Mr. Money Mustache » The MMM Blog Early Retirement through Badassity Fri, 27 Feb 2015 19:26:01 +0000 en-US hourly 1 If I Ran the School, Things Would be Different Mon, 16 Feb 2015 19:57:35 +0000 Mountainscalling

MountainscallingAs a retiree, I have a special place in my heart for Monday mornings, because that’s when I would have had to go back to work if it weren’t for the joy of early retirement.  Despite the option of complete leisure, I woke up at 5:30 this morning because the sky was starting to brighten and I was too excited about the new day to let any of it go to waste.

I’m writing to you right now, but later on I’ll be building stuff, riding bikes, meeting with people and teaching kids. Later on as bedtime approaches I might fiddle around in the music room, read a book or listen to a podcast. It’s my idea of the perfect life: self-directed activities in pursuit of knowledge, self-improvement and even getting a chance to help others if you’re lucky.

This might not seem related to the subject of our school system, but at the core I think the idea is the same:

Humans are naturally curious and energetic creatures, and if you set us free in the right environment, we will get to work learning, producing, and having a great time at it.

This is especially true for kids, whose brain composition is set up for maximum-speed-learning-at-all-costs. And double especially true for my son, who has always loved the freedom to create and worked with every atom of his being to fight against any rules that might constrain it. This is a boy who, given an elaborate new high-tech Lego set, will immediately discard the instruction set, open the bags of parts, and dump them without hesitation into his main supply bins. “Great! we have way more parts now – let’s make some ships!”

This inspired (but very high maintenance) personality has been clashing with the public school system on a regular basis. Last year, he started to feel the crush of boredom and irrationality and Mrs. MM and I fought it for a long while.

“You have to stay in school”, we insisted, “that is what all responsible people do to ensure a bright future, learn to deal with diverse sets of people, and of course to socialize with other children. With you being an only child, this is especially important.”

But it started affecting his sleep, and his non-school hours started to become dominated by worrying about school, and then even his health started to follow down that road. Through research and a bit of professional counseling, we learned that he has an anxiety disorder. While this is fairly common in young kids of his type, the teachers he had to work with most often seemed unable to adapt. His third grade classroom had become a disciplinarian place with a constant shushing of kids, straight lines in the hallway, and stern words for anyone who didn’t follow assignment instructions without question. Explanations of his ideas to the teacher were shot down as “talking back” or “excuses”.

There are of course many schools of thought on how to raise a kid. In 19th century England, they used to whack them frequently with canes to keep them in line. In certain philosophies, cultures or religions it is still common to maintain an iron fist of discipline over kids until they move out of the house as young adults. The traditional Asian school system emphasized long hours, strict rules and rote memorization. The opinions of the parents and teachers are the only ones that count, and failing to perform well in school is considered a disgrace to your family.

While I’m happy to let those people do their own thing, my response to this style of education as a parent now is the same as it was when I was a kid: “Fuck That.”

The Pursuit of Soul Craft

Around the time we were going through all of this, I was reading the book “Shop Class as Soulcraft” by the badass philosopher/mechanic Matthew B. Crawford. The author shares my own opinions on the bullshitty nature of most of our traditional rules and their influence on the modern office environment, and the value of thoughtful but difficult physical work. To quote the man on the clash of school with human nature:

 “It is a rare person who is naturally inclined to sit still for sixteen years at school, and then indefinitely at work”

Don’t get me wrong. The idea of a free public education for all is still a great one. In my school, a noticeable portion* of the kids come from families where the parents don’t seem to be putting much effort into their upbringing. Nobody is reading to them at home, or talking about science or teaching them a trade. There’s no Lego, not enough bikes and too much TV, drowning out the chance to actually learn by creating anything for themselves. For them, school is the only hand up they have in life so we’d better make the most of it.

But damn, we could do so much better.

If I ran the school, there would be none of those leaky-tire teachers that are permanently shushing kids in the classrooms and the hallways.

I remember one vivid experience while volunteering in the school, walking down the hallway with a group of my little advanced math students. The hall was empty and our journey back to the main classroom was going well. Without warning, an attack of shushes came at us from a sniper who had positioned herself inconspicuously at a desk off to the side. We escaped without losing the flow of our thoughts, but at the midway point, a second attack came from a guy standing at the far end. Arms down, straight line, no talking.

When kids are talking to each other, that’s called a conversation, which is one of the most valuable things you can let kids have.

And nobody needs to line up in the hallways. I don’t do lineups myself, so why would I make kids endure this irrational suppression of natural body placement?

If I ran the place, there would be a red button on the wall, that would start Walking on Sunshine, pulsing LED rope lights and a disco ball. Anybody could run up and press it. The walls would be padded and there would be subwoofers. It would be an invigorating and ridiculous dance party going from one class to the next. Coincidentally, this is very similar to how I run my own house.

Some teachers are still taking away recess from kids as a form of punishment. The most valuable and educational part of the school day – experiencing nature and fresh air, refreshing the mind and training the body – gone because of an cruel desire to make a child regret not conforming to their irrational rules. I found this both enraging and ironic, because the school hallway proudly displays a large banner with the following quote:

“Leave all the afternoon for exercise and recreation, which are as necessary as reading; I will rather say more necessary, because health is worth more than learning.”
- Thomas Jefferson

In my school, recess would come first. There is more than enough time to learn the easy stuff like physics, chemistry and software design. Plenty of adults accomplish that. But how many of us spend enough time outside and maintain reasonable levels of strength and fitness into our old age? How many people over 50 even do barbell squats with any regularity any more?

In my school, play is not something to be suppressed – it is something you facilitate and hope for. There’s a reason that kids of all the most intelligent animals (whether kittens, dolphins or humans) are born with a desire to play. It is because playing is the most efficient way to learn. How could this blatantly obvious bit of evolution have been suppressed in the design of our school system? Thus, the ultimate achievement as a teacher is to trigger a marathon session of Automatic Learning Through Play, and sit back and watch the neurons connect.

 So We Decided It Was Time To Run The School

My rant above is overly idealistic, or course. Real school systems are faced with all sorts of constraints, just like any organization that involves a large number of humans. You have vastly diverse kids, some of them uncooperative or even violent. Meddling administrators, parents, and politicians. The flawed implementation of standardized testing which often displaces actual learning. Sure, it can be improved, but that’s a separate battle from the job of taking care of our own son because he needed a solution right now. 

Much like Mustachianism itself, we decided it was more efficient to try something new immediately and start learning from it, than to sit around complaining about the system we were stuck in. Since we’ve been experimenting with this for about a year now, I figured it would be worth sharing some of the surprising observations.

Is Homeschooling Only for Weirdos? Surely it Wouldn’t Work for Me?

This was my first assumption before learning about the option. I had never met anyone who didn’t go to school, so I thought it was necessary to grow up as an educated, well-adjusted adult. This turned out to be totally wrong and I have heard from (and read about) dozens of exceptionally happy, intelligent achievers who went this way. But it’s not for everyone – if you find yourself with a kid who already likes school, you might want to keep that good situation as it is.

How Can This Lead to a Good Education?

If you start with the natural hunger kids have towards learning, and subtract out some of the biggest obstacles (lineups, waiting for the slow trudge of big-class teaching, boring and repetitive activities), you find that you can exceed the actual academic learning contained in a typical school day with just an hour or two of concentrated effort. You can double the pace by throwing in a second hour or more. And this leaves the rest of the day to broaden the benefits – activities with other people, physical challenges, educational trips, etc. You can also let the kid run free with uninterrupted time when he does find a true interest – for example getting into a really good book, writing, music, programming, etc.

This fits well with the modern and future workforce, where employers are looking for people who can adapt, create, and produce, rather than simply follow rules. But even using the word “employers” is shortsighted in my book. I’m not teaching my kid to be an employee – I’m teaching him to be a creator, who will find it satisfying to start his own small companies. Employees will be the people he hires when the time comes.

Where do you Get your Curriculum?

Sal Khan is pretty much The Man when it comes to great do-it-yourself education. Thanks Sal!

Sal Khan is pretty much The Man when it comes to great do-it-yourself education. Thanks Sal!

Much of this becomes obvious if you ask yourself what really defines a good education. But for a shortcut, just look at Khan Academy. This brillant utopia of an organization has been creating well-organized, advanced, free learning for years now, and it just keeps getting better. Get your kid an account there, set him or her free and watch the sparks fly. Of course, you should also hover conveniently nearby to help expand the learning.

We also worked with the school and borrowed some textbooks, looked at the US core standards that help define the teaching done in conventional school, and did plenty of online searching to see what other people use for their learning.

But the fun part comes when you leave the conventional lessons. For example, to illustrate math and trigonometry (as well as a tiny bit about astronomy), I taught my son how to calculate the height of our city’s water tower based on the length of its shadow at noon on March 21st. To learn about science and engineering, you talk about how things work and watch the amazing documentaries they have now that explain how fascinating these things are.

Technology and Computing: The video game called Kerbal Space Program tricks kids into learning rocket design and planetary physics at a deeply intuitive level. Another called Robocraft involves iterative design, construction and testing disguised as a first person shoot-em-up. We also build and program real robots using a VEX IQ set, but you can ease into kid-style programming with a language called Scratch.

In fact, any strategic and complicated video game contains a lot of disguised learning, because your kid has to learn the subtleties of using a computer in order to get it to work in the first place. How to use a mouse, keyboard, and menus. How to read, type, copy files, install updates, search for information, even connect to another IP address to host a multiplayer game. These end up being really useful skills throughout life, and this is why I would never buy an Xbox, Wii, PlayStation or other simplified video gaming system. Those things preserve the recreation, but strip out the important technology. If your kid is going to have “screen time”, it might as well be on a nice, complicated real computer, which is another reason we haven’t had TV service since well before he was born.

Music: At the most basic level, you learn a lot about music by simply listening to it. I always have something playing in the house and I let my son change the Pandora station and create his own. But we also jam with real instruments which are left strategically lying about the house and make songs with Ableton Live. Music lessons are valuable for those so inclined, but due to our resistance to rules and structure, my son and I are not so inclined at the moment even as people who are unusually interested in music.


Art Class tends to change along with the current topics of interest in real life. Currently space travel and colonization due to a binge of reading we did about SpaceX.


Reading and Writing: kids reading to themselves at any time, parents reading books to kids at bedtime, hitting the Library at least once a week, and leaving blank notebooks and great writing instruments and erasers around the house to facilitate creation of new literature and comics.

The Typical Day of Homeschooling

Typical day's schedule

Typical day’s schedule

It changes along with the season, but there is the whiteboard as it appears today. You got some writing, building/programming, lunch, outdoor activities, and math. We keep things in the 1-4 hour range to avoid homeschooling becoming a drag. After all, kids are always learning, whether you label it as school or not.

Surprising Advantages

  • You can live wherever you like without regard to “school district”. You can also travel and take vacations without regard to the school calendar.
For example, nice weather last week required that we spend Monday hiking in the mountains.

For example, nice weather last week required that we spend Monday hiking in the mountains.

  • You get the best private school, with a commute and tuition cost of roughly zero.
  • I find myself learning more, just so I’ll have more to share with him (similar to the effect that this blog has had on my life)
  • My son is at peace with the world, fired up, and learning quickly.

What about Testing and Standards?  Is anybody watching what I do?

This part is easy. Although it is unlikely any authorities will ever be involved with your schooling, in theory you are supposed to do at least 4 hours per day of classes, and keep a journal of what you do. You may also be able to drop in on your local school for special classes if you make arrangements with the principal there.

You can order practice tests, and the real end-of-year tests (called the Iowa Test of Basic Skills), which you can administer yourself or do at the school. Mrs. MM bought her copies from**

Your kid does of course need to pass the test, but if you’re serious about learning you will be miles ahead of the requirements.

What about Socialization? 

As it turns out, the regular school day is mostly about discouraging socialization. Get the kids to sit still and be quiet so they can learn, except in widely spaced controlled group activities. Most of the fun happens in extracurricular activities, which you can still join, or in plain old free play, which you can do any time.

Little MM still has all of his earlier school friends, and he hangs out with them constantly outside of school hours and on the weekends. We also keep meeting more people, just by virtue of living in a neighborhood where people want to know each other.

There are also organized homeschooling groups where you gather for group activities or even classes at a dedicated location. While we haven’t had time to join any groups yet, I plan to start running some classes of my own out of the parkside studio building I’ll be building in my back yard once the main house is done.

In Conclusion

Homeschooling has turned out to be a highly Mustachian activity: packed with Freedom, requiring high effort in exchange for high reward, and a way of improving upon the system of our society while working peacefully with its boundaries. It is not for everyone and it will consume much of your mental and physical power, but in exchange you will deliver a truly excellent education.

Further Reading: Mrs. Money Mustache shares more about her homeschooling journey in this March 2014 post on her own site.

 * By “noticeable portion” I’m not talking about kids with a different race or language of origin. This parenting divide is caused some other way – perhaps even by stress. If your own life as an adult is pushing your boundaries, you might have less energy left over to help your kids. Now that I’m a parent myself, I feel less judgmental about how things work out for other parents, because this stuff is pretty damned hard even from my very privileged position of having only one kid, two parents, and more free time and money than most. So instead of bashing parents of disadvantaged kids, I’d rather just help them by trying to inspire their kids.

**BJU happens to be a religious group, but the tests themselves are just the standard national tests. In fact, you’ll find a high correlation between homeschooling and religion, but that doesn’t make the idea any less valid for completely non-religious people (such as the MMM family) as well. For me, it’s all about better learning and a better life, which are almost the same thing.

]]> 331
The Radiant Heat Experiment – Did it Work? Fri, 06 Feb 2015 14:53:30 +0000 radiant_carrot

One whole year ago, I was in the depths of destroying and rebuilding a sagging 1950s brick ranch house, which has since grown up to become our actual home. Looking back through Google Plus’s automatic archive of my phone pictures, I can see the “kitchen” was still open to the great outdoors on that date:


Despite the lack of windows and insulation, I was already looking ahead with nerdy engineering glee to building a home-brewed heating system for this place, and I told you about it in the article called The Radiant Heat Experiment.

In a nutshell, this involved running thousands of feet of PEX pipe under my existing wood floor via the crawlspace and circulating hot water through it with a pump and a good quality tankless water heater.

The plan was met with both enthusiasm (generally from fellow engineers) and scorn (more often from plumbers), and since then people have been sending in emails and comments to ask how it all went. Although I’ve already dropped a few hints that I’m very happy with the end result, this experiment came with some good lessons and pitfalls which are finally ready to share.  I have also had a chance to measure the performance of the system (and the house in general) through most of a Colorado winter, and the numbers surprised me just a bit. So let’s dig in.

How it All Went Together

Last time I presented you with a daunting list of parts. The list makes a lot more sense when you stick everything together. Here is a picture of the heart of my setup as it stands now, with everything screwed onto a plywood board:


This funny part is that all of the brains of the system are right there on the board. All the research and shopping boils down to just that 2×3 foot rectangle. The input is hot water from your water heater on the left, 120 volt electricity for the pump through the orange cord, and a pair of small wires you connect to your thermostat to indicate “ON”. Then the hot water flows out through the zones, delivers its heat to your house, flows back into the cold side of the manifold, and returns to the heater for another round. If DIY radiant heat were more common, this whole setup would come as a single product for $199 at Home Depot instead of the $600 or so you see here.

It took only about two hours to attach all this together, and then I confidently crawled down under the house with it to get to work on the rest of the installation. Little did I know that the real work was yet to begin.

Running the Heating Tubes

This system proved to be quite torturous to build, but it was because of plain old physical challenges rather than anything technical or mental. The problem is that to install radiant heat below the floor of a wood-framed house, you need to thread a huge length of stiff, fussy pipe through an unyielding grid of tightly spaced floor joists. I divided my house into six zones, each one about 250 square feet in area. For each of those zones, I had to do the same steps:

  • Meticulously review the underside of each joist bay and clear out any remaining scraps of duct work, old plumbing, spider webs, etc.
  • Grind off a few hundred flooring nail ends poking through from the original Oak floor above using a cordless grinder with a cutoff wheel
  • Drill a 7/8″ hole through the end of each joist
  • Pull through the whole required length of PEX pipe, fighting the stiff tangly coil the whole way
  • Staple it up to the underside of the floor, using aluminum reflector plates
  • Run the ends of the tube back to the manifold and connect them into the system
  • Cut and fit R-13 insulation batts underneath the whole area to force the heat upwards into the floor instead of down into the crawlspace.

The end result in each bay looks something like this:

Here's the end of one joist bay. Tubing, aluminum diffuser plates (optional), R-13 insulation batts underneath (essential)

Here’s the end of one joist bay. Tubing, aluminum diffuser plates (optional), R-13 insulation batts underneath (essential). The fluffy spray foam insulation on the right is part of my new crawlspace insulation – not strictly related to a radiant system but handy for keeping the resulting heat from leaking out through the rim boards of your house.

I found that each 250 square foot zone took about eight hours of work. But not just a casual eight hours that flies by like it does when installing kitchen cabinets while your radio plays happy bluegrass music in the background.  This is eight hours of proper torture, crawling in a 40-inch-high space with sharp rocky dirt beneath and obstacle-laden floor joists above. Even the slightest movement stirs up thick dust, so you have to wear a full-face respirator. That’s handy, since the grinder also throws down hot metal sparks towards your eyes and face. Gloves and kneepads are essential too. And ear protection. It’s dark down there, so you also have a bright LED headlamp strapped over top of all the other accessories on your head. But the ground-driven temperature of 60 degrees is far too warm for the work pants and long sleeves you need to wear to avoid skinning your arms and legs, so you also sweat a lot. In general, I could only withstand about 2 hours of this work at a time, so each zone was done over four days.

But if the paragraph above sounds horrible, you’re just thinking about it wrong. This is voluntary hardship at its best. The physical and mental benefits of crawling and sweating and fighting with stubborn tools and materials for so many hours are incomparable. Every possible move is constrained, so you must overcome the constraints with strategy and strain. The feeling of suiting up and descending into the crawlspace each morning while knowing I could earn much more money by outsourcing the activity and instead simply typing a bit more shit into this computer was enlightening. The feeling of emerging two hours later into the fresh air and bright sunlight, stripping off the dusty clothes and seeing the beauty of the world again was life itself.

