Mr. Money Mustache » Getting Started Early Retirement through Badassity Mon, 27 Apr 2015 22:45:46 +0000 en-US hourly 1 Frugality: the New Fanciness Wed, 07 Mar 2012 12:46:46 +0000 My homemade "construction radio". Booming bass, workplace toughness, extra plugs, 25 foot cord. Made almost entirely of stuff I got for free.

My homemade “construction radio”. Booming bass, workplace toughness, extra plugs, 25 foot cord. Made almost entirely of stuff I got for free. Bonus: people tend to get a good laugh out of it.

I grew up in a pretty low-key family, financially speaking. We always had plenty of money for groceries and my parents never went into debt, but if you were one of the Joneses* living down the street from us, you’d be hard-pressed to notice any flashy spending.

This upbringing occurred in a pretty small town (we only got our second stoplight around the time I reached high school), and there wasn’t a lot of wealth to be flaunted around there. The closest thing to riches was a hot girl in my class named Kim who got to drive her parents’ brand new 1992 Mercury Cougar to high school every day.

This town was located in another country, the one called “Canada”, and we were known at the time for being less wealthy and flashy than our neighbours to the South. Hearty dudes with big beards and plaid shirts were our iconography, even if my own area was a bit more clean-shaven.

And finally, all of this happened over twenty years ago, at a time when all of us had simpler and less flashy lives. The very first cell phones – the ones that were tethered with a coiled cord to a base unit as big as a car battery – were only things to ogle curiously and were priced at $1999 on the last page of the Radio Shack catalog.

Even in university I was barely aware of wealth. We Engineers are notorious for our lack of cash-flaunting (and status-detecting) skills, so I thought of all of us as equals. There were a few rare kids that had expensive mountain bikes or laptop computers at the time, but for the most part, we all paid our own tuition and lived in cheap basement apartments.

So for most of my early life, I wasn’t even aware that money was something that could be flaunted to others. I thought it was a tool for buying your groceries, or if your parents really did well, a back yard swimming pool.

I think I experienced my first flaunting experience just after I had graduated and started working full-time in the software field. Some friends and I went on a summer trip to “Sherkston Beach”, a low-budget Canadian version of what they call “Spring Break” here in the US.

Beers in hand, we walked along the shore to join the party. I noticed that a long line of very clean and shiny cars had been parked along the strip, and each was playing some sort of boo-tss-boo-tsss dancy music from an upgraded stereo system. The owners of the cars, invariably tanned and bare chested dudes with expensive sunglasses, frosted hair tips and their little muscles carefully flexed, were busily walking around their cars, tending to this or that, setting up beer coolers or polishing volleyballs or otherwise keeping themselves busy.

“What is going on here?”, I wondered at first. “Why are their cars so clean? Why are they so well-groomed on a camping trip?.

“Oh… I think I get it … they are attempting to show off their wealth for the benefit of all the fine ladies around here.”

The whole scene seemed a bit amusing and evolution-driven, like the complex bird mating dances in Madagascar that David Attenborough likes to teach you about:

At the time, I was working in my first engineering job so I was probably making more money than any of the dancing bird boys. I even had a nicer car, since I had not yet learned of the folly of this type of purchase. I remember my car, dusty and parked over next to my tent, getting a bit of positive attention from the ladies… and I admit it felt pretty nice at the time.

When I got older and moved to the US of A, however, everything stepped up a few notches. I saw parking lots just casually filled with cars fancier than anything I had seen in my entire childhood. I learned about neighborhoods where people talk about each other’s wealth, and even enforce gardening and house painting standards upon each other to “preserve their property values”.  I heard about “Golf Club Memberships”, a bizarre concept where you pay thousands of dollars in advance, for the privilege of paying hundreds of additional dollars each time you play golf at certain courses. And I learned that people consider it prestigious to spend money on these expensive things, even while they consider it a hardship to lead a life that does not include the expensive things.

When newcomers stumble across the Mr. Money Mustache blog, they are immediately excited by the idea of early retirement and a lifetime of freedom. But then they are immediately dismayed when they realize that to earn this freedom, they will need to spend much less money than they earn, for several years.

“Damn!”, they say. “I want the reward, but I really don’t want that hardship and struggle that it takes to get there. I will be viewed as a lesser person among my peers if I dare to embrace such frugality!”

Well guess what? You can now drop your fears of looking like a loser, because things have changed. If you haven’t heard the word, here it is: Frugality is the New Fanciness.

Let me explain, for those still not convinced.

In the olden days, times were much tougher. Most of us struggled to keep food on the table and to keep the water from leaking through our roofs. The economic system was simple, based on slips of paper in bank vaults and file folders, and gold coins. The credit system was in its infancy so the average Joe couldn’t just go out and borrow money to buy whatever he wanted.

In these conditions, it took real skill to get ahead. A man had to really master the system to pull himself up out of poverty. This meant mastering financial concepts, understanding the emotions of fellow humans in order to rise into a position of leadership, and even conquering his own fear and lethargy to avoid the temptation to sit at home and do nothing all day.

Only after mastering these tasks, could someone start a successful business or earn a promotion to the top of an existing one, and only at that point would he have enough cash to buy a flashy house, or expensive artwork, or jewelry, or whatever else the status symbols of the day were.

So when the successful olden-days businessman walked down the street with these trappings of success, it could reasonably be deduced that he was actually somewhat badass. Of course, if he later passed on his wealth to children who would then flaunt the wealth without having earned it, he’d be watering down his own badassity. But for a moment, let’s suppose that a good chunk of the wealth in early 20th century America was self-made. Because of this, showing your wealth was a sign of status, as it was proof that you had taken a more difficult path and succeeded.

