Retire in 7 years? - My favorite financial blog

[HopeDream]

Hello PSers,

Thought you might enjoy one of my favorite lifestyle/financial blogs:

Say hello to Mr Money Mustache
http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/

 

[rubyshoes]

I started reading it and I LOVE IT. Fabulous link, thank you so much for sharing! Going to show it to my DH tomorrow.

 

[LaraOnline]

hrm, i'm not sure....I'm on a diamond board, after all lol
don't remind me that it's more important to save, save, save...
that guy sounds like my husband.

 

[diamondringlover]

hmmm to me realistically it would be impossible for me to put over 1/2 my income into a savings...I wouldnt be able to live on half our income..I have to many debts...believe me if I could I would have quit my job by now...lol

 

[rosetta]

We already live on half our income. But unless we want to live for the rest of our lives like hermits and not send our future kids to college, this isn't going to work.

 

[justginger]

All of the information and advice seems completely sound. But it also takes all of the excitement out of life. I'd rather work for the next 35 years with diamonds on my fingers, a menagerie of expensive foster animals at home, and yearly international holidays.

I did some quick basic sums and we'd theoretically be able to pay off our house in about 5 years, and then 'retire' another 6ish years after that, so around 15 years earlier than 'normal.' But...to do what? No mobiles, no renovations, no internet, no cars, no diamonds, no holidays, no nice meals out. Doesn't sound like the kind of retirement I want to live.

I do find it interesting to see how far some people will take various aspects of their lives, from hypermiling to extreme couponers to people following advice on this blog re: cutting food budgets down to the point of recommending olive oil as a significant source of necessarily daily calories. Kenny's philosophy in action.

 

[perry]

While the financial basics are correct; an item worth pointing out is that his claim is that he did this all on 2 normal incomes; which does not quite add up.

If you read the details of how he and his wife did it - both he and his wife earned upper middle class incomes from the get go for most people in the US.

I will concede that it is easy to save 1/2 of your income when each person is making more money than the average family income in America by controlling expenses. An internet search quickly shows that in 2004 the average income for a family in the US was $44,000. He started his job in 1997 with a salary of $41,000. His wife is reported to be making more than $60,000 in her job a few years later.

So in reality he and his wife did it on two abnormal incomes.

I actually was saving about 1/2 of my salary after college in the late 80's (because I was earning a high income for my geographic area). Unemployment, health issues, etc whipped out my savings. I will admit that if I had been able to maintain my job and savings rate for another 5-7 years I would have been well on the way to financial independence (and I had plans of retiring at about age 40 back then).

But, the general advice on reducing typically unneeded expenses is sound; and if your family is making the same ratios of upper middle class or higher income there is no reason you cannot do what he did.

Have a great day,

Perry

 

[HopeDream]

I agree that Mr Money Mustache's circumstances are out of the ordinary - certainly he started out with no student debt and a significantly higher than average salary, and he lives far below his means to a degree of frugality that is outside of the comfort zone of many of us.

We definately won't all become mustachians, but it's a nice change to think that all of us are capable of saving-up and living on our own terms, that we don't all have to win the lottery. Maybe it would take 14 years, maybe 20, but it's good to know that each of us has the ability to get of the treadmill of working to live and could choose to do what we want to do.

At the very least I'm sure that everyone could put mustachian tips to use to increas the funds available for bling.

Do you think living a richer life by spending less is a paradox or a goal?

 

[Lady_Disdain]

I did something quite similar, although my plan was to retire at 33 and, in the end, I gave up my corporate career at 30. To me and my lifestyle, it wasn't a huge sacrifice and it allowed me to try and make my second career work (it is far from supporting me at the moment).

I chose to go to college through an Army program, which gave me a stipend for all 5 years of my engineering degree. Physical training at 6:20am was tough but it was worth it. I also found payed internships and kept my costs down, which allowed me to graduate with a nice little nest egg. Throughout my career, I funded my savings before upgrading my lifestyle. This also fit my views of the world - an occasional luxury is much more appreciated than the same thing daily. I naturally tend to a simple lifestyle, I guess. I invested the money and educated myself on financial markets.

In 2010, I quit my job. I spent several months travelling, as a sort of sabbatical, and decided to not return to an office job. I had enough money to generate the income I need (ok, my market practices are pretty aggressive and far from the usual buy-and-hold strategy). I live the life I want. Sure, I would like more money to travel more and buy more gems, but I would much rather have the peace of mind and the ability to pursue my dream.