Even with all that struggle and joy, I paused the effort* after finishing four of the six zones. Those cover the primary areas of the house and are more than enough to keep up with our heating needs for the rest this year. I’m finishing up the main floor carpentry and a second bathroom, and those last two zones will go in before next winter.

Real World Performance

The Living Experience

This was the unexpected surprise – how nice it is to have warm floors. Your feet get a pleasant reward with every step you take, or as you rest them on the wood floor under the dinner table. On top of that, anything you leave on the floor gets extra toasty: a pair of wet winter boots, a forgotten coat, or even the socks you threw off before hopping into bed – perfectly warm and dry when you pick them up the next morning. The bathroom floor also dries quickly after a shower.

Keeping up with the Cold

On a “normal” January day in my part of Colorado, daytime temperatures reach about 43F/7C, but the extremely bright sunshine makes it feel much warmer. The South-facing glass of the house sucks in about 10,000 watts of heat at high noon and it gets stored in the copious thermal mass of the various interior stone and brick walls. I blow it around with a ceiling fan to accelerate this process and the interior temperature reaches a peak of around 76F in the afternoon. Then the sun goes down, the stored heat is gradually released, and we make it through the night (low around 20F) with the house dropping to a comfortable 66. If you’re lucky, the sun rises into a clear sky the next morning and you repeat the cycle – with no heating required at all!

But weather adjacent to the Rocky Mountains is anything but consistent, and this winter we have also seen an all-time record low of -26C (-14F) as well as a daytime high of 77F (25C) just a few weeks later. This is why you still need a heating system with some juice.

With only four zones running at -26C, my house was a bit underpowered – the temperature would drop slowly unless we lit a fire (the house also has a high-efficiency EPA woodstove). From a standstill, the system also takes about two hours to get the floors to their full operating temperature of 80F. However, the remaining two zones should provide the extra bit needed to keep up in worst case conditions.


To test this, I had to calculate the amount of natural gas I burned every hour, and compare it to the amount of heat actually being pumped into the house. I did this by cranking up the system on a cold day and taking “before” and “after” readings of the gas meter, and noting the flow rate and temperature drop** across the whole system:


Here are the things you need to look at to calculate system output and efficiency.


To make a long story short, the gas meter told me I used 40 cubic feet of natural gas over my 144 minute test period.  The gas bill tells me that each 100 cubic feet is 0.945 “therms ” (94,500 BTU) worth of heat. One therm costs 62.67 cents in my area. The net result is I was consuming 15,740 BTU per hour of gas, which is just under 10 cents worth per hour.

Next, I added up the (approximate) flows of those four flow meters and saw the system was pumping out 1.68 gallons per minute of water with a 16.5 degree F rise. You can calculate the energy delivered to the water with the “Universal Hydronic Formula” like this:

1.68 GPM x 16.5 degrees x 500 = 13,680 BTU per hour

Back in the design stage, this is roughly the heat loss I calculated my house would experience at a temperature of 20F, so the numbers seem realistic to me. Also, dividing the output by the input, we get a water heater efficiency of 88%, which is close to my unit’s stated efficiency of 94% (efficiency rises for lower input water temperatures, so I’m very happy it can perform this well with a 118F input).

On top of all this, I measured total electricity consumption (for the tankless heater and water pump combined) at only 55 watts, which is under $4 per heating month even if you run the system 24 hours a day. To add it all up, my home’s total gas cost this year breaks down roughly like this:

Gas company fixed monthly fee whether you use any or not: $12
Regular monthly gas use for showers, laundry, dishwasher, cooking, etc: $4
Heating for Oct 14 – Nov 12: $8
Heating for Nov 12-Dec 15: $55
Heating for Dec 15 – Jan 16: $58

And that’s probably the peak – here in February, the weather is already warming up and the system is off most of the time again.

So What’s the Catch?

When I started this experiment, I was optimistic that we could revolutionize home heating and make the forced air gas furnace obsolete. After all, the cost is lower, living comfort is greater, and you save a lot of interior space that would normally be consumed by ducts and chases – especially in multi-story homes. But until the industry advances a bit, there are a few flaws:

Building was Quite a Bitch

Installing this was near the limits of my skill and endurance, and I’m a not-all-that-old dude with lots of great tools who has been building things for over 30 years.  However, it would be much easier if you installed it in an unfinished basement instead of a crawlspace. Also, recruiting as many friends as possible to thread the pipe will speed you up exponentially. Overall, I’d recommend it only for experienced handypeople.

Heat Output is Lower than Expected

I’m getting under 14,000 BTU per hour over the 1000 square feet I have installed so far. This works out to 14 BTU/hr per square foot. This place is pretty well insulated, so I should be fine. But an older and draftier house would lose more heat. The problem lies in the slow transmission of heat through the 1.5 inches of my subfloor and the oak floor above it. To increase that, I’d need to raise the water temperature further (it is already at 140F) or add some extra radiators.

On the positive side, you can get really creative with radiant heat, embedding the tubes into tile walls, or making heated towel racks in your bathroom that tie into the system. Each extra heated feature will deliver more BTUs. Also, installing under a tile floor instead of wood floor will increase heat transmission.

Not all Tankless Water Heaters will Work

In reader feedback, I heard stories of tankless heaters dying early or cycling constantly. Cycling is not a problem with the unit I used*** – it runs at variable speed so the system quickly reaches a nice loafing steady state where the pump is going slowly and the heater is barely murmuring to match the required flow and temperature rise. Time will tell how long it lasts, but I’m betting it will prove to be far more cost effective than a $3000 boiler.

The Open Loop System Has Drawbacks (as well as advantages)

I am using a single tankless heater for both home heating and domestic hot water – this is called an “open loop” configuration. It would be easy to add a second basic heater for $600 for the domestic water. This would separate the water systems, and I may do that someday.

The main drawback of combining them that you need to keep the water heater set very high (140F) to get enough heat output to the floors. This means somewhat fussy water temperature balancing in the shower, whereas with a dedicated tankless heater you just type 110F into its remote control unit, crank the hot water handle, and enjoy a computer-regulated perfect shower every time.

A second issue is that the hot water can sometimes smell like new plastic pipes. This effect is fading now that we’ve been running the system for several months, but it does mean the hot water will never be tasty enough for drinking or to use in cooking,

On the positive side, I found that if you run hot water when the pump is off, water is drawn through the system through natural pressure differences. This means that in the summer, my floors will actually be cooled down by the cold water supply as it sucks unwanted heat from the house. So the floors will pre-heat the water before it hits the water heater. Double energy savings and free air conditioning.

Because the water supply is constantly refreshed and/or heated to 140 degrees Fahrenheit, bacteria growth and stale water in the pipes is not an issue at all.


It has been a worthwhile experience. Loads of learning, plenty of hard labor, a luxurious end project, and an $8,000 savings over having a new forced air furnace and duct system installed into this house. Although DIY radiant heat is not for everyone, I can declare this particular experiment a success.


* To finish up next fall, I will also swap out the manual adjustment dials (white knobs in the picture) for electrically controlled actuators, and use a multi-zone WiFi thermostat to control the whole house. This thermostat is being developed by an MMM reader who has started his own company to produce it – more details on that in a future story.

** The temperature drop is configurable with a little knob inside the computer-controlled circulator pump by Taco. I set my own pump to maintain a differential of 20 degrees F, which is typical for a system like this. Then if the pump starts seeing a drop of more than 20 degrees, the pump runs faster to compensate. If it is less, it means your house is already warm so the pump runs slower.

*** This has proved to be a kickass water heater so far. If you decide to pick one up from GP conservation as I did, try coupon code “MMM” – when I last checked they were running a small discount plus free shipping on tankless heaters for readers of this blog.




]]> 148
How Rich are You? Find your Net Worth, Spending, and Savings Rate Mon, 26 Jan 2015 15:56:04 +0000 wheel of consumption

wheel of consumptionMr. Money Mustache can tend to get a little high-level at times, talking about all these feelings and philosophies that underlie the proper path to wealth.

But you can’t just smile your way to the top – there are real numbers at work in the background, whether you understand them or not.  These can gang up and torture you (as in the case of a person with a crushing 60-hour workweek who maintains a paltry 10% savings rate), or they can boost you right out of a mandatory work sentence in unprecedented time.

This is especially relevant in the wake of the annual spending article, which always brings up a lot of questions about how Mustachians accumulate wealth so quickly. So let’s start with the big picture, which is how to become wealthy:

Financial Independence in 3 Easy Steps:

  1. Figure out how much money you are taking home and subtract the amount you are spending.
  2. Be sure to keep all that surplus money at work, by paying down high interest debt first and then investing the rest.
  3. Once the total value of all your investments reaches 25-30 times your annual spending, paid work is now entirely at your discretion. For life.

So with this post, let’s explain these three fundamentals of rapid wealth accumulation the MMM way, so the schooling will be there for all future students.

Net Worth

We’ll begin with the end in mind. Net Worth is a bit of a degrading term, as it incorrectly implies a person is only worth the amount of money he or she has accumulated. But you can use this for motivation, since as a Mustachian your figure will tend to be unusually high.

The overall formula is easy:

The Value of everything you own (-subtract-) The total of all your loans

The details are equally easy, although sometimes debated. So I’ll tell you the way I happen to think about it:

  • You do include the value of any properties you own, including your primary house
  • All 401(k)s, IRAs, savings plans, and other hidden assets are included
  • All mortgages, loans, credit card balances and other nonsense get subtracted
  • Don’t bother with depreciating consumer stuff like your cars,  furniture, or Apple products, unless you are willing to sell them right now.

Let’s start with a deliberately twisted example:

Joe Consumer (age 33) is a Washington DC Lawyer pulling down $250,000 per year.

He has a condo he paid $517,000 for with a current market value of $580,000 and a mortgage of $460,000. He also has a BMW 535i sedan that cost him $61,300 including tax a few years ago, payment is $539 per month and remaining balance is $43,000.

401(k) balance is $50,000, IRA is $27,300 and he has $90,000 left on his Harvard student loans, which he plans to get serious about soon and pay off over the next 10 years. Credit card balance is just a bit high at $8,000 right now, what with the holiday season hangover. What is his net worth?

Whoo! Look at that collection of financial spaghetti.  Oddly enough, when people write to me with financial problems this is usually how they are described: a big list of confusing and unsorted details. They just heap them on a plate and hope it will straighten itself out some day. When you’re confused about your own money, it is likely that you are wasting a lot of it.

Joe’s Net Worth

Ownership of the Condo: $580,000 – $460,000 = $120,000
Retirement accounts (401(k) + IRA): $50,000+27,300 = $77,300
Student loans, car loan, and credit cards: $-90,000 + $-43,000 + $-8,000 = $-141,000

Total Net Worth: $120k + $77.3k – $141k = $56,300

If you ask the average Josephine, Joe is a successful rich guy, doing very well for a 33-year-old. Expensive house, flashy car, massive income and even some money in the bank. If he just keeps on the current path and saves a bit more during those “peak earning years” in a couple decades once he makes partner, he’ll have a nice fat retirement fund by age 65.

My diagnosis would be quite different: “Holy Shit, Joe! What the hell have you been blowing all your money on?! You should have had a higher net worth than that many years ago, given your career!!”

Very Rough Guideline: Take the total money you’ve earned after taxes in your lifetime (suppose that for Joe it happens to be $1,243,100). If you don’t have at least 40% of it still around to show for it today, you are spending way too much.

Bonus: Suppose his nearly-new BMW can still be sold on Craigslist for $33,000. Although he has already lost $28,300 in depreciation on this horrible money pit, he could end the bleeding immediately by selling the car and taking the $33k plus $10k of his own money to pay off the $43,000 note. This would increase his net worth by $33k and set him on a much more prosperous path for the future.


This was Joe’s problem above. The key is to understand where your money is going, and for most of us that means tracking your spending. I calculate it like this:

Everything that flows out of your wallet, bank account, credit cards,  or automatic payroll deductions for things like insurance.

Finer Points:
I include property taxes and sales tax, but do not count income tax or other payroll taxes.
I include all loan interest and fees, but do not count the principal portion of loan payments.

Why? Because I’m very interested in financial independence: that point when your passive non-work income is enough to pay for a hypothetical retired life of your choosing. Right now, Joe might be earning $250k and paying over $60,000 in income taxes. In retirement, he will probably be in a lower tax bracket. Plus income might come from dividends, long-term capital gains, or rent checks from investment properties he owns. He might even live in an area with a different tax rate.

You need to deeply understanding your spending needs and wants in order to know if you can afford to retire. Instead of taking random guesses at the factors above, I prefer to think of everything in terms of after-tax dollars. Take-home income instead of gross income.

So if we sort out what is surely a twisted ball of credit card,  EFT and ATM transactions, Joe’s monthly spending might look something like this:

Joe’s Spending

Interest portion of his $2500 mortgage payment: ($2000)
Interest on credit card and student loans: $480
Car Payment: $539
Employee contribution for health insurance: $150
Full collision+comprehensive car insurance: $200
Car Registration/licensing fees: $200
Gasoline: $200
Unnecessary checkups at BMW Dealer: $150
Condo fees: $450
Property Taxes: $500
Utilities: $200
Travel: $800 
Country Club Membership: $200
Groceries: $400
Dining out: $1000
Wine and Scotch collection: $400
Clothes, Suits, and Gentlemanly Accessories: $600
Haircuts and Massages: $200
House cleaner: $400
Dry Cleaning: $150
Cell Phone: $150
Cable TV/Internet: $150
Miscellaneous Shopping, Gifts, Etc: $500

Total spending: $8919 per month

So how can a busy person track all of these transactions and categorize them well? You have two choices:

  • Manually save all receipts and enter them into a spreadsheet or piece of budgeting software every night, or
  • Do all your spending on a credit card and let some financial software like Mint, YNAB, or Personal Capital grab all your transactions and sort them out (this is what I prefer).

In either case, you’ll probably spend at least some cash which you pull out of ATMs. You will see this in your automated spending report as well – I suggest assigning your cash spending to a category called “the decadent throwing around of unnecessary $20 bills.”

Take-home pay

This boils down to the amount of your paycheck that you eventually get to spend yourself. So let’s look over Joe’s shoulder as he opens a biweekly paycheck:

Gross Pay: $8620

401(k) plan deduction: $692
Employer 401(k) Match: $300
Automatic deduction he has set up to pay towards student loans: $1000
Professional Fees/Insurance: $200
Federal Tax: $1724
State Tax: $689

Net pay to his bank account: (8620-692-1000-200-1724-689) = $4315
Since there are 2.16 pay periods in the average month (52 / 24) you would scale this up to see that he gets an average of $9349 per month showing up in the bank.

But this is where many people get confused, because this paycheck he takes home is not really his take-home pay. You need to add back in the money that he is actually using – including to pay off loans –  or will get to use – including all retirement and savings account deposits.

The MMM Take Home Pay calculation would thus be:

Gross Pay + Employer 401(k) match – taxes and fees
= $8620 gross pay + $300 employer 401(k) match – $1724 federal tax – $689 state tax -$200 professional fees
= $6407 biweekly or $13,839 per month

If this sounds like a shitload of money, that’s because it is. Anyone making $250k gross pay should be rolling in it and saving the vast majority, therefore able to retire within just a few years. If you get your savings rate right.

 Savings Rate

Now that we’ve done all the hard work, we get to hit the gas pedal and show off a little, since we can make some bold forecasts.

The savings rate is simply the percentage of your take home pay that you’re not spending.

(Take home pay – spending) / (take home pay) , then multiply by 100 to get a percentage

For Joe, it would look like this:

($13,839 – $8919) / ($13,839)    x    100

= 35.5%

Hey, Joe is still saving a third of his income, even with the most outrageous spending list that I could invent for a single guy. It’s not completely suicidal, but he is still squandering an opportunity that only a tiny percentage of humans have ever been offered: the opportunity to become financially free while he’s still young.

To steal a few data points from the most popular article in this blog’s history: The Shockingly Simple Math Behind Early Retirement:  Joe’s 35% savings rate means he is on track to retire in about 25 years. He is already 33, so this means he is sentencing himself to be locked into that office until age 58.

This may seem “early” by current American standards, but if the reports I get about high-octane Washington DC law careers are accurate, that shit can get old in a hurry. It is far wiser to earn your freedom while you are still fired up about working.

From this point, it can get far worse or far better. Joe could get married, have multiple children, and expand the level of spending (larger house, more vehicles,  private schools, etc.) to consume even more of his income.

  • If he adds just $3000 to this monthly budget, he drops to a tragic 15% savings rate and is set for a 43 year working career
  • On the other hand, if he trims down the excess and goes to a still-insane $5000 monthly spending level, he’ll be saving about 65% of his income, which means he will be set for life less than 10 years from now.
  • If he can streamline life to just a slightly less ridiculous level than that, let’s say to my own level of spending, he will be retired well before 40.

So there you have it: The easy way to calculate spending and savings rates, and your net worth.

Although I illustrated it here with an outrageous but very common example of high income and high spending, the principles work just as well, and are even more important if you are living on an average income. In the US, it is quite possible to live well on under $7000 per person per year, and even gradually become wealthy on a below-average income.

But the first step is to understand how all these dollars fit together. How are YOU doing?


Bonus: For those who love to calculate, my friend and fellow early retiree Darrow Kirkpatrick maintains a really thorough roundup of the best retirement calculators on his blog here:

]]> 338
Mr. Frugal Toque on Mortgage Freedom Wed, 21 Jan 2015 13:00:24 +0000 solo

Foreword from Mustache:

Almost exactly one year ago, our Canadian correspondent Mr. Frugal Toque and his family reached a nice milestone: a mortgage balance of Zero. Although early retirement and financial independence do not strictly require you to pay off your mortgage (or to own a house at all) as long as you have other investments to cover your housing outflows, for many of us there is an irrational and long-lasting glee that comes from owning the place in which you live.

From a rational perspective, sure, stocks and other investments will tend to return more than the 4% you’ll save on mortgage interest. But the mortgage “return” is guaranteed, and fully non-correlated to the stock market. Plus your home will always be yours regardless of what shenanigans the financial system might pull. 

Whatever the reason, mortgage freedom tends to deliver long-lasting happiness to many of those who buy it, which makes it one of the better ways to spend money in my book.

