I thought about MMM earlier today at the grocery store (wondering if we were spending too much), so I was surprised to see him profiled on this week's issue.
In a way, his methods make me feel relieved that a particular income benchmark or the wild growth of a business is not needed to lead a happy/sufficient life, yet I feel anxious because 1) I didn't have the best start (law school debt), 2) I haven't cut down my spending/saved as much as I should.
Just curious, are there any anti-mustachians who 1) bust ass to maximize earnings, 2) have unabated spending habits, 3) believe they are happier to live such a lifestyle?
I'm a "cautious skeptic" mustachian because MMM's net worth was fueled by the historic bull run in asset markets during the early--mid parts of his professional life.
I hesitate to be fully devout in the belief that asset markets will always produce outsized returns like it did for him.
Agreed. The article also touches on the point that his blog alone earns 400K yearly. Though it's honorable that he makes an effort to only spend 24K a year, he has safety net that sets him as a 1 percenter.
Investment success might make some difference in how quickly you can retire, but the various planning around early retirement makes conservative assumptions about long-term returns. The fraction of your income you save makes a far larger difference than how much index funds gained or lost in any given year.
This holds true not only because the money you save goes to fund your future retirement, but also because your retirement income doesn't need to match your current income, only your current spending. So if you save 40% of your income, you need your retirement savings to produce 60% of your income; if you save 70% of your income, you only need your retirement savings to produce 30% of your income. That means you both increase your savings rate and decrease how much savings you need before retirement.
That's only if you make the heroic assumption that expenses are static. From expenses related to ageing itself (increased need for healthcare, possibly even moving to an assisted care facility) to the particular conjuncture during old age (for example, in my country many unemployed adults and their children are living with the help of the pensions of their parents), I would avoid assuming that.
I agree with you to a point but his math checks out with 'only' making 4% (the 25x your yearly costs number to retire). I just lost about 2 years of gains in one year in my betterment accounts for instance. His fundamental point of making far less than you spend and not to have consumer debt is clearly sound advice.
Honestly, I feel that everything in moderation is a good rule to follow. I spend a more than I perhaps should but I enjoy my life.
As long as I am putting money away into savings each month and not going backwards I see it as a win. Going to extremes where you're worried about whether or not you put pieces of plain pizza in with mushroom pizza I feel is a bit too far for my liking.
My natural burn rate is well below my income and I like my job. It's very nice that money is mostly abstracted away: I swipe my card when I want to, don't look at my accounts or pay stubs that much, and maintain solid financial health.
As long as I don't lust after anything too ridiculous, money isn't a point of tension in my life. I certainly wouldn't want to make it one.
Regarding the last point: one of the most common deathbed regrets is to have worked too hard. An extension can be made for being overly frugal: leading your life hamstering cash is not much fun, and ultimately, pointless.
A common pitfall of frugality is to save money at the expense of your personal happiness. Example: In many companies, people head out to lunch together, grab a sandwich or whatever, eat together, and try to have a social time. That costs about $3300 a year, assuming 220 working days with the price of lunch at $15. That's a pretty large expense, and if you frame it solely in terms of food, probably not worth it for most. MMM would say that you should bring a packed lunch to work. However, I would argue that it is absolutely worth it for most office workers: chances are their jobs are in some way unpleasant, and if they bring a lunch from home, it's only a small step to eating that embarrassing, soggy PB&J in front of the screen, working and missing out on that small break. That can be very demotivating.
Beyond that, I think that some contrarian cases can be built for high-income, high-expense lifestyles. For one, an expensive lifestyle can be a great way to meet other successful people, which may open doors to opportunities. (There's a caveat on this: some kinds of expensive goodies, like vacations to Zermatt or living in a great area, are probably much better investments than buying a $15k handbag.)
Spending money on great experiences while young is also probably worth it. Having had "boring" 20s and 30s is another common regret, and it's quite feasible to prevent that, if you're confident in your earnings potential later on.
I am living frugally in Zurich and I am saving 80% of my income (see post above).
What I do when I want to participate in social meals is this: I just eat my own food before so I am not hungry, and then I just order a drink at the restaurant. My colleagues at work know my lifestyle and accept me the way I am.
If I am eating out with people who don't know me, I just say I am not hungry.
