Meet Mr. Money Mustache
“What do you mean you retired at 30?”
This is a blog about money. We’re going to cover a lot of ground and make plenty of amusing side trips into lifestyle and culture issues, but when it boils down to it, we are talking about money, and the freedom it can give you. Freedom from worry, and freedom from most forms of bullshit. And the best way to illustrate such freedom is to have an opinionated but wise role model guide you through your daily life from this point onwards. That role model is ME, Mr. Money Mustache.
I’m going to teach you a radical new way to think about and enjoy money that will get you off of your current debt-powered treadmill and into a lifestyle that is completely unimaginable to most people where I live, which happens to be in the United States, ground zero for self-imposed treadmills.
Once you are off the mill, you’ll feel like Neo did when he unplugged the suction cups from his pale naked body in The Matrix and looked around at the other imprisoned humans. “Holy Shit!”, you will say. “I’ve been living in this ridiculous slave world and never noticed.. and everyone else still is! WAKE UP DRONE PEOPLE!!!“. You will suddenly be able to fly freely through the world, free from having to work for a living, able to start living life as you choose, doing exotic things like spending time raising your young children, taking a 3-week vacation each month, or just enjoying understated shows of leisure like sweeping your driveway in pajamas at 11am on a sunny Thursday morning.
Let’s talk about YOU first. If you are one of the 99% of working people I hear and read about every day, you are in a bad place right now. Young folks today seem to live somewhere on a Spectrum of Financial Idiocy.
” I am…
- Retired, and my money situation is perfect
- Still working, saving max in 401k, no loans on cars or credit cards, paying regular mortgage payments
- Same as above but add one or more car loans
- Same as above but not quite able to max out 401k plans due to life’s little expenses
- Same as above but have a few credit cards that I’m making payments on
- Can’t always make all my payments, got some bad marks on my credit score.. I’d be screwed if I lose my job now
- Everything has collapsed – losing my house and possessions, can’t find work, debt is more than I can pay off in a lifetime, why is the world so cruel to me!?
So your goal is to move up this spectrum. Everyone can do it. But most people think they can’t because they’re still stuck in the Matrix. They blame “the economy” or other bullshit external factors, when really the only problem is they aren’t listening hard enough to Mr. Money Mustache. Become a regular reader of this blog and you’ll move up fast. See you at #1.
Mr. Money Mustache needs your help! If you click on any of the social networking connections below, or share MMM with a friend in any way, it will start a chain reaction of fun and wealth across the world. Many thanks for reading!
Hey Mister MM,Turned on to your site through EER.at 0300am this mourning an like what Im reading,will be stoping by every day,Im a over the road trucker that’s living in my truck by choice,no bill’s saving ton’s of money;just invested 10 grand in vanguard 500 index,hope I made right choice,27 thousand in e.fund,10% of pay to 401k,just drped from 20% 10 grand in it,should I drp.even more an invest the difference myself?45 years old,would like to have enough saves an out of this ratrace by 50,any ideas? thx.
Hi Scott, thanks for the comment. Sounds like you are on a great road already, saving so much.
If you’re only 5 years away from a nice early retirement, you might want to keep at least some of your money in non-stock investments, since while the stock market has provided great returns over the long run, you never know when it will turn around and give you the shaft with a short-term crash or a 10-year period of moving sideways, like we’ve just experienced. Like bond funds, or a mixed stock-bond fund such as Vanguard’s VBINX. That way, your plan at retirement will be to cash out just a year or less worth of living expenses at a time, and leave the rest invested to compound.
Another good strategy that protects you against an unpredictable market is this: leaving the door open to more work in the future if you need it. If your investments do well, fine, no need to do extra work. If there is a bear market and you don’t want to sell stocks while they’re low, go a bit frugal for the year and take on a little side work to boost income temporarily. Of course, if you have enough of a safety margin you have saved up in advance, you can guarantee that you never have to work, but I like to feel empowered by working occasionally even if I don’t need the money.
Good idea’s MMM,going to read your post on the stockmarket now,an take your advice,Thankyou for your repley.
Oh gawd I spelled reply wrong,sorry,well after reading your post on the Market guess the 500 index was a good choice,made $23.81 on it in two day;s,yepee..
So I’ve been a 2 on your scale for the last several years but now I’m headed to a top business school with a big six-figure price tag. I’ll drop at least one rung because I won’t be working full time any more but I’m trying to minimize slippage and graduate without debt. Cool stuff, I love your writing style and funny pictures. GW would have been a lot cooler had he sported a ‘stache.
I guess I’m at a 2, heading towards a 1.5 (no mortgage) within the next year and a bit, then aiming for a 1. Nice way to set out the progression!
There’s a big hole between 1 and 2 – being debt and mortgage-free is still a long way from being retired!
I guess there could be a few years between those two steps. But not for me – I retired BEFORE finishing paying off my mortgage. Finally got around to that last step earlier this month ;-)
Great site Mr Mustache…I suppose we’re at #2 and working to get to #1 ;)
2 – except … after some quick calculations at below market returns for indexes, etc, I am contributing not the max to my 401k. I AM contributing to get my full match, and I am contributing more than 16500 to retirement total, but if I want to retire early I need to access my money before my 401k timer goes off.
Yeah, great point – if your 401K is already conservatively projected to be more than you’ll need from age 59.5 onwards (which happens pretty early for savers who start in their 20s or early 30s), you can slow or stop your contributions to that and work on the Early Retirement fund instead. I need to do an article called “Are you contributing too much to your 401(k)?”