Mr. Toque wrote the story below right after he first killed the thing, then added an afterword to explain how he felt one year later. Finally I have found the right time to publish it. Enjoy!


Mortgage Freeedom

soloI’ve never liked debt.

I should say that first because, of all the privileges I’ve had in my life, developing a hatred of owing someone money has been one of the most profitable.  Every time in my life that I’ve ever borrowed so much as a loonie[1], there’s been a flashing red sign over my head:  “NEGATIVE $1″.  Once I forgot to pay back a guy ten bucks I owed him and he had to remind me.  I am ashamed to this day.

This has given me an edge in life that I can’t overstate.  The idea of running a balance on a credit card is so alien to me that I can’t believe anyone does it, never mind the breathtaking number of people who are comfortable with it.

On the subject of a mortgage, however, I ascribed to the wisdom of the times.  Given the size of house Mrs. Toque and I had decided was appropriate, it made more sense to get in on a fairly cheap market (Ottawa in 2002) rather than rent while gaining no equity.  With our down payment, we took out a mortgage for approximately $260 000.  For the first couple of years, when we were financially flopping around like fish out of water, we didn’t even pay attention to our mortgage.

“Strange,” we seem to have been thinking.  “In this one hand I have extra money.  In this other hand I have a mortgage.  I suppose we should buy a big television.”

Yeah, we really did stuff like that.  Not only is it a sad story, it’s also the tragic plot followed by the vast majority of house-“owning” humans in North America.

“Well, you see,” common thinking goes, “I’ve got a 25 year mortgage.  Can’t do anything about that.  I guess this extra money in my bank account should be turned into a boat, some leather clothing and a heated, indoor swimming pool.”

Then, about two years ago, when Mustachianism had already started chipping away at our habits, I got laid off.  You can read about that in detail, but the relevant bit is that Mrs. Toque and I enjoyed my period of unemployment so much that we became determined to make it a permanent thing.

The first obstacle on that road, from our perspective, was to kill off the mortgage.  Neither of us could rest easy knowing that a monthly payment so large would be hovering over our heads.  So we looked at our budget.  It turns out we live on about $2300, eating fancy seafood and enjoying our family martial arts workouts.  Our mortgage, as well, was set at $2k per month.  Without going into super personal detail, let’s say my salary is quite a bit more than $51k.

So I went into Kung Fu spreadsheet mode and my predictions looked something like what you see below.  The green line is how long it could have taken us.  The red line was another, more serious route.  I turned to Mrs. Toque to say:

How it could have gone vs. how it really went

How it could have gone vs. how it really went

“Honey?  We can beat this fucking thing into the dirt by the end of next year.”

“Really?” she asked.

I waved my hand at the undeniable, mathematical facts displayed on the screen.  A tingly, Han-Solo-saves-the-day, euphoria rushed over us both.

“Hell.  We’re that close?” she said.  “Let’s do it.”

What ensued was a laser like focus that would have made Mr. Mister proud.  Oil changes became things done in our own garage.  The barely used motorcycle was sold.  While I toiled at the 9-5, Mrs. Toque engaged in a culinary conquest that involved making large batches of chilis, sauces and curry dishes and freezing them in yogurt containers.  Our house was scoured and cleansed of numerous Products and Outgrown Clothing in exchange for hundreds of dollars through various Internet intermediaries.  Every bonus or raise was purposely channeled toward this one goal.

Video game purchases were put off, allocated as exceptional acquisitions belonging to special occasions like Christmas and birthdays.  We cut out restaurants in similar ways, doggedly keeping to our $2k budget.

There have been a few times in my life where I have felt something seize hold of me like this: a karate tournament when I was young; the desire to run 10k in under 50 minutes in more recent times.

This was something more intellectually powerful and more enduring than any of those previous desires and it drove the two of us for just about a year and a half.

On January 1, 2014, the Toque family made its final mortgage payment.

My grandmother and her sisters could drink you under the table.

My grandmother and her sisters could have drunk you under the table.

As promised, a bottle of whiskey was purchased.  You can’t really do anything impressive in my family without shots of Crown being involved, and this goes for births, deaths, weddings, birthdays, religious holidays and the stomping into cinders of a mortgage.

And though the shots were hammered back to mark the occasion, the gravity of the situation didn’t pull us in right away.

Mortgage freedom, like any other widening of the straits through which we guide our white-water kayaks, takes a while to register.  There’s this uncomfortable lack of turbulence and drama that makes you think something is about to go wrong.

As February came around, the instinct to “check the bank account” still nagged at me.  By March, money was just sitting there, comfortably reassuring us of the reality of our financial situation.  I scratched my head in dismay.  We’re in June now and it’s really dawned on us that our monetary burn rate has dropped by half.

Yes, it's exactly like this.

Yes, it’s exactly like this.

I wake up every morning and I can take a deep, relaxing breath knowing that I don’t owe anybody anything.  I ease into my morning cup of tea as if I were Patrick Stewart lounging in the ready room.  Every paycheque that comes in?  That’s ours.

The danger now, as with any reduction in stress in our lives, is that we let the new width and relative calmness of the river we fare allow our paddle strokes to become sloppy.  This is not the time, in the first months of our mortgage freedom, to start piling up the Lego sets, golden-handled frying pans and $500 bicycles that the 8 year old will outgrow by next summer.

We need only remind ourselves that expensive items, and even expensive experiences, will not make us happier.

As per the advice of the Mustachian horde, we cranked open a Questrade account and started dumping that money into Vanguard ETFs via RRSPs, but we can only do that for so long.  The key to our existence now, as we run the last leg of the race to early retirement, is not to let money sit around idly, tempting us with its purchasing power, but to get it stashed away as quickly as possible.  Online brokerages make that bit pretty easy: you can deposit money directly from your bank account into RRSP or TFSA accounts (The Canadian equivalent of Roth thingies and 401 what’s-its-nuts.)

But that’s only the technical side of things.

The heart of the matter is something else entirely.  It’s looking at the debts side of the spreadsheet and seeing nothing there.  It’s also a clear, wide open path from this point to the spot on our life journey where neither of us is ever again obliged to work in order to have the necessities of life.

Early retirement wasn’t an entirely real thing, at least in my mind, despite having seen that the Mustache family had clearly achieved it.  Making our mortgage a thing of the past, however, emotionally solidified the mathematics.  The equations and the spreadsheets, like the one you see above, aren’t nearly as tangible until you actually see the descending line hit the x-axis.  Then, very slowly, you realize that the math was a map of the world as it actually exists.  There actually is money piling up in the bank account.

And if the road to mortgage freedom is real, then the road to early retirement is real, too.

Update: January 2015

This article was written some time ago, as the feeling of being mortgage free was just starting to sink into the Toque family.  Our primary worry, naturally, was that we might be tempted by all this money floating around into becoming the sort of Consumer Suckas that we detest.

I’m glad to report, on further examination, that no such thing has happened.  Our monthly expenses did rise, from $2391/month to $2416/month, which is actually less than inflation.  So being mortgage free came without any statistically significant change in our spending habits.

Separately, what have we done with the money?  Exactly what we said we’d do: it’s all gone to fill up our RRSPs and TFSAs, which still had room from previous years.  As I discussed in a previous article, my priorities were:  RRSP, Mortgage, TFSA, due to my own hatred of debt.  So once the RRSPs are full up for the year, I dump everything into TFSAs.  Sadly, I’m going to run out of TFSA room sometime in the next year or so, necessitating further investigation into “Dividend Mutual Funds” and the magic I can work with them.

[1] – no seriously, that’s what we call a dollar in Canada.

It is now easy to find everything from Mr. Frugal Toque on this blog since he has his very own category.

]]> 270
You’ll Never Believe How Much the MMM Family Spent This Year… Fri, 16 Jan 2015 16:52:47 +0000 Hiking near home, fall 2013
Hiking near home, fall 2014

Hiking near home, fall 2014

Here we go again!

As we do once every year, Mrs. MM and I have spent the day nervously tallying the sinful blizzard of excessive spending that we have been committing over the past twelve months.

If you aren’t familiar with my budgeting style, it is “I Don’t Have a Budget“. Since we know there’s no chance of running out of money at this point, we make spending decisions based on our values rather than splitting up a fixed stream of income into categories every month.

While this is a hazardous approach for beginners*, it works very well once you have trained yourself with my alternative point-of-purchase approach. In short, whenever you feel like buying something, ask yourself the following questions:

  • Will buying this really improve my overall lifetime happiness?
  • Is there another, more efficient way to meet this same need?
  • Can the same benefit be had if I delay the purchase?

While I still follow these rules because they have become a habit, the application can be sloppy at times due to the fact that we are still just ordinary flawed humans.

Highlights of 2014 in the Mustache Household


First day of framing the new roof, January 2014

Even retired life seems to be full of change and adventure, and this suits me just fine. This year our boy grew up another notch, and we found his need for creative freedom really started to clash with the formal structure of school. This led us to full-time homeschooling. That required much more time from both of us parents, curtailing some of our other activities but also teaching all three of us a lot more about life and learning. Although the transition amounted to a couple months of emotional face punches, it was worthwhile as such punches generally are in retrospect.
We Moved

2014 will also go down in history as the year of the new house. Although we actually bought the place in late 2013, I started the project in earnest by tearing off the roof last January, framed and welded and sheathed the new structure through February and March, then stepped inside to do the electrical, plumbing, insulation and other trades before outsourcing the drywall. We moved in to the barebones residence in June and I’ve been working since then on more carpentry and details. All in all, we’ve spent about $80,000 on the complete rebuild so far, which I have kept separate from the regular spending budget. This is because the net spending on the new house (after selling the old one) is still a large negative number.

Details of the new house project, where the money went, and before and after pictures will get their own separate post. It is taking a while because work progress has slowed dramatically due to the aforementioned homeschooling

Business and Pleasure Endeavors

Little MM seems to be following in his father’s path – finding machines, space and science fiction, and creating electronic music (under the stage name Killbone7) to be more interesting than any organized activity we try to coax him into. Luckily he has a growing club of other junior nerds that have banded together for these activities, so he will have company when he starts the next Microsoft or Google from our garage in another six years or so.

This detail is relevant in a spending article because although stuff like this is amazingly educational, it costs the parents very little. We would fully support him if he were into more expensive things like sports leagues, and I do remind him that that is a better way to meet girls once he gets to high school.

Mrs. Money Mustache took the lead on homeschooling, burning through stacks of books and websites and distilling it down once she realized the practice is incredibly unregulated here in the US. As long as you can get your kid to pass a very basic test at the end of each year, you can do whatever you like. We are using this as an opportunity to speed up the educational pace considerably and do fun stuff instead of boring stuff. She also started a secret crafting business on Etsy which I won’t dare mention here lest she lose all her free time to an increase in sales.

And of course old MMM continued to build stuff out of wood and occasionally type some shit into the computer, juggling the demands and opportunities of the Internet against the pleasure of real world physical work. I indulged in a couple of these opportunities for some blog-related travel including Ecuador II and Camp Mustache, both of which will happen again in 2015.

But enough of this blathering on, for it is time for the final number. In the wealthy and spendy year of 2014, the MMM family managed to blow the following incredible of money on ourselves:

$25, 330

And here is where it all went:

Mortgage Interest00
Property Taxes2,5172,120New house has $1000/year cheaper taxes. This figure pro-rated based on months lived in each
Food and Dining7,7397,109
   Groceries   6,984   6,593
   Wine/Beer   466   322
   Restaurants, Coffee Shop   288   194
   Doctor Visits   425   484Includes some personal therapy surrounding our boy's school issues.
   Health Insurance   2,855   3,272$273 / month
   Dentist   366   512Mostly for kid dentist preventative work
   Pharmacy   143   n/a
Auto and Transport2,231490
   Gasoline   1,022   71Excellent!
   Insurance   330   347
   Registration & Testing   294   72
   Express Tolls   80   
   Service & Parts   422   n/a
   Public Transportation   81   n/a
Cell Phone300300
Internet Access360360
   Home Renovations   383   19
   Home Insurance   392   410
   Landscaping/Plants   85   n/a
School Tuition00
   Shoes & Clothing   606   492
   Sporting Goods   566   76
   Shopping Misc   965   654
   Books   46   61mostly used books
   Other   440   815Netflix, kids activities, homeschooling school supplies, local plays, apps, CC annual fee, cash withdrawals, foreign transaction fees
Travel1,9345,057Wow!! $1908 for xmas trip to Canada, $382 passport renewals, $216 flight home from SFO, $552 vrbo in San Fran, $880 safety pirate trip, $245 train travel, $727 flights for summer trip to Canada, $51 Super Shuttle, $96 Mrs. MM 40th Birthday Trip
   Subtracting Tuition, Donations   24,567   24,175
   Subtracting travel, crossfit   21,983   18,788
   Subtracting organic/luxury food   19,678   16,442Assuming a 33% increase on groceries due to organic + meat.
   Subtracting home renovation expense19,29516,423This is what our "no frills" living cost would be, unless we moved to a smaller house (Note: Misc category could be cut down a lot as well)

What the heck is going on here? With completely reckless spending and all of life’s variation, we are still within $150 (0.6%) of the previous year’s spending. There were a few notable things, however:

Groceries were still Ridiculous:

The place our sloppy nonbudgeting manifests itself most strongly is in groceries: high-end local organic stuff from the deli counter, ridiculous little triangles of cheese from the gourmet section, dark 85% chocolate chunks with my espresso, coconut and almond breakfast every morning, and an overflowing salad bowl alongside the dinner every night. And some sort of entertaining almost every week, where we actually prepare and give away large quantities of this fancy food to friends and visitors. It is hard not to feel rich and spendy when this is part of your life.

Driving Performance was Good:

Somehow, we went the whole year on only two tanks of gas for the car. In the past, I have talked up our impressive driving avoidance skills and called everyone else Car Clowns because we don’t use the car for local errands.. but then hypocritically embarked on long cross-country trips that burned hundreds of dollars of gas.  This year it seems I actually walked the talk, and the car was fired up mostly for shuttling people to the airport and to occasional hikes in the nearby foothills. I’ve even started biking for my occasional nights out in Boulder, thanks to the added speed of my Electric Bike. It also helps that the car is a Scion xA, a 5-passenger hatchback that easily exceeds 40MPG. Not on the budget is one tank of gas for my construction minivan – because it incurred no personal use this year other than carrying materials for the house.

Travel Spending was Way Up: 

The flip side of less driving is sometimes more spending on other forms of travel. In spring, we took an adventure on the Amtrak sleeper train to San Francisco and went North to explore the amazing coast and Redwood forests. And we closed out the year with a set of three overpriced plane tickets ($600 each!) to Canada to visit family for the holidays, something we haven’t done in winter for many years (usually we just spend every summer in Canada). Plus a great train ride to get the three of us from Toronto to Ottawa for phase two of this trip. This trip is an example of spending I would have avoided if money were tight, but it was nice to be able to afford it.

On the positive side, our out-of-pocket spending for this travel was really much lower than shown in this budget, because much of it was paid for with points from various rewards credit cards. But I decided to list the sticker price in the annual spending just to keep reporting simpler. In other words, we thought of the credit cards rewards as a form of income rather than a reduction in spending.

Health Insurance Held Steady:

We use a basic plan from Golden Rule that costs about $275 per month for the family. If this pre-ACA healthcare plan eventually expires, we’ll switch to a Bronze level plan under the new health insurance setup that will  offer more coverage in exchange for more money. You can read more about that in this 2013 post on our health insurance situation. None of us had any health issues besides checkups this year.

So that’s it for 2014. Although these updates are starting to look awfully consistent from a numbers perspective, I still find it quite revealing how powerful habits can be in dictating your spending, regardless of income.

And as I go through each year knowing that I’ll have to justify each expenditure to YOU the reader at the end of it all, I find my own life being guided gently away from the temptation to stray into bullshit spending as well.

Luckily for you, you will get exactly the same benefit this year. Because I’ll be right there watching over your shoulder every time you take out your wallet in 2015.


Quick answers to questions that seem to be coming up:

Why is your car insurance so cheap? Living in a city of only 90,000 people, age 40, cheap car with liability insurance only, nothing on driving record. I still use Geico insurance.

Why is your mobile phone bill so low? Republic Wireless – $25/month unlimited everything including data, or $10/month unlimited voice+text. Hint: Get the $150 Motorola G unless you are a serious techie – it is almost as good as the higher end $300 and $400 phones they offer.


* If you are going to train your fiscal discipline muscle with some budgeting, I am still a fan of YNAB software (You Need A Budget), which you can try out for free for a month to see if it fits your own style. Disclosure: I am a friend of the founder Jesse Mecham and think he tells excellent stories.

]]> 332
New Year’s Resolution: Getting Your Brain Back Thu, 08 Jan 2015 21:08:27 +0000 brain_500

braindanceWhen you think about it, that brain of yours is both the cause of and the solution to every one of your problems.

With the right thoughts, you can trigger yourself into actions that will change your life – or even the entire world. With the wrong thoughts and actions you can just as quickly end up dead. And in between, you can experience complete joy or utter dissatisfaction purely through different perceptions of an identical set of circumstances.

It is both obvious and miraculous to state all of this, and thus it is pretty ridiculous that we don’t put a higher priority on maintaining our and improving our own noodles in a more systematic way.

Imagine that you’re an Olympic athlete, or at least a well-muscled Underwear model. Your body is the key to your success. What if you were forced to live on a cruise ship with no weight training facility and a 24-hour buffet stocked mostly with beer and cake? Would the input to your body affect its performance?

Similarly, suppose that you’re a rising star of an Engineer at Google (which is statistically much more likely given this blog’s readership). Your career will live or die based on how much brilliance you can crank out of your brain and deliver to the world in usable and elegant form. Given this fact, should you feed your mind with whatever happens to be sloshing past in society’s slop trough? Viral posts forwarded by your Facebook friends or the latest update from the stock speculators on Wall Street? Or is there a better diet available for that high-performance machine?

Let’s take Mr. Money Mustache himself as an example. I’ve always had a cordial relationship with my own mind, and it has helped me accomplish some worthwhile life goals in the past. But as I worked through my twenties, I found I was renting that mind out to an ever-greater degree for pay as a software engineer. The more information and algorithms I burned through at work, the less fire I had left to do much real thinking about anything else after hours.