 

[missy]

I agree that Mr Money Mustache's circumstances are out of the ordinary - certainly he started out with no student debt and a significantly higher than average salary, and he lives far below his means to a degree of frugality that is outside of the comfort zone of many of us.

We definately won't all become mustachians, but it's a nice change to think that all of us are capable of saving-up and living on our own terms, that we don't all have to win the lottery. Maybe it would take 14 years, maybe 20, but it's good to know that each of us has the ability to get of the treadmill of working to live and could choose to do what we want to do.

At the very least I'm sure that everyone could put mustachian tips to use to increas the funds available for bling.

Do you think living a richer life by spending less is a paradox or a goal?

It can be either depending on the specifics of each individual/couple.

I haven't yet read this blog but hope it's OK to add my thoughts independent of reading it.

Personally, I value time over money. Time spent with my dh and my other loved ones but mainly my dh because he's my very best friend and soulmate and time with him is usually a joy. Time with him brings me happiness and peace and long lasting comfort. No material thing can ever bring me long lasting comfort, peace and happiness. Things bring fleeting happiness. So for us, living a richer life would mean the freedom to spend more time together doing things we love. Cycling,visiting friends, hanging out together, enjoying sports/hobbies that we love, museums,theatre, etc.

That freedom of having time though means we have the money to be able to pay our expenses (home, food, miscellaneous) and the less we need dollars wise is the closer we are to our goal of working less and enjoying time together more. Up to a certain point. Because one needs money to live and depending on where you live that cost can be considerable. Have I thought of moving away to a much less expensive place to live? Sure. But as my dh wisely points out we wouldn't be truly comfortable or happy there. One doesn't live in a vacuum so while time is a valuable commodity it isn't the only consideration.

I would love nothing more than to be wealthy enough financially (and healthy enough because that is a major major factor in anything regarding quality of life) that I could spend my days doing what I truly want (whether that would be spending time with loved ones, volunteering for animal causes etc) but since that isn't the case we must work. Would I quit it all, move somewhere where we could afford to retire (cause we certainly could do that...we have enough saved that if we were to move to a much less expensive city/state we could retire together) and enjoy nothing but time together? No way because I need other quality of life conditions. I need culture, people I love, a place where I fit in (mixed religion couple and lots of places do not like my religion or mixed couples) and generally a place I feel is a real home.

So it is a balance b/w the 2. Where that balance is depends on the person(s) but there is no black and white answer that applies to all.

Good for you lady disdain! I think it is awesome that you are living your dream!!

 

[iheartscience]

All of the information and advice seems completely sound. But it also takes all of the excitement out of life. I'd rather work for the next 35 years with diamonds on my fingers, a menagerie of expensive foster animals at home, and yearly international holidays.

I did some quick basic sums and we'd theoretically be able to pay off our house in about 5 years, and then 'retire' another 6ish years after that, so around 15 years earlier than 'normal.' But...to do what? No mobiles, no renovations, no internet, no cars, no diamonds, no holidays, no nice meals out. Doesn't sound like the kind of retirement I want to live.

I do find it interesting to see how far some people will take various aspects of their lives, from hypermiling to extreme couponers to people following advice on this blog re: cutting food budgets down to the point of recommending olive oil as a significant source of necessarily daily calories. Kenny's philosophy in action.

I couldn't agree more, plus I actually like having a job! When I was unemployed due to a move for my husband's job I was miserable, and that was only for 4 months! Turns out I actually like working a lot, provided it's interesting to me.

But I also don't typically get super stressed out about work, either. I have to be seriously slammed to start feeling stressed. (Which I am currently! But even still, I don't want to quit! ) I think some people tend to get very stressed out by their work and that bleeds into their home life.

ETA I read a few of the posts and I do really like the blog, though. I think a lot of the advice is great. I just wouldn't take it all the way like he did. But good for him!

 

[rubybeth]

Very interesting, I will save this for more reading later. I read one of his intro. posts where he mentions the things that a lot of people do but should stop doing in order to save more money, and DH and I are already doing a lot of that. We live on my income and save or pay off debt with DH's income. We are aggressively paying off student loan debt and will pay cash for DH's grad school tuition starting this fall. We live close to both of our jobs, paid cash for our cars, don't have cable, and I still have a cheap cell phone since I have a smartphone from work. This will give us some other ideas, though.

