Mr. Money Mustache is a 30 something retiree who now writes about how we can all lead a frugal yet Badass life of leisure at his blog. His goal is nothing short of a complete revolution of society, although continuing to run his growing blog is an acceptable substitute for now.
Like you, I am pretty much resigned to the fact that I’m going to have to buy a Tesla at some point.
I can tell because I have read every last scrap of Tesla news and inadvertently memorized every last technical detail about the company and their cars and energy storage systems that has ever been printed or YouTubed. Since about 2012. When this happens to me for any product, whether it’s a new laptop or a different vehicle or a house in a certain neighborhood, I usually end up buying it.
The purchase tends to happen when the list of justifications builds up to a tipping point where it starts to seem sensible. For the Tesla, these justifications are things like:
“I strongly support the company and its mission. Unlike almost any other big company on Earth, Tesla exists primarily to help out the human race. Surely worth a few of my spare bucks, right?”
“I can afford to buy it in cash without having to go back to work or anything extreme like that.”
“It’s the best car AND the best piece of technology in the world, and at least ten years ahead of the next best. Shouldn’t a lifelong tech expert like myself be taking a peek at the future?”
“It would be a lower-pollution way to replace some of my air travel, as the only car that can drive itself most of the time on long highway trips. PLUS, imagine the road trips I could take with my son! Mammoth Caves National Park! Lifetime Memories just like I have with my own Dad!”
“They are reasonably priced these days at “only” about $45k for a new Model 3 and even lower for a used Model S.”
In the past, my mind has made up similar justifications for other purchases like, “this lovely camera will help you create more engaging pictures for the blog.”, “this drywall hoist will save you a lot of time”, “you will make a profit by owning this high-end new laptop because it will encourage you to write more.”
And it’s not just me. As I’ve talked to more and more people about this, I find that most of us have some sort of Purchase Justification Machine running in the background of our minds. The PJM’s effects can range from very useful, like a carpenter buying a nailgun which will be used every day to make money, to completely disastrous, like the office worker who buys a $40,000 8-passenger Honda Pilot for his 12,000 annual miles of mostly empty driving on smooth roads, because “I need to make sure I can get to work in the winter, too.”
I like to fancy my own PJM as being at least a bit better than average, after all I have always maintained a slightly-less-ridiculous level of spending than the average middle class worker. Most of the things it has talked me into buying have indeed been things nailguns or reasonably good quality clothing that just happens to be from Costco or the thrift shop.
Yes, there was once a brand-new $13,000* Honda VFR800 sport motorbike which destroys a lot of my credibility, but that was in 2001 long before Mr. Money Mustache was born.
But I can TELL that it is really grasping at straws when it tries to justify that Tesla. And that’s why I thankfully still don’t have a Tesla.
The PJM has done its work well, but I try to stay ahead of it by tossing in my own list of objections, like throwing gnarly stumps into a wood chipping machine to slow it down.
“You don’t even have anywhere to drive that Tesla, dude! If you had a mandatory 20-mile commute and absolutely could not move closer to your six-figure job, that would be one thing. But you’re retired and you bike everywhere, so a car is only for camping and hiking trips. Wait until you are further along in the child-raising project and have more free time to take off for month-long road trips.”
“You can’t just leave a $40,000 car out in the searing Colorado sun to bake and fade and collect birdshit, but you also don’t want to sacrifice an entire bay of your tidy workshop garage for a car. So you need to at least wait until you build that master bedroom deck which doubles as a carport, right? So you’d better get out the post-hole digger before you sign into the Tesla Design Studio.”
“No matter how much you use that car, it will always cost more per mile than cross country air travel even with full carbon offsets. So don’t get lured in by the nearly-free nature of electric car charging.”
“Make sure you try it before you buy it. Rent a Tesla from Turo or from a friend and try your first road trip. If you still crave one after that first thrill wears off, then we can talk.”
See what’s happening here? In order to keep ahead of the relentless efficiency of my Purchase Justification Machine, I just need to throw up nice, rational roadblocks to slow it down.
But the reason this is so effective is that I’m not just flat-out denying myself that Tesla. It’s pretty hard to tell yourself that NO, you can never have what you want. Instead, I’m just telling myself what things need to happen first, before clicking “buy” on the Tesla website.
And if these things are healthy, happy things (raising my son, getting other labor-intensive projects done with my own hands, and planning a great future series of camping and roadtrips), I divert my attention into living a good life right now, instead of doing the easy thing which is just buying myself another treat.
And the further I can delay this or any purchase, the longer my money can remain productively invested in stocks, and the more it prevents my PJM from locking its greedy crosshairs onto the next little lifestyle “upgrade” that it will find.
But this trick is not just for jaw-dropping electric sports cars. You can use it almost anywhere in your own life.
Kicking the Kitchen Down the Road
A friend of mine loves to cook, and has been pining for a kitchen upgrade for many years to make this activity more enjoyable. And I can’t blame him – his kitchen is indeed dated, as is the rest of the house. But he’s also in debt and not climbing out very quickly. And too busy to do the kitchen upgrade work himself, because work and kids suck up all his time. Should he allow himself to upgrade this kitchen?
BUT only after meeting a carefully considered list of conditions:
Quit Cable TV, Netflix, Hulu, Facebook, Twitter, video games, and other time drains. Because getting three hours of life back each day will give you more time to address other shortages in life.
Make sure you’re getting in at least an hour of outdoor walking and/or cycling every day. Plus, regular weight training. The joy of a new kitchen is nothing compared to the benefits of getting your heart, muscles and mind in better shape.
Use another hour of each day for cleaning, organizing and optimizing the house you already have. Is every drawer in the kitchen well-organized? Could you get more space by hanging up the pots and pans? Adding one of those large but simple heavy duty rolling islands with butcherblock top from Costco? What about just a super nice faucet for 80 bucks and a couple of nice track lights?**
How about the rest of the house? Are the closets well-organized with optimal shelving? Is the garage spotless? Carpets DIY steam cleaned and rooms patched and painted nicely? Gardens and lawn tidy and peaceful?
How about the finances? Have you checked around for lower mortgage rates, home and car insurance, mobile phone plans, and canceled any unused subscriptions? Ask your friends what rates they are paying for all these things, switch to the best option, and you cut your bills by $500 per month, which will add up to pay for a kitchen pretty quickly.
See, instead of being constantly depressed because it will be years until you can afford that kitchen, you use it as a trigger to get busy and improve your entire life right now. Which gives you the feelings of happiness and control that were making you crave that kitchen in the first place. Or that Tesla.
And on that note, I am going to get out there and start measuring the post locations for my new deck.
In the Comments: what is YOUR Purchase Justification Machine trying to make you buy? Have you already bought the Model 3 or are you still milking the 2010 Prius for all it’s worth? How long are you going to push your current smartphone until you allow yourself to replace it? Sharing your battles will give others the strength to keep their own procrastination game strong.
* I forked over $10,000 of my hard-earned cash as a 26-year-old kid in the year 2001, which is about $14,000 if you adjust it for inflation to 2019. But motor vehicles prices have risen slower than general inflation over recent decades, so I split the difference a bit here. But any way you slice it, this was a foolish purchase on my part!
** I linked to those because I have been using that particular track light everywhere in recent years – headquarters, home, and other projects. Way nicer quality/style than the options at Home Depot despite lower price. These LED bulbs are great for it as well.
There have been a lot of big bills coming across my kitchen table recently. Property taxes, car registrations, income taxes, things for the school orchestra in which little MM plays the standup bass. Plus the usual credit card bills for all my spending on groceries and not-all-that-rare luxury indulgences. There’s nothing bad or unexpected in this pile of bills, but I still see it adding up to a tidy sum.
But this morning as I was looking at the latest one – a bill from the City of Longmont for all the various utilities, I noticed that the same familiar feeling crept across my chest that I had felt for all of these other expenses: a feeling of warmth and reassurance.
The utility bill had a little note on it that said “DON’T PAY – account is being paid by credit card.”
So I can be reassured that whenever the due date comes up, the right amount of money will be sucked out of my credit card account to pay for the electricity and gas and water and trash service. And then whenever that credit card bill is due, another automatic payment will suck the right amount of money out of my checking account, and I’ll remain debt free.
Isn’t this remarkable? I get to frolic around in this super comfortable house of mine, keeping it warm in winter and flipping on lights and stereos and pulling cold beers out of the fridge and hopping into a hot shower whenever I like. Hosting guests and sharing the fresh food and hot showers and cold beers with them too.
Music and movies stream in over the fiber optic internet connection, and my fleet of crisp and well maintained bikes flow in and out of the garage doors in the back without a second thought about how the bills will be paid. In fact, I don’t even know when a single one of my due dates hits during the month, and I also don’t keep track of when my dividends or payments come in from stock investments or my little one-owner business.
Everything is worry free, because I know there’s enough, and the very feeling of knowing that I have enough warms my heart and soul every single day. It is a feeling of liberation and freedom and a glider that keeps me soaring high above the bullshit of worry or having to sell out my free time for activities that aren’t really helping anyone. To me, this feeling is the very core of being a Rich Person.
But now that I’ve got you imagining a glossy and pampered douchebag, barking orders at my live-in assistant and personal stylists before I climb into a white-leather Lexus to roll down to the marina, I should mention a few additional details.
All this incredible luxury occurs within my small house on the train tracks, tucked into a less-than-gentrified neighborhood at the corner of a less-than-world-class city. When I sit at that kitchen table, I gaze out at a shitty pergola structure that really needs the first available appointment with my fire pit, which covers a sadly undersized side patio, which is currently the only outdoor living space on my postage stamp sized lot.
When I ride those wonderful bikes out of that tidy garage, I pedal past my 21-year-old Honda Odyssey, and I’m usually en route to Sam’s Club to pick up another backpack load of discount groceries, or to perform another few hours of dirty manual labor at my always-under-construction coworking space downtown. My flannel shirt may have holes in its sleeves from welding sparks and my jeans may have a ripped seam or two from performing squats without proper workout gear.
The two stories above are two different takes on the exact same life. As a high income professional, you might have shuddered at the second one. Riding a bike during Colorado’s unpredictable snowstorms or searing desert heat, eating at restaurants less than once a month, cutting your own hair, or standing atop a 32 foot ladder to reach the last patch of your house with a paintbrush are surely just the desperate acts of an extremely frugal man, who does them to save money because he needed to escape the corporate world, right?
But unfortunately for my uneasy high income critics, this is just not true. Because of my advancing age, natural growth of the stock market, and ongoing love for work including writing this blog, I can afford to not do any of these things. In fact, depending on how you measure it, last year I spent only about 5% of my income on myself. I could spend twenty times more and still not even have to go back and get a real job!