It wasn’t always like that. When I started that career, my phone was a dumb brick with an LCD screen, and only rarely did the odd email trickle in to my computer’s small, low-tech Microsoft Outlook window. Social networks were not yet invented, books were made of paper, and I was in heaven whenever I could spend a long day deeply wired into the compiler, debugger, logic analyzer, and on a good day even the soldering iron. The concentration I could summon back then seems to be in another league, considering how long it has taken me today to get even to the fifth paragraph of this completely non-technical article.

But a funny thing happened over the years. Wi-Fi was invented so suddenly my laptop was always offering up servings from the Information Buffet. I advanced a rung or two on the corporate ladder, so I became ensnared in more emails, documents, and meetings. The Internet started producing ever more distracting options for slacking. And I started a construction company on the side, which opened up a whole firehose of new information to guzzle. Gradually, I became less and less effective at my job, and I started delegating the fun but difficult technical stuff to people who could dig in and get it done properly. I started to feel pretty useless.

Luckily for me I had also been working on the early retirement project in the background, and at this point in the story it came to fruition. I quit the entire corporate world in 2005, never to look back.


Suddenly, everything was great again. I felt like I got my brain back. I would wake up each morning and break into a broad grin as I realized that all those projects, meetings, and emails I had been dreaming about no longer existed in my world. They were gone, replaced only by that blue Colorado sky outside my window, and the short walk to the kitchen where there was food and equipment in place for the preparation of a fine breakfast. I started learning again – reading books, doing new things, and meeting new people. Although we had a new baby at the time, plus I stumbled into some foolish business hardships during those first few years of retirement, there was no question that they were a time of great education, easy focus, and some pretty good accomplishments.

But secretly, complexity was brewing in the background and planning its next attack. In 2007, Apple dropped the iPhone bomb on the world, and within just a few years there were two of them in our household. Two otherwise capable adults found themselves unnecessarily swiping and pecking around on the little screens for hours. The baby became a boy, full of information, curiosity, and urgent requests for attention that did not care what you happened to be working on at the moment. And worst of all, Mr. Money Mustache was born.

This blog started as just a quiet writing outlet, where I would collect a few of my own thoughts, and send them out to a very tiny collection of strangers throughout the Internet. But gradually, the blog grew and the tide turned. More information started coming back in my direction. Comments, emails, tweets texts, and Facebook messages started as a trickle, but grew and grew into an overflowing torrent. Not a torrent of crap like you get by watching the news, but one of fascinating, useful information from genuine and brilliant people. So much information and so many opportunities to have fun and do good things for the world.

This is a wonderful problem to have. I’m ridiculously lucky. But it turns out it is still a problem, since human attention only scales up to a certain degree. At a certain point, you end up hearing from amazing people and thinking about amazing things all day and still not keeping up with it all. I started ruthlessly skimming and archiving emails, turning down anything involving more commitment than walking down to the Indian Buffet for lunch, and still not keeping up. Dropping the ball on even the most golden of opportunities, and probably mildly pissing off a friend or two due to email inattentiveness. Although my mind was busier than ever, my productivity was dropping in most areas of life. You can see the results in the slowing writing schedule on the list of all posts.

Getting Your Brain Back

Luckily, this problem has a solution: I call it Getting Your Brain Back, but it is a time-honored problem that has been solved by many people in the past. Originally limited only to company CEOs and world leaders, the excess of information has trickled down to the rest of us. To survive in this flood, we need to learn how to swim, in much the same way as busy and important people have always done.

The problem is that I’m taking in too much peripheral information and scattering my attention around. Instead, I should be feeding my mind in rich, controlled meals and giving it plenty of calm resting time between them.

Paradoxically, if you take in less random information, you will find that you can devour more useful stuff, and produce much more as a result.

New Year’s Resolution

byebye_twitterIn the olden days, I would have just made some top-level plans: “In 2015, I will spend less time and get more done. I’ll finish the house, publish my first book, write a blog post every week, and move up another level of physical fitness.”

But we’ve learned from the study of human habits that if you want macro-level changes in your life, you need to attack them with micro-level changes in your daily routine. Through the 365 chances we get every year, tiny things add up to surprising results more quickly than your intuition would suggest.

So this year, I resolve to change only a few things to change the balance and focus of information:

  • I removed the phone charger from my bedside table and put it in my office instead. No more mindless surfing before bed or immediately upon waking.
  • I uninstalled the Twitter app completely from my phone. This will seem insignificant to normal people, but any blogger will recognize it is a massive change. A nonstop stream of information candy and ego dopamine, gone from the day. I can still use Twitter from the real computer.
  • I cleaned up the longstanding pile of move-in debris from my office and replaced it with a tidy arrangement of heavy barbells and dumbells. Now instead of being faced with a mess when I come in here to write, I get the invitation to do a few quick lifts, then sit down and get some shit done.
  • I am giving up pointless casual drinking (disguised as the well-deserved beer or red wine at the end of a good workday), although keeping social drinking because it’s less frequent.

These changes alone have been very powerful (I actually cheated and started in mid-December), but to make them even better, I am using the concept of the keystone habit to replace the sad craving left behind by each bad habit with something good and equally rewarding.

  • When I wake up (usually before sunrise), I still immediately feel the urge to check my phone. This urge reminds me to go to the couch in my quiet office, flip on a little lamp, and read more of whatever book I am currently working on. I write down notes as I read each book and it tends to lead to a better and more motivated day.
  • When I find myself swiping through the screens full of apps on my phone and find Twitter is missing, I am reminded to put the phone back down and pull the little oldschool notebook out of my pocket – this is where I keep current ideas and my to-do list.
  • When the sun goes down and I suddenly feel the usual craving for an adult beverage, it reminds me to do something useful and physical instead. I pour a glass of cold water and step out to the back patio where I keep the squat rack permanently loaded to remove all barriers to this ultimate of exercises.

With these tricks, I have cut out most of the brain’s junk food and replaced it with things that are actually good for mental function. I still need plenty of computer time to keep up my cherished hobby of being Mr. Money Mustache, but now it comes in shorter, focused sessions at this bigass desktop computer in a quiet room with no distractions.

If all goes well it will mean getting more done with less unsatisfying gear-grinding. Better days and calmer nights. All in all, a worthwhile resolution in my books.

What are you changing this year? Are you going after big objectives or tiny habits?


]]> 186
It’s Winter… Get Out and Enjoy it! Tue, 23 Dec 2014 09:01:31 +0000 moons

MunetI’ve decided to grant myself the rest of the year off*. But don’t worry, I’m extending the same privilege to YOU as well.

As those of us in the North endure the coldest and darkest days of the year, everything seems to shut down. Some of this is a good thing – the holiday season brings with it plenty of time away from work and school. But some of it is rubbish as well – I am seeing drastically fewer bikers and walkers out there, and parents are even driving their kids to school to protect them from my area’s not-very-punishing winter.

Last month, a friend of mine reported his total biking miles to commemorate “the end of the biking season”, as if there were some imaginary and tragic season when we had to stop using our bikes. And at the risk of causing a domestic dispute, my own wife has started using the climate controlled motorized throne for her weekly grocery run, despite the fact that we live only 1.5 miles from the grocery store. Even YOU might find yourself spending more time indoors in the winter, taking shelter from the discomfort that lurks outside.

Beware of this tendency, for it is a perfect example of Bullshit Lifestyle Creep. You experience discomfort or inconvenience, and your efficient but misguided survival mechanisms kick in, gently nudging you to avoid the discomfort. You stay cozy inside, knitting on the couch or watching a quality series on Netflix, and the winter passes safely by outside your window. And you miss all the benefits she has to offer.

So in case you forgot, let me remind you: going outside is FANTASTIC. Especially in cold or rainy weather.

Sure, you already knew that a stroll outside on a beautiful day is a good thing. Everyone does that, and many of us fly great distances just to be able to have the experience during a Northern winter. But it turns out it is not the warm sunshine that is making that experience so worthwhile – that’s just the comfortable and convenient layer on top. The real benefit is just the fact that you are outside, walking, moving, and working on things as you are meant to be doing. And as it turns out, all of these things are possible in any weather, and they are even more rewarding in adverse conditions.

When you go out in cold and darkness, it is an adventure. You have to prepare in advance. It actually takes some brainpower to strategically design your outfit, because you could die if you spent too long out there without clothes. Do you need a hat? Gloves? Thermal underwear or a wind layer? A mobile phone and flashlight, just in case? Awesome.

You step outside and suddenly your world expands dramatically. There’s the black sky far above.


Says the moon as it looks straight down at you. Do you realize that thing is 250,000 miles away? And yet it hovers perfectly in the sky, because it’s really whipping around your planet, held by a quarter million mile gravitational bungie cord. That is infinitely more amazing than whatever you were doing before you stepped out for this walk.

But wait, look at all those stars scattered everywhere else. Some of them are really planets in our own solar system – Venus is a big one at 100 million miles away, but the stars of the Big Dipper are 100 light years away, which is more like 590 trillion miles.  And yet there they are, presented for your amusement as you stand there to take it all in.

If you’re lucky, it is damned cold out here. The air bites just a bit at your well-protected cheeks and your mouth can shoot out a good 3-foot plume of steam when you exhale. You start to walk.

Nobody else is out tonight. As you travel down the silent street, you can see the ridiculous lights flashing in the window of every home and apartment. These suckers are all wasting away their precious time watching TV, while you are out here being alive. In our future Badass Utopia, this experience will be different. Everyone will be outside, reverently taking in the beauty of the night and the freshness of the air. Every night will be like a Midnight Mass, with the Cosmos as the host. But for now, you’ve got the place to yourself. You are the pioneer of the evening walk.

This meditative feeling you have is like hitting the mental reset button. All of your stresses, worries and bad moods become less with each step you take. If you do this often enough, they will be gone altogether. But it’s not just the machinery atop your neck that is getting a tuneup, the rest of your body is jumping for joy as well.

Every one of your physical systems is coming alive. Clean blood is circulating through, healing the pipes from the damages of sitting down too long. Fat cells are being drained and deflated, while muscles are pumping up. And the exposure to cold air is having mysterious positive effects on your metabolism and everything else, best summed up as General Badassity.

You might even break into a little jog at this point. The jog feels so good that you keep it up for a while. And just to prove you’re really alive you decide to SPRINT for this next little bit of your journey, just until you reach those two trees way up there. Everything is whipping by now – the air is roaring in your ears and your eyes are watering from the cold wind. You can think of those as tears of joy from your cardiovascular system. You run out of sprint power and return to walking, with heart pumping and steam drifting from all exposed skin, and turn back toward home.

As you return to your warm, bright home you are the hero. Alive, glowing, creative and invincible. You are a mysterious force to anybody who chose the wimpier path of staying inside or taking the car. You are someone who has finally figured out how life is meant to be lived.

Now grab a pen and paper and list a few additional ways you’re going to make your life better from now on.


*The Mustache family is headed to Canada for the holiday season until January 6th – Hamilton first, then Ottawa. That’s where you’ll find some real winter night walking weather. Maybe we will even get to band together for an evening walk. Stuff like this shows up on the Twitter feed if you want to click the follow button there. The stream is also presented at the bottom of the blog’s front page.

]]> 214
Case Study: Average Everyday Complainypants Seeks Redemption Wed, 10 Dec 2014 16:06:54 +0000 Average consumer's daily commute vehicles
Average consumer's daily commute vehicles

Average consumer’s daily commute vehicles

Today’s case study is a classic, because it addresses a problem suffered by tens of millions of families: the chronic time shortage caused by a double income, double commute, kid-raising lifestyle. While some practitioners of this game do it by choice, many other would rather have more free time … if only they could afford it.



Dear Mr. Money Mustache,

I am new to your blog but have been seriously enjoying this new found financial porn on a daily basis. I think I have the basic principles down. Bike good; car bad. Mindful spending good; mindless consumer orgy bad. Early retirement good; endless wage-slavery bad.

Instead of sitting in my beige 8×12 government cubicle daydreaming about how cute I would look with a new red Guess bag and tall leather boots from the mall across the street…I am now in my beige cubicle fantasizing about a simpler life with a smaller home, more time at home with my tiny humans and more time to read.

At the risk of being labelled a complainypants, I genuinely do not understand how to move from this wageslavery to being a Mustachian. It seems to me to be bit of a chicken and egg conundrum. How do I live on 50% or less of my income while still being stuck in said cubicle with all the expenses that it incurs?

The Basic Stats:

  • I am a fellow Canadian and as such am exceedingly polite
  • I live in one of the coldest winter cities in the world (temperatures in January and February routinely dip to -40 degrees)
  • Aside from the extreme temperatures in which I live, I am otherwise average in virtually every way.
  • Average height, average weight, average number of kids (2)
  • Average home (1200 sq feet), average mortgage (260K, worth about 420K in today’s market)
  • Average income (75K/year, 165K/year household…although according to you…I have already made it big)
  • Average cars (2 –one 2006 Honda Odyssey mini van and one…wait for it…2011 Ford F-150 Eco-boost Extended cab truck)you saw that coming from a mile away didn’t
  • you?…but amazingly both are paid off)
  • Average commute time (20 minutes direct, 45 minutes if you include the kids daycare/school drop time. My husband works 15 km in the opposite direction so we can’t even car pool.)
  • And last but not least, average amount of consumer debt ($12000 on a line of credit).
  • We have an average amount of savings (120 000 in RRSPs and $12 000 in a few different savings places)
  • And best of all I am in 15 years into a 30 years sentence with Her Majesty the Queen to be given my golden hand shake at the age of 55 (ie 70% of my income for the rest of my life…or if I cashed it in today 280K)…which as you might guess, I am starting to think isn’t worth the next 18 years of my life.


A basic sampling of our current overall monthly budget is below:


Take-Home Pay$7500
Retirement accounts, emergency fund, etc$500
Debt Paydowns$500
Property Tax$325
Home Improvement /maintenance$300
Groceries and Personal care$1200
Insurance (home, life, van, truck)$475
Kids' sports (hockey/swimming)$100 (we're Canadian - hockey is a fixed expense)
Miscellaneous (birthday parties, lunches out, hair cuts,
gifts, golf, hobbies, entertaining)
Total Spending$6500

My days and nights consist of rushing around like a chicken with its head cut off.  How do I get from here to retirement and more time enjoying life with tiny humans?

Interestingly my husband is a structural engineer, who does carpentry and custom wood working on the side, which is his passion that he would like to make his career, he is not interested in ‘retirement’ he would just like a career change.

Whiny in Winnipeg

Mr. Money Mustache Responds:

Dear WW,

While your situation sounds horrific to me, it is of course the standard situation for most two-jobs-plus-kids families. Let’s begin with the end in mind: getting you some freedom ASAP.

Right now, you earn $75,000 before tax or 45% of your family’s gross pay. Since you listed take-home pay at $7500, let’s assume you are bringing in $3400 of it.

Out of that, the following monthly costs might be byproducts of your job:

  • Gas and direct/indirect car costs for almost 2000km/month of driving around in a van: $1,000
  • Parking: $95
  • Daycare: $1200
  • Convenience foods and services that show up in your grocery and miscellaneous bills: $200

    Total: $2495

This leaves only about $1000 per month of “profit” from your job. So, including commuting and shuttling kids around to child care, are spending about 250 hours a month to earn $1,000 – or four bucks an hour. If you can think of better things to do than working for well under half of Manitoba’s minimum wage, you should quit immediately. Since this is what you wanted anyway, congratulations!!!

But it gets even better than that. Since it sounds like properties increase in price as you move towards your job downtown, they might well decrease as you move towards your husband’s job. If so, you could find a new place close to his work, and eliminate his commute as well – potentially saving the $600 per month he is currently burning up commuting in the opposite direction.

The savings from owning a less expensive house might free up an additional $200 per month in interest, since the equity from your current house would easily wipe your debts and you’d also have a lower mortgage payment.

So far we have only addressed basic strategy – the simple choice of where to live and work. There’s even more wealth on tap as soon as you activate a bit of Mustachian frugality.

For starters, since this is the MMM blog we’ll need to fix your insane choice of vehicles.



You have two kids, and yet you drive around in a BRAND NEW GAS GUZZLING LUXURY RACING BUS. The 2006 Honda Odyssey is not a vehicle for an indebted mother to use to drop the kids off and then head downtown. It is something a hopelessly spendy multimillionaire might use to shuttle around six pampered passengers on a cross-country roadtrip while hauling a giant trailer full of supplies. For two kids, you use a Toyota Yaris or similar. That will cut your gas bill down by 50%.

Your husband appears to be driving alone and not even a multimillionaire himself, and yet he has a TWIN-TURBO SIX PASSENGER RACING FARM TRUCK!!! Holy shit, brother, how many heads of cattle and pigs are you hauling on that roundtrip, while simultaneously carrying international heads of state in the stately cabin? That is a fucking ridiculous vehicle for ANYONE to drive except the rarest breed of Farmer/Diplomat, and I’m betting none of them also hold jobs as Structural Engineers.

So you’ll be selling that, and walking to work. For those rare times you drive, you can ask to borrow the wife’s manual transmission Yaris hatchback. You are also permitted to buy a used mountain bike, and if you’re REALLY getting serious with the carpentry, a 2001 Ford Ranger pickup, 2 wheel drive 4 cylinder manual longbed. You may weld a 12-foot lumber rack to it in order to outperform your current clown truck.

The savings on depreciation, fuel, and insurance will compound an additional $86,000 per decade into your family’s wealth.

Once you have these big wins in place, you’ll have much more time and energy to go after the medium-sized ones: your grocery bill can easily be cut in half, according to most Canadian Mustachian 4-person families. Restaurants and other takeout frivolities may drop as well, depending on your priorities.  Another $1000 per month is possible in this area, which will go directly to your financial independence fund.

When you add in Mrs. WW’s outstanding windfall of a $280,000 early pension payout, all my calculations indicate that you will be further ahead than you are today, even after ditching the government job. In fact, after a year of making these changes, Mr. WW may even start getting the itch to scale down his own job and do exactly as he sees fit as well. And that would be nothing to whine about at all.

Best of luck!

Do YOU see any parallels to your own life? It is almost always possible to avoid the two-commute family with kids if you make it a priority.