You can always roll over you 401k to an IRA and convert to a roth IRA at which point it’s easy to withdraw after 5 years. Similarly you can contribute to a roth 401k instead of a traditional 401k if your workplace offers it.
Good point! You can withdraw principal only from a Roth Ira with no penalty after it has been open 5 years. However, at what point do you pay income tax on the 401k when converting it to Roth?
You’d pay income tax in the year you convert from a traditional rollover IRA to a Roth IRA. So ideally this would be after you’d retired since your income, and thus the taxes you would pay, would be lower.
You’d probably convert about a year’s worth of expenses (after tax) each year for several years to minimize the tax penalties and to line up income for five years down the road.
I’m at 4, quite a way to go to get to #1 but I am only 26 so middle sounds fine for me, But I have no car loans just student loans.
I really like your vision of working outside in pajamas at 11AM on a Thursday.
When I recently switched jobs I took a month and a half off to relax and practice my early retirement. I loved going out and doing exactly that, and I’d see guys come home for lunch and just look at me thinking “poor guy, he must have been laid off – but WHY is he smiling?!?”
I also loved going to the park with my kids for hours during the day, and getting the same looks and questions from all the stay at home moms.
we’re between 5 & 6. i managed to find a job after 5 months being unemployed. (i wasn’t even “on unemployment” because i’ve only had intermittent jobs, and they needed to do research. got the job a week before i was approved for unemployment compensation.
we have a ridiculous amount of debt ($70,000 on credit cards alone, and more on student loans) that last month before i was hired, we almost didn’t make our mortgage, but we sold as many savings bonds as we could find (husband was buying them a few years ago because his work encouraged him to buy them, and he didn’t realise they made no sense to someone with so much debt to hold on to something with such a small APR when credit cards are 1000%+ higher)
so other than that one close call with the mortgage, we’ve managed to make the payments (but i don’t think my husband is paying all that much into his 401k. i could be mistaken, but doesn’t it not make much sense to put away for retirement when the money could be better put toward reducing the credit card debt?)
i knew i didn’t want to commute very far (and that was one of the factors that caused me to take so long in finding a job.) i commute 3 miles each way 4 days a week for a 5-hour a day job. not too shabby, eh? :-) (back in 2007, i was commuting via train for 1.5 hours round-trip to a job that paid slightly less, and was a 4-hour a day shift. i definitely moved up in all aspects with this new gig. saving myself an entire day of commuting/working, staying in the same state. now i just need to condition myself to be able to bike 6 miles a day in slightly hilly terrain, and i’ll be set.)
i’m definitely going to subscribe. thanks!
How refreshing! There’s more of us early retirees out there than one might imagine. I checked out of the rat race at 33. My parents warned me that biking and skiing all the time might get boring but so far, so good. LOL’ed at the “sweeping your driveway in pajamas at 11am on a sunny Thursday morning” vignette
I’m @ 7. Yay me.
#6 for me. cruising along with a wife and young kid. perpetually worried about losing the unsatisfying yet well-paying job. not whining, just sayin’.
Use to be around #2, but now I’m off the scale. No debt/mortgage payments, money in the bank, no job (by choice). Cheap person all around, works at best a few months a year and travels the rest in low cost of living countries. And happy.
27 years old.
Thanks for posting your monetary underwear out in the sphere. I appreciate your candor and love your speech.
I’m not where I want to be, and I’ve made a lot of mistakes along the way. I love that you have a lot of money but it appears? not a lot of stuff? I want to declutter/refresh and hit renew.
New year, new possibilities. Not the same ole me, just a me that’s learning and growing.
Thanks for your voice.
Carri
Just found your blog today and it’s been like discovering I’m not the last member of an unknown tribe. I’m at #2 on your scale, and have had desires to get to #1, but as you said, not a lot of people share that view. I also share your view that humans had much more varied lives in the past and our programmed lives now are not normal to us. In my line of work, I sometimes spend long amounts of time in very remote places, where I am essentially “self employed.” Like you, I find that I work hard, sometimes with very odd hours, but overall it’s extremely satisfying. Now I just need to get to #1 and enjoy that all the time. Not so easy with a wife and three growing kids, but I’m hoping to pick up some more pointers from your site. Thanks for your efforts.
I’m sort of a wierd mix of a number 2 and number 5. i’m self employed as a fine artist, so i love what i do and will never completely retire. i make abou 45-50k a year. truck’s paid off as are ol student loans.
my Bf of 17 years and I just paid off our house in Sept.(16 years early).
I seem to need to keep one credit card for the irregular income/biz expenses that come up. but no other debt. we don’t have kids and travel 4 weeks out of the year. i have a sep ira, that i rolled from a 401k from my last job 8 years ago, but can’t seem to have enough cash flow to add more to it. it weathered the storm and has increased a wee bit. any advice?
Thank you so much for doing this blog. I am a teacher and totally at a loss with everything. I thought that working so hard for my education would benefit me. Instead I feel stuck like a slave. I love my job and have lots of time off but I want to be like you. I am going to try all these things. I have had to file for b/k this year so I can only go up. Right???? We don’t know what to do with our house that we can’t afford. I guess our last stop will be to foreclosure and then to a rental to save money. I hope the best for you. Thanks for giving me something to look forward to….retirement. At this point I never thought I would ever be able to say that I could retire someday before I am 80!!! ;)