At the same time, I have a few acquaintances – perfectly wonderful and thoughtful people – who do spend twenty times more and are still struggling to pay the bills and work one last year to get ahead of the treadmill. And they compare themselves to their other CEO peers, noting with relief that at least they that they spend far less than those crazy spenders and thus are living sensible lives.
Who is the reasonable one here, and who is off with their heads in the clouds? Mr. Money Mustache, or Corporate Chief Christine?
The answer of course is that we are both floating in space. My lifestyle is less expensive, but it’s still way more than almost anyone gets to experience, even in the richest country in the world. A single man in a three bedroom house worth over $350,000, with a seven passenger racing sofa parked out back that can tow 1.5 tons of construction materials in his cargo trailer, both of which he only needs once or twice per month. Plane tickets and parties, nice clothes and Amazon deliveries. It is all stuff that my teenaged self could have never even imagined.
So I could spend more, but I could also spend less, and I could be just as happy at any of those levels. My spending level today is just the result of my own imperfect efforts to build the happiest life I can manage while wasting as little as I can without being overly inconvenienced. And hopefully so is yours.
The trick is in realizing you can always go further while also ending up happier in the process. In not being afraid to add challenge to your life, because the right kind of challenge is a win/win rather than a tradeoff. And to not worry about what experiences you might be missing, but being mindful of the beauty of whatever you are doing right now.
At almost every moment in time, there is always something you could be doing that costs absolutely nothing, but which also makes you absolutely happy.
Your lifetime wealth surplus depends on how often you choose to find these joyful moments.
And only when you go far enough so that your spending is only a small portion of your income, do you become rich. It is at this point that your incoming bills feel like a joy rather than a burden, and your children’s future educations feel like a playground rather than a minefield. Even lurking medical expenses or aging parents who may need your help or the inevitable blow-ups in the economy just become things you are prepared for, but not worried about.
Right now, if you have any sort of income at all, it is probably enough to make you feel rich. The only question is, what changes do you need to make to your life over the next few months to unlock this joyful feeling?
I’ve been waiting to tell you this with considerable excitement for a whole year, but the sales contract prevented me from doing so until this moment. And as of April 1st, 2019, I’m officially free to reveal that:
Mr. Money Mustache has been sold!
Yep. I’m not sure if it’s the age-old truism that “Everybody has their price”, or the fact that I got bored after eight years of writing it and just ran out of things to say, but over time I have come to realize that it was time to pass this golden opportunity on to someone else.
The highest bidder in this case was Shamrock Financial Trust*, a financial products company in the Isle of Man, UK that specializes in special premium investments that beat the market while dodging the taxman.
I was unsure of exactly why Shamrock would be willing to pay so much for my collection of five hundred articles mostly about spending less money and investing in index funds. But when you put six zeroes after a number on a check, it is amazing how quickly uncertainty and questions can vanish!
From my understanding, a site like MMM has a certain value just from its ranking in the search engines, and ongoing traffic of several million page views per month and about 33 million unique visitors over its lifetime. But still, those are just numbers on the page and don’t seem real because I haven’t been taking full advantage of the opportunity.
But, the Shamrock leadership team has assured me that the site will take on a vibrant new life, with a team of professional writers churning out fresh content on the daily, and an SEO-optimized stream of monetized offers that deliver maximum value-added solutions to all stakeholders.
And I just thought I’d reach out to see if we could jump on a call to catch up on the bleeding edge of some big data, to see of there’s any Corporate Synergy in our Core Competencies.
Fuck! Don’t you hate corporate bullshit and business buzzwords? Me too.
It was both fun and sickening for me to type that cheerful little story, but hopefully you realized from the title alone that it is April Fool’s Day, and I thought I should play along by with a preposterous headline of my own.
In reality, of course I have no desire to sell this website, because doing so would violate some of the core math of early retirement of happiness:
It would subtract something from my life that brings me true happiness (the ability to be in touch with you, which in turn brings more friends and lots of challenge and a sense of meaning into my life)
while adding more money, which would make absolutely no improvement to my life because I am not feeling any pain due to a shortage of money.
And that’s the real reason I figured this lame April Fool’s prank also contained a life lesson that was worth sharing as a blog article. Because I am still hearing from people every day who are selling out their own lives for their careers.
So many people are using a successful working career and earning loads of money as an excuse for not facing the realities of life.
Although this is certainly not a gender-specific problem, as a 44-year-old man living in a wealthy area I am surrounded by peers who are afflicted by this disease of Success-itis.
People who are rockstars in the corporate sphere and at the peak of their careers, who have become so addicted to the activity that they can’t see they are just chiseled Kuhl-clad rodents jogging in the latest trail runners on a gilded hamster wheel.
Career success is a very sneaky thing, much like a layered salad of Superfood Greens that gradually devolves into a dessert of Creme Brulee enhanced with crystals of Crack Cocaine as you dig deeper. It starts out with all sorts of self-actualization and personal growth, but as you begin dining you are also hooked up to intravenous feeds of ego stoking and copious income. So even as the worthwhile parts fade, you grow more and more addicted to the superficial rewards.
Of course, the standard American tradition is to spend all of this money as soon as you get it, locking in a lifestyle that is so bloated and inefficient that you “need” to keep earning the enormous bucks to “support your family.”
It becomes very easy to justify career-itis as a noble and selfless thing, rather than the lame indulgence it really is, when you are simultaneously addicted to corporate accomplishment, and bad at managing the veritable shitload of money it generates. If you are making a multiple six figure salary in your 40s and still not even financially independent, please grow up and learn a bit about money beyond just buying yourself nice stuff. It should be embarrassing to be still dependent on a paycheck while sitting in such a privileged position.
But even for those of us who get the money part solved, with investments large enough to see us through several prosperous lifetimes, the career addiction still remains strong. The fact that people still end up on redeye flights, missing their kids’ school performances and barking out buzzwords at underlings during endless conference calls even with tens of millions in the bank, should serve as a real warning of how addictive this disease can really be.
So for this April First, I would like to issue a little reminder, for overly successful men and women of my overly rich country:
A successful career is a fine way to learn some life skills and earn some money. But if you’re still doing it at 40 years old, you are probably sucking at something else.
And if you’re still in the office at 50, you’d better be changing the world and not just a cog in a machine that is doing something you don’t believe in.
Since career-itis is an addiction to success, the easiest way to break free is to give yourself permission to suck for a while.
If you are a Successful Career Man and you want to start a family, there is going to be a 20-year period where you are either a half-assed worker, or a half-assed Dad, or both. But you can’t be amazing at both. And that is totally okay.
Because a good life is one that is well-rounded and nuanced. It’s not about PERFORMANCE at all costs. It’s about being okay with trying new things and making mistakes, and growing as a human in exchange for that.
Your kids don’t care if you make $75,000 or $75 million per year, because either of those numbers is more than enough to have all possible doors to happiness open to them.
So my challenge to you is not to work the longest and most fruitful career possible, but rather to move on to new and bigger challenges as soon as you are strong enough to do so.
Complacency and doubling down on your existing half-satisfying job is a form of weakness. Moving on and trying new things is a sign and source of flexibility and strength. And mental flexibility and strength are the biggest allies you’ll ever find in the long journey through life.
Thus, of course I did not sell this website, and of course I’m going to keep occasionally writing things for it, on my own schedule and nobody else’s, while struggling and fighting and learning in all the other areas of life.
It won’t be perfect, but it will be interesting and fulfilling and awesome. I wish you the same in your badass and ever-changing life!
* This is a fictional name that I picked because it contained the word Sham, plus a real financial company from the Isle of Man sent around some bogus legal threats to a few bloggers several years ago so I thought it would be nice to combine the ideas.
So a funny thing happened on Twitter this week, which almost changed the world a little bit.
Someone sent me a beautiful 3-D mockup of a fictional, car-free city of 50,000 people, set in the scenic nook of land* between Boulder, Colorado and Longmont, where I live. It came complete with street plans, detailed descriptions and dozens of cool photos, both real and computer-generated, showing how it would feel to live there. They called it Cyclocroft, in honor of the generally pro-bike stance of Mustachian culture.
This was not out of the blue: these plans came from some long-time readers, who have heard me muse about better cities in the past. Over the last few years, I have come to realize that the fastest way to get my fellow Americans into healthier, wealthier lives is probably just to change the way we lay out our living spaces. Instead of wasting trillions of dollars on separating and isolating ourselves just to accommodate giant racetracks for our gas-powered wheelchairs, we could make everything about 75% less expensive (and many times more fun) by making cities that work without cars.
So anyway, these architects sent me the plans, and I put them up on Twitter with a comment about how they’re fictional but boy wouldn’t this be a nice way to use a single square mile compared to what we do right now.
One square mile of suburban Detroit. Note the amount of space wasted on accommodating cars. Without the cars, you could house AND employ about 50,000 people with this much land.
I thought that would complete my social media indulgence for the day, but NO, things were just about to get interesting.
That night, an MMM reader who also happens to write for Forbes, wrote to me asking if he could do a story about Cyclocroft. He also pulled in the designers Tara and John from B4Place. And the next day, this rather racy article showed up in the news:
Whoa there, Forbes!
While the story was technically accurate, calling me a “Wealth Guru” instead of an “Early Retirement Blogger” definitely amped the intensity. And words like “Plans” and “has teamed up with” made it sound like things were very imminent and real, rather the just a set of pretty pictures I was happy to share.
But the world started to react as if Cyclocroft really were real. Twitter responses and emails started coming in from people who would buy properties and move there, if we really built it.
Even more notably, my email inbox and even the voice mail of my supposedly private mobile phone, started filling up with notes from news agencies and big players in finance and real estate, asking if they could do news stories and/or help get involved in building Cyclocroft.
The Chief Marketing Officer of the nation’s largest mortgage providers (who I was surprised to learn is also a longtime Mustachian) came to my coworking space and we talked for two hours about whether we could make it a reality. Because, aside from the potential to improve world through better design, residential housing is the world’s largest market, worth trillions of dollars.
Now, just in case you have any illusions about Mr. Money Mustache’s superpowers, it is important to remember the real story. I am a retired, stay-at-home Dad who occasionally types shit into the computer, and that’s the end of it. On the average week my biggest “business” meeting is a Tuesday morning workout in the back yard of the HQ for some squats or deadlifts with a friend or two.
Actual day of work. Does this look like a City Developing Wealth Guru to you?
Now, this Cyclocroft bonanza is still cause for celebration – all this attention and energy will definitely not got to waste. I really do plan nudge this country towards its rightful status as a Badass Utopia – it’s a lifelong project for me, and we are only about eight years in. It’s just that Starting a City right now does not play well with my other project of Raising a Boy, a contract which still has about five years left on it. I’m not a great multitasker so anything outside of that job has to be low-stakes and with complete flexibility.