]]> 581
All Wheel Drive Does Not Make You Safer Mon, 01 Dec 2014 15:15:33 +0000 1950s_cat

1950s_catEvery year right around this time, millions of consumers are tricked into a massive financial and lifestyle mistake as the natural incompatibility of snowy roads and safe driving take them by surprise.

“I know Mr. Money Mustache insists that I drive only efficient cars, but that’s because he lives in the dreamy semi-desert of Colorado where it never snows. Where I live, the roads are ice-packed for the entire winter, and you’re doomed if you don’t have All Wheel Drive. Therefore, I will buy a enormous four-wheel drive truck for the safety of my family. Or at least a Subaru.”

This is just plain wrong, and as a recovering gearhead, I need to make a public statement on it.

Just like any other great marketing-fueled deception, automakers have captured both our irrational fear of loss and desire for status, and channeled them into a product line that just happens to be more profitable for them. And it’s shocking how well it has worked, as even some of my most esteemed readers have been writing in to ask for advice on “which AWD vehicles are Mustachian?”

The answer is “Whichever one the Forestry service or the Military issues to you when you show up for duty in an area without roads*”. Because for the rest of us, it’s Hip and Knee Drive for your shoes, Chain Powered Rear Drive for the bike, and Front Wheel Drive for those rare occasions you need to use a car.

The reason I can state so confidently that the AWD hype is pure marketing bullshit is simple physics. Although this was one of my favorite subjects in engineering school, you don’t need a degree to understand it fully and cure your desire for AWD.

Car safety depends at the core on two things: not crashing into anything, and not letting anything crash into you. To accomplish those goals, the ability to steer your car in the direction of your choice is the top factor, with braking coming as a close second. A certain amount of acceleration is important as well, but not nearly as critical as the first two: note the extremely low collision rate of transport trucks and city buses per mile traveled.

Every car, truck, and SUV has four wheels. And every one of them has front-wheel-steering and all-wheel braking. So we’re all on a level playing field so far. The place where the safety in accident-avoidance starts to diverge is:

  •  How firmly the car sticks to the road (more grip means more safety)
  • How effectively the car lets you change direction or speed (cars with a lower center of gravity and stiffer suspension are safer)
  • How the power and braking affect vehicle dynamics (applying power to the rear wheels while cornering tends to break the grip and cause you to fishtail and spin out – this is why rear-drive-only vehicles like sports cars and pickups are terrible in snow, but front-drive works well)
  • Fancy computerized add-ons that compensate for human limits (ABS and Vehicle Traction/Stability Control) can increase safety by modulating power and brakes.

That’s it for the physics. You’ll note that there is not much in there that would allow cranking all four wheels, instead of just the front wheels, to make you any safer And in some cases it will send you into the ditch faster than front-wheel drive.

Note the implication of this: If anyone gets an AWD vehicle “for safety” but uses it with all-season tires, they have performed a Consumer Sucka Fail. A front wheel drive vehicle with snow tires would have more grip.

So When IS AWD useful?

All wheel drive is a performance feature, not a safety feature. With all other things being equal, AWD lets you accelerate more quickly on slippery roads. This is usually a bad thing, because it masks the true slipperiness of the road from you, leading to overconfidence which will put you into the ditch, courtroom, or emergency room. But it is useful if you need to plow through unusually deep snow in conditions that would normally get you stuck (for example a steep snowy driveway, or if you run a snow plow). It’s also useful on extremely steep unpaved roads or in areas with no roads at all – places you are unlikely to need a car.

But Why Does Mr. Money Mustache Hate AWD so Much?

I have nothing against all wheel drive. It’s a cool bit of mechanical engineering that gives a vehicle superpowers. Whenever my son and I make a LEGO Mindstorms or VEX IQ robot, you can bet we’re going to give that sumbitch AWD or even a set of tank treads, because hey, why not?

The thing that pisses me off is that people have started using AWD for no reason on paved roads. Here we are, a society who has spent trillions of dollars building a road network so wide and glassy smooth that you can get almost anywhere in the country in all seasons even if you are driving a 73-foot tractor trailer rig, and we are still wasting money driving off-road vehicles on it.

Make no mistake: In a gas-powered vehicle, AWD requires huge sacrifice in weight and complexity. Hundreds of pounds of steel shafts, gears, lubricating oils and reinforcements are required to get the power from the engine to that extra set of drive wheels. And not only must you pay to carry that dead weight around for the life of the car, you burn even more gas fighting the extra friction of the additional gears every second the car is moving. And then you have to pay to maintain and repair all those extra moving parts. It’s like carrying all your camping gear on your back every time you leave your house. It is also akin to a man attaching a set of 13-pound Decorative Testicles below his real ones, just for show. You would do it if absolutely required for a social event, but not when you actually had to get some work done.

My Subaru Story

Back in the day, even Mr. Money Mustache slipped into the Subaru trap at one point. It was a 2004 Impreza wagon. I bought it for the impressive cargo space, but sold it just a few years later for the abysmal gas mileage. Even with a 4-cylinder engine and a manual transmission and my best attempts at hypermiling, that little machine could suck down gas at 27 MPG on the highway, meaning it consumed as much fuel as my 15-year-old city bus of a construction van does. By comparison, the 2005 Scion xA I replaced it with holds the same number of people, but has averaged about 42 MPG in its life with me. But at least those Subaru years gave me plenty of time to evaluate the effectiveness of all-wheel drive**.

What I found was just what physics would suggest: it’s all in the tires. The car came with reasonable all-season tires, which gave it fast acceleration and average stopping power in blizzards. On the other hand, I would end up Dukes of Hazzarding through slippery intersections because the rear wheels would break their traction more easily than a front-drive car. On the positive side, the car could do outrageous drifting power doughnuts in an empty ski resort parking lot – a longstanding Subaru owner tradition.

Later I upgraded to a set of Pirelli 215/45ZR17 performance tires on fancy wheels (hey, I was just a clueless lad back then), which greatly improved its handling on my area’s usually-dry roads, but turned it into an all-wheel-drive toboggan in the snow.

I vividly remember a moment in my town’s level, well-plowed Lowe’s parking lot, pulling out with a small load of lumber. It was a sunny but crisp day in January, so the snow was melting only slowly. I found myself stuck right in the pedestrian crossing in front of the store, with all four of those big alloy  wheels whirring cheerfully but uselessly as they polished the packed snow and I went nowhere. It took a couple of friendly but sarcastic contractors to push me out by hand. They mocked my vehicle for not being a truck, but the real joke was the tires.

 But why is my Aunt’s Subaru so much better in snow (even braking) than my Prius?

Last year my van pulled a heavy load up a grassy hill covered with 8" of snow.  Front wheel drive is more than enough.

Last year my van pulled a heavy load up a grassy hill covered with 8″ of snow. Front wheel drive is more than enough.

The tires are the biggest thing, but a few other factors than can also affect traction:

A wheel and tire combo with a longer contact patch can grip the snowy road better. Larger diameter, narrower width, taller sidewall profile, softer rubber compound, and lower air pressure all contribute to this. The Subaru comes with larger, softer tires than the Prius.

A heavier vehicle can crush the snow enough to get slightly more grip in certain conditions, but this is tricky since extra weight also means more trouble changing directions. Extra weight also makes you more lethal to everyone else on the road, which would make it a pretty selfish way to try to defend yourself. If you choose to play this game, just be honest and add machine guns instead.

Higher ground clearance allows you to skim over deeper snow without scraping the car’s belly. But this is a smaller deal than you’d think. For example, the Nissan Pathfinder SUV has 6.5 inches of ground clearance, while the Toyota Prius is only an inch lower at 5.5. A road with even 5 inches of snow is insane to drive in any vehicle above about 25 MPH, so you might as well get out your mountain bike or cross country skis.

The Ultimate Solution

The first choice, of course, is to design your life so you don’t need to drive in the snow very often, or very far. I accomplished this partly by moving away from the extremely snowy area of Canada where I grew up. But you get equal effect by doing your house and job shopping with car commute avoidance in mind. A person with your level of skill is definitely entitled to work from home on snow days – your boss will agree.

Oddly enough, once I laid the ground rule of no snow commuting, the freedom from cleaning off cars and driving them in snow has been one the longest lasting bits of happiness I have ever experienced: 15 years of smiles and still going strong. Nowadays, although I argue strongly for snow tires, I don’t own any – because I just don’t bother driving on those rare days it snows in my own area.

Second best: Snow Tires on Dedicated Rims

Blizzak WS-80 - slightly pricey, but your Honda Fit will outperform Jeep Grand Cherokees with them. Highly recommended for extremely snowy areas.

Blizzak WS-80 – slightly pricey, but your Honda Fit will outperform Jeep Grand Cherokees once you outfit it with these. Highly recommended for extremely snowy areas.

This part is really easy.  We now know that SUVs and AWD are not useful for those driving on paved roads. We know that summer tires and even all season tires are death traps compared to snow tires. I’m serious about this: there is a night and day difference in snow grip between all season tires (sometimes referred to by driving professionals as “no-season tires”) and good snow tires, because of the different rubber compounds and tread patterns.

But you don’t want to take your car to a mechanic twice every year and pay to have summer and winter tires swapped. This costs time and money, and damages the tires and rims. Instead, you simply get a second set of rims with snow tires permanently installed.

In the US, you just go to, look at their winter catalog, and pick out a set of wheels and tires that are guaranteed to fit your car. They come via UPS, and you jack up your car and swap them on one at a time, just as easy as putting on the spare. Any dedicated tire shop or Costco is also a good choice (Tire Rack will still help you get an idea what a good price on tires and wheels looks like). And as usual, the auto dealer is to be avoided – they’ll just try to sell you two thousand dollar tires and rim sets, or worse,a brand new model with AWD.

Happy Holidays, and may this set of snow tires be the last you ever need.


* If you read all this and insist on disobeying Mr. Money Mustache to your own detriment, the least ridiculous new AWD cars on the market right now are the Subaru Impreza wagon (they have improved it to 33MPG highway) and in the Large SUV category, the Subaru Forester (up to 32 hwy). Another good choice for large off-road camping families with an extreme money surplus is a 2010-ish Honda CR-V. SUVs larger than this have no rational reason to exist at all – just get a van.

** Thanks to my upbringing in Canada and various subsequent snowboarding trips around North America, I’ve also snow tested a few other all-wheelers: the Subaru Legacy/Outback, WRX wagon and Forester, Jeep Wrangler and Grand Cherokee, Toyota Tacoma and 4Runner, Audi S4 wagon, Nissan Pathfinder, Ford F-250 pickup, Chevrolet Trailblazer and Traverse, Honda CR-V and Element, and even an Eagle Talon turbo AWD. Diagnosis: It’s all in the tires.

Further reading on cars: Top 10 Cars for Smart People

Car and Driver: Snow Tires Still Beat Four Wheel Drive

Jalopnik: let’s settle the Winter Tires vs AWD debate forever, and Snow Tires: to buy or not to buy

]]> 450
If You Think This is About Extreme Frugality, You’re Missing The Point Sun, 23 Nov 2014 22:54:33 +0000 nymag

A few months back, I joined in fnymagor an episode of a podcast called the Disciplined Investor. The host Andrew Horowitz and I were chatting about money, raising children, stock market crashes and so on, and then this question popped out of the void and really surprised me:


So, there must be something you really miss. What’s the thing that it hurt most to give up, to live the way you do so you could retire early?

What happens when your son wants to go to Disneyland, and you have to turn to him and say, ‘Sorry, that’s just not in the budget this year’?”


For some reason, the question stirred up so much stern enthusiasm in me that I had to loosen my collar to let some of the steam shoot out. There were so many wrong but telling assumptions behind it. It was asked from such a well-meaning but self-defeating position.  I quietly took a deep breath and did my best to explain that this is exactly where the path of the Sucka Consumer divides from that of the Mustachian.

More recently, this lifestyle you and I share showed up in New York Magazine, which brought us a good amount of new attention. The writer Annie Lowrey seemed to get the idea pretty well, describing Mustachianism as a thing people (even rich people) aspire to by choice, rather than a wacky  thing that some extremely warped people are doing because that’s all they can afford. Economist Ezra Klein mused on Twitter that frugality might now be becoming a status competition that replaces clueless consumption. I sure hope so.

Unfortunately, the article was capped with a flashy but  misleading headline*:  Meet The Blogger Who Wants You To Spend Like You’re Poor.

 Another version of the same article was given the label This Tightwad is Trending“.

Those were probably calculated phrases, because the goal of any headline is to capture attention and draw in readers. The problem is that too many of those readers still aren’t getting it. You end up with comments like,


“Fiscal responsibility is one thing but I haven’t time for cheap people. I am financially careful but I refuse to deprive myself of the few luxuries I prefer to indulge. People like Mustache take it to another level.”

“So the point of living like you are poor is to have enough money to retire in your 30’s and live like you’re poor… perpetually? No thank you.”


So let’s break it down real quick so brand new Mustachians will know what this shit is about, while the old timers can stand in the back and sing along.

This is not about being cheap, minimalist, or extreme.

It’s about using logic and science to design a Slightly Less Ridiculous Than Average Lifestyle in order to live more happily.

The Mustache family does not lead an “extremely frugal” lifestyle by any stretch of the imagination. I mean, holy shit, we are a multimillionaire family living in an expensive house with a stream of luxury goods, services and food shooting at us from all directions.

Not only do we bathe daily in this spectacular river of affluence, but we even walk casually away from it a few times a year in order to ride in Jet Aircraft which allow us to sample other unnecessary parts of the world. The total bill for this nuclear explosion of consumption is an outrageous $25,000 per year, which would be closer to $40,000 if you accounted for mortgage interest or rent on a comparable house. The life we lead in this rich part of a rich country is extreme, but at the other end of the scale than that suggested by the critics.

The only unusual part by American standards is that we could afford to spend many times more, and yet somehow we choose not to do it. This is a lifestyle of choice, not a sacrifice we make just because we don’t want to have to go back to the office. And therein lies the reason this blog is of any use to anyone:

 Learning to separate “happiness” from  “spending money” is the quickest and most reliable way to a better life.

The side-effect of this is that your life will become much less expensive and you will therefore become much wealthier very quickly.

But it’s not about the money, and as long as you think it is about the money, you’re still fucked.

 So I explained to the man in the interview that if we wanted to go to Disneyland, we would go to Disneyland. Hell, we would live inside the park or perhaps one of the Disney-owned cruise ships if we saw fit. We just happen to find that tourist traps like Disney are a pretty pale and distant second place compared to the fine places that Mother Nature has built for us.

We don’t use our bikes for transportation and hauling instead of our cars, even in the dark and even in the middle of winter because it saves us a few dollars of fuel. We do it because it’s an awesome way to connect with your own town, stay in proper condition, adapt naturally to your own climate, and live like a real human instead of a sanitized, flabby car clown.

I don’t swim and and paddle kayaks and canoes all summer because I lack the funds to buy a twin-engine motorboat. I do it because when it comes to recreational pastimes, muscle wins over motor every fucking time.

I’m not expecting my son to earn his own living early in life and pay for his own higher education because I’m a tightass or because it would break the bank to fund a Harvard doctorate. I set out this challenge because pampering your kids only encourages a dependence on Pampers, while giving them the advantage of working for their own rewards is the best possible gift. I will give him unlimited time, guidance, and access to knowledge, and teach him how to amass an embarrassingly large fortune in a short amount of time. It will then be his choice how to put this knowledge to work.

We spend most of our time at home, a place which I built from the ground up with the valuable helping hands of a few friends. We do our own cooking and cleaning and of course maintenance. Entertaining, creating things, stories and music and hosting a neverending stream of fun guests. Even my gym, workshop, and office are right here in the same spot.

None of this is done because this is a cheap way to live, but because it’s a rich and efficient way to get in touch with all the things that make a human happy. We could go out and get faint approximations of these same services by driving around constantly to various cities and manage to spend more, but why the hell would we do this?

Oddly enough, it hasn’t always been this way. At age 21, I had a fairly materialistic life planned for myself: perhaps a 4500 square foot luxury home in the best neighborhood and a reasonably flashy car like an Acura NSX. Maybe a vacation house or two later on, once I made CEO.

But over the years, this has changed. Even after retirement, our costs have continued to drop even as our income has increased. The choices are no longer based on saving money, but rather on doing our best to live a good life. This was a pleasant surprise to me, but it seems to be an incomprehensible incongruity to the average consumer.

I told the man that my family’s lifestyle was not designed from the top down, starting with a restrictive budget and chopping off important activities based on their cost. Instead, it is a work in progress where we learn as much as possible about the entire planet and the various lifeforms therein, and do whatever we feel is most worthwhile given our limited time aboard this fine ship. Nothing is off-limits based on cost, because making money is fairly easy at this point. We do whatever we want, go wherever we want, and buy anything and everything we feel is worthwhile.

And as for that New York Magazine headline, no, I don’t want you to Spend Like You’re Poor. To me, that would imply car loans, processed food, hair salons, restaurants, lawn care companies, housekeepers and all the things that people get when they follow the standard script of a people who are starved for free time and chasing material comforts as a replacement for happiness.

I want you to spend like you are the richest person in the world, a person who has so much happiness and balance in your life that you can’t imagine anything you could buy that would make you any happier.


* Annie has since confirmed to me that writers for most magazines don’t get final say on their own headlines. I think you need to fix that, NY Magazine. If you’re going to hire people to write for you, why go in and subsequently mess with their shit? These are artists, and you get a better product if you don’t run in with a can of spray paint to make little adjustments after they finish their creation. Otherwise you’ll find an empty desk waiting for you as soon as they reach financial independence themselves.


 Further Reading: New people might enjoy this list of frequently complained questions, which I wrote a couple years back after a similar media incident. Glad you’re here!

]]> 323
Are You Giving the Shaft to your Future Self? Tue, 11 Nov 2014 23:26:49 +0000 medusa

mustache_sawUnfortunately for me, one of the concepts I find most annoying to read about happens to be one of those the mainstream financial media likes to write about the most: The hard times that have befallen Hardworking Americans*, and how it is entirely the fault of the system in which we are all stuck.

