I've had this dumb brake ordeal on my 89 xj for a while, I have a squishy pedal, I bled the lines and didn't solve anything, I changed the master cylinder bench bled it and bled the lines again, they worked for about a week, now there squishy, looked in the master cylinder and the fluid is low. I don't see any brake fluid on any of the lines, Any ideas of where it could be leaking or what it might be?

 

Wheel cylinders? Prop valve? Calipers? Plenty of places it could leak, start at the master and track your way through the system one line at a time.

 

If you're losing fluid then its leaking somewhere. Or the brake fluid fairy is stealing your brake fluid as you sleep

 

Check to make sure it's not leaking into the brake booster diaphragm.
(since you put a new master cylinder on, it's probably not that, but I'd check anyway)
Pull the rear drums to make sure a wheel cylinder is not leaking. Hard to spot right away until brake fluid starts leaking out of the bottom of the brake drum.
Also, adjust your rear brake shoes. Sometimes if they are worn, and they are not adjusted close to the drum, you will have squishy brake pedal until they contact the drum.

As Ronino said, trace all the lines and hoses from front to back to check for any dampness or leaks.

Do you have ABS? Sometimes those systems can be fun trying to bleed all the air/old fluid out.

Last thing, it's probably not the issue since you have said you have bled the system a few times, but make sure there is'nt any old fluid still in the system. Make sure you have flushed fresh clear fluid through the whole system, front and back.
Brake fluid absorbs moisture over time, and leads to squishy pedal.

Everything is fixable.....................Don't give up!

 

Check the soft lines. Sometimes, when they start to go, they'll bubble up with the fluid. That'll make for a squishy pedal.