However, I am with others who have said they enjoy spending money on some things, because those things really do bring them joy. A colleague of mine suddenly died about 2 months ago, and it hit me really hard; she was around my age, doing a similar job, and didn't know she was sick until 5 days before she died. DH agreed that we are okay with being in debt a little bit longer in order to go on some trips we've been putting off, and I may just get my upgrade sooner rather than later. Life is short, and as DH and I say to each other when making some decisions, YOLO (you only live once).

 

[partgypsy]

I read personal finance blogs and found his blog a couple months ago. I agree with a lot of his views, and we do do a number of things he suggests (no cable, no iphone, lower housing costs than the average, and one car (supplemented by biking/walking). The main thing is that our family doesn't make the same kind of money as he and his wife do, so really we are doing all those things simply to pay the bills and to be able to retire at a normal retirement age with no frills, versus never being able to retire. We would have to be more hard core, and/or my husband or I need to bring in more income.
I am trying to have my husband read the blog, to get him "fired up". I feel like we've had some lifestyle creep as time goes on, we were better at saving and living on less when we were younger.

 

[rubybeth]

I read personal finance blogs and found his blog a couple months ago. I agree with a lot of his views, and we do do a number of things he suggests (no cable, no iphone, lower housing costs than the average, and one car (supplemented by biking/walking). The main thing is that our family doesn't make the same kind of money as he and his wife do, so really we are doing all those things simply to pay the bills and to be able to retire at a normal retirement age with no frills, versus never being able to retire. We would have to be more hard core, and/or my husband or I need to bring in more income.
I am trying to have my husband read the blog, to get him "fired up". I feel like we've had some lifestyle creep as time goes on, we were better at saving and living on less when we were younger.

I agree, he makes it sound really do-able for everyone, but for many people, it would necessitate working really, really hard--maybe 2 jobs for each spouse--to save as much as he and his wife were able to, and it would take many more years than it took them. As I mentioned in the college degree thread recently ([URL='https://www.pricescope.com/community/threads/iyo-what-college-degree-will-give-you.187020/']https://www.pricescope.com/community/threads/iyo-what-college-degree-will-give-you.187020/[/URL]), he got a very smart degree, a computer engineering degree (http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/). After only 3 years of working post-college, he moved to the US and got a job making $77k a year, and the next year, his future wife got a job making $44k a year, putting them at about $121k per year combined, which is a heck of a lot more than most people make in their early-mid 20s. They also had employer match funds for some of their accounts, so they were able to save even more. Just a year or two later, they made $160k combined. Then another 2 years later, they made $195k combined.

I had to spend about $25k in student loans and 3 years in grad school (library science) in order to make a starting salary similar to his wife's, and I'm the higher earner--DH makes enough to support himself, but not both of us, which is why he's starting grad school, as well (counseling), also to (we're hoping) make a salary similar to Mr. Money Mustache's wife's starting salary. Except I was 28 when I got my job, and DH will likely be 35 by the time he finishes school and gets his first job. My goal is to retire from full-time work by 55, another 23 years from now, which makes sense, because it takes DH and I about 3 years to earn what MMM and wife were making by year 6-7 in their 7 year journey (23 years / 3 = 7.5 years).

 

[MakingTheGrade]

Honestly I love my job, as of now I plan to retire when I die, lol so as long as I'm putting in the hours, might as well enjoy the monetary perks. I don't spend on clothes, purses, cars or make up. But I do love travel and shinies.

 

[rubybeth]

HopeDream, not sure if you are still around, but I just wanted to THANK YOU hugely for posting this link when you did. I'm now a huge fan of MMM and life is good.

 

[partgypsy]

It's funny I would think that Pricescope would be the last place to find pple who read MMM, but it seems there are quite a lot of admirers here! I guess it gets to prioritizing what you spend your money on, and forgoing the rest.

 

[MichelleCarmen]

All of the information and advice seems completely sound. But it also takes all of the excitement out of life. I'd rather work for the next 35 years with diamonds on my fingers, a menagerie of expensive foster animals at home, and yearly international holidays.

I did some quick basic sums and we'd theoretically be able to pay off our house in about 5 years, and then 'retire' another 6ish years after that, so around 15 years earlier than 'normal.' But...to do what? No mobiles, no renovations, no internet, no cars, no diamonds, no holidays, no nice meals out. Doesn't sound like the kind of retirement I want to live.

