First Retire, Then Have Kids

I’ve been broadening my blogging horizons a little bit and reading what other people are writing. One blog that caught my eye is Frugal Dad. I like the title and the great variety of topics he has covered over the years, in a nice easy-sipping style.

The Frugal Dad is a guy who started out mixed into the consumer culture, and as a result ended up with an uncomfortable amount of debt, before he hit the brakes and started turning things around.

It’s a nice contrast to Early Retirement Extreme (the first place where I had the opportunity to do a guest posting) and Mr. Money Mustache, since ERE and I both embraced the frugality plan right from the start, thus missing out on many of the hard knocks and life lessons that are dealt to people who mix it up with The Consumer Credit System

So I wrote to the author, and he graciously agreed to post an article from me on his site.

Update: The Frugal Dad site changed style and ownership over the years, so here’s a copy of the article that I published on his site:

First Retire, Then Have Kids
by Mr. Money Mustache

I have a far-out idea to share with the next generation of the American middle class.

Right now, I’m speaking specifically to the young people who are finishing up a college degree, perhaps in a promising field, and starting to get interviews for jobs with salaries they could only dream of just a few years earlier. The Adult World lies exciting and vast before you, and the Opportunities are unlimited!

At this point, let’s imagine you just dive in and start playing it by ear. You work hard at the new job, buy a new car, rent an apartment, enjoy restaurants and vacations, and may even save towards the downpayment on your first house.

There is usually a student loan still kicking around, and then a car loan, and maybe even some credit card debt that pokes its head in at some point. Meanwhile your new career advances quickly and within a few years you’ve almost doubled your new graduate salary – perhaps you are now making $60-100k or more.

Eventually, you might pair up and move in with your true love, so that you are now sharing one nice place. Maybe it’s even your very own home. Now you’re about 30, and you are one of the lucky households with an income of well over $100,000 per year! But you’ve still got two student loans, two car loans, assorted other debts, and when you add everything up, you still have a net worth of less than zero.

You are thinking of starting a family, but something doesn’t feel right about your financial security. How did you work so hard for almost ten years and still end up having less than zero dollars? At this point, you turn to the Wise World of Financial Bloggers to see how to clean up your act. And you begin the long slog to get out of debt, just as your expensive first baby is born…

But since this surprisingly realistic example is still just fictional, let’s stop and rewind it back to the beginning. What if the college student or recent graduate could receive the life-changing advice of one of us Thirtysomething financial bloggers, and use it to their advantage? What knowledge could the wise blogger impart?

Here’s what I would say:

“Hey young fella (or lass). It’s me, Mr. Money Mustache. Congratulations on entering the fantastic world of Real Work!

But before you take off running, take a look over here on the side of the grand hallway we’re standing in. There’s a little doorway that most people don’t even notice, called Real Wealth. If you take that particular door, you have the opportunity to become quite rich by the time you’re in your early 30s… right around the time the rest of your friends are just realizing they must have done something wrong because they are still recovering from debt!

In fact, the situation through this door is so good, that you can even quit work entirely in order to spend time with your future children, and for the remaining 70 years of your life, work will be an enjoyable and optional part-time affair of pursuing your true passions in life. Sound good?”

As the New Graduate, you would probably be pretty excited to go through that door. It would put you on the path to True Early Retirement. Instead of spending all your money, I’d advise you to live on about $15 to $25 grand of take-home pay per year, and if you pair up into a couple, the number would become $20-$35k.

The rest – and I mean ALL the rest, regardless of how much you earn, goes into your early retirement fund. Maximum contributions to the 401k, and to Roth IRAs, and then beyond that to more low-churn growth investments that don’t generate taxable gains. Maybe even a rental house or two if you really want to be on the Bullet Train plan.

A plan like this may sound quite tricky if you’re currently stuck in the American Ultraconsumer mindset. But as someone who followed this exact path myself, I can tell you it is absolutely enjoyable, fun, and even still quite luxurious. I still owned houses and reliable cars and a nice bike, and did a reasonable amount of restaurant eating and travel through the whole process.

The only difference between me and my indebted thirtysomething peers is that I was much more careful about considering each purchase to avoid wasteful ones, and I was adamant about never borrowing for anything other than a house. And I married a woman who was willing to live the same fun lifestyle to reach the early retirement goal together.

The ultimate reward for us came with the birth of our baby boy in 2006. We had already retired from our real jobs and could share the joy and pain (OK, mostly pain for the first few months) of parenthood together, with none of the compromised career-juggling lifestyle that defines our country.

We actually do enjoy working, and still do a small and non-mandatory bit each week to bring in extra savings and interact with other adults. But taking the entire pressure of finance out of your life so early on, so that you can enjoy the next SIX DECADES focusing on more worthwhile things, is a worthwhile thing to shoot for as a new graduate.

So which door will you choose, Next Generation of the Middle Class? Will it be more of the same old same old, or do you want to try it the Mr. Money Mustache way?

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  • chrissy July 1, 2011, 8:48 am

    It’s really interesting to see the difference in readership between Frugal Dad and MMM (or even GRS). From the first 7 or so replies to this guest post, there seems to be a lot of fear and cynicism over there. I guess fewer of them are drinking the financial independence Kool-aid… or at least maybe more of them are still struggling under the weight of debt.

    • Mrs. Money Mustache July 1, 2011, 9:42 am

      Yes, it is a very different group of people for sure! It’s very interesting to read the comments and hopefully a good discussion gets started over there. MMM is on the road today, but hopefully he’ll have time to respond this evening.