Now let’s fast forward to the present day. Everything is fucking amazing – we all have touchscreen computers in our pockets that can listen to our voices and speak back, while accessing the sum total of humanity’s knowledge instantaneously through invisible radio waves. We have cars that can shoot us across the country in climate-controlled comfort, yet they’re cheap enough for teenagers to buy them on minimum wage. And most significantly, credit is so widely available that anyone with a heartbeat can sign up for tens of thousands of dollars in debt. You can buy anything you want, even if you have no money at all. People buy houses with an 80% mortgage, and then get a second mortgage for the other 20%, and cars are bought with zero dollars down as well. And almost every single person does this.

In this environment, the easy path is to do what everyone else is doing. You see an ad for the iPad, or the Chevrolet Traverse, and you are excited by the power and the sleekness. You’ve got no money, but thanks to the advertising and peer pressure you’ve got plenty of desire. So you swipe a card or sign some paperwork, and now you too have the fancy stuff.

Everyone likes going out for sushi on Friday nights, and buying a few bottles of Kirian and Sake to go with it. They laugh and have a grand old time. They’re not worried about the fact that they don’t own their own houses and even their cars are borrowed. “This is socialization, it’s important!”, they rationalize. “And besides, sushi is extremely yummy!”. You too want to participate. You drive yourself to the restaurant in your own borrowed car and live “the good life”.

It can be pleasant to indulge in these things, and it sure is easy. But there’s another path available: the more difficult one.

Certain rare people live in the same society, and work the same jobs as the folks described above. But they’re a little bit better at math, and they can think a little bit further into the future. They see that money is useful for spending, but even more useful as a tool for earning more money. So they train themselves to master finance, and hard work, and self discipline. And they figure out how to have just as much fun as the big spenders, while being sure to do it in a way that allows them to save at least 50-75% of their income.  It has already been proven that these people can meet or exceed the happiness levels of the more spendy group. The only difference is that they are able to spend less.

To top it all off, research comes in that the spenders are in fact consuming too much of the world’s resources. Oil reserves, Ice caps, and Ecosystems are taking a huge hit. The spenders refuse to believe this, latching on to any information that justifies the continuance of their lifestyles. The companies that provide their consumables are only too happy to furnish this information. Only those with the ability to understand scientific research are able to see through the haze.

In this situation, which group is more badass, more skilled, and thus more worthy of social status? The spenders, or the savers?

See? Frugality is, quite obviously, the new Fanciness. The only reason to maintain a non-frugal lifestyle in the face of all this evidence, is if you’re too stubborn and stupid to accept it. Will you continue to fight against frugality, to show the world how stubborn and stupid you are? Or will you wise the hell right up right now and start showing your better side?

The only thing that has been missing for the rich world’s Fancy Frugal people, has been a support community. When you’re smarter than 99% of your neighbors in a way that intimidates them, you’ll tend to run short on people to invite to your weekly poker nights.

But now the times are ‘a’ changin’. The Mustachian Nation has been born. Look around at the comments on these articles and in the Forum. These are real people, tens of thousands of them, who have collected here on a less-than-one-year-old website that does no advertising or promotion. These people were already out there, and they are growing in number every day as more people see the light.

A great thing about frugality is that it still allows you to show off in a hilarious and social way. In the olden days, the executives at the golf resort felt camaraderie as they showed off their Rolexes and BMWs and thousand-dollar titanium drivers.  It wasn’t the actual nature of these products that made the situation fun, it was the fact that they felt close to each other as they joked about their latest purchases.

When Mustachians gather, they show off the way they have modified their 30-year-old work trucks to work harder than brand new ones while burning less fuel. They bring their home-made radios to the campsite and share tales and tips of how it was made using entirely leftover materials. They discuss strategies on how to feed a family with peak nutrition and deliciousness, for less than $1 per person per meal. And unlike those who compete to consume more, these people actually have something to be proud of – they are blazing the necessary path towards a sustainable life for everyone. Eventually, all humans will have to learn to live on what the planet can regenerate each year. When you use more than that, you’re stealing resources from your own kids, and from the rest of the people you share the globe with. You don’t have to feel guilty about this.. you just have to feel good when you stop doing it.

This appreciation for our badassity is still rare, but it’s growing. If you adopt a frugal lifestyle, you may occasionally have to endure some misguided shit from clueless consumers around you. I took lots of it from the MSN readers back in January, although nobody has hassled me in real life so far. But you will also find you start getting some envying looks and respect from other people for your frugality skills.  Eventually, just like the BMW-financing 21-year-old gets respect at Spring Break today, you will in due time become a hero in your own community for doing what’s right.

But ironically, the same skills that will get you there, mean that you won’t give a shit what they are thinking.

Onwards, my Fancy Frugal Friends!!

Shit!  I just realized, one day after writing this article, that I had been planning for months to include a reference to this article by A.J. Kessler. Just to try to embarrass him, because he dares to mock both my shopping habits, and my writing style in this blog’s very first post. He and I became friendly frugality arch-rivals after somebody forwarded me his post months ago. So even though I missed my big chance, please click on that link so he’ll see the flurry of visitors and know we are talking about him.

*we really did live two doors down from the Jones family. But they didn’t buy much of anything either.