I gave an example to illustrate a point. Granted, my example was not perfect. The overall point still stands: not to make the mistake of sacrificing expenditures that are (in some way) critical to your happiness and motivation.
I am frugal and like many people here also attend to my side project on nights and weekends, committed relationships are off the table with this lifestyle (sure, there might be rare exceptions).
She likes that I don't waste money on useless shit like everyone else but rather save such that I can finance studies at Stanford or some other good school for our future kids, if they desire to do so.
Having kids will mean I can't retire in 5 years but maybe in 15 years. In any case I have a heads up compared to everyone else. Having tons of cash on hand and little expenses gives you sort of super-freedoms other people don't have.
> eating that embarrassing, soggy PB&J ... can be very demotivating.
I don't follow the American labour market so office wages are a bit outside what I want to look up. However...
Using the average weekly wage for men >25 years old [1] I get an annual salary of ~50k. $3.3k is ~7% of that, or half an hour each 8hr working day.
Eating a soggy sandwich is not so terrible that it is worth staying at work for another half hour each day. Figuring out some method of socialising without that 15 dollars (which isn't that hard, talk is proverbially cheap) would be well worth it.
I consider myself a little bit of an anti-mustachian. But I'm sure the majority of Americans would probably consider me quite mustachian. I spend significantly less than 10% of my gross income on housing. I almost never take a cab when I could take the subway. I save enough so that for all practical purposes I never have to worry about money. But at the same time I spend substantially more than the mustachian 24k / year. I don't particularly enjoy cooking, so MMM would consider my food expenditures to be grossly high.
My view is that people should live in a way that maximizes their happiness. MMM seems to enjoy taking frugality to the extreme. But I'm different. That lifestyle would not make me happy at all. In the past I have lived with very little left over for savings. That way of living also caused a lot of stress any time unexpected expenses pop up. It absolutely did not maximize my happiness. I'm fairly careful with my money naturally, so my current mode of living doesn't require any effort on my part. It leaves me free to make what many would consider pretty large splurges from time to time while still maintaining a nice cushion for unexpected expenses as well as a nicely increasing investment portfolio that should allow me to retire well before the standard retirement age.
So no, while you might not be able to say I have fully unabated spending habits, MMM might say that I do. And in that case I would satisfy all three of your points.
I think blogs like his seek to do for your lifestyle what meditation does for your thoughts--make you aware of your choices and their effects. At their best, they enlighten you toward a more conscious design of your own lifestyle. I'm not "anti-mustachian," but I can speak to the choices I've made.
I could be saving waaaay more, but I have no burning desire to optimize my lifestyle toward freedom. I'm super lucky that I enjoy my work. It's not fun 100% of the time and I'm not free to come and go as I please without consequences, which is something MMM especially optimizes for.
I'm optimizing to always be doing interesting work with people more intelligent or creative than me. Right now this is best accomplished by doing good work for companies with deep pockets so that I can do the fun stuff. I also optimize for exciting experiences and good connections with people. Sometimes those two optimization goals are at odds, but I've managed the cognitive dissonance by being more loosey goosey with my priorities than MMM advocates.
This has led to immense fun, personal satisfaction, and growth. I've lived and worked abroad. I make big, silly art. I'm floored by some of the people I work with. I'm lucky to have several big friend group--often the result of working on fun stuff together and then continuing those relationships outside of their original contexts.
All that said, I might totally change my tune if I had a kid and wanted to build a family or I suddenly wasn't making good money.
Right now I work in R&D for toys, VR, and IoT. I started as a straight up game designer, but I got very into programming and embedded electronics. If I went searching for a new job tomorrow, I would bill myself as a T-shaped HCI R&D guy with a deep knowledge of game design.
As someone with a kid and family and all that jazz, I am so happy I spent my 20's frivolously 'wasting' my money on fun adventures and silly projects. Easily some of the best times of my life.
> In a way, his methods make me feel relieved that a particular income benchmark or the wild growth of a business is not needed to lead a happy/sufficient life
Are you sure about that? He worked during the boom era (1998 to 2007) and the article says he saved 250k in five years, which indicates that he had a very good salary.
In addition, he says that he and his wife still work occasionally (and she was also a developer in the boom era) and that he makes 400k/year from the site.