But there’s still is a heck of a life lesson in this story, that can help all of us change our lives. It’s on par with the lessons of the Optimism Gun, and the Circle of Control.
The lesson is to Begin with the End in Mind – and Start by Painting a Beautiful Picture of that end destination.
It’s the technique at the core of the world’s best marketing and negotiation strategies, and it works so well because it short circuits the human brain into making everyone – including you – see things in the desired way.
I’ve known this for a long time, and applying it is the reason for most of the successes I’ve had in life so far. Yet I still sometimes get sloppy and fail to use it, and sure enough many of my failures can be tracked back to that sloppiness. Let’s check out a few examples of Painting the Picture in real life so you can see exactly how this works and how powerful it is.
When I started this blog in April of 2011, I didn’t just start rambling about interest rates or student loan debt. And I definitely didn’t mention carbon footprints or get into environmental guilt-tripping. The first sentence of the first post is “What do you mean you retired at 30?”
Retired. At. 30.
It was a simple picture of a very clear end destination that automatically got people’s imagination running and filling in their own details.
Everyone knows that a 30-year-old is a fairly young adult with lots of promising life ahead of them. And everyone knows that “Retired” must mean some unusual financial accomplishment was involved, which makes them imagine what their life would be like with that sort of money.
In retrospect, that marketing decision was the main thing that has made the MMM blog catch the attention of newspapers, which in turn brought in the readers, which in turn kept me motivated to keep writing it. So painting that initial picture was an amazingly big leverage point.
And Cyclocroft worked in exactly the same way. You’ve heard me harping almost daily about “live close to work and ride a bike”, but this produces only small changes in the world. You are still fighting the car-based design of your city, your car-loving spouse, and all of the excuses that pop up from looking at the small day-to-day picture.
But Tara and John bypassed all of those arguments by sharing a simple, beautiful picture of the end lifestyle, with just enough detail to provide a framework that got everyone’s imagination running.
Car-free city. Next to Boulder. 50,000 people.
People read these key points and see the pictures, and in their minds they are already nestled into this bucolic town in the Sunny Western US at the base of the Rocky Mountains. For most people, the sale is already made and now they are ready to hear the details – most importantly “How can I get you my money?!”
Once you go looking for this pattern, you see it everywhere, especially in the most successful bits of persuasion in the world.
Tesla almost completely took over the coveted luxury car market with no paid advertising, even while its competitors fought tooth and nail with their old ads, by painting a clean-slate picture: clean, beautiful, prestigious cars that are the fastest in the world. They were introduced to the world as if they were movie stars, rather than squeezed out through the crusty sphincter of an old corporate marketing department as most cars are. They can even make a commercial hauling appliance into a rockstar that has everyone waiting breathlessly for its world-changing arrival.
So How Can You Use This Amazing Power on Your Own Life?
We can see how this works by painting a few pictures of our own:
You want less money stress in your life:
Describe the picture of your ideal financial life. Your house is paid off, the kids are well cared-for, and you think about money no more than you think about tap water. It’s just there, so instead you spend your time figuring out how to get more fulfillment out of each day.
Then to get there, you suddenly feel the motivation to streamline your spending (and perhaps optimize your earning) today. It’s no sacrifice to skip over a car upgrade, if it rockets you towards this clear picture of your future life, right? And conversely, making the car upgrade is suddenly less appealing if it means you will be extending your time on Cubicle Lockdown by three more years and pushing off the beautiful picture you have painted for yourself.
You wish your spouse was on board with more frugal living:
You won’t get anywhere by nagging your partner she needs to take shorter showers or telling him to give up his Porsche convertible. The only hope of teamwork is to agree on the end goal: do you want financial freedom more than you want the Porsche, or not?
Well then, what does financial freedom look like? Perhaps it includes being able to stay home to raise children, or to have more time to travel together, or to pursue part-time meaningful work instead of full-time-just-because-I-need-the-money careers. Or something else you can both agree on. This article on Selling the Dream describes a case study where this method worked beautifully for a couple.
Once the dream is there, the daily steps that move you towards it become easy and obvious.
You want to earn your dream job
Rather than sucking up to the company or stepping through your individual qualifications and acronyms of all the programming languages you know, begin your campaign as though you’ve already won.
Describe (with beautiful pictures of your past work and future proposals if appropriate), the way that things will work, once you are working with the company. The ways you are excited to build the culture of the group you will be joining and managing, and why that is destined to influence the entire company over time. This vision of you excelling in this job needs to become a crystal clear anchor in the company manager’s mind, that lodges itself in as the way things are going to be. From there, it becomes difficult to dislodge.
These same principles work in both large and small situations, for persuading any range of people from just you up to the entire Human population. From getting into better physical shape to winning an election.
My own Failures to Paint the Picture
When I look at my own areas of less-than-satisfactory performance in recent years, they all carry the hallmark of scraping along from one daily hardship to the next, while neglecting the big picture.
My former wife and I did not keep our own marriage alive, and it may be partly because we didn’t think of what we wanted a good marriage to look like. We just reacted to the ongoing realities of daily life, doing more damage as time went on.
My son copes with some anxiety and can tend to be an extreme homebody, avoiding all new situations if not challenged to do otherwise. But if you work at it, you can get him out for adventures, and he always has a great time. And his Mom has shown much greater skill than me in making these things happen.
But far too often during our days together, I will make a few offers to go out and do things together, then give up and feel deflated when he rejects them. And I come back the next day and try the same thing, and I usually get the same result.
But if I paint the bigger picture well in advance – for example of a two-night camping trip with his favorite friends and their dads and kayaks and sand dunes – the chance of a breakthrough greatly increases.
The recipe for change is right here in front of all of our faces. It’s up to us if we are bold enough to paint the picture, and then do the work that will become obvious once that picture is hanging on the wall in front of us.
Okay, but When Do We Get To Move to Cyclocroft?
I am happy that this big, beautiful picture of the future of North American city planning is now out there, creating an anchor in the public mind that is bound to stick. That alone is an amazing accomplishment.
For my part, I’d love to help out in many ways. But at the same time, the picture I have painted for my own life does not involve being a property developer. I’ve done that on a small scale in the past and learned there are other people that thrive on the phone calls and meetings and contractor cat-herding much more than I do. So as much as I’d love the results, I’m not willing to do the work. And this is a great thing to know about myself, because chasing accomplishment and prestige and things that seem “important” is not necessarily the path to a happy life, if you don’t enjoy the work along the way.
But with the right group of people working together on the aspects they truly enjoy, it really could happen. Tara and John like designing spaces. I like describing things to the world, but also solving physical and engineering problems. You might like running a restaurant or a bike shop, or playing in a jazz trio. It takes all sorts of people to build a new city and change a culture, but as long as we are all working on the same end goal in mind, we will definitely get there.
* Never mind that this particularchunk of beautiful land is currently a NOAA facility! The real point is that when you only need one square mile, you can fit a world-changing city almost anywhere, including into the corner of an existing large family farm.
A recent campfire at in the back yard of MMM-HQ coworking space.
Don’t get too excited, this isn’t a real blog post. But there were enough things worth sharing that I thought it would be worth sending a little mid-month Hello.
Life has been busy around here, drunkenly walking that fine line between the zones of
“Exciting and stimulating and action packed!”
“Way too much overflowing action, how do we turn off this firehose?!”
It’s one of the core Tenets of Mustachianism that too much of a good thing can become a not-so-good thing, so I have been working on stepping back and focusing on the smaller and more personal things with the people who are close to me, even if it means turning down bigger, “important” sounding things out there in the world.
If you are an overdriven and success-oriented career person, you can take the same lesson: your PERFORMANCE out there on the business stage is a lot less important to the world than you imagine it is, so now is a great time to lean back and take a few breaths and turn down that extra work assignment so you can spend Saturday just digging in the sand at the playground with your kids.
Okay, so with that take-it-easy warning aside, here are a few things that have been keeping my local gang and I busy recently:
1: We have expanded the MMM HQ
MMM watches as Alan Donegan’s Charisma steals the show at September’s Pop up Business School
Some adventurous friends decided to dive in with me and team up to buy out the other side of the building that houses my little coworking space in downtown Longmont. As a result, we have now quadrupled our interior space and are looking for new members!
In the spirit of adventure and growing the community from the current 50-ish to a new goal of two hundred, we are no longer limiting it to people who live right in Longmont – you can be the judge if it’s worth $52 per month to be part of our growing entrepreneurial gang.
Over the long holiday season, my 12-year-old son and I were spending a lot of time together. He has become a prolific music composer and video editor and posts something to his own channel almost every day. So he often ribs me about my own neglected MMM YouTube channel, with just a few halfhearted construction videos I had thrown up to illustrate certain things as part of blog posts.
Long story short, we just turned on the camera and started recording some Question and Answer shit and putting it up there, learning as we go. So far, it’s a “He’s the DJ, I’m the Rapper” situation, but I hope to get him to come out from behind the camera one of these days too, at least for a cameo.
The result, our first six figuring-it-out-episodes, is here and we definitely plan to do more:
It has been a lot of fun so far, and an incredible bonding experience for the two of us, to be working on something difficult together. I’m even paying him for his work and we will also split any resulting revenue from YouTube (currently a not-too-bad thirty bucks in the first month!), as I think this is a great way for a kid to learn more about money.
3: I’m part of The FI Summit
One of the members of my coworking space is an enterprising dude named Sean Merron, who also runs a podcast called 2 Frugal Dudes. Over the past year I’ve come to respect his work, so when he invited me along with some other very genuine financial independence writers to join a little online course they are running in March, I was happy to accept. I am going in as a newcomer to such an experience, so it’s an experiment.
The event takes place live on March 5-7, with course material and replays available afterwards.
This isn’t just a website or even a ‘movement’ anymore. There are real-life friends, and potlucks, hikes, local and international trips, and even romances going on out there and I have had great fun watching them all develop over the past few years. A few ways you can get involved in real life:
Camp Mustache was the original meetup – About sixty people in a beautiful rented lodge in the rainforest outsid of Seattle. Five years running now, it is small and well established, so it always sells out much quicker than any resonable person could be expected to buy tickets. It is the only event I’ve attended every year. But it set the stage for its international cousin …
Camp Mustache Toronto is a similar but more Maple-flavored event, also in a lakeside natural area far enough from the concrete jungle that it feels like a genuine camp. This year’s event is in September. But Camp Mustaches are just the start of it all.
Camp Fi is a more ambitious string of events, spawned by an unstoppably friendly and optimistic guy named Stephen who liked Camp Mustache so much that he decided to adopt the principles and take it from coast to coast. They have run something like a dozen already, and there are more coming up on the calendar.
