program Guide

Tracking the flow of money/life energy in and out of your life is the basis for the progress that will be made over the next seven steps, so it is important. 

As the Financial Integrity program guide tells us:
It’s important to know exactly what you are doing with your money, and tracking gives you that data. Why every cent? Because it all adds up! As you will learn in Steps 3 and 4, combining your real hourly wage calculation with your tracking will help you make rational, wise decisions about your money – your life energy. In the steps that follow you will use your tracking information to:
  • Eliminate expenses that aren’t worth the life energy they cost.
  • Spend your life energy where it brings most fulfillment. 
Helpful Reminders
The program guide and book also give some helpful reminders for dealing with this step, such as
  • Remember, no shame, no blame!
  • No leeway - accuracy in money tracking is important.
  • No judgment, lots of discernment. Blaming ourselves and labeling things in terms of good and bad isn't helpful; sorting the true from the false is.
  • Consider ways to decrease work-related expenses, so as to increase your real hourly wage.
  • As you make financial transactions, think about the amount of money, received or spent, in terms of the TIME it represents. Before making a purchase try asking yourself, “Will I get my time’s worth?” 
  • If you’ve stopped tracking for whatever reason, just start again whenever you notice you’ve lapsed. Ask yourself why you stopped, and address whatever issue your answer brings out


  1. I haven't actually done the tracking for years, but I'm gonna start again, even if just for curiosity's sake. I'm still a compulsive receipt saver, and I pretty much charge everything and pay off the bills each month because it makes it really easy to track my expenses, so it shouldn't be too hard.

    But... this is the chapter that made a whole pile of things come into focus for me the first time I read the book. I'm sure you remember my little nervous hoe-down about the pens:

    But in a funny way, this chapter made me realize that I was really selling myself short in the money department. My wages were soooo small, and when I calculated the hourly wage it was downright horrifying! It came out to something like $2/hour. Of course this was in about 1996, but still...

    Anyhow, this was the chapter that really made me realize that if I was ever gonna have financial freedom I was gonna have to make some more money... and perhaps making some money didn't have to mean you were evil.

    I'll write some more once I work through my current numbers. Although I'm not really sure how to quantify my time since I no longer have a job...

    1. I like that post you linked to. It's like the perfect super-huge comment to this post.

  2. My city-level of understanding is pretty good. However, as a child, we didn't have much money. I lived under the assumption that I shouldn't ask for anything when, in fact, I should have checked prices and gone ahead and asked for some of the super-cheap things I wanted.

    Last time I calculated my hourly wage, it was depressing because it was so much, so it made me feel stuck. I commuted for free on the bus while reading, I brought my lunch most of the time, I didn't need to decompress or escape when I got home, my clothes cost the same at thrift stores as the clothes I would be wearing if I didn't work, etc., so I didn't have to add costs or hours. But I did add income because in addition to my salary, my job also provided a pension, health insurance, free access to a fabulous library, and free bus rides, so it came out that my hourly wage was huge.

    Now I just got a part-time temp job (same employer) so my hourly wage is actually what it appears to be. Still no added expenses, but also no added benefits. It's about 1/2 of what it was at my last job.

    I would say that overall, my "real hourly wage" is not a very useful number for me. It's trying to combine things that don't make sense combined for me. I need enough money to live on, and I need a happy life. So, for example, I prefer making $17.50/hour now to making $40/hour in the past because it's (almost) enough, I only have to work 20 hours, and those 20 hours are kind of fun.

    I did once use a similar measure of cost. In my 20's, I would measure prices in terms of boxes of macaroni and cheese. Back then I could get 4 boxes for a dollar, so a $10 dress would be equivalent to 40 boxes of macaroni and cheese.

    I don't use that strategy anymore, either. A lot of times you're spending more than you need to do something because you don't even realize that there are better options. Nowadays, I focus on searching for (and trying out) more options and keeping my costs as low as reasonably possible.

    I'll write about tracking expenses in another comment.

    1. I used to have a "candy-bar" metric. How many candy bars would this buy? In graduate school I think it was meals out someplace cheap. I've stopped doing that... but if I had to again it would be months off the mortgage or something.

      I put my hourly wage at $25/hr, not because that's what the metric says I should do (it is very difficult to calculate how many hours I spend working as a professor), but because that's about where I won't refuse outright when someone offers me contract work.

    2. The problem with months off the mortgage is that it tends to trivialize purchases. Let's say you're paying $350 in principal per month these days: a $30 dress is 8.57% of one month or about 2.57 days.