I imagine that it's much easier to retire at 30 if you have a crapton in the bank made on a high salary in a good economy (when you bought your houses [one of which they rent out]) and then have recurring income that can pad out your savings in event of any emergencies that might come up.
Someone who's budgeted 30k a year for the rest of his life and doesn't have the kind of job/expertise to do random contract work and retires could easily find himself completely ruined by one bad accident.
Be that as it may, there's a pretty big difference in financial security between retiring at 30 with $600k in the bank (where one financial emergency puts you on pretty thin ice) and retiring with $600k in the bank plus $400k/year extra income.
I pretty much do this. Not that I am an "anti-mustachian" by philosophy, I just have had pretty good paying jobs since the day I got out of school and have spent a lot all throughout... The money I have saved has been automatically deducted from this or that... the rest... poof!
> Just curious, are there any anti-mustachians who 1) bust ass to maximize earnings, 2) have unabated spending habits, 3) believe they are happier to live such a lifestyle?
I'd classify myself as a bit of an anti-mustachian in the sense that I pay 0 attention to 99% of purchases. I don't think twice about going out to dinner regularly, buying a round of drinks, or going on random trips. It's rare for me to look at a receipt.
Despite spending freely, I still manage to save around $80-100k annually.
Increasing earnings is far more effective than trying to minimize earnings. Trying to cut your spending by 25% is pretty challenging, but making 25% more is totally doable and often involves just getting a few competitive job offers. As Ramit Sethi sometimes says, skipping lattes never actually lets someone retire early.
A lot of the things MMM recommends are actually economically irrational for developers (unless you enjoy them). Why would I ever cook when I can earn $150 from the equivalent time and get a nice meal delivered for $20?
The only bit of spending I pay attention to is rent, because that can eat up a huge portion of your salary if left unchecked—particularly in the places with the highest salaries.
Great coverage and love what the guy does but I understand people are annoyed with him. The guy makes around half a million from his online work each year. That excludes ROI of earlier escapades. Yet he is living on some 30K a year. So what is he doing with all that money? Accumulating wealth for the sake of accumulating? Proving you can be rich whilst spending little? As long it makes him happy, but it has always stroke me as odd.
The article vaguely mentions a plan of giving it away to charity, which seems reasonable enough to me. If he's just as happy with his current life, why should he feel obligated to spend it?
Keep in mind that the period 2000-2015 includes two major recessions. Almost any other fifteen year period will work even better (you can test it on that website). Move the timeframe to 30 years (which is the bare minimum that the early retirement crowd looks at) and it's difficult to find a period with less than 7% returns. Even adjusting for inflation, it's rare to have a 30-year period with less than 4% returns, which is the basis for the 4% Rule mentioned in the article.
I've seen this before, and live in Ireland. It's a very different story here, with taxation on ETF index funds at 40% on gains, calculated every seven years. From my perspective, the 4% rule just does not count. Perhaps running a business is a better way in Ireland, for example.
I thought his trick was to earn lots of money, and your future wife too, when you're young, and then go move to Colorado and have nearly no living expenses. ;)
I take slight issue with the fact that he made the lion's share of his savings riding the tech bubble of the late 90's.
> He got a computer-engineering degree in 1997, and skipped the graduation ceremony to begin working at a company near Ottawa called Newbridge Networks. This was the early upslope of the dot-com boom. He started at forty-one thousand dollars a year, with no savings or possessions except “a bike, a backpack, and a diploma.” He made the rookie mistake (“what a clueless young man!!!”) of buying a sports car with a loan from his sister. He got his first raise soon afterward, to fifty-seven thousand and six hundred dollars. By the end of year one, he’d saved five thousand dollars. A year later, he had twenty-three thousand. By year five, a quarter of a million.
It's quite apparent that yes, Adeney has done a ton of work to be rigorous enough to have built and to maintain the endowment.
However... it feels like he built this retirement nest egg on a rare period in the markets' history. I'd question how repeatable it is.
But it's a mindset thing too. Do you "give up" and take out the biggest mortgage and car loan you can, or do you act against it and take your destiny into your own hands a bit more.
This guy makes most of his money from a dot-com nest egg and the community of people he's built around him that subscribe to his brand of asceticism.