The NoCo Mustachians Meetup Group is a 400-strong club of fun and FI seekers in my own area. There is a nice, sociable overlap between members of MMM-HQ and this larger group, so they often use our building to host their larger events.
The ChooseFI Meetups: if my hobby of “Financial Independence Guru” were an actual business, I would never tell you about this, because these guys would be my toughest competition. Growing from nothing to hundreds of thousands of followers in just the last few years, I have heard about more Choose FI meetups than Mustachian ones in recent times, and some existing MMM groups have even been so bold as to rename themselves from my silly (but more fun) terminology to adopt some version of the more bland and sensible “FI” branding.
Fine, have it your way, FI people – your ability to get together and have fun in the real world is way more important than appeasing Mr. Money Mustache’s ego, so I encourage you to get out there and enjoy it all.
And with that batch of suggestions, the clouds have suddenly cleared up outside my own window, so I am going to fold up this laptop and head out on the town myself.
“You can’t slow down time, so treasure your days because they’ll be gone before you know it.”
We’ve all heard these thoughts, often from the parents of grown children. If you’re part of the older and wiser population, you may have even spoken similar words yourself. And if you’re younger, you may have felt fear well up in your heart as your elders dropped this bit of Bummer Wisdom upon you. The Inevitability of Life Racing By.
But your fear is unfounded.
Because somehow, I seem to have stumbled upon a workaround to the problem of life being too short, and instead I find myself be existing in a different universe of Vampire-like perpetual renewal and the feeling of youth. While other parents of almost-thirteen-year-olds claim the time has gone by in a flash, I feel I’ve had my own son for at least 30 years.
And those same thirteen years have since I retired from real work have also been packed with an almost inconceivable variety of experience. Adventures in business, travel, relationships, weddings, funerals, adventures, injuries, growth, definitely at least the recommended minimum dose of pain, but a much bigger amount of joy.
Reflecting back on it all always leaves me shaking my head in a smiling disbelief and muttering at least one involuntary “Holy Shit.” I feel like I have lived an entire human lifetime, or maybe even more than one, in just the years since I hung up the keyboard and walked out of that cubicle.
I look at this strange development with great gratitude. After all, if we are going to assign any purpose to our lives, it’s probably something like “Make the most of the time you are here, and try to do some good while you’re at it.”
So if I feel like I’ve already had a spectacular amount of time and Made the Most of It, you can imagine how lucky I feel to still have so many more decades worth of it potentially still in the tank!
What do you think could be going on here?
As it turns out, I am not the first one to wonder this. And there is some real science that connects a Mustachian Early Retirement to a life that feels much longer and more full, even before we get into the reasons you will probably literally live quite a bit longer as well. The key to this is in the way we perceive the passage of time.
Figure 1: Some of Eagleman’s Intriguing Books I’ve read (click for more.)
A few years ago, I stumbled upon the work of the modern-day Indiana Jones neuroscientist/author/adventurer David Eagleman, immediately developed a Man Crush and started working my way through his books and interviews. It was exactly what I was looking for at the time: a bigger picture on why our brains behave the way they do in many different realms of being alive: emotions, decision making, happiness, and of course our perception of time.
Like many people who were born with an engineering side to their brains, I sometimes feel like I’m standing with half my body outside of the human species, observing with Vulcan-like amusement how crazy we all are, and the other half firmly inside it, being whipped around by all the same joyful and tumultuous and passionate and irrational emotions as everyone else. So it can be very satisfying to try to put it all together, by embracing all that humanity but also understanding it from a bigger perspective. Books like Eagleman’s are a lot of fun and useful in that regard.
So by reading books like Incognito and The Brain (along with this interesting profile on him in the New Yorker), I was able to learn a lot more about the nuts and bolts of my own existence as a creature, which I find is a very useful antidote to prevent me from taking myself and my moods too seriously as a person. And it also helps me get the most of the gigantic arc of a human lifespan with all of its details, without getting too hung up on whether I’m “doing it right” or fussing about our inevitable mortality.
This is your brain on MMM
That compact but powerful brain of yours is more than just your thinking appliance. It’s your entire world, because it controls every bit of your interaction with the world, plus the way you feel about it. And one of its trickiest roles is in sucking up and storing every experience you ever have, and filing those experiences away so that you can recall the most important ones, all while leaving you able to focus on immediate tasks without becoming completely batty from this ever-growing pool of past experiences.
So the brain uses a few tricks in order to keep you sane. And the best way to sum up its approach to its approach to things is this:
To focus on the novel and important-seeming things, and mostly ignore everything else.
We’ve already covered the remarkable subject of human habits, where we learned that our brains tend to click us into little autopilot routines whenever possible to avoid the strain of puzzling consciously through every single moment, of every single day.
So an average person might go through routines like …
“get out of bed”
“make some coffee and breakfast”
“get dressed up and drive to work”
… in an almost unconscious fashion.
Habits like these are convenient, but they can also compromise your full enjoyment of life. Because when you are running on autopilot, you are not forming nearly as many meaningful memories. And if you do it long enough, your brain will also start clumping entire phases of your life into individual thoughts:
“the college years”
“those years I worked in Des Moines as a fertilizer salesman”
“the baby-raising years”
“my 25 year career as a Middle Manager in Megacorp”
“my golf-and-TV retirement to a Florida condo”
If you look back at your own phases so far, which ones do you remember being the longest and most vibrant?
For most of us, it ends up being the ages from about 6 through 21, because these were the times of greatest change, learning, and new firsts in life. Then as we get older, we lock ourselves into family and work routines, including the most time-compressing of all: a multi-decade period of having the same house and the same career. The years go by, but significant new experiences become more and more rare.
Mustachianism (even if you are a long way from early retirement) is thus the perfect antidote to this, because I am always encouraging you to try new things and maintain an eye towards constant optimization.
With practice, you will let go of your natural fear of failure, and start thinking of everything as an opportunity for an experiment. Or as the great Bob Ross would put it, “There are no mistakes in life, just happy accidents.”
Although you will be fighting the very core of your Human nature with this activity, it’s a fight worth picking, because you are immediately rewarded with a life that is wealthier, more satisfying, more interesting, and one that feels much longer.
To put this philosophy into practice immediately, all you need to do is start throwing some changes into your daily routine. A few ideas ranging from beginner to expert:
Take a different route to work than you usually do, and a different route home. Pay attention to the new experiences you have on this journey.
Shop at a different grocery store and get ingredients that you don’t usually get, in order to eat different meals than usual.
Try breaking your usual morning routine by going out for a short walk before you have your breakfast and sit down for work. (I happened to do this today, and it led to me feeling great, and my walk turned into a run, and the added energy from that led me to sit down with inspiration to write this very article for you.)
Find a way to meet a new person every week, or at least every month. People are the most powerful gateway to new memories and a longer, richer life.
Switch roles in your company, or switch to a new job.
Remove TV, news and social media from your daily routine or limit them each to five minutes per day. Then when you feel the inevitable pull to check in, use this as a “keystone habit” to grab your paper to-do list and start working on something from the list – even if it’s just ten push-ups, or picking up an old-fashioned paper book you are working through.
Move to a new apartment or house that is closer to work and to worthwhile amenities like public parks and waterfronts.
Start your own small business and begin building it up, embracing change and setbacks until you find something that is truly rewarding.
All of these things will shake up your life for the better, and they will restart the flow of new memories, waking your brain back up and extending your time of really being alive.
For my part, life keeps getting more varied with each passing year, and time keeps getting slower and slower. Here’s to you and I clinking our glasses together in the distant future, after several more centuries of the joyful Vampire-style youth that is early retirement.
In the Comments: what have your experiences been, with periods of your life where time has flown by, and others where your memories are particularly rich and detailed? And if you’re an early retiree, what has your experience been with the flow of time since you pulled the plug?
Selected quotes from the NY article that I liked:
“Clocks offer at best a convenient fiction, he says. They imply that time ticks steadily, predictably forward, when our experience shows that it often does the opposite: it stretches and compresses, skips a beat and doubles back.”
“When something is new or more emotional, the amygdala seems to kick into overdrive, recording every last detail of the experience. The more detailed the memory, the longer the moment seems to last. “This explains why we think that time speeds up when we grow older,” Eagleman said—why childhood summers seem to go on forever, while old age slips by while we’re dozing. The more familiar the world becomes, the less information your brain writes down, and the more quickly time seems to pass.”
Even in the most carefully run and financially independent of lives, there will be some wrenching twists and turns.
Friendships and businesses will fail. You or your loved ones will get sick and some of them will die. Kids will have plenty of trouble on their long road to adulthood – if they even make it. And all around you, there will be a sea of fighting and breakups and divorces and mismatched relationships that you wish would end, for your sake or that of your best friends.
With all of this happening, it’s a wonder that we can remain happy and productive and even thrive as humans. But we can. And we do. Because sometimes life just serves up a shit salad and we don’t have a choice in the matter, but we always have a choice of how to respond to it.
So if you haven’t already heard through the rumor mill, the former Mrs. Money Mustache and I are no longer married. Although we had been drifting this way for a while, the formal change of our status is still less than a year old, so it’s still a topic that deserves some quiet respect*.
The downfalls of our own relationship are personal and not something we choose to make public, but you’ve heard it all before anyway. Sometimes people just grow apart over the decades and find that they want different things from life. And when this happens, not even the greatest advantages of a lifetime money surplus or a supportive network of great friends and family or living in a beautiful place can save you.
So that’s the bad news. The good news is that we have had about the most amicable separation that one could hope for, we all still spend plenty of time together and our son is still in the same loving environment he has always had. And I would venture to say that both of us parents are going to come out of the experience much better off than we were before.
See, even the harshest moments come with a little golden key taped secretly onto their side, which you can use to unlock personal growth and greater future happiness. But only if you choose to accept that key and put it to use.
I’m not going to sit here and pretend that there weren’t plenty of harsh moments for both of us, both before and during this experience, with plenty more still to come. Because divorce, especially with children and family and traditions involved, is really fucking hard.
But guess what? There are a lot of things in life that are hard. Being born and going through childhood is hard. Having babies of your own is even harder. School and jobs are hard, and money is really hard for most people. Relationships and friendships and dealing with bossy or dysfunctional friends or family or parents, personal habits and addictions, and everything else. Life is full of hardships.
But throughout all of it, we always have a choice about how to deal with them.
We can choose to focus on how unfair the situation is, how we were right and we tried our best and the world still mistreated us. And we can fight back, chasing the unfair person or company or situation and get revenge. We can make sure they know exactly why they were wrong and every way in which they were flawed.
And we can collect bathtubs full of sympathetic tears from our friends. And burn years on reliving the past, with a mixture of regret and vengeful self-righteousness and self-pity.