Further reading on the current trend of misguided spending as a silly social cue:


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Muscle Over Motor Mon, 05 Dec 2011 13:20:40 +0000 lowes-mowes

It’s definitely late fall here in Colorado, and the trees have dumped most of their leaves onto the ground. In my neighborhood, this invariably triggers a flurry of lawn contractor activity. A pickup truck pulling a long trailer full of equipment pulls up, a fleet of young guys gets out and each picks up a leafblower, then for the next hour they blow leaves and gasoline fumes back and forth at each other while the surrounding square mile of city becomes a toxic and ear-splitting war zone. Eventually they manage to get a portion of the leaves into plastic bags in their trailer and they motor off.

Just a few days ago, there was yet another snowstorm here, dropping four inches of luxurious fluffy powder onto the newly blown lawns. I was enjoying a quick bike riding errand through the stuff when I encountered another one of my fellow Longmontians clearing the light powder from his short sidewalk with a SNOWBLOWER! Like 99% of the snowfalls in this region, this was a quantity of snow that could have been easily swept aside with a shovel, or a broom, or even a tiny little bird feather.. but my man was out there doing his duty with a gas-powered appliance. The stench leaking from the crude 2-stroke engine left a stain in the air that could be smelled from 500 feet away.

Earlier in the week, when the temperature was in the 60s, other neighbors were using gas-powered lawnmowers to slowly mow their lawns while simultaneously sucking up and chopping the autumn leaves into the lawnmower’s bag, which they then threw out with their weekly trash.

All of these events led my brilliant engineer’s brain to come up with a few new Inventions:

Imagine a leafblower so advanced that it harnesses the power of your abdomen and biceps, while sucking away your stored fat reserves. Yet it operates nearly silently and costs under 15 bucks. With just a simple wooden handle and a few ounces of sturdy bent plastic or metal prongs, it could be lightweight and quite wide, and be able to clear thousands of square feet of densely-packed leaves per hour, leaving you feeling refreshed and healthier and more connected with Nature every time you use it.

Imagine a snowblower so supreme that it works a complementary set of muscles to the leafblower above: your shoulders and your lower back, as well as the hamstrings and portions of the gluteus. It also operates with silky silence, and it ALSO gets 100% of its power from the ultimate renewable resource – your beer belly. You would assume this would cost hundreds of thousands of dollars, right? Wrong! This too is under fifteen bucks.

My next invention is an advanced motorcycle that weighs less than thirty pounds and costs less than three hundred dollars. Yet it has a range of over a hundred miles per day, and you never have to find a power outlet to plug it in, because its power source is – you guessed it – the cellulite stored in your ass which gets converted into muscles in your legs and calves as a side effect of the transportation!!

I know I am blowing your mind with these inventions, but I actually have working prototypes right in my garden shed and garage.

I also have a lawnmower with a spinning reel of sharp metal blades that gets its power from me pushing on the handle, and even a boat (which I am demonstrating for you in the picture below), that is 11 feet long, and able to navigate everything from tranquil lakes to roaring ocean surf waves to car-sized river rapids.. but which deflates to fit in a bike trailer, weighs less than 25 pounds, costs less than $100, and is also powered entirely by muscles.

boulder creek

Yee Haw! Motorboats be damned.

I think you might be noticing a pattern here. And the pattern is of course Muscle over Motor. It’s more than just an article. It’s a Founding Principle of Mustachianism, because when you embrace it, it adds great fun to your life even while it simultaneously strips away the fat from your physique and your budget. It’s one of the most powerful little three-word sentences you can embrace.

Because of the power of Muscle over Motor, you should be deeply suspicious of anything with a motor. A motor represents a shortcut to getting something done. That sounds good on the surface, but you must consider what you are shortcutting.

A motorboat will get you across the lake quickly, but wait a minute, you like being on the lake – so why not use your muscles to actually earn your trip across it. It takes longer – that is a good thing. You will enjoy the beers on the deck afterwards much more when you really deserve them.

A Hummer will get you up the logging road and across the rocky meadows. But dude, you’re sitting in a glorified Lazy-Boy recliner and pushing on a pedal. What kind of wussy way of climbing a mountain is that? Leave the motor vehicles where the pavement ends and put on your hiking boots like a Real Man or Woman (or a pair of old flip-flops if you want to be even more badass like a local ultrahiker friend of mine). If you want speed and the ability to cross dozens of miles of terrain per day (as well as catching much more air on the descents), try a mountain bike instead of an SUV.

A Harley with its quiet stock mufflers replaced with illegal straight pipes will get you through some beautiful rocky canyon roads and allow you to ruin the outdoor dining of thousands of people in the hopping downtown Chicago restaurant districts. But a nice lightweight road bike will get you up the same roads and let you hear the birds at the same time, and your resulting muscular physique and healthy glow will get a lot more positive attention in downtown Chicago than the overpriced motorcycle and standard-issue black leather “Independent-minded Renegade Harley® Rider” Halloween costume ever will.

If you need to carry a few bags of cement over to a neighbor’s house, try a wheelbarrow or dolly instead of a pickup truck. If you need to get up to a different level of a building, give me a break, you don’t need an elevator or escalator… find the stairs! You work on the 63rd floor? I envy you!

In the gym, the machines with displays are to be mocked, because there is already a much more effective yet simpler tool that helps you exercise, namely the chunks of metal with handles on them in the free weights section.. or better yet, in your own garage or basement or living room or friend’s house. Even if you’re missing some of your younger physical abilities or you are in a wheelchair, you can still use what you’ve still got to kick as much ass as possible!