Depending on the day, this same underlying story comes dressed up in different clothes:


  • The middle class wages have stagnated (while the rich keep earning more) so life has become too tough for us.
  • The cost of living in ExpensiveVille* has grown so high that people can barely scrape by on $150,000 per year.
  • Education has become so costly that students must take out $200,000 loans, which then burden them until at least age 50.
  • Americans are headed for a retirement crisis. Most people are still broke by age 50, which means they will have to work until at least 80 (because of course it would be impossible to live on only Social Security benefits).
  • The 1991 recession and subsequent economic upheaval hit Martha hard. After 30 years of rising wages as an executive in a typewriter company,  she found herself without a job and competing with other CEOs for jobs at the local K-Mart.
  • Bill and Jenny worked diligently at their jobs as well as caring for their two kids. But when the 2007 credit crisis hit, they lost one income even while the value of their Las Vegas house was cut in half, leaving them with a mortgage that was $100,000 underwater. Foreclosure was inevitable.


The dangerous thing about all these stories is that they sound so plausible. Income inequality has indeed been growing, as have house prices in expensive cities.  We do indeed suck at saving, and executives do sometimes end up falling far down the pay scale in the event of job loss. But there is one thing the journalists never say, and that most of us don’t like to admit:

In almost every tale of financial woe, the real villain is the victim’s Past Self.

These people had been giving themselves the shaft for years or decades without realizing it, and it was this shafting that allowed The System to get them down later on. So what the newspaper describes as a medical bankruptcy could in fact be a Caribbean vacation bankruptcy** “victim” who happened to have the bad luck of getting sick when almost out of money. A foreclosure caused by the recession could very well be more attributable to commuting 25 miles to that job for the preceding 10 years in a GMC Tahoe. 

In fact, if you’ve ever blown a dollar on frivolous spending, and years later find yourself a dollar short due to the arrival of hard times, it’s not the hard times that broke you. It was that dollar blown long ago. Because a dollar is not an ephemeral phenomenon like today’s weather, it is a permanent accessory that sticks with you for life if you allow it to do so.

All this may sound harsh, it’s really just an expansion of one of my favorite concepts in personal finance: the idea of a present, past and future self.

You’re Borrowing from Yourself

Every financial transaction you make today is not so much a deal with a mortgage company, car dealer or department store. It’s a deal with your future self. After all, when the 20-year-old version of you borrowed $32,000 to buy that fully loaded Honda Accord, who ended up having to pay it back? The past self got the new car with no responsibility, and her successor in the present holds the result: a debt hangover and a car that’s now worth only a tiny fraction of the new price. Past You gave Present You the shaft.

But it goes further than just money. While your life as a baby has everything to do with the random luck of genetic composition and what sort of parents you were handed, you quickly get the opportunity to start influencing things yourself. By the time you get to my age, almost all of the features of your daily life, both the jewels and the turds, gifts and shaftings, are things deposited on the Conveyor Belt of Time by earlier versions of you. You have your Past Self to thank for all of this. But until you acknowledge that, you can never become the generous benefactor that your Future Self deserves.

The Tragic Comedy of Rich Country Recessions

Every ten years or so, our furiously strong economy takes a very short breather.  Instead of setting a new all-time record for economic output every quarter, sometimes it only matches its previous all-time record. This is called a “sluggish” economy and we usually fire the president over it. Sometimes it even goes down a percentage point or two. This is called a “Severe Recession”. Millions of us lose our homes and we fume about how irresponsible the bankers and politicians were for lending us so much money before taking away our jobs. What they are missing, of course, is how ridiculously vulnerable we all made ourselves back when the times were still good.

Now is the Time to Stop the Shafting

Suppose you’ve just graduated into this booming economy and scored yourself a great job. Sure, you have some student loans, but they are easily dwarfed by your new Big City Salary. Do you celebrate by buying a car, a house, adopting a couple of dogs, getting married and immediately having several kids like everybody else does?

Holy Shit No!!!

A new graduate with outstanding student loans is like a person riding a unicycle in November, just before the start of an icy winter. Balance is tricky, but it can be done. The pavement is dry now, but you know that ice is coming. So do you jack up the seat of the unicycle another 20 feet and balance a few fire-juggling elephants atop a broomstick which extends from your hat? Do you open a can of grease with your other hand and squeeze some onto the tire of the unicycle, and then start pedaling through town to go see if you can find a half pipe to bust out a few frontsides? Again, “Holy Shit No” would be wise advice to your future self.

You slow down the unicycle, set your feet on the ground, and adopt a stable stance. Then you gently set down and free the elephants, find yourself some winter boots, a coat, gloves, hat, food and shelter. With continued preparation and ingenuity, you can be out making snow angels and watching the winter moons, instead of having your frozen and crushed body blackening in the shadow of the elephant corpses, being nibbled away by raccoons until the eventual maggot infestation when the spring thaw comes.

The strange part to me is that while most people would consider this lesson in Unicycle Strategy to be self-evident, when it comes to money they are right there at the elephant shop adding the broomsticks and grease to their shopping cart. So let’s set this gruesome metaphor aside and consider a more reasonable financial strategy. Something that will prove to be a gift to your future self rather than a crushing lifelong hindrance.

Getting Started 

When you move out of Mom and Dad’s house, your first job is to set your eye on the prize. You want a fulfilling, happy life with plenty of challenge and reward, but hopefully a minimal amount of tiresome bullshit (TB). As it turns out, the amount of TB you must endure is inversely proportional to the amount of control you can gain over your own life. And control is something you build through a combination of skills, a wise yet optimistic attitude, time, and of course money.  Thus, everything you do should be done with an eye on building those four factors.

Buying a Car brings you no skills, wisdom, free time, or money. Nothing except a hole in your wallet. So you do it with an eye on efficiency and minimizing cost. Spend no more than four months of your net monthly savings, with an upper limit of $12,000 until you are at least a millionaire. Then make that machine last at least ten more years.

Choosing a Place to Live is not about kitchen countertop surfaces or closet arrangements. It’s about putting you in the center of where you want your life to be. You can always decorate and optimize, but you cannot teleport. So location is everything, even if it means downsizing or renting instead of buying. Living in the right place gives you back time, energy, and friends.

Your Job is a convenient source of income, but it is not your lifeline or your identity. Never be afraid to shop around for a new one, switch careers entirely, or dabble in your own businesses which may very well grow to be more lucrative than your main job.

Kids and/or Large Animals are not just things you pop out or pick up because hey, they are snuggly. These are enormous and fantastically expensive commitments, because they dictate where you will live, drive, and how much time and energy you’ll have left to work for money. It is a wonderful luxury that we can all afford these things if we prepare for them in advance. But make sure you’re on very firm ground before jumping in.

Good old-fashioned Hard Work  is almost always a gift to your future self, because it builds skills and earns you money. And the satisfaction you get from the subsequent lifetime of looking back on all that hard work is even better than the money and skills.

Maximizing your Luxury and Convenience right now may feel like a reward to your present self, but the belly full of expensive food will be converted to a turd on the conveyor belt by the time your future self retrieves the results. You leave your future self poorer, fatter, and with fewer skills. You may create a pleasant memory or two, but memories of hedonism are less satisfying than those of hard work.

This last rule applies to all categories of life, from purses to pickup trucks, iPhones to international travel. You can safely buy them if you have more money than you need, but you can also safely forego them without losing an atom of happiness or life satisfaction. Of course, we will all enjoy breaking this rule and indulging occasionally, but in general the rule is to put down the golf clubs and pick up the tool belt a little more often.

 The Reward at the End

You could live your entire life as described above and it would still be a fine, deeply satisfying existence. By building strength and character, you design away the worry and whining that dominates modern life. It’s simply the right way to live. But there is pleasant little side-effect: standing here in the future and unwrapping all these gifts as they come off the belt.

I’ve always been almost pathologically focused on creating a better future for myself and anyone who happens to be along for the ride. I endured four years of relatively horrible engineering classes because I knew they were the ticket to a good job. The happiness of the resulting jobs easily made up for all that hardship, but I was already looking ahead at the next step: how to invest all that money to make the future even better. Every beer foregone, barbell lifted, bike pedaled, and fence post hole dug through hard soil in hot weather was done with the benefit of the future self at least partially in mind.

But suddenly I have noticed that I am that future self, and the rewards keep piling up. This bonanza of gifts from the past has been ongoing since about age 21, and yet I still have 60 years to live.

It still blows my mind each Monday that I never have to go to work: I can thank the 25-year-old version of me for that. Here at age 40 I can still sprint through the park with my boy or enjoy a long day hoisting roof rafters and balancing on ladders: I owe this good health to the generosity of my past self as well. Even my pleasantly warm bare feet, which sit comfortably on an Oak floor heated to a toasty 80 degrees by a DIY radiant heat system*** as I look out the window at a snowstorm, are owed to the October version of me, who crawled around for hours in the dirt of the crawlspace to thread and connect all those hundreds of feet of PEX pipe. Thanks, dude.

The rewards are great, but the very act of giving (both to yourself and to others) is just as great. So with that in mind, I’m going to fold up this computer and get back to work, sending some more gifts into the future.


* You can insert your own city or country name here, as this phenomenon of crybaby journalism is a global phenomenon.

** Actual example from one of my less pleasant landlord experiences

*** It’s Alive! I am working on the long-awaited follow-up article for you, but this system is a joy to use, and it looks like the project’s plentiful naysayers will end up defeated.

]]> 350
Why I Put My Last $100,000 into Betterment Tue, 04 Nov 2014 18:08:09 +0000 bettermentlogo

bettermentlogoI’ve always been a do-it-yourself investor. This habit started around age 19 with a series of ridiculous speculative trades in individual high-tech company stocks. “This stock is sure to go through the roof”, I would think, “because their products are so great.”

This is a terrible way to invest.

But after a few early financial haircuts and the subsequent 20 years of reading an investment book or two every year, I’ve come to appreciate the much more boring and successful strategy of extremely long-term investing in extremely low cost index funds. Nowadays, I don’t just avoid trying to guess the short-term movements of individual stocks. I avoid looking at financial markets and news entirely, for weeks or months at a time.

This is a much better way to invest. In fact, doing just this will not only put you ahead of most average Joes, but you will also beat the vast majority of expensive personal financial advisers and professional investors as well. The reason is simply that you minimize the main sources of potential loss: human error and our flawed boom-bust psychology, fund fees, capital gains taxes, and broker commissions.

If we were to put a wide range of popular investing styles on a spectrum of effectiveness, it might look something like this:

Fig. 1: A few asset types with expected annual return after inflation.

Fig. 1: A few asset types with expected annual return after inflation.

You can see that we’re already up near the top of the chart. You can improve slightly on buy-and-hold-forever investing, but at this point it starts to take some work. To really beat it, you need to be a lifelong business prodigy who devours financial statements and human psychology in equal parts for most of your lifetime. (Note that most of us currently feel like stock geniuses because of the recent 20% annual gains in the overall market, but this all tends to average out over the decades and in reality you’ll do well to get 7% after inflation.)

vanguardFor almost 40 years, Vanguard has been the place* to invest to get these high-on-the-chart results. As a member-owned firm, they have patiently operated with maximum integrity** and zero bullshit salesmanship while most financial firms leveraged, hedged, churned and charged their clients to maximize their own profits. I started my own Vanguard account in 1999 and have never looked back as multiple recessions and crises, booms and dividends have helped my small militia of green employees expand their ranks by hundreds of thousands of dollars.

But in recent years, technology and the latest startup company boom have brought new options for index fund investing. ETFs have delivered even lower expenses, easier transactions, and allowed Vanguard-like options to spread to Canada and European countries. Lightweight wealth managers like Future Advisor, Wealthfront, and Personal Capital deliver their own takes on index investing, with more service than Vanguard in exchange for moderate cost. Then there is Betterment, which appeared on my radar when I discovered some financially savvy friends were entrusting the company with big chunks of their wealth (Jesse Mecham and the Mad Fientist among them).

So Why did I Pick Betterment?

bettermentIn two words, technology and psychology are what attracted me to this company. At the core, Betterment is just a fancy frontend for Vanguard funds – when you invest with Betterment, you end up owning Vanguard funds just like a wise person would already do. But they add value by automating two things that actually allow you to earn and keep more money: automatic portfolio rebalancing, and tax loss harvesting. They do this for a fee that amounts to roughly $150 per $100,000 invested. I expect the benefits to be substantially greater than that, meaning it should prove to be a profitable choice if I have done the homework right.

On top of that, their mobile and web-based interface make contributing and watching your growing ‘stash a lot of fun, which is a big part of the battle. But your interaction with the company remains in the digital realm – no adviser will be making personal calls to offer hand-holding and warm guidance. This works well for my typical engineer’s personality – I answer the phone for my mother, my wife, and a few close pals. The rest of the world can send me an email or put their information on a website. I’ll go read your site if I want your information, thanks very much.

What is Rebalancing and Tax Loss Harvesting Anyway?

Rebalancing means maintaining your original mix of stocks, bonds and other bits of the world economy in a strategic proportion. If one class goes up while another goes down, the system automatically sells a small portion of the winners and/or buys more of the discounted assets. On average this amounts to systematically buying low and selling high, which improves your returns slightly over the years, as explained in my older post on Asset Allocation.

In the normal course of all this rebalancing, Betterment will end up selling some index fund shares for you at a profit, which means capital gains taxes. This can be cleverly offset by selling other funds that have lost money in the same year, but then using that money to buy other funds that still allow you to own those same companies. This is called Tax Loss Harvesting.

You can’t do this trick by just selling and re-buying the same stock in the last week of every December: that is called a “wash sale” and the IRS disallows it. But with today’s wealth of interchangeable funds and within the whole scheme of automatic asset allocation, it is a perfectly valid strategy that Betterment estimates could improve the performance of a non-retirement account by about 0.77% annually, which is again several times the fee they charge.

The Experience of Betterment

Shortly after becoming convinced of the benefits, I had the unexpected good fortune of meeting with a crew of Betterment workers, including co-founder Jon Stein. Over dinner I was pleased to absorb the realness of the company culture – technical and pragmatic, and completely free of the stuffed-shirt hype that has been pervasive in most of my peeks into the financial services industry. They answered every question I could throw at them, and then lent me one of their engineers to handle any follow-up technical questions that might come up in further research.

At last I decided to take the plunge, and I signed up for an account just as any new customer would do. The reassuring simplicity of it was a joy. I did the basic account setup, linked in the checking account, and within a day I was able to transfer the last $100,000 of leftover cash from my recent house sale into productive investments where it should be.

What I Bought

Betterment is designed to make things simple for you, even while they do some pretty sophisticated management in the background. They start with a brief questionnaire on how long until you retire, and your financial goals. In the end, this translates to a ratio of stocks to bonds, and people closer to retirement get more bonds because stability is often preferred over the higher returns of stocks.

However, I retired 10 years ago and I still don’t care at all about stability, because we have sufficient safety margin to allow (and even benefit from) greater volatility. So I overrode the system and selected “90% stocks, 10% bonds”. The portfolio ended up like this:


My $100k Betterment portfolio (which has since drifted up to $105k) is balanced across 10 Vanguard funds.


A Slew of Educational Emails

An unexpected benefit of the process has been enrollment in what I would call “Betterment University”. Since starting the account I have received no fewer than fifteen emails from the company’s system, nicely timed to be easily digestible in my limited email schedule. Some of them were just status updates: “Congratulations on funding your account / Your pricing plan has been upgraded”, etc. But others were concise tutorials on investing itself: “Explore Betterment’s historical performance / Why market timing is even more dangerous than you think / How we use dividends to keep your tax bill low.”

Vanguard does the same thing to an extent, but they tend to focus on drawn-out webinars and the presentation is less approachable. I look at Betterment as being a service to get started, plunge straight into top-tier investing, and then learn about what you’re doing in the coming months after you’ve already done it. For the typical beginner with no idea where to start, this can be an ideal approach since fear of starting often keeps many of us in savings accounts for far too long.

Where To Go From Here

I’m excited to watch this investment carefully over the coming years. While I’m not expecting magical performance, I do expect Betterment’s simple but worthwhile automated management to outperform my own overly complacent investing style, and to more than pay for the company’s fees. Much like this blog’s Lending Club Experiment (now well past the two year mark), I’ll set up a dedicated page where we can keep track of things in detail and compare Betterment results after fees to my default investment, which would have a two lump-sum purchase of Vanguard’s Total Stock Index(VTSAX) and Total International (VTIAX) funds.

Update: I have now set up this page, and you’ll find it here:
The Betterment Experiment – Results

As always, you are welcome to follow along with your own investment. If you do so with the banner below, this blog will benefit (and thanks!)

But even if you aren’t ready to invest at this time or need a few more opinions, I would suggest that the service could provide value to almost any US-based Mustachian. Put it onto your list of things to research further – I’m glad I did.


 Conflict of Interest Warning! After this post came out, many described it as reading like an advert for Betterment and accused me of becoming a sellout. That’s a fair opinion and if you hold it, you should probably hold all of my recommendations as suspect. To be clear on the background, I did not get paid to write this or any other post. I just like the way this company works, so I invested a good chunk of my own savings with them and thought it was worth telling you about it.

But since they have a referral program, I signed up for it just as I always do for services I happen to use (Capitalone360, Republic Wireless, Lending Club, etc). Other things have no referral program (Vanguard, the public library, Costco, bicycling) and yet they get the same recommendation. But it’s a fine line to walk, and I have appreciated the callouts from readers to watch it – it is much better to sacrifice potential income than credibility and reputation.


* in the US, anyway. Luckily they have finally reached Canada – learn more in Mr. Frugal Toque’s article on Canadian Investing. And in the UK, where you can get great education and investing knowledge by reading anything from my friend The Monevator.

** In fact. Vanguard founder John Bogle has done so much in his long career for the individual investor and for business ethics as a whole that he is up for a presidential medal of freedom. I’d say he is a good candidate. You can read more about it in this story on Jim Collins’ site. I also wrote a bit about Mr. Bogle in the article called “Enough”.


]]> 317
MMM Challenge: Can You go Car-Free This Weekend? Wed, 29 Oct 2014 01:32:30 +0000 local haul

local haulThere’s a subtle yet powerful difference between the Standard Consumer, who manages to spend all of his income regardless of how much is coming in, and the Mustachian for whom saving is an effortless activity. For the first type of person, saving money means deprivation, struggle, and painful budgets. For the second, saving consists of living a rewarding life, then casually sweeping the few thousand dollars of leftover cash into investments at the end of each month.