– OR –
We can get right back to work on positive things to rebuild our lives. Improving ourselves through better habits and health. Building new relationships and nurturing old ones, and making sure we put out only positive energy to every person in our lives, including our ex-spouse. Building everyone up and never, ever tearing anyone down. Because they already do that plenty to themselves.
Like almost everything else in life, human nature draws us to the easier but more destructive of these paths, and only self-knowledge and self-discipline can lift us out of that rut and place us onto the more productive one. And even then, our human nature will keep pulling us back and we’ll make mistakes. And then we’ll have to drag ourselves back out of that rut again. And put the happy face back on, and start behaving like an adult again.
As one friend puts it, “Being a divorced coparent is like being the co-owner of a business. Except it’s the most important company in the world and having it fail is not an option. So you have to treat your business partner accordingly.”
It has been a hard year. But at the same time, I feel we have both already learned so much, that it seems almost impossible that the experience won’t help both of us live better lives in the future. We are both doing well in new relationships and supportive of the other’s success in that important aspect of moving on.
But this is usually a personal finance blog. What does my romantic life have to do with your financial life? Not too much in the specifics, but quite a bit in general, because about half of all marriages end in divorce, and I have found it can be quite a tricky minefield to navigate.
First of all, there is the effect on your child raising, which is a parent’s most important job in life. In the best scenario, the end of a marriage is just a change to your love life, and you can continue to collaborate with your former spouse in a wonderful and open way. But the more conflict you have with that ex, the harder it is to cooperate, which leads to a worse experience for everyone – especially your children.
Then there is the social shame attached to divorce in our culture. While it could be looked at as the natural and peaceful end of an arrangement that has just run its course, other people will see it as a failure or a betrayal or a sin. In fact, when rumour of our separation got out, multiple gossipy and negative and downright distasteful discussions formed around the Internet – on Reddit, other bloggers’ websites, even right here on my own forum. People who don’t even know you, will speculate on your character and your motives. It adds pain to an already difficult situation. The only way to survive this is to ignore it and focus on your own internal compass.
And finally there is the famed financial cost of divorce. It is legendary for destroying lives and fortunes, and indeed this is sometimes accurate. This is because conflict is a form of war, and war is the most expensive things humans have ever invented. And if you hire lawyers and other specialists to fight on your behalf, you just multiply the damage and the cost and stretch out the timeline.
But fortunately, like everything else, going to war is almost always a choice.
And if you don’t choose to fight, a divorce doesn’t have to cost much at all. Two people can peacefully collect up their financial and physical belongings and go their separate ways, and the only cost is in any duplication of possessions you choose to do, to replace things you formerly shared.
So the former Mrs. MM and I (mostly under her guidance!) worked through the do-it-yourself paperwork and paid a $265 fee to the county court for the divorce. I bought the lowest-cost house in the neighborhood, just a 2.5 minute bike ride down the hill from the family house, and I’ve already fixed it up and started hosting Airbnb rentals to help make it carry its own weight. I left the Nissan Leaf behind and chose not to buy a car of my own because I already have bikes.
We share plenty of time with our son and he is doing amazingly well – because we are choosing to make this new life about growth rather than conflict.
And most notably from the perspective of early retirement and financial independence, having enough money in advance has made this part of the split much less painful. Both of us can remain retired and continue to live in mortgage-free houses with investments easily covering our living expenses, while sharing child raising expenses. Although I chose to buy a house, nobody had to compromise on quality of life or sell the expensive family house.
Because I enjoy moderate living for its own sake, my own cost of living will go way down. And because I continue to enjoy writing and working, my income may continue to stay high through this next stage of my life. I’ll continue to use the surplus for projects and philanthropy just as before, but the point here is that one’s relationship status does not have to affect their financial status.
As a long-time reader said to me in a recent email as we discussed our shared fate, having a solid financial cushion and low expenses and lifestyle flexibility, has made the best of an otherwise difficult situation – especially in not having to disrupt the lives of our kids.
Still, having been through it, I would not recommend divorce as a decision to be taken lightly. If you’re still married and there is even a chance that you want it to last, you might consider the following steps.
How to Stay Married
Read about how to stay married – early and often. Peruse the bountiful relationship advice section at Amazon and definitely check out the 5 Love Languages book that resonates strongly with so many people.
Most of us (myself included) drift through the years, assuming we are doing a perfectly good job at being married, while unintentionally making all the same mistakes that everyone else makes.
You need to proactively nurture a close, loving relationship before things get too dire, and never take it for granted. Because many bits of damage you do to a relationship are permanent. You cannot nag or criticize your partner for years and expect them to forgive you when you eventually see the light. And for those being nagged: you cannot ignore the requests of your partner for years, and expect them to forgive you for that either.
There are so many things, like being on each other’s team in times of hardship, and being genuinely excited and greeting your partner warmly at the door if they’ve been away, that fall to the side in marriages as they get stale. Every time you let this slide, you do a bit of permanent damage. The effects are cumulative like erosion, not temporary like moods or weather.
So the bad news is that there is definitely such thing as “too late.” At some point, the idea of “working on” a marriage sounds like hell because you have been waiting for so long to be able to escape it.
But the good news is that it might not be too late for you, if you do want to stay married. And the benefits begin immediately – if both people are working at it, every positive gesture from one side will be met with a positive one from the other, and they can reinforce each other into a beautiful upward spiral.
But if You’d Rather Not Stay Married
The flipside of all this is that many, many people are currently married, who should not be and don’t want to be.
You may be two perfectly great people with irreconcilable differences, or there might be one great person stuck with an abusive user or loser, or any other combination in the grand spectrum of possible humans. And it is important for these people to hear that although divorce is always difficult, sometimes it really is the best choice and there should not be shame or blame associated with this choice.
Every human needs and deserves to be accepted and loved – even the people who drive us crazy and even those who treat us poorly. They are who they are and while you can’t change them, you can’t make the world any better by spitting venom back at them. So your best strategy is to carve them out of your life, while keeping your words as kind and respectful as you possibly can.
And heed the wise words of my own relationship and coparenting counselor, who noted that the first months after any divorce are the times of greatest conflict. And then it gets easier. And easier. And mellower and friendlier. And after a few years, many former divorcees have moved on so happily that can’t even believe that they were ever angry at each other. That’s entirely possible, and it should be your goal.
So lean on friends, talk to a relationship counselor even if it is just by yourself (yes, it’s really worth it!), read books, laugh, cry, learn mindfulness and meditation, eat salads, get outside and exercise, write more new things and build new things and new businesses and new relationships, and you will come through it better than ever.
That’s what I’ll be up to in 2019. I hope your new year is even better!
In the Comments: I have found it so helpful over this past year to share with others and realize that I am not alone in this. Feel free to share your own experiences and hopes and fears anonymously.
My comment form allows you to use a pseudonym so you can be anonymous while you let out the truth. And read the other comments, to see what other people around you are feeling.
And for those who have been through this and gotten through the other side and found happiness, go ahead and share your message of hope.
* A bit of social approrpriateness that seems to be lost on certain forum participants and even other bloggers, who we won’t call out here. Please don’t be like them – using the Internet to publicly gossip about strangers helps nobody.
These last two articles have focused on how common it is for early retirees to continue making money after they say goodbye to the cubicle. I share stories like that because I’ve seen it happen in so many lives, including my own. Plus, if you do it right, work is fun.
But the downside of all this “side hustle” talk is that you can take it too far, and people start to think that early retirement is possible only if you keep making money afterwards. To the point that I’ve now been hearing many thirtysomething millionaires saying things like,
“Sure, the numbers say I’ve easily reached financial independence, but I’m not even going to touch my nest egg until I’m 60.
So these days, I just do a bit of unpleasant consulting work here and there to cover my expenses and to get the employer subsidized health insurance. “
On top of that, it is hard to get mainstream financial advisers to admit that there is such thing as a finite chunk of money that you can live safely on, forever. They say stuff like, “Financial independence is great, but truly retiring from making money? Forget it.”
This is where Mr. Money Mustache puts a stake in the ground.
Because it IS absolutely possible and in fact very easy, to make a chunk of money last through your lifetime. There is no magic or unusual risk or hope involved, it’s just plain math.
Even with all the complexities of the modern financial world with its booms and busts, OPECs and Brexits and the churning sea of changing politicians and dictators, it still all boils down to a really simple number. And we can illustrate it with this really simple example:
Let’s say you want to be able to spend $40,000 per year, for life, and have that spending allowance continue to grow with inflation. And you never want to make another dollar from work in your lifetime.
In this situation, the following three sentences represent the entire universe of probability for you:
If you retire with $800,000 in investments, you willprobably make it through your whole life without running out of money (a 5% withdrawal rate)
If you start with a $1 million nest egg (a 4% withdrawal rate), you will very likely never run out of money
If you start with $1.2 million chunk (a 3% withdrawal rate), it is overwhelmingly certain that you’ll have a growing surplus for life.
Now, these statements do all depend on the continued existence of a productive human race which continues to innovate and trade and not destroy its own productive capacity.
But you know what?
In the event of a global apocalypse, you won’t be thanking yourself for spending those last few years in the office accumulating a few last shares of index funds anyway.
The strategies described in this blog are designed to shift us all to a more sustainable, healthy, productive economy. So when you live a Mustachian lifestyle, you’re boosting the likelihood of an apocalypse-free future for all of us. Thus, because of you, We are all going to do just fine.
So. A fixed chunk of money is about as safe a retirement strategy as you’ll ever find.
It’s safer than relying on any job, because keeping a steady job depends on the overall economy remaining healthy enough to feed your company, your company remaining solvent, and you remaining productive and useful to that company.
Meanwhile, a good investment portfolio just depends on the world economy in general continuing to exist.
But once you’ve got that chunk, how do actually convert it into a safe stream of lifetime income?
In other words, most of us get to the door of financial independence with something like this:
A complex financial picture with lots of dollar signs – but can you retire on it?
But what we really want is something like this:
This is how money flow really works in early retirement..
So What Is The Problem?
Most people get stuck on the same three questions:
What investments do I use to provide a lifetime of income?
A big chunk of my savings are in 401k or pension, locked up until I’m 59. How do I retire at 35?
How can I pay for (US) health insurance on a $3300 per month budget, when I’ve heard monthly premiums can exceed $1200 per month for a family of four?
The great news is that there are easy answers for all three. They are just not widely known because true early retirement (with no backup income) is such a rare field that very few people write about it. So let’s bang out those answers right here:
The Simple Path to Wealth is a short book on investing that convinces you that the simplest strategy is also the best.