I do find it interesting to see how far some people will take various aspects of their lives, from hypermiling to extreme couponers to people following advice on this blog re: cutting food budgets down to the point of recommending olive oil as a significant source of necessarily daily calories. Kenny's philosophy in action.

I couldn't agree more, plus I actually like having a job! When I was unemployed due to a move for my husband's job I was miserable, and that was only for 4 months! Turns out I actually like working a lot, provided it's interesting to me.

But I also don't typically get super stressed out about work, either. I have to be seriously slammed to start feeling stressed. (Which I am currently! But even still, I don't want to quit! ) I think some people tend to get very stressed out by their work and that bleeds into their home life.

ETA I read a few of the posts and I do really like the blog, though. I think a lot of the advice is great. I just wouldn't take it all the way like he did. But good for him!

I like having a job, too! My current position is really stressful to me, though, so the idea of being financially independent and then finding a job that's enjoyable but not something I'm dependent upon would be a dream come true. I also commute almost 2 hours per day so my 40-45 hour a week job is more like 50-55 hours and leaves me exhausted and barely any recovery time on weekends or time to pursuit interests (am too tired to even read during the week!), so not an ideal situation...

Re: the groceries...I'm working on reducing grocery costs at home, so was eager to read that part of the blog...the olive oil as a food source concept left me scratching my head! lol I can totally go with eating more basamati rice and almonds...but relying on olive oil as food sounds like torture...I like to eat too much!

 

[diamondseeker2006]

I feel like we have lived fairly frugally, but definitely not to the extent he did. We have cable, iPhones, average grocery spending, no debt other than mortgages, pay cash for cars, etc. I worked on and off through the years and stopped a few years ago. My husband plans to retire in 2 1/2 years at 62. We could have a smaller house, never go on vacation, never buy jewelry, and gee, we could just die and never have any fun at all! Not to mention, we WANTED to be able to pay for braces for our kids as well as college so they will not graduate with debt, just like we didn't. We always lived off his income (and saved for retirement), and mine went partly to savings and partly to extras and a few luxuries. One of our best investments is part ownership (with friends) in a beach property, and that is a virtually free vacation a few weeks a year, aside from yearly taxes, insurance, etc.

I agree that money is not the most important thing in the world. However, I probably wouldn't want MMM's standard of living for the rest of my life, either!

 

[rubybeth]

I feel like we have lived fairly frugally, but definitely not to the extent he did. We have cable, iPhones, average grocery spending, no debt other than mortgages, pay cash for cars, etc. I worked on and off through the years and stopped a few years ago. My husband plans to retire in 2 1/2 years at 62. We could have a smaller house, never go on vacation, never buy jewelry, and gee, we could just die and never have any fun at all! Not to mention, we WANTED to be able to pay for braces for our kids as well as college so they will not graduate with debt, just like we didn't. We always lived off his income (and saved for retirement), and mine went partly to savings and partly to extras and a few luxuries. One of our best investments is part ownership (with friends) in a beach property, and that is a virtually free vacation a few weeks a year, aside from yearly taxes, insurance, etc.

I agree that money is not the most important thing in the world. However, I probably wouldn't want MMM's standard of living for the rest of my life, either!

Well, if you read the blog, you learn his standard of living is actually really high. They spend a lavish amount on groceries, just renovated a new house and sold their old one (downsized but the new house is laid out better and more energy efficient, but they don't have a mortgage), and have started partially homeschooling their son. They also travel regularly, have some nice things like good bikes and home gym equipment, but just don't care about the rest (cars, status symbols of any kind, etc.). I'm also guessing they are millionaires a couple times over, but he doesn't reveal exact numbers.

 

[Tacori E-ring]

Wow, they got lots of raises very quickly! That is NOT common in my field. In fact, I get a pathetic 3% raise, no bonus. I am in a low paying field (counseling) and knew that going into this line of work despite having a master's degree and dual licenses. I will probably never be able to retire also due to life circumstances. What I think it interesting in he doesn't seem to talk about taxes. If your salary is $50,000, you are only really bringing home $3,500 or so depending on where you live. So saving $25,000 would be challenging. Not impossible, but living on $17,000 a year...you have to do more than cut your cell phone bill. I don't know. Dual income, no childcare, obviously makes a huge difference. Plus his side work/rental income. Just not sure how realistic is it for the average person.