The difference seems to lie in the design of the underlying lifestyle. If you get this part right, success comes almost automatically.

At a party recently, I met yet another Prototypical Modern Successful Family, a rather common occurrence in my area. The guy was a doctor. The woman was a professor. They had appropriately hip Colorado-style clothing, muscular calves, cool rectangular glasses, and rode bikes to the party along with their two cute young children. Everything looked stellar on the surface until my new friend and I got to talking after a few drinks.

“It’s a bit of a mess these days”, he said, “These kids are so precious, but they’re growing up fast and I hardly ever see them. I took a job at a practice in the city because it pays better, but it means I get up at 5AM. The kids do competitive swimming and ski racing on the weekends, so we’re never home to recharge.”

This seemed like a pretty simple set of White People Problems to me, so I decided to throw in a bit of advice disguised as self-effacement: “Oh yeah”, I said, “We solve that problem in my family by making our lives much less exciting than yours. We just hang around Longmont most of the time, and because of that we have a lot more recharge time and were able to cut back on the two-career thing f0r a while.”

“Man”, he said, “That would be nice. I’ve been in medicine for 16 years now, and to be honest I’ve had enough of it. But we could never live on just her income. Professors just don’t make that much, even tenured ones at a good university.”

And therein lies the trap that ensnares so many otherwise-fortunate people. It is called the Poisonous Pitfall of Piss-Poor Lifestyle Planning.

Fortunately there is an antidote, which is quite literally Simplicity itself. If the situation above sounds even remotely familiar to you, I am excited to deliver this bit of good news, because it is very easy to solve. You can very quickly give yourself the gift of a much better life, just by chopping out a good chunk of the unnecessary activities that currently distract you from living.

We could go on and on about the detailed benefits including greater happiness, lower stress, better health, better relationships with your significant other, family, and children. More money, lower needs, deeper wisdom and even a longer life*.

But instead, I thought it would be helpful to just start with one giant baby step. An instantaneous taste of the good life, at no cost to you and with the chance of starting a massive life transformation. Are you ready? Your assignment is as follows:

Give the damned car a break for the entirety of this coming weekend. Instead, try living two days of non-motorized life.

That’s right. This weekend, there will be no errands, shopping trips, drives to the mountains or the beach, horseback riding lessons or Harley cruises. Just you and your actual body, doing things that it is actually meant to do.

You’ll want to prepare in advance. If you live far from a grocery store, make sure the house is stocked with food. Get your library books ready, make sure the television is unplugged, tune your guitar if applicable, dust off the bicycle, walking shoes, recipe books and board games, invite some local friends over if desired, and let’s make a weekend of this.

What you’ll be doing, although it may sound somewhat novel to my new doctor friend, is living approximately like the Mustache family has always done. Although I’m not a hermit or a homebody, I often feel just a bit of anxious terror when I hear about how much activity most of my fellow wealthy Americans pack into their weekends. And I’m simultaneously filled with Pure Joy every time I wake up on a Saturday morning, walk with bare feet through my back yard and into the park beyond to watch the sun rise, and only then decide what I  might want to do that day. If he’s awake that early, my little son often comes along for the event.

On weekends, we simply chill together. It is my idea of living, and it is the foundation of our relationship together as a family. We sit on couches and read and write books and comics. The boy and I ride down to the creek and carve channels and dams in the rocks and sand. Then we’ll climb some trees, max out the swingsets at the park, and maybe do some urban planning in the sandbox. We get home tired and nicely sunned out, and he’ll disappear to his room and make songs with Ableton while the lady and I will make some dinner. At this time of year it tends to cool down and get dark outside pretty quickly, so we’ll start a fire in the woodburning stove I built into the new house. Some wine may be poured. All of that, and it’s still only Saturday night. There’s still time to have friends over, or walk over to someone else’s place to mingle all the neighborhood kids and prepare a feast.

A key to successful chilling is the complete removal of television as one of the options. As much as you like your favorite shows or sports events, the experience deprives you of what you would have done if the TV hadn’t been there. It is in the void left behind when TV disappears that real life can start to occur.

Living a Local Life

The headline of this article sounds like just another meaningless personal finance tip. Sure, you can save fifty dollars if you cut out the 100 miles of driving that gets packed into the typical weekend. Maybe a couple hundred more on the restaurants and shopping trips you forego. All told, changes like these would increase your wealth by about $200,000 per decade.

But the transformation of attitude and lifestyle that you can learn from it is much greater. What I’m really hoping we can all learn about is living a local lifeYou can become friends with the people who live right around you. There are trees and hills and features of your environment that you miss completely if you never slow down to actually live where you live.

Once you give it a try, you will find it quickly becomes very natural to live this way, because it is really how we were meant to spend our days. If an event pops up in another city, my own family usually considers it briefly, then politely declines. Because we realize we don’t live in that city, we live in this one.

The world gets more exciting every day. There are more activities, opportunities, and bits of entertainment packed into the atmosphere than ever before. The modern culture dictates that we take every chance to pack our days with exciting things, limited only by our need to sleep. If you don’t do this, you are “missing out.” But I propose that the opposite is true: the Good Life is found in between those times when you are engaged in travel, being “entertained” and participating in too many organized activities.

So by living a life driving around afraid of missing out, you are in fact missing out on your entire life. Let’s fix that this weekend.



* In a sad coincidence, on October 27th, the day this anti-car-culture article was originally scheduled to publish, Mrs. MM’s childhood best friend died in a car crash back in Canada. Rest in peace Janet.

Further Reading: In this Article, researchers found that kids who are allowed to spend more of their time in unstructured play develop greater independence and judgement. Could this be related to why some adults are hopelessly sucked in by the consumer/debt/industrial complex and others are able to step out and make their own choices? 

I like to imagine this all as an evolutionary response – you can adapt to a regimented life or society if that’s what you are born into, but given a more freeform existence, you are better off becoming more experimental or creative. I feel that the second option is now much more productive: both for early retirees, and for dealing with a rapidly changing world. But this is pure La-Z-Boy scientist chatter – real scientists are welcome to make fun of me for throwing out such a speculation without any testing :-)


]]> 257
Aquaponics – the Automated Ubergarden of the Future Mon, 20 Oct 2014 12:00:47 +0000 tamaterAn Introduction from MMM:

I was late to the party in learning about aquaponics, but it made a big impression on me when I toured a massively creative food facility two years ago.  

The slightly wild entrepreneurial founder had converted some cheap, remote industrial buildings in Loveland, Colorado into a spectacularly productive indoor farm. Expensive herbs, heirloom tomatoes and fluffy fish were popping out at high speed, with (mostly solar) energy and sparse human labor as the only inputs. With over 40% of the Earth’s land area already converted to farms, I was excited by the idea that someday we may be able to get much more food out of much less land with a lower input of oil and chemicals.

This kicked off a bit of an aquaponics reading binge on my part. And quite coincidentally, a reader named Jeremiah wrote to me towards the end of it to tell me about his own inventions in the field. I was impressed, because he has combined the art and science of Aquaponics with a Mustachian ethos of time and money efficiency. According to Jeremiah, you don’t need to be an advanced entrepreneur or scientist to build up a fancy food factory of your own.

So we collaborated over the past four months to create something worthy of sharing with you. And by “collaboration”, I mean I made the unrealistic demand of a “Zero to Hero” lesson in Aquaponics that would culminate in something readers could actually build, and Mr. Robinson diligently cranked it out with a summer of design and documentation. I am thankful for his generous work on your behalf, and I hope this great article he wrote becomes a primary source on the Internet for learning about the craft. It’s a great read.

High-Tech Gardening and the Kick-Ass ROI
by Jeremiah Robinson

MoneyGroceriesA new gardening technique is about to save you a crap-ton of money on your food bills.

Can you guess what it is?

I’ll give you a hint.

It was invented separately in ancient times by some badass farmers in both China and the Amazon.

In China, it allowed subsistence farmers to survive on plots of mountainside land that no traditional farmer could ever survive on.

It helped the indigenous residents of ancient Bolivia and others the power to develop a wealthy and sophistocated agricultural civilization atop worthless soil for 1000 years.

For the past 2 millenia, these farmers quietly developed the most efficient and sustainable method of growing food known to man.  And nobody noticed.


Nobody, that is, till 40 years ago the New Alchemists and others put 2 and 2 together.  Their modern methods, combined with the ancient techniques, got rid of most of the work associated with traditional growing (eg. weeding, watering, mulching, soil building, etc…), allowing for much higher production output at a much higher quality.

This ancient-turned-modern method of growing is called aquaponics.

It combines the raising of fish (aquaculture) with the growing of plants in nutrient-rich water (hydroponics).  The fish fertilize the plants, and the plants clean the water.

Hotter than Carhartt, aquaponics is beginning to revolutionize the world of home-grown healthy food.

DesertPonicsNow it’s much easier to grow your own safe, local, healthy food yourself in your own backyard, roof, balcony, or basement.

It doesn’t matter where you live.  It works in the desert.  It works in the tropics.  You can do it urban or rural.  I live in Wisconsin where the polar vortex gave us -25°F (-32°C), and it works here all winter long (actually improves the taste).

For the Zero-to-Hero system I’ll describe later, you just need an area that’s 5′ wide by 14′ long, exposure to either the sun or some fluorescent lights, and a weekend to build it.  To make a smaller system, you just use smaller parts.

The Math

SpinachThe ROI (return on investment) on this thing will kick Warren Buffet’s ass.

I haven’t run the Zero-to-Hero (Z-H) system long enough for good measured data on its output, so I’ll tell you about the larger system I use.  The Z-H system should give proportional results until you decide to upgrade.

My 8’x16′ aquaponics greenhouse (which is about 2x larger than the Z-H system) cost me $3,000 to build, soup-to-nuts.  In one year my system can grow the following fish and better-than-organic produce (local farmers’ market prices in parenthesis):

  • TroutPrices50 lbs of fresh trout fillets ($15/lb)
  • 100 lbs of fresh, cold-finished, food-purged tilapia fillets (Not sold anywhere.  If they were, $10/lb?)
  • Basil Prices75 lbs of pristine basil leaves for pesto ($20/lb)
  • 50 lbs of winter spinach ($5/lb)
  • 40 lbs of fresh unwashed lettuce ($4/lb)

Add all this up and I get a yearly gross output of $3,660, not to mention eating like Louis the XIV.

Here are my yearly costs:

  • Electricity ($0.20/kWh) – $200
  • Fish Feed ($40/bag) – $400
  • 7-8″ Tilapia ($3/fish) – $300
  • 7-8″ Trout ($2/fish) – $100
  • Water ($2.80/1,000 gal) – $15
  • Seeds (prices vary) – $15

Add these up and you’re looking at $1,030/yr.

As a good Mustachian who goes shopping with your middle finger, let’s say that somehow you find a way to pay half the farmers’ market price, or $1,830/yr. Subtracting out the $1,030, you still bank $790, for a simple ROI of 27% or a four-year simple payback, which is very good.

The Z-H system is ¼ the price for ½ the size, so your ROI would be even better.


System BuildBut, you object, the missing element in my budget is obvious: labor.  So true!  I haven’t included it for three very good reasons:

  1. Building it is fun: With good instructions and ideally with the help of good friends, building an aquaponic system is one of the most fun projects you’ll ever do.  It’s the sort of thing I hope to fill my time with after I quit the rat race.  As MMM says, hard work can be joy-filled and life-giving, especially in small doses.  This past weekend I built a Zero-to-Hero system with a group of 10 people in a few hours at a permaculture workshop.  I’ve rarely had such an enjoyable time!
  2. Checking on my fish is the best part of my day: I love checking on my greenhouse, feeding my fish, and harvesting food, especially when the neighbor kids come and help. You’d have to pay me not to do it.
  3. Nearly zero ongoing labor: This is especially true compared to soil gardening.  Unless you make some dumbass mistakes that you have to fix (which happens while you’re still learning how it works), the only time is daily feeding (5 minutes), weekly water testing (5 minutes), monthly planting (2 hours), twice/year runs to the fish hatchery (3 hours), and harvesting whenever you want to (5-20 minutes—you don’t have to clean your veggies, but you do have to clean your fish).

Another objection you might raise is that you want to visit your long-lost relatives in Azerbaijan, or attend the MMM gathering in Ecuador.  Don’t you have to be home every day to feed your fish, or at least every week to check your water?

Actually, you don’t.

Fish routinely go for 3 to 5 months without eating.  In my area, they do it every winter.  They survive these fluctuations just fine, if a little leaner by the end.  With no food in the system, the water chemistry remains stable as the plants slowly absorb all the excess fertilizer.  So go ahead.  Throw some basil or spinach seedlings in the system and come back in 3 months to full grown plants.  If you want, find a neighbor kid and teach them to how to throw some food in the tank and use the water test kit once per week.

I monitor my system online using an Arduino controller along with Xively.  Incorporate Zapier and you’ll get a text message when there’s a problem.

It’s high-tech, low-maintenance gardening.

The Zero-to-Hero Aquaponic System

SystemDiagramThe Zero-to-Hero system offers you a simple jumping-off point if you’re interested in this kind of growing.  You can buy all the products in an afternoon for about $730, build it in a weekend, and grow a significant portion of the fresh greens and herbs that a family or a frat house can eat.

It will allow you to grow year-round in USDA zone 7 or warmer.  To grow in winter in colder climates (like I do) you’ll need to make some additional improvements, such as a small hoop house to store it in. You can also shut down for the winter, and harvest your fish in October.

While you probably won’t see the kinds of outputs described above in year one, you will see them as you learn to operate your system better, which fish you can find locally, and what plants you eat the most of.

It’s difficult to exaggerate how convenient it is to have mostly maintenance-free and exceptionally fresh / tasty food right at your doorstep.

However, one point worth emphasizing is that while aquaponics is very easy and labor-free to manage once you’ve got it working, the process of making it work is a learning curve. It will take about a year and result in some dead fish, dead plants, and problems you’ve got to solve.  I’ve never met anyone for whom it didn’t, though I’ve also never met an aquapon for whom solving these problems was beyond their reach.

On these occasions, your best resources are the online forums, which are full of helpful people eager to answer your questions.  After that (or if you don’t have time) you can contact most any aquaponics instructor or product seller and they will help you for a reasonable fee.  There are also a number of books that can help you on your journey as well.

Growing this way is a lot of fun, and can be habit-forming—in a good way.

The Zero-to-Hero system plans are available for download free for MMM readers at the page linked to below.  To get them free, type in the coupon code mr_mmm at the checkout page.

Link to Zero-to-Hero system plans.

Aquaponic Farming

Some of you might be thinking the following thought:

If this works so great on the small scale, I’m going to cash out of my bank account, scale up, and start farming!

CommercialFarmIf this is you, I offer this caution: Aquaponic farming is still farming.  Nobody gets rich off it.  If you have the unique combination of skills to make it work it can be profitable.  But you still have to plant, harvest, market, transport, and sell your products, as well as manage employees.  This is hard, challenging, sometimes unrewarding work.  Many aquaponic farms go out of business after a few years.

Because the USDA is behind on their regulations regarding fish, organic certification is hard to get for aquaponic vegetables and nearly impossible for fish, even though any unhealthy fertilizer, pesticide, herbicide, or fungicide (even those used on organic farms) would immediately kill all your fish.  This means you have to convince your customers that your products carry a higher value than conventional produce and fish from China, in most cases without organic certification.  This is more difficult than you might think.

Many aquaponic farmers live off grants and free intern labor, while a few market brilliantly and make a profit selling to high-end restaurants and grocers.  If you’re interested in growing commercially, I recommend you do the following:

  • First, build the zero-to-hero system, operate that for a while, read all you can on aquaculture, horticulture, and greenhouse design, visit some farms, and start getting involved in forums.
  • Next, scale up your backyard greenhouse system, trying new designs and keeping up the research and experimentation.
  • Once that’s running smoothly for a couple of years, contact Nelson & PadePentair Aquatic EcosystemsFriendly Aquaponics, and Green Acre Aquaponics, and ask if there are any farms you could contact to inquire about an apprenticeship.
  • Also, make sure you find some farmers that have gone out of business and talk to them about what went wrong, asking them if they think your plans can work when theirs didn’t.

It can be done.  Maybe you’re the one to do it.

Aquaponic Investments

FairOaksThere are a number of existing farms out there that would be happy to accept investment funding to expand their operations.  It will take you a lot of due diligence to ensure that their farm is profitable and likely to remain so because – as I’ve said before – farming is tough!

One interesting investment opportunity I stumbled across this year is Fair Oaks Farms in Indiana, a combination farm and tourist destination with a fascinating ownership structure. They are getting a lot of people interested in farming, which is a good thing as most farmers these days are late-middle-age or older. Currently expanding into aquaculture, they are likely to include aquaponics in the next couple of years. Give them a call to talk about investment opportunities if you’d like to invest in this space.

Aquaponic Produce

ASCMagIf you’re not the farming type, aren’t looking for new investments, and can’t find a weekend (or the space) to build a Z-H system, you can still take advantage of aquaponic produce and fish.

Because you and I know that it’s better-than-organic while not actually certified, we can get the high-quality food for a cheaper price.

While there’s no directory of aquaponic farms, you can google “aquaponic farm” in your area and find out where they sell, or if they sell direct.

Give it a shot.  Once you go aquaponic you’ll never go back.

– Jeremiah Robinson
Frosty Fish Aquaponic Systems


]]> 177
Credit Card Churning: for Mustachians or Sucka Consumers? Mon, 13 Oct 2014 15:57:43 +0000 fiddy_leaves

fiddy_leavesIt’s a beautiful October morning, and you are taking a stroll along the sidewalk in your neighborhood. Mixed in with the red and orange autumn leaves at your feet, you notice a hundred dollar bill. Do you stop to pick it up?

Most of us would say “Yeah!”, and that makes sense. Autumn mornings are fun and pleasant,  as are the factors of bending down, colorful leaves, and the rewarding feeling of increasing your wealth by a hundred dollars. Then you get the reward of telling the story to others, and maybe even a second reward of doing something unusually generous with the found money.