If it brings a person a person emotional comfort to live as the willful anti-consumer, then that's the value in it. But I think it's unkind or deceptive to suggest most people can ride a bike instead of drive a car and suddenly save most of a semi-retirement nest egg in 6-7 years.
> I don't spend on any such thing, track all my expenses, make a good high-tech income, and still spend most of my earnings.
If you track all your expenses, you should have a pretty good idea of where your spending is going. The question then becomes how you could reduce that.
Many people spend a majority of their income on housing alone; that's can be one of the harder items to fix, but one of the most critical. A long commute creates a pile of expenses, above and beyond an expensive or inefficient vehicle. An expensive area can worsen both of those problems; it's reasonable to evaluate whether you get a high enough salary differential to compensate for the area you're in.
Past big items like those, the details tend to vary greatly between people. There are a pile of case studies posted on the MMM site, analyzing specific budgets.
> I don't spend on any such thing, track all my expenses, make a good high-tech income, and still spend most of my earnings.
I have to question your story then.
Because I do drop big bucks on fancy restaurants and liquor, yet I still manage to save a ton every month.
Two hypotheses:
1. Your "good high-tech income" isn't good enough. Anything under $125k globally is not good. More if you're senior and in SF/NYC.
2. You're spending too much on rent. Particularly in tech hubs, this is a much more decisive factor in your financial health than whether you cook your own food.
According to the graphic in the article, he has a net income of 6200 CHF/mo. He says he saves 80%, that's 5000 CHF/mo, or 60k CHF annually. The graphic says he's 27. I assume he started work at 22. At a constant salary, he will have saved 300k thus far, and will save another 300k in the next five years.
So in five years, he will have accumulated 600k savings in cash. That's not sufficient for early retirement -- not even for MMM, who retired on 600k cash + 200k house. I suppose he could make it happen if he bought an extremely cheap apartment and lived more frugally than MMM, but that does not strike me as having a satisfactory quality of life.
Regarding your second point:
While it is true that investing over the span of 5 years does not significantly change his cash stack, investing matters looking forward: he definitely needs to invest if he plans to retire early on mid six-figure sum.
Whether he can retire on 600k would depend on where he chooses to live. Certainly it would be financial suicide to try to do so in the SF Bay Area. You'd likely be able to live quite well in many parts of SE Asia. He may very well be able to afford a decent life in various parts of the world.
Regarding looking forward, one could theoretically just buy an annuity (I don't actually recommend this), or live in a country with a deflationary economy. "Investing" in the most commonly cited way, isn't the only way to provide cash flow from a nest egg and protect against inflation.
I myself run a very conventional asset allocation for my own portfolio. Generally speaking, what you say is prudent advice and is good wisdom. But that doesn't mean that there are other, particular, ways to go about designing one's financial life (sort of like edge cases), and his choices shouldn't automatically be considered nonstarters.
You can buy Vanguard ETFs from Switzerland e.g. VWRL on the Euronext exchange. The UK (Ireland) based funds seem to be the appropriate choice for people in Switzerland.
You do this the same way you would buy Google, Apple, Tesla, etc.
US citizens need not apply, right? I mean, due to FATCA a US citizen can't open a bank account in Switzerland. Makes it hard to cash that fat paycheck. Or do you have a way around that?
I live in thailand as a US citizen I have a bank account here. You can have a bank account just about any country. You simply have to fill out a form "online" once a year if one of the accounts exceeds a certain amount of money. Not that big of a deal
Yes, I know. I also live in Thailand. I'm asking about Switzerland since that's the country mentioned in the parent comment. Swiss banks stopped providing services to US citizens due to FATCA. Same for Singapore. There may be other countries that have done the same.
It looks like you're also mentioned in the article—I like that your approach seems to be more analytical and less "cultish" than Mustache's.
Do you think Zurich offers any net advantages over NYC or the Bay when it comes to aggressive savings? It seems like salaries are about the same and living costs are higher (at least based on the few times I've visited).
You can win on the fact that food is so much cheaper in Germany. I mean, French, Durch, Austrian, and Swiss people shop in Germany on weekends, if they live on the border and have a family to feed etc.
Zurich is not particularly on the border, but I have to go there anyway for various reasons once in a while and usually I come back with a suitcase full of food.
Also dentists in Germany are bound to fixed prices for certain things like checkups (a checkup in Germany costs like 23 Euro), so that is also massively cheaper and justifies the ride.
