125 comments

The Real Benefit of Being Rich

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 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?

  • Mandy April 29, 2019, 7:29 pm

    I am recently finding my joy in discovering how long something I purchased has lasted… For example, I found myself appreciating my jeans this morning… jeans I bought ten years ago that I wear every week (they are well made, saved me a fortune in clothing costs, and make my clothing choice easy every day… “What am I wearing today?” “Jeans!”) I found myself having a major ah-ha joyful moment… what else have I purchased that has made my life easier, lasted this long, saved me this amount? It’s a new standard for future purchases! Having jeans that have lasted this long makes me feel like I hacked the matrix or something!

    Reply
  • Trip Seibold April 30, 2019, 6:23 am

    Since you began blogging, do you feel the needle has moved in terms of how Americans view being rich? If so, does the change trace back to your blogging?

    I like how you setup the importance of perspective to deliver the powerful last 6 paragraphs. I’ve always felt that the best thing money can buy is the freedom from having to worry about money. I’ve often puzzled over how other individuals view money as power or something else, because those concepts are so foreign to me.

    Reply
  • Ms Blaise May 1, 2019, 3:20 am

    This is one of the classic MMM posts.
    As I walked to work this morning in the clear autumn sun, for one of the two days I work a week, I realised I was rich beyond compare. If I did nothing else frugal for the rest of my life, I’d still be in the top 15%, by accident of birth into a peaceful, western democracy ( with ‘socialist” universal health care and benefits for those in need or solo parenting etc). I honestly can’t think of a single “need” that isn’t met. So much abundance. So many things to do that delight me.

    Reply
  • Kpeds May 2, 2019, 2:23 am

    My wife and I are buying our first house and I think about the balance between consumption and happiness a lot. Where do we buy a house? How much do we spend? is our house buying decision infIating our lifestyles too much and limiting what we can do? Can’t we find enough with less?

    Been having trouble sleeping thinking about all these things!

    Reply
    • David May 2, 2019, 5:50 am

      Buy close to work (biking or even walking distance). You will not regret.

      Reply
      • Kpeds May 3, 2019, 2:07 pm

        When we were in the big city I road to work every day. It was great. Unfortunately, that looks like it won’t happen this time around. Instead of going straight to work, I may start driving to a parking lot a few miles from the job and ride from there!

        Reply
  • robert May 2, 2019, 12:30 pm

    So what about the bills that charge an extra fee for paying with credit card? I hate paying that on principle. I figure I get about a 2% benefit from using my credit card so anybody that charges a higher fee than that I still pay manually.

    Reply
    • Amanda May 6, 2019, 10:52 pm

      You might be able to pay those via automatic bank transfer – no CC benefit, but still automatic.

      We’ve always been able to do all our bills via CC or bank transfer except our housing – those could still be electronic, but had to be manually done, which is fine for us (we like seeing our CC statements and our housing payments).

      Reply
  • Kevin May 2, 2019, 1:04 pm

    Sam’s Club?!? What are you, a fascist!?! :-D
    Lol, I kid. What happened to Costco?

    Reply
    • Marcia May 2, 2019, 1:48 pm

      Probably doesn’t live within biking distance of Costco anymore.

      Reply
  • Marcia May 2, 2019, 1:46 pm

    Yup yup. The benefits that I’m seeing, as I drive my 13 year old car (that looks a little worse for wear), wearing my old running shoes, free faded work polo shirt, and blue jeans to work:

    – Property taxes, whatever
    – Oh crap, trip and fall on a trail, have to be carried out … $5000 of bills, all but $500 covered by insurance, meh.
    – Ear infection for the little one, $184 later (we have difference insurance). Ok, we need it.
    – Last orchestra performance for the 13 yo and those damn dress shoes are too small! We can find a pair last minute.
    – Oh, our company is running out of money again (I’m probably the only person who would welcome a few months off, to be honest!)

    It’s a good place to be.

    Reply
  • Catie May 2, 2019, 2:15 pm

    So very true: happiness is found within! No matter how much stuff you have, if you’re not finding enjoyment in the little everyday gems in your life, we’ll itll be a long life.

    And there are so many amazing things to do in Colorado that are free…it’s hard not to feel rich living here!

    Cheers Pete!