But what if the bill was buried in some mud with just a corner poking out? What if you had to climb a tree to get it? How much would you reduce your effort if it were only a $50, $20, or $1.00 bill? How would all these factors change if you were desperate for money, or financially independent with more money than you could possibly spend?

These are the silly questions I spring upon myself when making decisions about money these days, and they come up in the context of credit card hacking (also known as travel hacking or credit card churning) as well.

What do Credit Cards have to do with Hundred Dollar Bills in Autumn Leaves?

Until a few years ago, I thought credit cards were just a slightly irrational but necessary byproduct of our modern financial system. Retailers accept them universally without extra charge. Online shopping is safe and convenient. We all get nicely summarized tracking of our spending and a small percentage of cash back each month. In exchange, we all pay about 3% more for everything, and those foolish enough to leave their monthly bills unpaid lose a much larger amount to high interest rates and other charges.

But then an arms race developed, and certain credit cards started offering incentives of  $500 or more just for signing up. I diligently tried one of them out and found it worked just as advertised, and since then I have repeated the trick on an annual basis. But meanwhile others have gone much further, making me look quite lazy in the process. With moderate effort, some of these people collect over $10,000 in annual profits from the activity, for what seems like about a week of total work distributed throughout the year.

For those interested in going further, I figured we could meet a few of them and learn their tricks. With that knowledge in mind we can decide how many hundreds are appropriate to scoop up ourselves.

Meet the Wealthy, Frugal Woman with a Dozen Credit Cards

clinkAt an event called Camp Mustache, MMM readers and other friends gathered for a weekend to share knowledge on topics of interest to our type of people: Real estate investing, home brewing, advanced bike maintenance, and travel hacking with credit cards were just some of them.

I stopped in on the hacking one and overheard the phrase, “So when I’m setting things up for my next round of card applications”, and I knew I had to sit down and listen in.

The speaker was Marla, a woman who I knew to be financially independent and retired in her 40s, creative, entrepreneurial, and a hell of a lot of fun to hang out with. But she also enjoyed pulling the various levers of the credit card system to extract well over $10,000 per year of cash and mostly-free travel. From her I learned the key to making it fun is to make it efficient:

  • Set aside one morning per quarter  to apply to 4-8 strategic cards
  • Keep track of everything in a spreadsheet to ensure that all necessary hoops are jumped through to collect each reward.
  • The net pay rate for the simple bookkeeping involved is about $250 per hour.


The Young Entrepreneur Who Deals a Mean Deck of Rewards

Earlier this year I met Greg, a 24-year-old who runs his own successful Silicon Valley technology camp for kids, teaches snowboarding in Colorado in the winters, and will quite enthusiastically sleep in the back of his 2007 Honda Fit at temperatures far, far below freezing in a high mountain valley if it gives him more convenient access to the slopes. He whipped out a well-organized flipbook of glistening rewards cards.

“Is it really worth your time to keep track of so many credit cards? Isn’t that like a binder full of ticking time bombs?”, I asked.

“Not really”, he said, and he wrote a whole article for me on the subject. I have summarized it in the box below:

Last November, I flew from Rome, Italy to Jakarta, Indonesia for $66.70. My friends and family were shocked at how little I spent, and were even more shocked to find out that my flight from Jakarta to San Francisco was only $42.50, and my night in an executive suite at the 5-star Marriott Grand Flora Hotel in Rome was only $8. But how else was a Mustachian to travel? Certainly NOT by spending thousands of dollars to fly through the air in an aluminum tube towards a landing strip in the shape of Mr. Money Mustache’s fist.”

Here are some examples of how far you can go with just a couple of churns:

Chase Sapphire Preferred – 40,000 bonus points after $3,000 spending in 3 months
Option 1: A one-way flight to Amsterdam on United (30,000 points), plus $100 cash (10,000 points)
Option 2: A round-trip flight to Mexico on United (35,000 points), plus $50 cash (5,000 points)
Option 3: $400 cash (40,000 points)

American Express Business Gold – 50,000 bonus points after $5,000 spending in 3 months
Option 1: A round-trip flight to Trinidad and Tobago on Delta (35,000 points), plus a night at Hyatt Regency Trinidad (15,000 points)
Option 2: A 3-day lift ticket at Breckenridge (27,000 points), plus 3 days of snowboard rental (15,000 points), plus $48 in statement credits (7968 points)
Option 3: $301 in statement credits (49,966 points)

Churning exists because credit card companies make more money off of non-Mustachians racking up huge bills than they lose from more financially savvy folk who simply move their normal spending to a new, high-bonus credit card every so often.

The Process:

  • Be sure to keep track of your spending and accounts using an online tool like or Personal Capital.
  • Don’t even get mixed up in advanced use of credit cards if you still have a credit card Debt Emergency to clear up.
  • Monitor your credit score quarterly with a free service like Credit Karma or Credit Sesame .
  • It’s best to wait 3 months or more between card application rounds to lower the impact of the hard credit inquiries on your score.
  • Before even activating a card, I call customer service to verify the bonus and the annual fee, since it’s very easy to apply for the right card with the wrong URL and get no bonus at all.
  • Hardcore churners perform “manufactured spending” to meet spending requirements of multiple cards well over their normal monthly spending (beyond the scope of this short article and not recommended by MMM, but you can look it up. It involves things like gift cards and Amazon Payments).
  • Keep everything in a spreadsheet including dates, actions, and requirements. Use Google Calendar to serve up reminders for yourself.
  • If you aren’t planning on any travel, you’re probably best off sticking to cards with points that can be redeemed for cash. In many cases, 10,000 points equals $100 cash
  • But if you are planning on travelling, your points are usually most valuable when used for international travel, where they are often worth over $200 per 10,000 points.


Don’t let yourself get caught up in thinking about the number of dollars “saved” on travel.  Instead, ask a friend to give you a nice slap in the face when your eyes start glazing over, so that you can come back to reality and consider the true value and the true cost of your rewards travel, rather than what’s marketed to you. Think about this as you’re deciding how to redeem your rewards. Some airlines, like British Airways and Delta, like to tack on huge surcharges in the name of fuel and taxes. Exercise your own Mustachian Due Diligence when making your travel plans to find similar flights without the insane surcharges. If your international rewards flight costs more than $200, you’re doing it wrong.

A Cardiologist, Father … and Travel Hacker?

alexiIn Portland Oregon I met Alexi, a physician by day and a father of three, and free travel enthusiast when it’s time for a break. He also writes a blog called “Miles Dividend, MD“.

Alexi became a card hacker by necessity, since he married a woman with roots in Japan and they wanted to keep their kids connected with the rich heritage of her family who still lives there. Although I find it hard to imagine free time being a part of such a life, Mr. Dividend does it well with his analytical and efficient methods, and he had the following wisdom to offer.

Why is rewards card hacking a Mustachian pursuit?

  1. Because travel is expensive: In my case we previously spent over $16,000 in travel a year. Now we spend less than $1000.
  2. Because figuring out a new system is good for your mind, and it opens up more new ideas. As an example, I wrote here about a strategy to use nothing but the miles game as “springy debt” in order to replace (A.k.a. allow you to invest) your emergency fund.

The point is not that this is a wise strategy. (I don’t think it is.) The point is that playing the miles game gives you skills that allow you to access capital in clever ways. Which is a very useful skill set to have when pursuing early retirement.

Other notes:

  • Not for Debtors: The only way the miles game is even remotely worth it is if you pay off all of your Credit card bills in full every month and never pay a dime of Credit card interest.
  • Good Credit Score Required: In order to score the big bonus credit cards, you generally need a score of at least 700.
  • Not Detrimental to your Score: Surprisingly, in the long run, using multiple cards properly can actually help your score. Despite this, you will often see a temporary 2 to 7 point drop in your credit score for each hard credit check that accompanies each card application.
  • Watch it if you have an upcoming big purchase If you are in the market for a home, securing a low interest rate loan should be your first priority. The miles game is simply not worth having to pay an extra point or two of interest on a 30 year home loan.
  • Use travel hacking as a way to spend less on travel, not a way to travel more on the cheap. Investing the difference (instead of just spending it on first class seats) can cut years or even a decade off of your journey to financial independence.

Piecing together your strategy is not unlike a giant puzzle. It is a lot of fun, and really opens up your world to new and interesting possibilities.

Simply put, the miles game is happiness inducing.


Meet Brandon Cronan, Your New MMM Card Curator

Brandon Cronan, rewards card guru

Brandon Cronan, rewards card guru

Brandon was actually the founder and instructor of the credit cards workshop at Camp ‘Stash. Watching him present and share his deal finding prowess, I saw his enthusiasm spreading to the audience despite our best attempts to be appropriately scornful of the credit card industry in general.

Brandon and I have kept in touch since then, and I decided that the best way to benefit from his skill would be to share it with you. Although I can plainly see the benefits of credit card mastery, my own attempt at a credit cards page was unsatisfactory. The card companies would change their offers regularly, representatives would ask me to update my page, I would generally ignore their requests and continue building parts of my house, and they would kick me out of the program. With Brandon’s help, we have re-qualified this blog to link to American Express and other top-tier cards, and he has signed up to be our in-house expert on the topic on an ongoing basis.

Bringing it back to the leafy sidewalks of my own town, I do still stop to pick up a hundred every now and then. Sometimes they are within easy reach, and sometimes they take a bit more work. But whenever there is effort, there is also the opportunity for learning, so as long as it doesn’t involve compromising my own values, I’ll happily continue to harvest and may see you out there.

You can keep tabs on Brandon and his strategies at the new MMM Credit Cards page. I’ve even enabled the comments section for that page so anyone can ask specific questions and share knowledge. He also writes occasionally at his blog called Life Reengineered.


Many thanks to the enthusiasts above for sharing their expertise on the subject, since it greatly exceeds my own, and people keep asking me about travel hacking. If you’ve had success in this area, please share your own best cards, tips, and experiences in the comments.

]]> 236
Getting Rich with Science Tue, 07 Oct 2014 17:58:25 +0000 doc


An angry man by the name of Jared stopped by the blog the other day and left this beauty of a comment on my old A/C article:

Oh, you anti-air conditioning freaks crack me up. Here in Alabama I keep my a/c unapologetically set between 68-71 all year around. […] I do not care about utility bills. Some mornings I have my house so cold my windows are dripping with dew. I love my air conditioner. You guys toughing it out make me laugh. Even on 62 degree days the western sun warms it enough to bump on the air conditioning. When I’m drinking I set it even lower. Who are you air conditioning Nazis– judging your neighbors for running the a/c’s? Enjoy sweating, I guess. It’s currently 69 degrees in my house. I have two spare window units in my garage that serve as emergency backups should the central systems fail for any reason. Have fun saving $50. Buy 3/4 of a tank of gas with it or something. Cry about the climate change lie our government wants you to be afraid of so they can control you.”


Now, my first inclination was probably the same as yours – a deep sigh as you pull on the 20 ounce XL bloxing gloves and prepare to Deliver some Education yet again. But if you set aside the facts and just look at the feeling behind these words, I’m right there with Jared. He and I are not so different after all. If I were to paraphrase a little:

Do you outsiders really think you can tell me what to do? Fuck that. I’m going to continue doing as I see fit, and now I’ll even make a show of it, just to prove that you don’t own me.


In fact, defiance and standing up for your own freedom while rejecting the influence of invaders is a natural human instinct. It has been pretty useful to us in the past, and it can still come in handy today if you use that rage for a good cause.

Unfortunately for our defiant friend, the substance of the argument doesn’t stand up quite as well as the emotion. And a good chunk of our society’s self-imposed hardships come from falling into the same basic trap: becoming so convinced that you are right, that you block yourself from ever learning anything.

Looking at this example specifically, we start with a guy rightfully seeking happiness. But in doing so, he seems to have snarled in the idea of comfort and convenience as being part of happiness. Both old philosophy and modern science have shown that this is counterproductive: voluntary discomfort and mastery of hardship are far more powerful life boosters than avoidance. Even Jared has probably noticed that kicking the ass of a daunting challenge is more satisfying than having all of life’s luxuries flow in through an IV needle and then back out through the catheter and the bedpan. The key is in what challenges you choose to embrace: I suggest as many as you can handle. Especially those dished out by Mother Nature herself.

Then there’s the rest of those factual errors. Lowering your dependence on climate control and other electrical extravagances isn’t about saving 50 bucks. It’s more like $100 per month, which compounds rapidly into $17,300 every ten years. And that 17 grand doesn’t have to go into your gas tank and out through the exhaust pipe. Instead, it could buy portions of businesses and thus become an army of employees that work for you for a lifetime. That’s a solid start at becoming a millionaire, which is something best done ten bucks at a time.

Then his argument goes on to reinforce my point perfectly with the generalization about climate change. Here our man has singlehandedly outfoxed the world’s scientific community and declared the last few decades of their research to be incorrect. The incredible irony is that he confuses climate science with a government plot to control society, when it’s actually quite clearly documented that the opposite is true: climate change doubt is a strategic misinformation campaign designed to control voters to rally continued support for the fossil fuel industry. The doubt is most prevalent in countries where the industry has close ties to the political system and the campaign has been well-funded.

For the past 20 years or so, I have watched with wonder from the sidelines as this societal experiment raged, because I’m shocked that it actually worked so well. Why is our species so easily duped by such transparent (and centuries-old) methods of tomfoolery? How are the morally good air-conditioning lovers of Alabama converted into campaigners against science itself (and unwittingly against their own best economic interests)? How has science become a political issue, with liberals and scientists being branded together as out-of-touch elites, and a certain 50% of Real Americans united in a mistrust of the whole field?

Let’s clear this all up right now and get one thing straight:

Science is your friend. It is the most useful thing humans have ever developed, and there is absolutely no downside to it.

Regardless of your religious or political views, understanding what Science is, and using everything it offers to your advantage is the fastest way to accelerate your path to leading a rich and fulfilling life.

Science is not about ideology, or trying to cover the truth, or trying to manipulate people. That is what politics are generally about, and Science is exactly the opposite of that.

Science is all about looking for evidence through experimentation, and forever questioning itself and refusing to simply repeat dogma. By refusing to cling to existing assumptions about what “The Truth” is, Science gets us forever incrementally closer to understanding what is really going on in our world.

In other words, Science is the method that we have developed to protect us from our own tendency to cling to incorrect assumptions forever.

Luckily for all of us, we don’t have to get into the bullshit national debates about the current political hot topics (which politicians are using to control you). Instead, you can apply the principles of science to improve your own life right now.

How to Get Rich through Scientific Living

1. Understand more about yourself as the Human Animal, so you can work around your own mental weaknesses.

At the core, you were “built” for exactly one reason: to produce as many healthy babies as possible. Every finger and toe, emotion and follicle of your being has been optimized for this purpose. If you have other goals, like deeper life satisfaction or getting out of debt, you need to learn to override some of your default programming. Learning about how we are all Predictably Irrational is the key to this.

The moment you think you are a perfectly rational being is the moment you stop being able to think critically (and the moment you become easy for others to manipulate). A study of your own species by learning some basic psychology and behavioral economics is the best bit of education you can get.

2. Understand the difference between correlation and causation, and the value of the double blind test.

When society falls for massive misinformation, it is often because of our tendency to latch on to simple patterns and fall into the herd mentality. “I always win at Roulette when I wear my bright red shirt”, or “these $59.00 Chi Energy Alignment Pills always make me have a better day”, or “Buying this more expensive wine will provide me with a happier life” are common blunders that could be avoided if we were all better at conducting semi-controlled experiments upon ourselves. And fear of doing something differently from everyone else tends to lead us all into group mediocrity, even while stepping out and doing things in your own better way is much more likely to earn you attention, respect, and greater success.

3. Instead of fighting the gifts of Science, embrace them and use them to live a better life.

Climate change skeptics aren’t really uncomfortable with the science, they are uncomfortable with the implication that their fossil-fuel dependent lifestyle is immoral and endangered. This is an incurable condition that will lead to lifelong unhappiness, because the science is not going away.

Try as you might, you are not going to out-science the scientists by reading “skeptic” websites and repeating their memes. You’d need to practice in the field for many years to make even a small new discovery, and yet the “armchair” climate scientists are fond of grabbing each news story and squawking about how the deep ocean results prove this or disprove that.

Don’t waste your time. The real scientists will just keep collecting evidence until you’re the last one standing on the shore insisting the world is flat and those sailing ships are falling off of a giant waterfall at the edge of the horizon.

Instead, I prefer to learn more about the science by letting the specialists do their work for me while sit back and read the summaries as they come in. I then have my own time free to decide what it all means to me, and how to best deal with reality. I too wish that the world wasn’t warming so quickly, but there’s a happier way to deal with it than angry denial.  I can choose to lead a happy and engaged life in my own community and consume a bit less stuff. More money, better health and closer friendships: No loss there.

Sometimes you may still choose to blatantly burn plenty of fossil fuels despite a full knowledge and acceptance of the results. I’ve been known to drive across the country, hop on a jet, or even eat a steak. But I get to do it with the understanding that it is a tradeoff, instead of hiding behind a plastic shield of wimpy denial. The extra bonus is that understanding some of the workings of our environment has greatly reduced my craving for BMWs, which has saved me at least $250,000 so far. It also brings me great optimism – I think the world’s transition away from sloppy and expensive fossil fuels is the biggest business opportunity we have yet stumbled across. The progress and prosperity involved will keep the stock market and the economy booming for more than the rest of my lifetime.

Although I now have this blog to share my own ideas about better living, its effects are obviously very finite. But there’s no need to fret about what the rest of the world is doing, because that is outside of my circle of control. Worrying is 100% counterproductive, and it was psychological studies that helped figure out that very principle.

Science is bound to deliver news that is sometimes convenient (the news that sex is very good for your health, for example), and sometimes less so (that fossil fuels and alcohol are not). But knowledge is power, and power means the opportunity to make the best of your own life, which includes dominating on the financial side of things, as well as just the ability to go to bed with a broad smile on your face each night.

Science is the way you get knowledge – nothing more, and nothing less. You’re free to fight it at your own peril, but I’ll be hanging out here in my own Life Laboratory keeping the grand experiment going as long as possible.


Further Reading: An earlier MMM Classic called Safety is an Expensive Illusion digs into some more examples of how scientific thinking about everyday life decisions and risk can lead to huge profits.

]]> 456