The thing about this philosophy is that it keeps you very busy, which means it keeps you out of trouble. If you are following Muscle over Motor, your leisure time is packed with active high-effort outdoor activities which you love. And because of this, you don’t even have time to take up expensive hobbies like waterskiing behind a powerboat, or jacking up your Jeep so it has higher ground clearance so you can drive it around the trails at Moab, or riding ATVs around to shoot at animals. These are surely fun activities as well, but we all have a finite amount of time and money. So which activities do we choose: the expensive ones where you sit on your butt and twist a throttle? Or the low-cost ones that also make us healthy and develop our physical skills?

This isn’t a perfect rule, because there are exceptions. Motors are still useful when we’re trying to get some serious work done. I’m not suggesting that the world’s excavator operators climb down out of their cabins and pick up garden shovels, or that carpenters sell their table saws and start cutting 16-foot trim boards with a handsaw. Taxi drivers may or may not want to switch to rickshaws, and accountants should definitely not give up their computers.

But when applied to most of your life, this whole idea of powering your own damned recreational activities (including lawn care) is a great one. It’s another form of Insourcing, but it applies to everyone, not just homeowners with chores.  If you find yourself tempted to use a motor when a muscle will do just as well, you should imagine me hovering behind you and reminding you of the slogan every time you reach for a gas-powered lifestyle accessory.

Let’s finish off  this love letter with a little video I made last December – mountain bike riding with a background of Jurassic 5 reminding us of the joys of doing things the old-school way: “Let’s take it back to the concrete streets / original beats with real live MCs..”

If you watch carefully for the parts where the video gets smooth instead of jerky, you can almost feel the times when the bicycle was flying :-)

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Get Rich With: Your Local Public Library Tue, 08 Nov 2011 13:05:26 +0000

A few years ago, I learned the most shocking fact about public libraries:

Not everybody uses them!

“No!”, you may say, “That’s impossible – how else do people get their books?”

The scary answer that I discovered is that some people have developed a habit of regularly buying books which cost them $10 – $30 each, reading them, and then collecting them on an ever-growing series of bookshelves.

When you talk to a compulsive book collector, you’ll hear things like, “Oh, but I just LOVE books. They are my guilty pleasure. I love the feel of them, the smell of the paper, the beautiful covers and the way they look all lined up on my bookshelf. I love just being able to move slowly along my bookshelf on a Sunday morning, looking at all the titles, picking out books I haven’t read in years and sitting down and re-reading them, and blah blah blah”

I can relate to all these feelings, because I also get pretty excited when I walk past a big collection of books. I read whenever I get a chance, and I am overjoyed that so many books exist to provide me with a lifetime of unlimited learning and entertainment. The only difference is that I have several hundred thousand of them, and a paid staff who roams through my modern curved-glass 20,000 square foot book storage facility, automatically maintaining them and buying more for me constantly. I have so many books that I share them with everyone in my entire city, and we’ve even come to an agreement where we ALL pay just a few dollars per year each for the facility, and yet any one of us can borrow any of the books. By pooling our buying power together like this, everyone wins, and yet none of us have to waste space in our house storing books that we are not currently reading! We love our book sharing facility so much, we decided to call it the “Public Library”.

I know the home-based bookshelf is emotionally attractive to many who fancy themselves to be intellectuals. But if you are really that smart, why are you paying dearly for something that you can get for free?

All of us probably know one of these people, who buys “just a harmless book or two every week or so from Amazon, because hey, it’s only twelve bucks, and I’m a highly paid office worker, and I don’t really have many other vices”.  But unless this person is already completely financially independent, he might eventually wake up and notice over ten thousand dollars leaking from his ‘Stash every ten years from such a habit. A large book collection also amounts to a boat anchor of unnecessary belongings making future moves more difficult for you, not to mention the sizeable amount of natural resources that went into harvesting, printing, and shipping a thousand pounds of dead trees to your house.

But instead of the negatives of book collecting, let’s focus on the positives of library membership. The Money Mustache family can speak from experience here, since we have become enormous fans of the place over the past six years.

My city’s library is an unusually nice building, located in a scenic part of downtown. It’s within a 7-minute bike ride of my house, which has nothing to do with luck – we picked our current location specifically to be close to the library as well as the school, grocery stores, and the rest of the city’s amenities.  Because of this nice proximity, all three of us tend to visit at least once a week on average.

It romances all of us and sucks us in by catering to every one of our interests.

A kid in a library is just as amazed as a kid in Disneyland. The children’s section has thousands of kid-oriented books on all subjects, placed on low shelves encouraging them to dive in. There are also play areas, educational computers and games, and a gigantic model train set that was donated and maintained by a local model railroad club (i.e., friendly old dudes who still like toy trains and kids).

With no experience in turning to broadcast television for his storytelling entertainment (in fact, I’m not sure if he even knows it exists), Junior ‘Stash naturally turns to books. He reads simple ones to us, and we read complicated ones to him. It really seems to add up over time – we’ve read him somewhere over 50 full-sized novels during the normal bedtime reading sessions, including most of the Harry Potter series and more recently Ender’s Game.

Mrs Money Mustache heads upstairs and loads up her backpack with books about gardening, parenting, and intelligent-looking Lady novels with obscurely artsy titles and drawn-out and emotional subject matter.

I’ll usually end up in the non-fiction section and get books about economics, investing, technology, social trends, as well as cheesy self-help books, construction guides, and on a special occasion a little bit of science fiction or action – like Snow Crash or Cryptonomicon by Neal Stephenson.

Between all of us, we tend to have 30 books checked out at any given time, and we make the most of the generous six-weeks-including-renewal holding period.