 

[smitcompton]

Hi,

I'm having some difficulty figuring out how he is doing this. Say, he is saving 140,000 per year minus taxes. In 10 yrs saving, he may reach 1 million. He invests in index funds. During the last seven yrs, he lost money, then may have gained it back. Dividends don't usually pay more than 2 and one half percent. So, that gets him 25,000 to live on. Where did he get the money for the high end paid up rental property? Does $3,000 sound right for a high end rental property. so he can add 36,000 to high 25,000 making 61,000 income?

He now must pay for medical insurance, real estate taxes and insurance, reg. fed income and state taxes , so that 61,000 is substantially reduced. He can live on it, but I still want him to tell me where he got the money to buy the high end real estate. Growth and dividend stocks don't usually go together. Dividend stocks are usually the safer stocks and not growth oriented.

I think if anyone wanted to try this, they should do it when they are young. I think you have more resilience and can be more goal oriented. There is one obstacle, besides debt, and that is you need a mate that will go along with this. its not a bad idea. Ok , who's going to be the first pricescoper to show us how its done.



Annette

 

[Jennifer W]

I suppose you can take the aspects of the techniques that work for you, and use them to the extent that they help with your own goals.

I personally relish being in my job, and enjoy being part of the workforce, and a member of my profession. I'm not in any rush to give that up, and I certainly don't want to retire early. I can retire from the age of 60, and that seems like absolutely the earliest I could even think about giving up my job. I'm 40 at the moment, and 60 suddenly doesn't seem all that far off, or anything like the advanced old age it looked like when I was 30... Not sure I'd be anything like ready to quit at that point, unless I achieve absolutely every career goal in the intervening 20 years. Well, you never know.

It's not like I live to work, far from it. But I don't just work to live, either.

 

[packrat]

We'd never be able to do this in a million years. You can't retire when both your incomes total 50k/year and you have 2 kids and a mortgage. We tried to be good when we first got married and we got kicked in the teeth so many times we quit bothering.

 

[rubybeth]

Wow, they got lots of raises very quickly! That is NOT common in my field. In fact, I get a pathetic 3% raise, no bonus. I am in a low paying field (counseling) and knew that going into this line of work despite having a master's degree and dual licenses. I will probably never be able to retire also due to life circumstances. What I think it interesting in he doesn't seem to talk about taxes. If your salary is $50,000, you are only really bringing home $3,500 or so depending on where you live. So saving $25,000 would be challenging. Not impossible, but living on $17,000 a year...you have to do more than cut your cell phone bill. I don't know. Dual income, no childcare, obviously makes a huge difference. Plus his side work/rental income. Just not sure how realistic is it for the average person.

It may not be realistic for everyone, but the point of the blog is to share how he did and how easy the math is to figure out how you could do similarly. DH and I don't have the income that he and his wife had, but we definitely don't plan to work until 65, either. As for taxes, there's lots of advice out there about tax optimization, but one of the biggest and easiest ways to save on taxes is to use the tax-free savings the US government provides workers--your 401k, HSA, IRA, etc. If you've got mortgage interest and a child or two, those are deductions, as is student loan interest, tuition, etc. I doubt that MMM ever paid more than 10% effective tax rate.

Hi,
I'm having some difficulty figuring out how he is doing this. Say, he is saving 140,000 per year minus taxes. In 10 yrs saving, he may reach 1 million. He invests in index funds. During the last seven yrs, he lost money, then may have gained it back. Dividends don't usually pay more than 2 and one half percent. So, that gets him 25,000 to live on. Where did he get the money for the high end paid up rental property? Does $3,000 sound right for a high end rental property. so he can add 36,000 to high 25,000 making 61,000 income?

He literally lays out all of the math in one blog post, he never saved more than a million: http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/ And a post on their spending from 2014 (he does annual posts on their spending): http://www.mrmoneymustache.com/2015/01/16/exposed-the-mmm-familys-2014-spending/ and how to make money in the stock market: http://www.mrmoneymustache.com/2011/05/18/how-to-make-money-in-the-stock-market/

Also, he has a post where he uses two more average salaries to demonstrate the same thing: http://www.mrmoneymustache.com/2011/09/17/the-race-to-retirement-revisited/

And my favorite post, The Shockingly Simple Math Behind Early Retirement: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/