You don't have the possibility to win on this geographic arbitrage in NYC or the Bay area. Although there "crazy" salaries (>200k USD / year) are probably more common than here.
I think many people focus too much on the money and frugality side what Mr Money Mustache says, and not enough on the happiness part. The preconditions for human happiness are fairly constant, but the way we achieve those conditions can be more or less expensive.
For example, we know that people greatly enjoy being in flow. There are many ways to achieve a state of flow. You could do a DHH and get into car racing---a rich boys sport if ever there was one. Or you could take up bike racing, and drop a few $K a year on a bike (with ancillary health benefits as well). Or you could drop the racing part and ride for pleasure (maybe $2K over ten years; my last bike lasted 18 years). All will achieve the same result, but with vastly different impacts on your wallet. Of course racing is not the only way to get into flow. Dance, programming, other sports, etc. are all options and there are cheaper and more expensive choices within each category.
Similarly, it has been shown we get more long term happiness from experiences than from things. This is a great reason to stop buying stuff and spend money instead on activities. Of course different activities have different costs. You could book an expensive "adventure holiday" or you could just grab your backpack and head out the door. Anyone who has done backpacking on a shoestring budget knows it's great fun.
In my experience all these choices are quite easily substitutable. You can make a conscious decision to choose low cost options and have just as fulfilling and enjoyable a life as someone who spends all their money on the latest gaming rig / sculpted carbon fibre bike / hottest restaurants etc.
The wikipedia article [1] describes it pretty well. It's a fascinating concept and if you find it interesting I can highly recommend the book Flow: The Psychology of Optimal Experience, by the guy who introduced the concept.
Personally I'd say when it comes to happiness 'flow' is a bit too narrow a concept. Or rather, it's a specific form of 'wu-wei' ("natural action, or in other words, action that does not involve struggle or excessive effort").
A great book on wu-wei which also references the concept of flow is 'Trying Not To Try'. I can strongly recommend this book as well. Especially it's final chapter(s) provided a lot of food for thought.
>we get more long term happiness from experiences than from thing
That doesn't mean "don't spend money on things." Things can and do (and should!) enable experiences.
I'll buy a high-end laptop I'll spend a great many hours using it, and experience of using it is better than the experience of using something cheaper. (Seriously, when I see people fighting their POS trackpads and 15-second seek times to do basic window management operations, it's no wonder they're not into computers.)
I'll buy a good car because the experience of driving something comfortable and responsive with a pleasant interior is better than the experience of driving a shit heap, and I actually like driving.
I'll buy $500 headphones because listening to music on them is amazing.
I'll buy a $500 DSLR because having the shutter actually respond when I press the shutter button is amazing.
We can even go less obvious: I'll buy fashionable clothes because people will treat me with more respect and interest if I look put-together.
I refuse to be directed by money to such a degree as Mr. Money Moustache seems to be. By putting so much effort into not spending any money you make yourself highly dependent on money, albeit in a negative sense. “Distinction is perfect continence.”
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[ 2.9 ms ] story [ 136 ms ] threadIn a way, his methods make me feel relieved that a particular income benchmark or the wild growth of a business is not needed to lead a happy/sufficient life, yet I feel anxious because 1) I didn't have the best start (law school debt), 2) I haven't cut down my spending/saved as much as I should.
Just curious, are there any anti-mustachians who 1) bust ass to maximize earnings, 2) have unabated spending habits, 3) believe they are happier to live such a lifestyle?
I hesitate to be fully devout in the belief that asset markets will always produce outsized returns like it did for him.
This holds true not only because the money you save goes to fund your future retirement, but also because your retirement income doesn't need to match your current income, only your current spending. So if you save 40% of your income, you need your retirement savings to produce 60% of your income; if you save 70% of your income, you only need your retirement savings to produce 30% of your income. That means you both increase your savings rate and decrease how much savings you need before retirement.
As long as I am putting money away into savings each month and not going backwards I see it as a win. Going to extremes where you're worried about whether or not you put pieces of plain pizza in with mushroom pizza I feel is a bit too far for my liking.
As long as I don't lust after anything too ridiculous, money isn't a point of tension in my life. I certainly wouldn't want to make it one.