What a wonderful place. When you visit the library regularly, you start to notice that it’s not just a local government service that lends you books. It’s a place where the whole community of people interested in learning gathers together, secretly avoiding the TV and the shopping mall that gets the attention of everyone else. Local experts come in and give free talks in the conference rooms. People stop by to donate their recent issues of magazines after reading them. Volunteers raise and donate money and books.  Surplus library books get sold off for a buck each.  Little display tables get set up with currently applicable themes. There was a “peak oil” display recently with some articles, magazines, and books all laid out, free for anyone to sign out and read. And there is free wi-fi access throughout for those who want to just tune in and read on their laptop or phone.

Overall, you can get the equivalent of another complete University education in a different field, every few years,  just by being a regular visitor and letting your curiosity lead you around. You’ll learn new skills even while you enjoy the ultimate free leisure activity. All in a nice building surrounded by relatively cool people.

So your local library is much more than just your well-stocked home bookshelf. It’s really a Temple of Mustachianism, at which you would do well to start worshiping if you are not doing so already.


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Getting Started #4 – If you Try Sometimes, you Just Might Find, you Get What You Need Sun, 17 Apr 2011 16:45:38 +0000 By the Realist

Mr. Money Mustache has been a bit more reasonable lately, posting some numbers to back up his assertions. But I thought I should join in at this point to address something that has probably been in your mind: how much can I really give up, without going crazy? After all, we all COULD live under a bridge and eat out of dumpsters, but no amount of money savings would make this worthwhile.

The miraculous answer to the question of how much you have to give up is: not much at all. The reason is that you will be using your creativity to enjoy the lifestyle of your choice, at about 75% less than the standard cost. You can  think of it as gaming the system. And it can be really fun once you get into it.

Let’s start by explaining why the system is so easy to game if you live in a so-called rich country like the US, Canada, Australia, or much of Europe.

Our country is home to a great surplus of wealth. It is very unevenly distributed, but there is plenty of it. We also have mind-bogglingly advanced technology and international trade which makes it so that certain goods are unbelievably cheap to buy. You can buy enough basic food (rice, beans, oats) to power you for a day for about $1.00. You can buy enough oil to carry you and 2400 pounds of steel 40 miles for $3.50. But there are also goods that are incredibly overpriced. You can pay $900 for a decorative leather satchel that serves no purpose. A day’s worth of food could also cost $900 at the right restaurants.

The whole game of our system is for the rich company owners to pay for advertisements to convince everyone else to buy their products at as high a price as possible. Ads and peer pressure make it very tempting to have the more expensive products. Rich people and other big spenders buy these products briskly, driving up the high-priced products while simultaneously advancing industrial technology and competition which actually drives down the price of medium-range products. But if you can peek through the ads and identify the actual needs that you want to meet, you can pick much more suitable products for yourself and save a bundle. To put a number to it, your goal should be to spend only 25% of what the average person of your income spends in each product category.

By letting yourself spend 25%, instead of 0% like the guy living under the bridge, you can still be part of the good life, enjoying normal modern society without anyone even knowing what you are up to unless you choose to share it with them.

So to go through a few examples:

  • Goal is getting around the country on 4 wheels: Average person spends $25k for a Honda CRV or Ford Explorer, you can spend $7k for a few-years-old Scion Xa
  • Goal is being not naked all the time: Average person spends $600/year on clothes from the mall, you can have a slightly smaller rotation of nice clothes (considerably nicer than Mr. Money Mustache’s clothes, for example) from Target for $150/year
  • Goal is getting out for healthy bike rides: your friends may buy $2400 carbon fiber road bikes. You can still find a great bike with some old-fashioned aluminum on the frame and carbon forks for $600 on Craigslist and ride just as fast as them.

You can figure out a trick like this for just about every category of living expenses. I challenge you to tell me one (leave comments below if you like) that can’t be improved over the standard person’s expenditures. There are some that are easier than others of course, so I like to cut those even more than 75% to free up some money to spend on things more dear to me. For example, I spend 0% of the average on cable TV and 10% of the average American dining out budget, but more than 100% of the average on housing since I like to live in a nice place. As long as my other savings can more than make up for the house I can still meet the 75% off goal.

So you’re giving up some spending.. but you’re not giving up your needs.. or your happiness, if you do it right.

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Getting Started #3 – Eliminate Short-Termitis, the Bankruptcy Disease Sat, 16 Apr 2011 03:15:29 +0000 I just saw one of those automatically generated text ads at the top of my Gmail account. Here’s what it said:

2011 Pilot 4WD LX $319/mo

It gave me shivers to look at it, just because it is advertising a purchase that is so wrong on so many levels. We’ll get into all of those levels in future postings, but.. no, fuck it, let’s talk about this particular piece of financial suicide right now.

  • 2011. Why the hell would you buy a vehicle made in 2011? Unless you’re a taxi company and you are going to systematically run that vehicle 60,000 miles per year until it evaporates at a million miles, you don’t need anything close to a brand new car to get around.
  • Honda Pilot. A ridiculous truck from a great car company. 4500 pounds, 250 horsepower, 31 thousand dollars, all so you can carry usually-one-person on a paved road at 23 MPG.. 4 MPG worse than my work truck (a borrowed 1984 Nissan pickup) gets.
  • $319/month. What!? Are we renting the truck here? We don’t buy things by thinking about how much they are “per month”.

And that brings us back to being on topic for today’s post. There are several ways to think about a purchase. We can list them here in order of increasing intelligence.