    Reply
  • gary fischer May 2, 2019, 2:27 pm

    “sucked out of my credit card” – not quite – that spending is plopped onto your credit card and subsequently sucked out of your bank account. No doubt MMM is maximizing his credit card amenities by also gaining cash back or travel points or some other benefit. I use this approach too, and it has an additional hidden benefit – limits who and how your bank account can be accessed. I only go to my mailbox once or twice a week because years ago, I opted out of everything. One the rare occasion that any unsolicited direct mail lands in my mailbox, I contact the offender, ask them to permanently remove my names & address from ALL of their databases & contact lists, and opt out. One of my neighbors got a new job and without my permission, submitted my name & address to her new employer. Ugh. I put a stop to that right after her intro letter landed in my mailbox. If I could pay my property taxes with a credit card, I could earn a lot more hotel points :)

    Reply
  • Johnny B May 2, 2019, 3:22 pm

    My 2¢ on cutring your neck line: use the two mirror method and your non-dominant hand. For some reason, my left hand handles the mixed up signals from my brain and the double mirror setup better than my right.

    Reply
  • Matthew Watt May 3, 2019, 4:05 pm

    I cannot wait for that point in my life when I no longer have to manually track and pay my expenses but can set them on autopilot. It took me a year to pay off my $27K of debt. That one small step to financial independence completely changed my mindset. I no longer worry about my job security. And that lack of worry translated into the confidence I needed to take more calculated risks, which has in turn led to larger bonuses and better opportunities for career advancement. Everyone is on the path to financial independence, just depends on how quickly you want to get there. For my own sanity, it’s as quickly as possible. Appreciate everything you do!

    Reply
  • Lou May 4, 2019, 12:06 pm

    Great post. After I read it I realized I’ve been treading towards over spending on things that provide little value to my baseline happiness.

    Reply
  • Dharma Bum May 4, 2019, 3:40 pm

    I’ve been cutting my own hair for years now. Unfortunately, I have more bald spot than hair, so it’s pretty easy.
    It also started growing super slowly around 15 years ago, so it’s an occasional task, at best.
    I haven’t spent a dime on a haircut since I don’t know when.
    Yet, I am still stunningly and remarkably handsome, and the envy of lesser men everywhere!
    Or not.

    Reply
  • Dwiebe May 6, 2019, 9:02 am

    Hello mr mm
    I must say this is an amazing blog! I felt like responding to just about every article! I am a full time single dad raising my 7 kids on my own for last 5 years ! So I understand the article about divorce. I went from debt free and 60000$ in savings , to nothing in savings and 80000$ debt 😬 I’m a freelance welding contractor, and just recently got an amazing contract for industrial welding. I should probably ask for a case study in the forum some time. I am tracking all my spending with an app now. And those great big teen boys of mine are eating me out of house and home! 900$ per month groceries! Thanks to my mechanical and welding skills, I can keep older vehicles on the road. And my hobby of working on old cars is saving them from the scrapyard! Just google rat rod if you want an idea of my latest creation
    I’m optimistic if the work keeps coming and I grow my stash handle bar style, I will be fi in 2 years!

    Reply
  • Steve May 8, 2019, 8:39 am

    Hi MMM and all MMMers.
    I have been reading your blogs and people’s replies for a while now. It is very insightful. Although not as much as I want to, I have been frugal saving for a no worry life. Now I am at a junction — I am maybe to be laid off and wondering if this is a blessing in disguise. Here are my #s.
    401k ~ 235k
    other before tax contributions ~ 16k
    mutual funds and ETFs ~ 72k
    roth IRA ~ 11k
    529 for my 2yr old ~ 11k
    Saving acc. ~ 40k
    Home value ~ 260k (128k left on loan. Bought it for 170k and made ~30k on repairs the last 7 yrs.)

    –Monthly Payments
    Mortgage + insurance + tax ~ 1300
    Utilities + car insurance ~ 450
    Car payment = 510 (I know this is a travesty. After driving ford expedition 97 for 10+ yrs, and near accidents with baby on board I made an emotional decision to buy an outback 2018 with highest safety rating at the time. Driving 17miles for at 30 to 45min and the absurdity of DFW area drivers with 70% of them driving F150 are my justifications.)

    Finally here is the rumor at work. Those who are going to be laid off will let go with a severance package of near 150k (includes health care cost + full vesting of LTIPs). Now if I get this kind of ushering from work, do you think there is a chance for a “retirement” with some level of confidence?
    Other factor that influence are: 1. We are single income family, 2. We are pregnant and due in Sept., 3. I don’t have a hobby that can turn into a source of income in the near future, 4. I am not thrilled about my career choice for the last 8+years and the stress it entailed; good money though.
    I appreciate all your advises and pointers.
    Thank you

    Reply
  • Kyle May 9, 2019, 7:06 am

    Question for the MM Community:

    I’m selling a rental property (a property I lived in for five years and when I moved out, I turned it into a rental). I will be receiving a modest amount of cash from the sale of around $100K (plus or minus). The overall ownership of this property feels like a mistake, as I’m selling it only 6% higher than what I paid in 2012 (after fees, I lose money).