As always, I suggest that you only need one thing: a generous bucketload of low-fee index funds. It can even be a single index fund if you want to keep it even simpler: Vanguard’s VTI “Total Stock Market Exchange Traded Fund”
Whether you own these funds through your company’s 401(k) plan, or the brokerage account of your choice, or a Vanguard account, or through an automatic management service like Betterment* as I do, doesn’t matter. What matters is that you are buying pieces of real, profitable companies, which pay dividends and appreciate over time.
Okay, got the funds, Now What?
Okay, you’re 35 years old, you have saved exactly one million dollars, and handed in your resignation.
At this point, you will probably have at least two chunks of money: a normal chunk (also known as a taxable account), and a retirement chunk (perhaps a 401k, IRA, or pension).
Let’s suppose it is divvied up like this:
When you retire early, you Use up your taxable accounts first.
On your first day of freedom, you log into your account, find the option for what to do with dividends, and set those to get automatically deposited into your checking account.
Right now, the VTI fund happens to pay a 1.89% annual dividend, which means that the $500,000 account in that green box above will pay $9000 in annual dividends straight to you.
Then, if you’re shooting for $40,000 of annual spending, simply set up an automatic monthly withdrawal of an additional $31,000 per year ($2583 per month) to be sent to your checking account, which is set to automatically pay off your credit card, which you use to buy your groceries.
But Won’t I Run Out of Money If I Do This!?
That’s the magic of early retirement math – the answer is NOPE! Because check out how this plays out:
Because of those withdrawals, your account will lose a few shares every year.
But because of natural stock market growth, your account will be fighting back and each share will be worth a bit more.
Thus, your money lasts much longer than it would if you were just keeping it all in a checking account or stuffed in your mattress.
So a quick spreadsheet simulation of this drawdown reveals that your account survives almost 23 years. At which point you are 58 years old – almost eligible for penalty-free withdrawal of your true retirement money.
BUT, during this whole time, that other $500,000 in your retirement account grew untouched (and untaxed), and it’s now worth about $1.2 million dollars even after accounting for future inflation**. In other words, you have WAY more than enough to live on forever at that point.
Here’s a quick spreadsheet with simple assumptions and 4% after-inflation stock market returns. In this situation the first 500 grand lasts about 23 years.
And here’s the same thing, except I did it in Betterment’s fun retirement income simulator, using a 95% stock portfolio. This version is slightly less optimistic, but still gets us out to almost 20 years in the most probable scenario.
If you have a really large locked-up retirement balance and a small taxable account, you might want to tap into the retirement account sooner. There are ways to do that penalty-free too, see this earlier MMM article for a few ideas.
The overall lesson: It doesn’t matter how you have your investments split up between normal investments and retirement accounts. It just matters how much you have in total.
Heck, even if you are stuck with a $1 million house occupying a huge part of your net worth, you can convert that into livable money: sell the house, put the cash into index funds, and use the resulting cash stream to rent a spiffy but reasonably priced house or apartment in the lovely walkable area of your choice.
Okay, What About Health Insurance?
If you are stuck in the world’s most expensive medical care market like I am, the most profitable investment of all may be salads, bikes, and barbells because these virtually eliminate the “lifestyle diseases” that trigger about 75% of US healthcare spending.
But even so, most people choose to insure against surprise medical bills, and people with existing medical needs depend on help with those costs.
The good news is, the politically controversial Affordable Care Act actually handles this much better than most people assume. If I go to healthcare.gov right now (or in my case the Colorado-specific equivalent) and put in a hypothetical 4-person family with a $40,000 annual income in my zip code right now, I see this:
This represents a cost reduction of $830 per month relative to what a high-income person would pay for the same coverage. So in other words, the United States just has a progressive tax bracket system like other rich countries, chopped up a little differently. It’s not great and to be clear, this is shitty health insurance because it has a high deductible. But at least it’s not a retirement-buster.
Other Things You Probably Don’t Need To Worry About But Everybody Does
What if Stocks fall or My Cost of Living Goes Up?
Stock market crashes are never permanent. In the long run, the market always goes up. So all that happens during a crash is that those few shares that you do sell during those brief times when the market is down, will hurt your account balance just a bit more. Within a year or two, the market is back up and your remaining stocks are more valuable than ever. If you want even further reassurance, you could just choose to spend a bit less money during this time.
As for your cost of living going up – it rarely happens. And if it does, you can adjust by spending less in other areas. Most things are in your control, especially if you take a big-picture view. You can shop around, move, and alter your lifestyle in a million different ways, and in fact this is really good for you.
Standard retirement advice is based on protecting people from any form of hardship or change, which is completely counterproductive. In the right quantity, these are the backbone of a good life and the fuel for personal growth. Without them, you will melt into a whining puddle in front of a television that endlessly blares Fox News.
Every Financial Advisor (even Betterment!) Seems to Suggest Lots Of Bonds, – Why Does MMM Only Hold Stocks?
The quick answer is that stocks earn more money on average, especially right now in 2018 with bond yields so low. Sure, stocks are more volatile, but volatility only bothers fearful people who look at the stock market every day and fret when it jumps around. As a Mustachian, you don’t do this. Lower stock prices are simply a temporary sale on stocks.
What About All Sorts of Other Stuff Not Covered in this Article?
The absolute key to success in early retirement, and indeed most areas of life, is to get the big picture approximately right and not sweat the small stuff. And design the big picture with a generous Safety Margin, which allow lots of slop and mistakes in your original forecasts and allows you to still come out with a surplus.
For example, in the story above I assumed a $40,000 annual spending rate, which is way more than almost anyone really needs to live well here in the US, especially once your kids are grown. I completely ignored Social Security, which will benefit most people at a level between $1000 and $2500 per month for a big portion of their older years. I ignored any incidental income or inheritances or profits you might make on selling your house someday, and the list goes on.
So that’s the line in the sand.
Although I personally think working hard almost every day after your retirement is good for you, it is also completely optional, and you do not have to earn any money at it if you don’t want to.
A chunk of money is a perfectly good retirement plan, and the math doesn’t care if you are retiring at 5 years old or 85. If you get the numbers right, you’re set for life.
*Betterment, Wealthfront, and Personal Capital are investment management systems known as “Robo-Advisors”, which typically buy shares on your behalf and then add on features like rebalancing, tax loss harvesting and personalized advice. I happen to use Betterment because the I like the interface and benefit from their tax loss harvesting more than pays for their service fees in my own tax situation.
Betterment purchases a flat rate advertising banner elsewhere on this site, although I don’t get paid for mentioning them or for any new customers they might get. And blog affiliates/advertisers have no say in what I choose to write.
** For this calculation, I assumed the stock market delivers a 4% rate of return including dividends, after inflation. (or roughly a 6-7% total annual return)
I’d like to retire soon. I’ve had a good career and the numbers say I’m just over the threshold, but I’m still afraid.
It would help if I had a solid plan for what to do after retirement – perhaps even make some money eventually. Because I think it would help boost my confidence to pull the plug at the old law office. But as an attorney, I’m trained to see the pitfalls of everything and frankly I’m afraid.
How do all of you fearless Mustachians just go out and start businesses and make money, when it is so hard to get started – so many details and contingencies to account for?
– the Skittish Scottsdale Solicitor
To answer a question like yours, it sometimes helps to look at a role model who has some of the traits you would like to cultivate in yourself. So this seems like the perfect time to share a story I have been wanting to tell here on MMM for at least five years. And the funny part about this tale is that it keeps getting more interesting, the longer I wait to share it.
It is the story of my long-time friend Luc, who has earned a reputation in our own community as the honey badger of entrepreneurship.
The Honey Badger
Luc takes a brief rest from digging out 30 tons of dirt from his own basement and hand-pouring a new foundation while his son supervises.
From painting houses to raising edible insects, selling handmade pine coffins to writing and shooting his own feature length film in Scotland, all while never becoming too proud to take a literal Shit Shower while cleaning the sewer lines in his own rental properties, Luc’s story never fails to amaze. And it can be especially useful for those of us on the other end of the spectrum – wannabe entrepreneurs who are still hesitating to open our first small business checking account.
This story is a great financial lesson as well. Luc’s family* has gone from zero to financial independence without the benefit of the easy tech salaries that got my own household there back in the mid 2000s. Like most of us, they have seen windfalls and setbacks over the years, but the biggest factor in getting them to a better financial place has been continuing to get the work done, while choosing not to squander all of the proceeds on an ever bigger lifestyle.
So from this interview I’m hoping you will pick up both some inspiration for continued down-to-earth hard work, and a perspective to just go out and try new things, especially in the area of entrepreneurship.
If you do it right, there is upside waiting around every corner. So let’s get into the questions!
The Man Who Never Got a Real Job
MMM: The first moment we met was in July 2005, when I had just retired and we bought our first house in old-town Longmont, with a baby on the way. Walking through my new backyard, I immediately noticed two thirtysomething dudes in dirty clothes, working up on the roof of the old garage on your side of the fence. And I thought to myself, “These are my type of people!”, and walked over to meet you.
What was going on in your life at that moment, in both life and business?
Luc: Well, considering our daughter was born nine months later, it was near the end of one phase and the beginning of the next. At the time, my primary business was a house painting company that I had started in the late ‘90s, after my biology degree wasn’t enough to get me a job at a pet store (in Boulder you need advanced degrees for that sort of thing).
I had worked pretty hard to get that painting company up and running, starting as a one-man show, then employing as many as 18 people at one point. It was a good gig in that I had a lot of free time to work on other projects in the winters, and even went back and got my Master’s degree along the way.
By 2005, though, I had severely downsized the company and I was back to a small crew. I was beginning to think about what I wanted to be when I grew up.
One project we started that year was buying and quickly fixing up a house a few blocks from our place on a street called Carolina Avenue. This was primarily achieved by leveraging the equity we had built up in our first house. I still own and rent out that place (which you subsequently helped me do a more extensive renovation on).
MMM: So then we both had these children born at almost the same time, and all six people in our two families became friends. We both started helping each other with construction projects, but when Longmont denied my building permit application to expand our tiny 600 square foot house, I decided to move out and turn that one into a rental, and move into a bigger place a few blocks away. What was the catalyst that made you leave the little leafy paradise of that street? (and yes I realize this is a leading question :-))
Luc: The first thing is that old Happy Street is a pretty busy street, and with a young daughter, we thought it might be nice to live on a quieter stretch. One day my wife and I went for a walk and picked our favorite blocks in the neighborhood. There happened to be a “beautiful” old fixer upper for sale on one of those blocks, and within a few days we were under contract.
That we were willing to take the plunge so quickly was largely because of you and your construction company. At the time, I hadn’t done any extensive remodels, but because you were willing to help me out, I figured we could make it work.
At the time, my wife was certain that it would be a fix-and-flip and there was no way she would actually live in the house. Because it started out in such bad shape, it was hard to imagine it ever becoming a nice family home, but it really did in the end. So we we moved in at the beginning of 2008 and here I sit, typing away in the office.