  1. I just want it and I don’t know how much it costs – put it on my credit card and I’ll deal with it later.
  2. $319 per month? I think I could afford that because I’m already paying $299/month on my current car and that’s only 20 bucks more.
  3. $31,000 is the price of the Honda Pilot? I do have $32,000 in the bank so I guess I’ll buy it.
  4. $31,000 list price, plus $2400 sales tax, $1600 registration equals about $35 grand. If I buy a 2002 Honda Odyssey for $6000, which is the same vehicle in a more practical minivan body, I save $29,000. Over a ten year period, that money will compound at 7%, saving me a total of $57 THOUSAND DOLLARS!

Wow, is a 2011 Honda Pilot really worth $57,000 more than a 2002 Honda Odyssey?
As a future young millionaire, you need to start thinking about all of your purchases as LONG-TERM events, not short-term ones. That means each decision should be carried forward in your mind for at least 10 years, rather than just until your next paycheck. Here are a few more fun examples.

A deserving couple eating out at a restaurant twice a week, with wine, dessert, and coffee ($75), versus once a week with just a nice meal ($40): A difference of $110/week, compounded at 7% for ten years is $82,756. Would you rather have a luxuriously soft flabby physique from 1040 restaurant meals, or a leaner one and $82,756 in the bank?

A Starbucks habit of picking up a regular coffee and biscotti on the way to work each workday. $4/day = $20/week = $15,040 in coffee over just ten years!!

A new pair of shoes, or a few necessities from target, or a professional haircut.. once a month, for a total of $100. $17300 of handbags and closet organizers and hair clippings in ten years!

Now that you are amazed by the numbers, here is the simple formula for you to apply yourself.

  • to calculate a weekly expense compounded over ten years, multiply the price by 752
  • for a monthly expense, multiply by 173


You can fiddle around with the “future value calculator” at for other interest rates and payment amounts.
See? Everything costs a thousand times more than the price tag you see, Now you don’t want something just because your next paycheck will cover it. You want those big sums in bold above much more, right?


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Getting Started #2 – The Higher Cause Mon, 11 Apr 2011 23:14:46 +0000 By Mr. Money Mustache

The Realist thinks he has me pegged. He’s right about the 1999 REI Bookpacker Plus backpack, but in his calm by-the-numbers approach he is missing a lot of the reasons frugality is great.. no, not just great.. it’s the only non-ridiculous lifestyle for the thinking person. And this is because for many of the happily frugal, there is a higher cause beyond just money.

There are many reasons why the act of going to a store and Buying Yourself A New Manufactured Product should hurt a little bit. And while we’re all still going to do it, it should be done carefully and after some thought, and after considering the alternatives.

One big reason is The Earth. Many of us feel some sort of love for our planet and a desire to preserve as much as possible of its healthy ecosystem for the rest of our fellow plants and animals to enjoy. Maybe even our children. Well, unfortunately, buying products and preserving the Earth are at great odds with each other. You’re not helping the Earth by buying a Toyota Prius. You just caused the burning of 1500 gallons of fuel and the mining of about eleven thousand pounds of Earth herself, just to produce a car of that size.. before you even buy its first tank of gas. Eating meat, building a new house, and lots of other fun activities are equally destructive. Assignment: Watch a few of the great documentaries like Fast Food Nation and Food Inc., and An Inconvenient Truth.. then you might build up the appropriate level of guilty awareness to take the innocence out of shopping.

But then, you get to cheer up again. Mr. Money Mustache has got the solution for you. As luck would have it, not buying things is not only the solution for saving our planet, it is also the solution to your financial problems!

“But what about being happy?”, you ask.  “I am buying these products to make me happy. Won’t my happiness level drop if I stop buying them?”

Great question! That brings us to the next Big Reason Frugality is Great: it actually makes you happier, and there’s science to back it up.

OK. As logical people we probably agree that our main goal in life is to be happy. But what does happiness mean? At the lowest level, it means that something in your body is releasing the right chemicals that wash through your bloodstream and make your brain interpret the situation as “good times”. What triggers these chemicals? Usually, things that we evolved to think are good for us – eating rich foods, having various pleasant experiences with potential mates, enjoying social status among our peers, and doing satisfying tasks like nesting, building, creating things. It’s easy to understand how these things contributed to our survival in the past, so our brains evolved to reward us when we do them.

Shopping satisfies some of the later things in that list – you might get social status by having the latest trendy type of shoes, or you might trigger your nesting reward center by buying super cute shelving and accessories to organize your closet.  It’s a valid form of happiness, except it comes with the cost of taking away your freedom (money), which makes you have to worry more in the future – and in most cases, the short reward causes a longer period of suffering, so you’re not coming out ahead.

So what is the alternative?

What if you were to write down the top ten activities that make you happy and are good for your long-term happiness and health, then start spending most of your time doing those things? You would probably find that most of them are not expensive, and that they take so much time you don’t have time for the expensive ones.

For example, for me the list would have things like:
– have breakfast with my family every day
– have some playing, learning, reading time with my son every day
– read 1 new book per week for myself
– practice guitar at least 1 hour per week
– work out with weights and ride bikes 3 times per week
– family hike or other outing 2 times per week
– try cooking a new semi-fancy recipe for the family or friends once per week

Wow, wholesome but fun stuff there.. and it already adds up to more than the amount of time I have available!
Like most people, I still have material cravings. And my unconscious mind is automatically trying to rationalize each one even as my conscious mind resists. For example, right now I have inexplicable desires to buy
– a new computer with a gigantic 30″ monitor (for creative pursuits like music-making and blogging)
– an Apple iPad (for the educational games for kids, and around-the-house convenience for us adults)
– a few new high-end tools to add to my already-complete tool set(because I’m a professional carpenter these days… I shouldn’t have to compromise by using any of remaining amateur-grade Ryobi tools even though they still work.. should I?)
– a $200 Zojirushi bread machine (to replace the rattly $10 garage one I use that still works fine)

But I just acknowledge the desires and put the research time needed for those purchases at the bottom of my to-do list. If I get everything else on the list done, I’m allowed to buy those things. Meanwhile I can feel good about leading my existing simple life because the Earth doesn’t want me to buy extra things anyway. See? There is a higher cause.