      I have the same problem with using monthly retirement income. If I invested $30 instead of buying a dress, and I with draw 4% per year, that's an extra dime every month I could be getting. It just doesn't sound that exciting!

    3. Depends on the size of your mortgage (and the interest rate)! In terms of trivializing purchases... if your hourly wage is high, the wage metric can do that too. Although, maybe it really isn't trivializing purchases if your income really is that high. When 15 min of your time is a lot of money then you can buy pretty much anything... much more than many people's "enough."

      These days I'm not really looking at thinking about purchases of $30-- more like $500. (Not that we make a whole ton of purchases, but $30 is no longer worth the mental effort and time.)

    4. Interesting. I don't have many $500+ purchases. Actually, let me think if that's true:
      * computers
      * vacations
      * cars
      * property taxes
      * homeowner's insurance

      I think that really is all. And I love all those things and will keep paying for them. I did seriously re-consider the car last time I replaced it, but I really value my locational independence as well as financial independence.

      So, it doesn't work for me. I'm only willing to look at reducing cheap expenses!

      I found my old calculation for hourly pay--$29.38/hour. It seemed high when everyone else in the book was finding $10 or $2/hour. But it's not really high enough for me to afford to by pretty much anything. Actually, it is, but not to also afford to quit working, the main additional next thing that I still want.

    5. Here are the specifics I found for my last calculation for when I had a 42K/year job. Base pay + longevity pay - pension contribution + pension benefit* - SS contribution + SS benefit - income tax + health insurance + life insurance + accident insurance + alumni membership that would give me the same library access + monthly bus pass = 53K.

      *the amount I would have to save to be able to get the same increase in benefit by withdrawing only 4.1% of my funds. The problem is, I have to assume I will live to be very old, whereas they can assume that I will live to the average age.

      2080 hours (40 hours a week x 52 weeks) - 156 hours vacation - 120 holiday - 16 sick** = 1804 hours.

      **I got 12 sick days a year but I tended to use an average of one sick day being sick and about another sick day if you add up the doctor and dentist visits.

      Hourly wage = $29.64/hour (found an error since my last comment). This does not take into account the part of income taxes paid by the employer or the times when the bus was late and I got too annoyed to enjoy my reading or the benefit of knowing that I had loads of sick leave available if I needed it or the benefit of group rates for dental insurance and long-term disability insurance. I also ate out more often, but at $2/lunch, that was trivial. The amount of food I brought to parties about evens out the amount of party food I ate instead of lunches.

      I'd forgotten about all those pension and tax calculations.

    6. That's about our list. Mainly it comes to thinking about vacations (really mostly about plane tickets to see family) since we don't often buy computers, cars etc. (And we're kind of stuck with property tax and insurance and child care.) When we do have to buy a new car it will because we have to buy a new car (because the cost of repairing the old car will be more than the value of the old car).

  3. Even before I read this book I would keep track of my spending any time I felt myself wondering where my money was going. In college I learned it was going to a lot of small things, all important. Later I learned I was spending more than I liked eating out. Later I decided I was spending too much in the "educational" category and decided to no longer work towards degrees unless they were quite likely to lead to a better job or my employer was paying. (I still audit classes sometimes, though.) Later I learned I was no longer spending too much eating out and I used my results to see things like how my grocery budget compared to that of others. Later I learned that the only real problem was that my roommate was paying his half of the bills so late. And then lately I've been keeping track for a while so I could see exactly how much I'm spending so that I could calculate exactly how much time I have before I need to have another job of some kind.

    My method has been to keep receipts, when available, and just add them to a spreadsheet when I get home, once every day or three. (I'm sure I forget things that don't come with receipts sometimes.)

    It's fun picking out categories that are of use--you don't have to use the categories you always see on budget sheets. You can combine a bunch if you want, and then separate out possible problem areas.

    Normally I don't keep track of every bit of income, but I've been doing that all year, too. I've learned that there are quite a few sources of income, but most of them have been tiny. For example, besides money from my job, I've also gotten the following this year:
    * credit card rewards - $22.71
    * gift cards for birthday presents - $74.00
    * rebates for bringing my own bag or container to the store - $0.50
    * dividends - $19.71
    * savings account interest - $13.04
    * savings bond interest - 16.82
    and January was an above-average month because I had both a birthday and enough credit card rewards to cash in (I need at least $20 worth). February was also a little above average because I received dividends on three of my four dividend-earning stocks.

    I also got dividends and capital gains in my retirement accounts, but I'm not paying attention to those because I'm more focused right now on things I can do before I can access those accounts. Plus the numbers for those are all over the place.