    Long story short, with the equity market sitting at peak, record levels, what would the MM community recommend I do with the cash? I have no other debt other than my primary residence. I’m leaning toward closing my eyes and buying index funds at peak levels…

    Thanks!

    Reply
    • Igor August 15, 2019, 10:35 am

      Hi Kyle! Let that 100k sit in cash for a year or two. Hate to be pessimistic but another crash is close by (even Warren Buffet is holding a max amount of cash at the moment) and when the market crashes, then you invest (and will get more then double worth for your money). I guess high interest savings account is ok, perhaps in more than one bank if they were to go out of business. Wait it out a bit

      Reply
  • Steve May 13, 2019, 8:39 am

    That’s fascinating to me the post started with the automated bill paying as starting this year I set up what I considered the last step of this. Every month I have a monthly payment moved from my Vanguard investment acct MM to my checking based upon my intended SWR. I’m still consulting and making enough right now to cover my expenses, but having this variable paycheck deposited directly into my investment accounts and having my SWR “paycheck” being what goes into my checking account monthly for me to live off of was the step that made me finally “feel” FI.

    Reply
  • jgh May 13, 2019, 7:30 pm

    Direct Debits (autopay) are better than sliced bread. Everything runs on computers nowadays, the bank is playing with my money when I’m not using it, why shouldn’t they make my bill payments automatically for me? Every year or so I get a nice letter from my utilites telling me they’re paying me a early payment and loyal customer bonus. One year *they* *paid* *me* to use their electricity.

    Reply
  • Dicey May 29, 2019, 8:25 am

    Steve and Kyle – I don’t know if you’ll see this, but the MMM Forum is a great place to get feedback from other mustachians. Lots of pre- and post-FIRE folks hang out there, helping each other reach our goals. You can start an actual case study, plug in your numbers, tell as much of your story as you choose to, and the suggestions and support will pour in. It’s like magic!

    Reply
  • Mark D Thomassen June 21, 2019, 7:09 pm

    I fn love your random thoughts MMM. I have had similar thoughts about how life’s simple joys, like just having ice and clean water coming out of my fridge makes me feel totally spoiled and insanely wealthy. Not having ants in my house, or being able to open my pantry and finding food there that in my past would have been taken by a selfish sibling or cuniving roommate who pretended it was theirs.

    Please hit me up if you ever drive through St. George, UT on your way West. I would like to sit in my driveway, talk about the perils of trying to parent well, and share a budget but tasty beer from my garage mini-fridge that I would have killed-for in college.

    💪 MT

    Reply
  • BC Kowalski June 22, 2019, 11:16 am

    Oh cool, I used to play the standup bass too! Played electric bass in bands in high school and my early 20s and now I mostly play guitar. But upright bass is super fun!

    And self-haircut – I wish people knew how easy this really is, and that no one can tell. Seriously. For me it’s less about the money and more about the pain in the butt of making an appointment, sitting through annoying small talk while someone has sharp scissors pointed at your head, and getting a hair cut I usually hate. I’ve been cutting my own hair for a few years now and on occasion when I tell them, they’re shocked. Their next step is to take a really close look at my head to see if they can tell. My technique is to use an old Wahl shaver (they made em tough back in the day) and shave the sides and back, then take a scissors and cut the corners (the hair immediately above the shaved sides) and trim a little off the top. The David Schwimmer hair cut for free! (Note: I’m indifferent toward David but thought it a useful way to describe the hair style lol)

    Reply
  • Lola August 5, 2019, 4:41 am

    ‘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.’

    Amen to this! Mindfulness in spending is what I’ve been working on in the last couple of years inspired by MMM and other FIRE bloggers. Nowhere near the required saving level but I know what we are spending and we did triple the saving rate. It won’t allow me to retire in the nearest future but it already gave me a sense of financial freedom and enabled me to finally! quit my corporate job. Every day is pure joy, free activities turned out to be as much or more fun as expensive do-like-others leisure pursuits and I just love this summer of simple joy and freedom. Next is getting rid of the mortgage by moving to a cheaper place which will enable me to finally do the work that I love and that matters. Thank you, MMM and all readers/ commentators, for inspiration!

    Reply

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