The Rental Real Estate Projects
MMM: So, our biggest collaborations over the years have been in fixing up houses, often rental houses that one of us owned (okay most of them were yours.) We started with The Foreclosure Project in 2011, then went back and did a major upgrade to one of your other places here in town. Most recently we did The Atwood Project, which was the inspiration for my post on Installing your own furnace.
How has your experience been in owning single family rental houses, while doing your own management and maintenance? Is it a reasonable return on your investment and labor?
Luc: There are a lot of real estate/rental experts in the Mustachian fold – I am not one of them, but real estate is the main reason we’re now financially independent.
We bought our first house in 1999 with $5000 from my dad and a $3000 courtesy check from Chase. We chose the house because it had a mother-in-law basement, with its own entry and kitchen – we went from paying over $900/mo in rent to having a tenant and paying around $300/mo toward our own house. We were fortunate enough that soon thereafter Longmont housing prices had a nice little bounce.
In 2003 I took out a home equity line of credit and we bought a condo in Fort Collins. A realtor soccer friend had given me a handy little spreadsheet that detailed all the ways to make money from real estate, and at the time it was hard to find cash flow properties in Longmont.
In hindsight, that first condo was a mistake. It was an hour commute to deal with any issues, it wasn’t a place I had much emotional attachment to, and it didn’t attract tenants who cared about it – it was a soulless investment. Nonetheless, we held it for over ten years, and finally saw some significant appreciation in the last few years (and it gave me my first taste of YouTube success with a video on How To Finish a Subfloor.)
I sold the condominium on Craigslist in 2015 and did a 1031 exchange for the Atwood Project – probably the most soulful investment I’ve made.
The lesson I learned from that first condo was that I wanted properties that were in my neighborhood, that I cared about, and that, when fixed up, made our community nicer. And of course they had to make money, too. Again, I was lucky enough that all those things were achievable here in Old Town Longmont, even through the recession.
Over the years, we leveraged our way into four rental properties in Old Town (moving into our current place along the way and turning that original home into a two-unit rental). The cash flow alone allowed me to spend less time painting and more on other pursuits. And my wife was able to move her teaching career down to half-time.
In 2016, I spent an average of under 10 hours per property – over the whole year – on maintenance and administration. Yes, there are occasional shit showers when cleaning out an old lead P trap, but most of it is more pleasant than that.
After finishing up the remodel work on the fourth and final property, we had 100% occupancy in all places and pulled in about $92,000 in rent; $36,000 after expenses.
Meanwhile, our longer term gamble on the livability of Old Town has paid off, as home prices have more than doubled here in the last several years, leaving us with equity close to $1.5 million (including the home we live in). The best example is the Foreclosure Project, which we bought for $113,500 in 2011, put about $25K into it, and is now worth over $300K.
To take some of that appreciation money off of the table, I chose to sell the most expensive of these houses last year, and re-invest the cash into standard stock market investments.
This is where MMM will probably caution you that not all real estate investment will go so well.
Building DIY Electric Cars
Although it’s no Tesla, this little homemade contraption was my first peek at the world of electric cars.
MMM: One of the most technically impressive things to me, was the time you read a book on converting an old gas-powered GEO Metro econobox car into an electric vehicle (EV), using basically a trunkload of golf cart batteries. And then decided to team up with a friend and try the same thing yourselves.
Not being auto mechanics yourselves, what possessed you to do this? And did it turn out to be a good business idea in the end?
Luc: Ha, this was a terrible business idea. I can remember sitting in the office of the City of Longmont fleet manager, trying to convince him to let us convert some of their gas pickups to electric; Fox News was blaring in the background and he was staring daggers at me. Needless to say, we didn’t get that gig, and that was probably a good thing, considering we didn’t have the expertise or capital to pull off truly decent EV conversions.
We did do a couple GEO conversions and an old Ford pickup, which was a lot of fun, but they were novelties more than anything. That was 2009, and it was an exciting time in the electric vehicle world. Lithium batteries were becoming more reliable and less expensive, the movie Who Killed The Electric Car? had come out a few years prior, Tesla was starting to make some waves, and of course addressing climate change was becoming more urgent. I wanted to do something meaningful, and I thought electric cars were the future of transportation. The cash flow I was getting from rentals had given me more free time. And I’m slightly crazy, so why not start an EV business?
At the time, Colorado had an amazing incentive for people to buy EVs. One of my favorite parts was arguing with the clueless administrator of the law for months, and then lobbying for sensible changes and clarification when they wrote the new law.
We spun off a new company, Boulder Hybrid Conversions, with two other guys (with more EV expertise), in which we converted Priuses to plug-in hybrids by upgrading them to a larger battery.
Meanwhile, largely thanks to my partner, our original business morphed from being a handcrafted car conversion hobby, to a reseller of electric car batteries and other components. It became one of the larger businesses of this type in the country, grossing over $1 million a year. I had a lot of other ideas for how we could expand the business, but my partner didn’t see it, so he ended up buying me out for about $125,000 (which, for all the time I put into the biz, turned out to be decent but not extravagant hourly compensation).
Boulder Hybrid Conversions became Boulder Hybrids, specializing in hybrid and EV maintenance and repair. One partner bought the rest of us out, and he continues to grow that business. I now own a 2013 Nissan Leaf and a 2015 Prius wagon (my off-road vehicle) and one share of Tesla, and I look forward to the day when I can buy an autonomous mini-van that will safely transport my family and me to Wisconsin overnight while we sleep.
Dead Pine Trees for Dead Bodies
A handcrafted biodegradeable coffin takes shape in the handcrafted workshop. (image credit: Mat Body / Longmont Colony)
One day, I got an email from you that said, “Well, I’ve done it again – decided to start yet another business. Building coffins from reclaimed beetle-killed pine planks”
So we both reviewed the simple plans from a book you had found in the library, built a prototype of this Dracula-style “toe pincher” coffin, and then you photographed it and put up a website. I gladly worked alongside you because I like hanging out and building things, but I remember thinking, “Luc’s really gone off the deep end here – who is going to buy our DIY coffins??”
What was the motivation and the eventual fate of that coffin venture?
Luc: I started Nature’s Casket in 2009 for the same reasons I started the EV business: to do something meaningful for the environment. And because it was different and exciting. And because I wanted to help my brother with more hours when we had downtime from painting. All the remodel work we had done meant I had most of the woodworking equipment I needed to build coffins. And it was nice to have some technical, logistical, and, hell, labor support from old MMM to get it going.
The green burial movement, already well-established in the U.K., had been growing in the U.S., largely as a result of the Ramsey Creek Preserve, a conservation burial ground that conserves the land in a natural state. Green burial is traditional burial: simple and environmentally friendly (none of the swimming pools full of formaldehyde that are pumped into cadavers, no unsustainably harvested wood, stamped metal caskets, toxic paints, concrete vaults, or pesticides and copious water for manicured cemeteries).
Here in Colorado, the pine beetle epidemic was devastating our lodgepole pine forests, but leaving a lot of dead trees with beautiful blue grain (from a fungus that feeds on the beetle’s waste).
With some support from Karen Van Vuuren, who runs a nonprofit helping families direct their own funerals (and has now started The Natural Funeral), I was able to start getting the word out and selling a few caskets here and there. And it turns out that the media is really interested in things like death and beetlekill wood.
The Denver Post ran a front page article on my business in 2010 – many people saved that article, and when they’re ready, I get a call for a casket (to this day I’m still getting calls from that article). The New York Times mentioned Nature’s Casket (they never contacted me, so my mom was the first one to tell me about that). The Wall Street Journal sent a guy out to do a piece on beetle kill (I wasn’t mentioned in the article, but had a lot of time in the accompanying video). National Geographic sent one of their photographers out to take photos of the caskets at a funeral, but we didn’t make the magazine. There was also a nice story in Longmont’s Times Call newspaper.
Soon I was shipping coffins around the country. One of the most interesting gigs was when we built and reinforced eleven oversized caskets (with MMM on welding and metalworking support) that could hold up to a ton; these were for the reinterment of a 19th Century family cemetery in Virginia that was being moved to make room for a high school football stadium (most of the remains were biodegraded, so they included all the dirt from each plot).
This is where I should mention that I’m kind of success-averse. Nature’s Casket could have been a large business with an industrial shop and a storage warehouse if I had pursued that path. Instead I stopped shipping (too onerous and stressful) and ceased most advertising. Now it’s just a local business, and I average less than one casket a month – it’s still quite rewarding, but there are other projects to focus on.
Miscellaneous Mini Businesses and Pursuits
Scattered in among these years were a few smaller things. The time you started designing your own greeting cards and printing them on fancy textured recycled paper. Then there was Simple Brew Kits, which was just assembling the required components for converting good grocery store cider into booze. A photography pursuit that started with just taking your daughter to over twenty of Longmont beautiful parks and ended up culminating in a show at the city’s museum.
Oh! And then of course the time you went to Scotland with two friends and some quickly researched photo equipment and shot a feature length film that ended up in the Front Range Film Festival – despite the fact that none of you had any experience or training in filmmaking. What was that all about?
Luc: Recycled Greeting Cards was actually born in the late ‘90s, around the time I started the painting biz. At one point I had pretty high hopes for RGC, even attending the National Stationery Exhibit in New York. That business was mostly a failure, although I have one loyal business customer who still buys a thousand or so cards a year.
Simple Brew Kits was a business I started for a blog post..
Fig 1: Suze Orman’s opinion of our lifestyle, as captured in a crazy interview on Paula Pant’s Afford Anything podcast.
In case you hadn’t already noticed it in the news, it seems we are hitting a turning point in how the rest of the world perceives this lifestyle that you and I have been enjoying.
First, we were ignored. Then, there were a few stories that just focused on the strange lives of Mr. Money Mustache a few other freaky magicians, cataloging our feats of extreme frugality like “spending less than 100% of your money on a car” or “occasionally eating food from one’s own kitchen.”
But time went by, and our numbers kept growing. And we weren’t just thirtysomething white male tech workers anymore, we were women and men of all ages and professions in all different countries, absorbing blogs and podcasts from a thousand different sources.
And suddenly, instead of just a blogger or a few millennials here and there, the media is starting to call it the Financial Independence Movement. And this is a big deal, because when it comes to cultural traditions, perception pretty much defines reality.
The New York Times article looks very positive. But there’s another one in there called “Why I Hate the FIRE Movement”, another that complains our ideas are a “Massive fallacy of composition”, and any number of others saying that we have got one aspect or another wrong.
There’s a tricky paradox going on here: the more people you reach, the bigger the range of misconceptions that will come up, potentially cockblocking your movement before it really takes off.