A common pitfall of frugality is to save money at the expense of your personal happiness. Example: In many companies, people head out to lunch together, grab a sandwich or whatever, eat together, and try to have a social time. That costs about $3300 a year, assuming 220 working days with the price of lunch at $15. That's a pretty large expense, and if you frame it solely in terms of food, probably not worth it for most. MMM would say that you should bring a packed lunch to work. However, I would argue that it is absolutely worth it for most office workers: chances are their jobs are in some way unpleasant, and if they bring a lunch from home, it's only a small step to eating that embarrassing, soggy PB&J in front of the screen, working and missing out on that small break. That can be very demotivating.
Beyond that, I think that some contrarian cases can be built for high-income, high-expense lifestyles. For one, an expensive lifestyle can be a great way to meet other successful people, which may open doors to opportunities. (There's a caveat on this: some kinds of expensive goodies, like vacations to Zermatt or living in a great area, are probably much better investments than buying a $15k handbag.)
Spending money on great experiences while young is also probably worth it. Having had "boring" 20s and 30s is another common regret, and it's quite feasible to prevent that, if you're confident in your earnings potential later on.
I am living frugally in Zurich and I am saving 80% of my income (see post above).
What I do when I want to participate in social meals is this: I just eat my own food before so I am not hungry, and then I just order a drink at the restaurant. My colleagues at work know my lifestyle and accept me the way I am.
If I am eating out with people who don't know me, I just say I am not hungry.
Having kids will mean I can't retire in 5 years but maybe in 15 years. In any case I have a heads up compared to everyone else. Having tons of cash on hand and little expenses gives you sort of super-freedoms other people don't have.
I don't follow the American labour market so office wages are a bit outside what I want to look up. However...
Using the average weekly wage for men >25 years old [1] I get an annual salary of ~50k. $3.3k is ~7% of that, or half an hour each 8hr working day.
Eating a soggy sandwich is not so terrible that it is worth staying at work for another half hour each day. Figuring out some method of socialising without that 15 dollars (which isn't that hard, talk is proverbially cheap) would be well worth it.
[1] http://www.bls.gov/cps/cpsaat37.htm the average weekly wage
My view is that people should live in a way that maximizes their happiness. MMM seems to enjoy taking frugality to the extreme. But I'm different. That lifestyle would not make me happy at all. In the past I have lived with very little left over for savings. That way of living also caused a lot of stress any time unexpected expenses pop up. It absolutely did not maximize my happiness. I'm fairly careful with my money naturally, so my current mode of living doesn't require any effort on my part. It leaves me free to make what many would consider pretty large splurges from time to time while still maintaining a nice cushion for unexpected expenses as well as a nicely increasing investment portfolio that should allow me to retire well before the standard retirement age.
So no, while you might not be able to say I have fully unabated spending habits, MMM might say that I do. And in that case I would satisfy all three of your points.
I could be saving waaaay more, but I have no burning desire to optimize my lifestyle toward freedom. I'm super lucky that I enjoy my work. It's not fun 100% of the time and I'm not free to come and go as I please without consequences, which is something MMM especially optimizes for.
I'm optimizing to always be doing interesting work with people more intelligent or creative than me. Right now this is best accomplished by doing good work for companies with deep pockets so that I can do the fun stuff. I also optimize for exciting experiences and good connections with people. Sometimes those two optimization goals are at odds, but I've managed the cognitive dissonance by being more loosey goosey with my priorities than MMM advocates.
This has led to immense fun, personal satisfaction, and growth. I've lived and worked abroad. I make big, silly art. I'm floored by some of the people I work with. I'm lucky to have several big friend group--often the result of working on fun stuff together and then continuing those relationships outside of their original contexts.
All that said, I might totally change my tune if I had a kid and wanted to build a family or I suddenly wasn't making good money.
Are you sure about that? He worked during the boom era (1998 to 2007) and the article says he saved 250k in five years, which indicates that he had a very good salary.
In addition, he says that he and his wife still work occasionally (and she was also a developer in the boom era) and that he makes 400k/year from the site.
I imagine that it's much easier to retire at 30 if you have a crapton in the bank made on a high salary in a good economy (when you bought your houses [one of which they rent out]) and then have recurring income that can pad out your savings in event of any emergencies that might come up.