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Getting Started #1 – What am I Supposed to Do With All This Money? Sun, 10 Apr 2011 21:06:17 +0000 Hi, It’s me the Realist again.

I think I’ve noticed a pattern with Mr. Money Mustache. He is part of what I like to call, “The Religiously Frugal”. For him, the avoidance of spending is not just a way of reaching a goal… the frugality itself is the goal. He actually likes this shit! If you give this guy an extra million dollars before bed tonight, he’ll still be riding his old bike to the grocery store tomorrow and bringing home the organic produce in a backpack from 1999.

But for the rest of us, who might find lifestyle changes difficult at first, let’s focus on the practical side and the numbers.

As soon as you start not buying certain things, you will find that there are some dollars building up in your bank account. You keep getting paychecks, maybe the odd windfall from selling something on Craigslist or a gift from Grandma, etc., and it all goes straight to the bank.

Your goal every two weeks or so will be to count up all this extra cash, figure how much you need for upcoming bills, and sweep the rest to somewhere useful. Somewhere that either pays you interest, or saves you money by reducing the interest that you pay.
Note that there’s a powerful double psychological trick going on here:

  1. You are keeping your bank account very low, which makes you really think twice about impulse purchases. “Hmm, I can’t buy this $1500 television set, because I’ve only got $300 in the bank and there’s only one paycheck coming before my credit card statement will come due”.
  2. Plus you are keeping the money as active as possible. Every dollar is actually a little employee that will work for you, 24 hours a day, for as long as you keep it. But you don’t want your employees hanging around eating donuts in the smoking lounge of your zero-interest checking account. You will simply sweep these green paper employees to wherever they will work hardest for you.

For most people, those places in order are:

  •  paying off any high-interest debt like credit cards
  •  making sure all your deductions for your 401K plan at work are set to their maximum level, especially if they have employer matching
  • paying off any other debts like car or student loans
  • paying off extra principal on your home loan
  • buying a conservative dividend-paying stock index fund – go to and start an account to buy some units of the VFINX fund, or if you have a brokerage account you can buy SPY shares.
  • last resort: just putting the money into a cash account that pays the highest level of interest you can find – Vanguard’s Prime Money Market fund or ING Direct’s Orange Savings Account.

So there you have it. Save this posting. It is simplistic advice, but if you go out and read 50 books worth of financial and investing advice and distill them into only a few paragraphs, you’ll probably end up at the same place. Mr. Money Mustache actually reads these books every night, since they are part of his unusual idea of fun. He also follows Warren Buffet as if he’s a sports hero and read his 800-page biography over two red-eyed days as soon as it came out.  I encourage you to get more into investing too if you find it interesting, but if you just want the cheat sheet of what countless millionaires do with their money, just follow the points above and you are good.
These techniques will keep your employees working for you at a rate of between 5 and 12% per year. If we average it out to 7%, that means for every $100,000 you put to work, they will kick back $7,000 per year to you forever, with no work on your part.

So if you have 700,000 employees, you get a lifetime golden parachute of $49,000 per year, forever, with no thought or effort.Hopefully you are already starting to see the blinding and obvious light at the end of the tunnel. You are now saying, “Damn, I want those 700,000 employees working for me as soon as possible. How can I get them!? When can I start!?

And that boils down this blog to one simple idea – getting rich in the only way that is pretty much foolproof, as quickly as possible.

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Mr. Money Mustache’s Own Story Sat, 09 Apr 2011 02:14:31 +0000 Ahh, I see that sissy the “Realist” has been posting on my blog. I hope that doesn’t happen too often. Sukka’s too soft. You’ll never get anywhere with piddly numbers like $5/month or $5/day.

And I had to laugh at that example.. would anyone really start buying lunch at a restaurant when they were already so tight on cash that they were saving NOTHING? And would they continue buying it once they saw that their credit card balance was starting to grow? What kind of idiot would do that? Why does this guy call himself the “Realist” with such an unrealistically stupid example?

What I want you to do is start thinking of REAL savings. Not putting away $5 or $150 per month, but more like FIVE THOUSAND per month. Not everyone can do that. But a middle-class American family with two teachers making $60k each per year, who are currently saving zero and struggling to get by? THEY SHOULD BE SOCKING AWAY $5000 PER MONTH. Word.

Here’s my story, so you can see how it’s done.

As a boy, I learned frugality by growing up in a family where my parents didn’t buy much stuff. Instead of having stuff given to me, I had to get a paper route, trudging 6 days every week in the bleak Ontario, Canada weather for thirty bucks. After this experience, earning $4.15/hour in a gas station with a partially heated booth was incredibly cushy and generous. Imagine then, how amazing it was the next year to earn $6.50/hour to work in a convenience store with not only windows and doors to protect you from the weather, but heat and air conditioning that allowed you to wear indoor clothing year-round? I was making $650/month, going to high school, and by the end of a year, I had $5,000 in the bank.

My point is that in the United States and other rich countries, you’ve got it good. Even if you work in Wal-Mart, you make more money than I did, you get to walk around in a huge fancy store, and you can save almost everything you earn if you don’t get ridiculous and waste it all. When I made $6.50 an hour, I knew it wasn’t enough to afford a car or my own apartment at age 16. Well, it was enough, but only if I wanted to spend everything I earned. So I stayed at my parents’ house. When I started making more, I was ready to up the lifestyle a bit.. but not a huge amount.