So, with that in mind, let’s clean up the biggest bits of WRONG that are preventing the latest round of several million new arrivals from fully enjoying the fruits of their own labor.
Because as soon as you stop making excuses for why these ideas can’t possibly work for you, you can start actually doing them and seeing the benefits – today.
1: This is ALL WINNING and there are NO DOWNSIDES.
If you think there is even the slightest flaw with the ideas behind FIRE, you’re probably just not understanding it correctly. Because the whole reason for doing any of this is to lead the happiest, most satisfying life you can possibly lead.
Sure, there are a few tricks behind the curtain – I’m going to make you occasionally tackle some moderately difficult stuff instead of the lazy, easy things you are accustomed to doing. But this too is a win, because a lazy life is a sad, depressed, unsatisfying life. We are going to lift you up OUT of that bullshit. So from now, you can assume that any objections can be solved. Zero complaints allowed.
2: It Doesn’t Matter How Much Money you Make
Sure, many of the people most passionate about FIRE tend to be tech workers and doctors who happen to make a lot of money. When people with lower salaries notice this fact, they tune out and assume the ideas won’t work for them. When in fact, they work even better, the further down the income scale you go.
When I tell a Google employee earning $200,000 per year that she should not burn through too many $10.00-plus-tip glassses of wine at happy hour, she can rightfully respond that each one represents only about ten minutes of her after-tax pay. But what about the guy getting by on $20k? A ten-dollar expenditure is ten times more of a blow to his finances, and an even bigger portion of his monthly surplus income, if he has any surplus at all.
I’m not telling low-income people that they can retire in five years. I am telling them that they can make their lives better, RIGHT NOW, by spending less money on certain things that don’t improve any of our lives. Ten dollar drinks are one easy example, but there are dozens of other ones that I’m suggesting.
And dozens of ten-dollar bills start to add up to real money pretty quickly, which is something most people don’t realize. The vast majority of wealthy people are the ones who have figured out that a millionaire is made ten bucks at a time.
At the opposite end of the scale, earning more income will rarely solve your financial problems: most high-income people are still within just a few paychecks of insolvency, because it is possible to blow almost any paycheck, simply by adding or upgrading more cars, houses, and vacations.
A fundamental truth in society is that most people are pretty bad at math. At the core, these FIRE ideas are simply about taking some solid math, combining it with principles of human happiness, and then distilling it down into a list of simple tactics that will get you way ahead in all areas of life. The benefits go way beyond money.
3: FIRE Is Not Really About Early Retirement
Everybody uses the FIRE acronym because it is catchy and “Early Retirement” sounds desirable. But for most people who get there, Financial Independence does not mean the end of your working career.
Instead it means, “Complete freedom to be the best, most powerful, energetic, happiest and most generous version of You that you can possibly be.”
Does this mean you will quit commuting through traffic into a lame corporate office to sit in meetings about products you don’t really care about? Yes.
But does it mean you won’t work hard at things that are important to you, for the rest of your life? NO!
The people who lob this “retirement is bad” complaint against us are often the lucky ones – a professor who loves researching and teaching, or an established doctor who loves saving lives and happens to enjoy the work environment she has created for herself. But in real life, over half of people are in jobs they genuinely do not enjoy, and which they would immediately quit if they didn’t need the money.
Early retirement means quitting any job that you wouldn’t do for free – but then continuing right ahead with work in something that works for you, even when you don’t need the money.
If you’re lucky enough to find a job this good early on in your career, then congratulations, you can have the benefits of early retirement even before you have the huge nest egg. But don’t fool yourself – having the financial independence side of things is very powerful as well.
And because of this tendency of early retirees to go on through life and keep earning more money – at least occasionally – the issue of running out of money is even more remote. Most of us end up with a higher net worth every single year, even decades after turning in the keys to the cubicle.
5: You Can Be Happy on ANY Level of Spending
As a society, we’ve been trained to assume that having a bigger budget is always better, and cutting back always means some sort of compromise. The Suze Orman interview above is just dripping with that assumption. The amazing news in this department, which will save you millions of dollars, is that this is complete bullshit!
Happiness is your goal in life, and it comes from meeting certain core Human needs. The thing is, that there are many ways to meet each of these needs – some of them free and some of them shockingly expensive.
For example, improving your physical health is one proven way to be happier. But you can accomplish this with a $2500 per month personal trainer or a $100 set of barbells from Craigslist. Same happiness, vastly different cost.
And as it turns out, there is a similar hack for every single one of life’s major expenses. You can meet all your needs at little or zero cost – it just takes a bit of skill. At this level, you would be able to save almost all of your income.
Or, you can substitute a bit more money and a bit less skill to meet those needs in an (only slightly) more efficient lifestyle, like the one I try to lead. This might allow you to save half or two thirds of your income.
Or, you can spray money in every direction randomly, trying to meet an unfiltered list of wants and needs, and end up with a random but very expensive life, while remaining almost broke throughout the entire thing. This is what most people do, and it leads to saving almost none of your income.
All three choices are possible to do with great happiness. But in a bit of a paradox, the last and most expensive choice is the most difficult one in which to find happiness, because you end up with so many distractions and so little free time.
6: It Doesn’t Depend on A Booming Stock Market
I started this blog soon after the crash of 2009. Now we’re in the boom of 2018. Another market crash of epic proportions is coming sometime, probably pretty soon.
Our uninformed opponents think that FIRE-style early retirees are extra vulnerable to this. But in reality, it’s just the opposite: we are on a safe island, far above the choppy seas of the everyday economy. Because here’s how it really works:
We have low and easily controlled expenses – remember, we got here precisely by being good at controlling our spending.
The stock market always fluctuates, and crashes are an expected and healthy part of the system. Then Human ingenuity continues its magic, we keep on striving and inventing great things, and the market goes back up. Stock market volatility is already built into the math we used to design this plan. Relax.
Even in the event of a permanent collapse (for example the end of the US or world economy), the FIRE practitioner would still come out ahead: instead of focusing your energy on leasing BMWs or dressing yourself up fancy, you have learned to live happily and work on your skills, health, and friendships. It’s a package that will make you wealthier in good times and bad.
7: Education, Health Care, or High Cost of Living areas are Comically Tiny Obstacles
FIRE is simply about making smart decisions with your spending so that you waste less money. This means that you have way more money available to work with.
The potentially costly monsters mentioned above are simply things that cost money. So if you get better at managing your money, do you think these problems will loom larger, or smaller, in your life?
For example, my son will be reaching University age in just five more years. I haven’t bothered to set aside any money for this part of his education, because we already had way more than enough before he was born!
On top of that, financial independence gives us many more options to handle any unexpected expense, whether it’s education, health, or anything else. For example, as a team my son and we parents could easily:
shop around to find the most cost-effective way to get any given degree (start with community college for the first two years, compare different schools, etc.)
earn more merit scholarships to get through even an ivy league school for free.
earn more money to pay for any cost shortage
bypass university entirely and simply start a business
move to another state or even country in order to qualify for local tuition rates or more reasonable medical rates
use personal relationships to get cheaper or free education or medical care in exchange for helping teachers and doctors with something they need from us.
These are just a few ideas. The point is, every problem can be solved, and financial independence simply gives you more mental and money power to solve these problems.
8: The Only Thing To Fear, is Fear Itself
In the interview, Suze Orman goes on and on about what might go wrong, and how you need an incredible amount of money saved to protect you, just in case. But this thinking is completely backwards – money will not cure your fear, as megamillionaire Suze proves so clearly.
If you are afraid of what might happen in the future, you have a mental problem rather than a financial problem. So you should work on that first, by training your mind and body:
Start each day with at least a one mile brisk outdoor walk – before you even attempt to work. This drastically improves your hormonal balance and reduces stress and fear.
Completely avoid the daily news cycle, especially on TV or radio. If you insist on being a world events junkie, just read the Economist once per week. Focus on optimistic sources of information – like this blog!
Seek out and hang out with more optimistic friends. Remove negative or gossipy friends from your daily life.
9: Place Your Bets Where The Odds Are In Your Favor
Because my brain has a math side I can’t turn off, I tend to see the world in terms of numbers rather than just emotions. And this is incredibly helpful, because by understanding probability, it helps me set up my life to ensure a much more joyful stream of those happy emotions.
For example: many people avoid cycling because they have heard from friends that it is very dangerous. But by doing so, they replace bike trips with sedentary car or bus trips, which clog their arteries and compound into fat gain and other medical issues which really are dangerous.
A lifetime of bicycling in average conditions might give you a 0.2% chance of untimely death due to accident – which can be slightly higher or lower than car driving depending on where you live. But a lifetime of drinking soda and skipping your cycling and barbell workouts gives you at least 50% higher chance of dying ten years earlier due to medical complications, while cycling reduces those health risks (and costs) considerably. So which activity is really the dangerous one?
With this in mind, which of these activities is more risky?
working ten extra years in a job you don’t love so you can have an extra million saved up in case you encounter heath problems later.
quitting that job right now and investing those ten years into living a healthier and less stressed life with more exercise, better relationships, and a more diverse range of skills. Focusing on you instead of your bank account.
We’ll skip the spreadsheets for now and just boil this into a list of habits that really do give you the best chance at a good life: more happiness, better health and less negative stress.
Physical health FIRST: your brain is a system of meat and tubes, just like the rest of your body. The whole system will only perform well if you place its wellbeing first, before anything else. Salads and barbells every day, no goddamned excuses.
Mental health NEXT: feed your mind with happy input and learn to practice mindfulness, educational reading, and meditation daily, which is simply a workout for the brain.
Daily hardship and Learning: if you are not sweating and learning and doing something difficult and solving problems, you are not living fully. Find a way to scale back the pampering and achieve more with your own body and mind.
Indulge, but only with Moderation and Self-Mockery: this country is rich enough that you can become wealthy even without perfect self-discipline – even on minimum wage. But the moment you think you deserve or need whatever indulgence you are currently treating yourself to, you have lost the game. Luxuries and treats are just short-term pleasurable distractions, like any other drugs. Indulge if you can afford them, but you’re not missing one ounce of happiness if you choose to go without at any given moment.
So that’s the FIRE movement.
It’s a system of living your best life in all ways rather than just the financial, based on our best understanding of human nature, with a bit of math and science behind it. Like science itself, it’s not a dogma or a religion, but more of a self-aware system that invites questions and experiments. It’s always open for modification or improvement, but like like science itself, there’s nothing for a rational person to hate. Who hates learning?
The reason it has spread to millions of people is that it works. People try it, they like the results, and so they share it with their friends, and the cycle repeats. There’s no stopping an idea or a movement like that.
*and guess who had the honor of writing the foreword for the new edition?
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