    So far, the only way I have been able to get serious living expense money (besides moving back in with my parents!) has been to get a regular job.

  4. I've been trying to track my expenses for several weeks now and I must admit, I'm pretty terrible at it. I'll do okay for a day or three, then fall off the wagon for a week or more. Doh! I hate receipts and toss them as quickly as possible. I do tend to pay for everything with my credit card (then pay it off in full every month, natch) but then I'm relying on my memory to separate categories (e.g. any non-food items at the grocery store, etc.). So I must do better.

    I just went back and recalculated my real hourly wage because I forgot to add in health and other bennies.

    I must say that I had the issues with the subtractions suggested for the real hourly wage exercise. For instance:

    -Meals: I take a thermos of coffee and my lunch 4/5 days per week, and I would eat even if I didn't work, so I don't see the point in subtracting that. In fact, I eat out more on the weekends instead of during the week since our schedule is fairly irregular.

    -Commuting: My commute is fairly short, even if I didn't work I would easily spend that amount of time driving somewhere else at least half the week.

    -Vacations: I enjoy traveling and would take vacation regardless.

    -Decompression/escape entertainment: I read, watch TV/movies, surf the net more on the weekends when I'm not decompressing. I like doing these things and I take issue with the idea that we should be doing something productive every minute of every day.

    -clothes - I don't spend as much on work clothes as I used to and besides dress pants, I wear the rest of my clothes whether I'm at work or not. Plus, if I wasn't buying work clothes I'd probably spend more on casual clothes. So this charge rankles as well.

    The only legitimate expenses that I wouldn't have if not for work is our yearly parking fee, and chipping in on the occasional goodbye/wedding gift. But then I would pay a whole lot more than that for medical insurance.

    Did anyone else have a hard time with the real hourly wage exercise?

    1. I think the real eye opener for me in doing the calculation was how much time my job was really taking out of my life. I was probably putting in at least 60-70 hours of actual work, plus the all encompassing nature of the job meant that I'd get phone calls at home starting at 7am and sometimes as late as 1am!

      I also included all of the time I spent worrying about work, being pissed off about work, strategizing with CatMan about how to make work less awful, picking fights with CatMan because I was totally stressed out from so much work etc, etc.

      I also thought that I wouldn't save much money when it came to things like clothes, commuting etc, but I was really wrong. I mean, my commute was under 10 miles, but since I stopped working I actually have to remind myself to drive somewhere at least once a week just to keep the car battery charged! I literally only fill up the tank 3-4 times per year!

      And with the clothes... when I stopped working I was able to get rid of a huge pile of them. Anything that I didn't totally love or wouldn't wear to paint the garage went away, and it was WONDERFUL! It's amazing how my whole idea of clothing changed when I wasn't out there "being seen" every day. It wasn't really a conscious thing, and it's sort of evolved over the past 5 years or so, but at this point I literally buy maybe 2-3 things per year.

      Same thing with eating out, going out, vacations etc. I never spent a huge amount on that sort of thing, but these days the whole idea of going out to eat or to the movies or for a trip to the mountains seems like a pain in the rear... where it used to feel like a nice enjoyable break. I guess it's like when you have a life that you don't feel the desire to get away from, it all changes.

      Anyhow, that's my long winded way of saying that you're probably spending more time and money on your job than you realize.

    2. min hus, maybe you can just keep the receipts where it isn't obvious which category the expenditures go in. (For me that would be Target.) Then rely on your credit card statement for the other numbers.

      I also didn't subtract anything for commuting, vacations, decompression, or clothes. I guess by the end I was blowing a fair amount of time decompressing (just doing puzzles or something to keep my mind busy instead of reading good books or doing projects), so that would have been relevant if I had done this equation then.

      I suspected I might do more shopping, more eating out, and other pricy things if I didn't work, just because I had more time. But I got to spend a month and a half between jobs, and it went pretty much like before. Actually, I read less, but it's because I had more projects. Such as getting health insurance and trying to roll over my retirement money and getting a health savings account. And once I know I never have to work, I'll be committing to more volunteer projects, which is pretty cheap. Mainly I just actually got more of my projects accomplished. I did have real food for snacks instead of pretzels and graham crackers, but I don't know how that affected my costs.

      EcoCatLady, I like your point about possibly not knowing how it would really be if we didn't have to work. For example, with work still in my future, I didn't get rid of a bunch of work clothes and other stuff. I definitely have more blazers than I'd need without a job. I also might not need so many re-usable food containers. Who knows what other things there are like that?

      min hus, I think if you're really not spending more to have a job, then you don't need to subtract that from your hourly wage. Some of these chapters are more eye-opening than others, (though which are which is different for different people). I love the way he gives examples of people who discovered very interesting things.

