Your Money or Your Life Summary: Chapter 9

It’s time to invest in your future.

To put your saved capital into income-producing vehicles so you can reach your ultimate goal of having enough residual income to cover your expenses and then some.

In other words, to reach your crossover point so you no longer have to work for money.

Before we continue, in this post, I give specific examples of what I do with my money. This is not intended to be financial advice. I am not a financial advisor.

Also, it should be noted that in the “Your Money or Your Life” program it is advised to park your money in government bonds until you reach your crossover point, and then to invest the extra in other places. This is definitely the safer way, but it will take longer.

I prefer to take a little more risk in the hope of a faster outcome. Ultimately, what you choose to do depends on your risk tolerance.

Savings are important, especially for emergencies. You need to be able to access money quickly. I personally like to have at least six months of living expenses for emergencies in a high-interest savings account.

Just to reiterate, this is NOT financial advice.

I currently invest all of my capital in low-cost Vanguard index funds that pay dividends.

I know next to nothing about investing, but I know Warren Buffett knows a lot about it, and he recommends that the average Joe consistently buys index funds and then forgets about it.

Something I learned from Scott Pape, the author of “The Barefoot Investor,” is to not invest any money you intend to use in the next ten years. That is because the stock market changes. Bad things happen in the world, people get emotional, and that affects the stock market. You don’t want to have to withdraw your money when the market is in a slump.

The good news is, that historically, since the invention of the stock market, the market has always gone up over the long run. So as long as you just keep your money in there, it will regain its value and continue to grow after a crash.

Don’t try to time the market. It’s impossible. Diligently invest into low-cost index funds on a regular basis and leave it there for at least 10 years, preferably forever.

It seems to me that the “Your Money or Your Life” program is aimed mostly towards people with traditional jobs with set work hours and fixed pay.

I am not one of those people, and these days, fewer and fewer people are. I consider myself to be an online entrepreneur, and to be honest, the barrier is low. Anyone can do it if they are willing to put the effort in, but it is not for everyone.

The beauty of it is the ability to create ongoing income that, once set up, takes little ongoing maintenance. Although it is not as ‘set and forget’ as an index fund, I feel I can get it to a stage where I need to do very little to maintain it, and the return on investment can be far greater than that of index funds.

Capital is what you primarily invest to get you over your crossover point. For me, this is what I put into index funds.

Cushion is your cash reserve for emergencies. For me, it is a minimum of six months living expenses in a high interest savings account which I can access at any time.

Cache is any additional savings beyond your capital and cushion. It is not meant to be funds you can use to blow on luxuries. Instead, it is for replacing big items when you really need to, such as if your car finally dies, and to put into projects that align with your values.

I am not at this stage yet, but once I get there I plan to buy a homestead and then invest my time and money into sustainability projects.

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