Someone who's budgeted 30k a year for the rest of his life and doesn't have the kind of job/expertise to do random contract work and retires could easily find himself completely ruined by one bad accident.
Fool-proof retirement plan that anyone can follow:
1. Have 400k/year of passive income.
2. Retire.
1. Retire
2. Live of savings as planned for years
3. Start a blog that ends up making money
I'd classify myself as a bit of an anti-mustachian in the sense that I pay 0 attention to 99% of purchases. I don't think twice about going out to dinner regularly, buying a round of drinks, or going on random trips. It's rare for me to look at a receipt.
Despite spending freely, I still manage to save around $80-100k annually.
Increasing earnings is far more effective than trying to minimize earnings. Trying to cut your spending by 25% is pretty challenging, but making 25% more is totally doable and often involves just getting a few competitive job offers. As Ramit Sethi sometimes says, skipping lattes never actually lets someone retire early.
A lot of the things MMM recommends are actually economically irrational for developers (unless you enjoy them). Why would I ever cook when I can earn $150 from the equivalent time and get a nice meal delivered for $20?
The only bit of spending I pay attention to is rent, because that can eat up a huge portion of your salary if left unchecked—particularly in the places with the highest salaries.
You don't get that on bank accounts; and the stock market too has not given such returns over long-term timespans in the last 15 years.
https://www.portfoliovisualizer.com/backtest-asset-class-all...
Is this reliable enough over the long run to retire on?
I've seen this before, and live in Ireland. It's a very different story here, with taxation on ETF index funds at 40% on gains, calculated every seven years. From my perspective, the 4% rule just does not count. Perhaps running a business is a better way in Ireland, for example.
Like I need to be told that?
I don't spend on any such thing, track all my expenses, make a good high-tech income, and still spend most of my earnings.
There is something fishy behind this story.
> He got a computer-engineering degree in 1997, and skipped the graduation ceremony to begin working at a company near Ottawa called Newbridge Networks. This was the early upslope of the dot-com boom. He started at forty-one thousand dollars a year, with no savings or possessions except “a bike, a backpack, and a diploma.” He made the rookie mistake (“what a clueless young man!!!”) of buying a sports car with a loan from his sister. He got his first raise soon afterward, to fifty-seven thousand and six hundred dollars. By the end of year one, he’d saved five thousand dollars. A year later, he had twenty-three thousand. By year five, a quarter of a million.
It's quite apparent that yes, Adeney has done a ton of work to be rigorous enough to have built and to maintain the endowment.
However... it feels like he built this retirement nest egg on a rare period in the markets' history. I'd question how repeatable it is.
But it's a mindset thing too. Do you "give up" and take out the biggest mortgage and car loan you can, or do you act against it and take your destiny into your own hands a bit more.
If it brings a person a person emotional comfort to live as the willful anti-consumer, then that's the value in it. But I think it's unkind or deceptive to suggest most people can ride a bike instead of drive a car and suddenly save most of a semi-retirement nest egg in 6-7 years.
If you track all your expenses, you should have a pretty good idea of where your spending is going. The question then becomes how you could reduce that.
Many people spend a majority of their income on housing alone; that's can be one of the harder items to fix, but one of the most critical. A long commute creates a pile of expenses, above and beyond an expensive or inefficient vehicle. An expensive area can worsen both of those problems; it's reasonable to evaluate whether you get a high enough salary differential to compensate for the area you're in.
Past big items like those, the details tend to vary greatly between people. There are a pile of case studies posted on the MMM site, analyzing specific budgets.
I have to question your story then.
Because I do drop big bucks on fancy restaurants and liquor, yet I still manage to save a ton every month.
Two hypotheses:
1. Your "good high-tech income" isn't good enough. Anything under $125k globally is not good. More if you're senior and in SF/NYC.
2. You're spending too much on rent. Particularly in tech hubs, this is a much more decisive factor in your financial health than whether you cook your own food.
If you want to do the same and / or if you are interested in working in Switzerland in IT, just shoot me a mail (see HN profile).
In fact, all your frugal living and saving is critically offset by the potential revenues lost due to a failure to invest.
Even a very rosy scenario of 8% compound interest pretax over said 5 years wouldn't change the 5 years to something dramatically smaller.
Besides, not everyone is psychologically equipped to handle market swings -- particularly what we've seen in 2016 so far.