    3. That's a good point Debbie about keeping some receipts. I've been better about it this week, I think just keeping tracking in mind and establishing it as a new habit is key.

  5. I can get tied in knots a bit over issues in this chapter. I like how he says-All our false notions about money have one common flaw- they identify is as something external to ourselves. It is something we don’t have, struggle to get, and on which we pin our hopes of power, happiness, security.

    Learning about FI and realising that it is theoretically possible to be financially independent has in some ways made me more focused on money. I am saving, saving, saving and watching the clock to when I get my long service leave and hopefully reach my savings goals and I can take the risk to go it alone without the monthly pay check. Anyhow it can get tautological for me this one…………..I found that working out my hourly rate was illuminating. I don’t costume much but still have to to some extent. I get my hair trimmed every 6 weeks which I know I wouldn’t do if I wasn’t working. I buy work clothes sometimes when mine have just about had it. I have found I have to look the part to remain in my job. I try were possible to op shop good quality clothes but this takes lots of time and I don’t have that- yet : ) I would love to learn to sew and make my own but ditto so the end result is often buying something poor quality from the mall and it falls apart in a few washes. I put down $600 for costuming but the keeping track on my money should help to test this. Commuting has gone up with petrol increases (I commute through peak traffic and didn’t add up the time just the petrol) and work commute is the heaviest wear and tear on my poor little car. Meals I make my own but often there are celebratory or leaving lunches that I’m expected to join and therefore require buying and paying restaurant food prices. Escape- my big blind spot- coffee and cake. Not tremendously opulent but compared to my income and savings plan it is huge. I am seriously worried about my coffee and cake at the café addiction and worry it will continue when/if I am free from work. Illness is a definite yes. I became very stressed a while back due to work and have a kind of (self diagnosed) PTSD were I have low resilience and become triggered emotionally very easily about work issues and then get sick. A naturopath, supplements and healthy diet all link into this. I paid $6000 for these last year to ‘get right’ and hope I can now get by on healthy eating and my yoga. I don’t smoke drink or take drugs like I did in my younger years to cope. I lead a very healthy lifestyle and have a loving family around me. I was quite shocked to realise that my hourly wage had shrunk by 50% when I added up the figures.
    Like Diane I can be up and down with tracking my spending but am determined this time to keep it up as I feel this is my last chance to sort things out. I have just begun to track : )
    Ruth in WA

    1. I still find myself arguing internally over the money = security being a myth. I definitely subscribe to this one and while I do certainly spend money, I would feel very uncomfortable without a large nest egg/emergency fund. I agree with the analogy in the book that money doesn't always equal security in all situations. But let's face it, a lot of issues regarding security, including having a roof over your head, living in a safer neighborhood, having security systems, etc., can be solved with money.

  6. sorry I meant min hus not Diane!

  7. I just did my real wage exercise. I'm on Chapter 4 but went back to do it. However after I came up with what I call my "magic number" I did some research and some people with similar incomes seem to have come up with a higher number. Of course everyone has different variables, like commute time, costuming, etc.. I didn't add in health benefits and paid vacation and wonder if I'm supposed to?
    Here are thoughts from my own blog:

    1. I don't see the issues of health benefits specifically addressed in the book, but they are in the Financial Integrity program guide (which, for those who may not know, was originally developed by the book's authors), along with any pension/401K match. I went back and added pension and health benefits (those can really add up!) to my adjusted RHW, but I forgot to account for vacation time and holidays.

  8. I've been self-employed for a few months, and right now my earnings are pretty low. Before that my real hourly wage was close to my actual wage. I had no benefits, but also few additional costs (other than the stress factor, which I never calculated.)

    My problem is I was always an Idealist/Artist about money. I wanted to have enough, and I was willing to work for it, but I didn't want to think about it in the big picture. I just managed to get by. The odd thing is, I'm very good at the daily tracking. Maybe this is because I worked for an accounting firm for years as a bookkeeper. Also, because my husband and I have both been self-employed or had self-employment income in addition to wages for years, I've always had to keep up with receipts, and we kept up with sales taxes for a while for the itemized deduction. After I read YMOYL the first time, I started tracking in more detail, and rigged up a QuickBooks file to be able to keep up with everything in one file. I used to use Excel, but I would have to sort and total to see results.

    1. Congrats on being self-employed and thanks for joining in for week two!


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