From here the MMM story goes on. I went to university, but picked the local one so I could live rent-free with family. I worked in the summers and found affordable ways to party so I graduated with no debt. A decent professional job awaited at graduation, so I upped the ante to include my first used car and a house shared with many roommates (rent: $270/month). After a few raises and new jobs, I moved to the USA, doubled the salary, but kept the used car and the living-with-roommates situation. Finally, a 20% downpayment had been saved for a house, so I made the jump to buy my first fixer-upper, sharing it and working on it with my future wife.

At this point, we had it made – double incomes, low mortgage. We let the good times roll a little bit, enjoying the same luxuries as our peers, doing plenty of international travel. But the difference was, we were spending only about 25% of disposable income, while they were spending 90%, because of additional expenses like auto loans, higher mortgages, and hidden stuff like clothes and restaurants.  This meant saving a good $4,000/month, which rapidly compounds and results in a net savings of $7,000/month after a few years. Pretty soon we were on a treadmill that was pushing us forwards instead of fighting one that pulled us back.

At this point, we could have bought a huge house or a small fleet of nice cars. But instead, we spent the money on the ultimate luxury – quitting our jobs. For other people, a sailboat or a starting a local charitable trust might be the luxury of choice. You get to choose your own reward. But it’s all about not getting stupid when you can’t yet afford it.

For example, when you’re making $30,000/year, you can’t be out buying $7 martinis on the weekends and financing a $20,000 new car. At this level, you are still in the cooking-at-home and riding your bike club. Maybe a $3,000 used car if you can buy it in cash and if it’s really necessary to get to work.

When can you truly afford a fancy car like a BMW? Well, once you have the cash for it in the bank, your house and all other debts are fully paid off, and you are either retired or very comfortable with delaying your eventual retirement for a year or more to pay for this depreciating piece of luxury property, THEN you can roll into the dealership.

The funny part is, if you follow the ways of the Money Mustache, you’ll hit these levels sooner than you think. So you can borrow to buy the BMW today, and pay for it forever. Or you can pick it up with the spare change in your wallet in the surprisingly-near future, and be a happier person for the wait.

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Meet the Realist Thu, 07 Apr 2011 16:09:18 +0000 Whoa, did you read that opinionated garbage yesterday?

Who is this Mr. Money Mustache? The guy thinks he’s got it all figured out. And is he trying to offer financial advice, or just financial scorn to those less fortunate than himself? Sure, maybe you can retire early if you are born to a frugal family, get a good education and never make any mistakes. But what about the rest of us? Is there any hope at all?

My name is The Realist. I’m contributing to this blog to add some perspective to the hard-edged idealism of this “Mr. Money Mustache” (who needs a fake catchy name like that anyway?).

So, life is hard in the modern world. Rapid changes in the business environment mean frequent layoffs and difficulty in holding a steady job. Health care inflation means we waste more of our small paychecks on medical costs each year. Gas prices are higher than they used to be, and so are other costs like food, child care, and education.

Yet some people manage to get by while others go bankrupt. Is it all just luck, or is there something we can do to beat the odds ourselves? As the Realist, I’ll step in to present small but powerful steps to help you get ahead. There is a sometimes a fine line between financial solvency and bankruptcy.

How fine? How about $25 a month?

Here’s your lesson for the day: say you are breaking even – paying all your bills, buying $500 monthly of necessities on a credit card which gets paid off IN FULL each month with no interest, but not able to save a cent.

Then a McDonald’s opens up next to the office where you work and you start buying lunch once a week instead of brown-bagging it. All of a sudden, you can’t quite pay the credit card bill each month so a small balance starts to accrue.

  • Month #1: there’s a $525 balance and you pay $500
  • Month #2: you are charged interest the unpaid $25 from the first month at 20% ($0.42) you’re $25.42 short
  • Month #3: interest on $25.42 ($0.43) plus this month’s shortfall ($25) – you are now $50.85 short
  • Oops, you are just a few days late for a payment and suddenly the whole $550 balance is subject to interest ($9.16) plus a late fee ($30). Now you’re $89.16 in the hole.

Ahh, one burger a week, 89 bucks after 3 months. That’s not so bad, is it? YES IT IS.

After 10 years, you’ll have a credit card debt of about $5,000. If you couldn’t pay it off when it was $525, things are looking much tougher now.

And that is $25 per month. Imagine someone so free spending that they went to McDonald’s once per DAY?

That person would be over $50,000 in debt after ten years.

Wow, that is truly extreme. So the lessons for the day are:

– never EVER let a credit card go even one month without paying the balance in full – because the interest rate is ridiculous, and if you ever slip up on the due date, they trick you by charging you interest on all your purchases for the whole month.

– there is a surprisingly fine line between staying afloat and sinking, even over a short period like a ten years. Understand this and then all those stories about people going bankrupt start to make sense.

But there also a fine line between staying afloat and rising up quickly to become very wealthy. What if the person breaking even above found a way to save $10 a day instead of spending $25 more than she made each month?

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Meet Mr. Money Mustache Wed, 06 Apr 2011 19:49:37 +0000 “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…

  1. Retired, and my money situation is perfect
  2. Still working, saving max in 401k, no loans on cars or credit cards, paying regular mortgage payments
  3. Same as above but add one or more car loans
  4. Same as above but not quite able to max out 401k plans due to life’s little expenses
  5. Same as above but have a few credit cards that I’m making payments on
  6. 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
  7. 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.

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