According to the graphic in the article, he has a net income of 6200 CHF/mo. He says he saves 80%, that's 5000 CHF/mo, or 60k CHF annually. The graphic says he's 27. I assume he started work at 22. At a constant salary, he will have saved 300k thus far, and will save another 300k in the next five years.
So in five years, he will have accumulated 600k savings in cash. That's not sufficient for early retirement -- not even for MMM, who retired on 600k cash + 200k house. I suppose he could make it happen if he bought an extremely cheap apartment and lived more frugally than MMM, but that does not strike me as having a satisfactory quality of life.
Regarding your second point:
While it is true that investing over the span of 5 years does not significantly change his cash stack, investing matters looking forward: he definitely needs to invest if he plans to retire early on mid six-figure sum.
Regarding looking forward, one could theoretically just buy an annuity (I don't actually recommend this), or live in a country with a deflationary economy. "Investing" in the most commonly cited way, isn't the only way to provide cash flow from a nest egg and protect against inflation.
I myself run a very conventional asset allocation for my own portfolio. Generally speaking, what you say is prudent advice and is good wisdom. But that doesn't mean that there are other, particular, ways to go about designing one's financial life (sort of like edge cases), and his choices shouldn't automatically be considered nonstarters.
You do this the same way you would buy Google, Apple, Tesla, etc.
Do you think Zurich offers any net advantages over NYC or the Bay when it comes to aggressive savings? It seems like salaries are about the same and living costs are higher (at least based on the few times I've visited).
Zurich is not particularly on the border, but I have to go there anyway for various reasons once in a while and usually I come back with a suitcase full of food.
Also dentists in Germany are bound to fixed prices for certain things like checkups (a checkup in Germany costs like 23 Euro), so that is also massively cheaper and justifies the ride.
You don't have the possibility to win on this geographic arbitrage in NYC or the Bay area. Although there "crazy" salaries (>200k USD / year) are probably more common than here.
For example, we know that people greatly enjoy being in flow. There are many ways to achieve a state of flow. You could do a DHH and get into car racing---a rich boys sport if ever there was one. Or you could take up bike racing, and drop a few $K a year on a bike (with ancillary health benefits as well). Or you could drop the racing part and ride for pleasure (maybe $2K over ten years; my last bike lasted 18 years). All will achieve the same result, but with vastly different impacts on your wallet. Of course racing is not the only way to get into flow. Dance, programming, other sports, etc. are all options and there are cheaper and more expensive choices within each category.
Similarly, it has been shown we get more long term happiness from experiences than from things. This is a great reason to stop buying stuff and spend money instead on activities. Of course different activities have different costs. You could book an expensive "adventure holiday" or you could just grab your backpack and head out the door. Anyone who has done backpacking on a shoestring budget knows it's great fun.
In my experience all these choices are quite easily substitutable. You can make a conscious decision to choose low cost options and have just as fulfilling and enjoyable a life as someone who spends all their money on the latest gaming rig / sculpted carbon fibre bike / hottest restaurants etc.
I have no idea what this phrase means. Could you expand?
Personally I'd say when it comes to happiness 'flow' is a bit too narrow a concept. Or rather, it's a specific form of 'wu-wei' ("natural action, or in other words, action that does not involve struggle or excessive effort").
A great book on wu-wei which also references the concept of flow is 'Trying Not To Try'. I can strongly recommend this book as well. Especially it's final chapter(s) provided a lot of food for thought.
[1]: https://en.wikipedia.org/wiki/Flow_(psychology)
That doesn't mean "don't spend money on things." Things can and do (and should!) enable experiences.
I'll buy a high-end laptop I'll spend a great many hours using it, and experience of using it is better than the experience of using something cheaper. (Seriously, when I see people fighting their POS trackpads and 15-second seek times to do basic window management operations, it's no wonder they're not into computers.)
I'll buy a good car because the experience of driving something comfortable and responsive with a pleasant interior is better than the experience of driving a shit heap, and I actually like driving.
I'll buy $500 headphones because listening to music on them is amazing.
I'll buy a $500 DSLR because having the shutter actually respond when I press the shutter button is amazing.
We can even go less obvious: I'll buy fashionable clothes because people will treat me with more respect and interest if I look put-together.