      For the record, I was 31 when I had our child and felt very young (I still do)! We planned to have a second as well, but decided against it after much contemplation. It’s funny how I never would have thought of having a child in my 20s, even though MMM and I met when we were only 19… In fact, almost everyone I know had their children in their 30s.

      For us, our original plan was to do a bit of a mini retirement when our children were young, and then possibly go back to work after that. Plans change as your perspective changes, so we will probably stay on this path for a while longer as we are quite happy.

      As for retiring with $1 million… easy. :)

      • Chrissy July 2, 2011, 2:36 am

        Hey Mrs MM – hope the drive is going well! Canada must be pretty spectacular to lure you out of the confines of Colorado for so long :)

        I don’t know where anyone got the impression you were 32 when the little one was born. I’d always understood you and MMM were 30/31.

        In my opinion, (admittedly, my husband and I have not yet had kids) the best time to have kids is when you want them. I’m nearly 27 and he’s 29 and we’re just not there yet. This is actually the first year my HS friends are starting to reproduce. I have friends who’ve had fertility problems in their mid-late 20’s, but I don’t view fear as a good reason to push for having kids younger. I think MMMs principles still apply, whether you’re having kids at 25, 30 or later (or even never) – learn to live off less, and save for your future, whenever it starts.

      • Flow Focused October 6, 2017, 9:34 am

        Those comments were crazy! Haha. Human nature is a funny thing sometimes.

    • Steve July 1, 2011, 11:20 am

      I laugh when I read people say about MMM’s early retirement methods…”What if everyone did that? It isn’t sustainable.”

      Everyone isn’t going to do it. Frugality is a lifestyle.

      “We have over a million dollars saved up, but we can’t retire.”

      No, you don’t want to retire. Not that there’s anything wrong with that.

    • Lilacorchid July 1, 2011, 3:10 pm

      I posted over there. Maybe the other women who posted about fertility have issues like me? It took four years, tons of drugs, and finally two rounds of IVF to have our son, and we are only 30!

      I agree with everything written, but I did want add that women don’t have the luxury of waiting as long as men to start a family.

      • Mrs. Money Mustache July 1, 2011, 3:31 pm

        It’s true that women have a finite set of fertile years. I personally know several who have struggled with infertility and it is a very difficult and emotional thing. I know women of all ages that have had issues, even in their younger 20s. I also know women who have successfully had kids in their 40s with no problem. Certainly it would be nice to know in advance how things will go…

        It’s interesting that this topic is coming up, but it is true that if you have children earlier, then you will have less time to save. However, even if you have 5 years to save vs. 10 years, there’s still a lot of saving that can be done and it turns out that it is more about changing your habits then actually saving money. For some families, simply cutting their spending in half TODAY may mean that one parent can stay home with their child, or both parents can switch to part-time. No big bank account required. When there’s a strong will, there’s always a way.

        • Lilacorchid July 1, 2011, 5:46 pm

          Yes it would be great to know how family building would go, I agree! The have your kids later mentality really bugs me in general probably due to my own struggles and my wish that no one suffers what I did.

          I read both Jacob and FD’s blogs, so I’m already a convert. Because of both of them, we are going to have all debt, including our mortgage, paid off before our son turns one. We even had enough money saved up to pay cash for our IVF cycles.

          I even thought about writing my own PF blog from a woman’s POV, but other than this and maybe an article about Diva cups, I’m not sure what else I would write that is new. The principles are all the same.

          Anyway, this blog is firmly in my favorites! Write on!

        • Steve July 5, 2011, 6:49 am

          Older parent here. There isn’t just infertility to worry about as you age, you also have to worry about Down’s and other genetic diseases.

          Approximately 1 in 1,400 babies born from women in their 20’s have Down syndrome; it increases to about 1 in 100 babies born with Down syndrome from women in their 40s.

          Money by itself is just a bunch of silly paper. It only when you spend it, and change the quality of your life, that it has significance. Don’t sacrifice the quality of your life chasing dollar bills.

          • Mrs. Money Mustache July 5, 2011, 6:26 pm

            I agree that you shouldn’t sacrifice the quality of your life for money. This post is about having enough to raise our child how we wanted to raise him, mostly through leading a more frugal lifestyle. I’m glad we made the sacrifices required to do this as it was well worth it (plus the “sacrifices” were easy!)

            Just to be clear, we did not delay having kids at all. If anything we started trying before we were even fully ready. For me, 30 was the perfect time to start. I was not ready in my 20s.

            It’s interesting that this turned into a fertility discussion, as it was not meant to be one. The point is not about delaying having children, it’s about having the flexibility to raise your children the way you want at whatever age you choose to have them.

          • Steve July 6, 2011, 9:48 am

            Sorry Mrs. Stash, but I can’t reply to your post. I think the reason everyone jumped into the fertility discussion was the title of the post on Frugal Dad, “First Retire, Then Have Kids”.

            I read the article and the main gist of it wasn’t delaying children until retirement – it was “When you are young kids and retirement seem far away, but they really aren’t.”

            Anyway, I think it’s the title that drew the fire.

          • Mrs. Money Mustache July 6, 2011, 10:27 am

            I think you are absolutely right Steve. Good observation!

          • MMM July 8, 2011, 10:19 am

            Hi Steve!

            I sort of agree with your “Money by itself is just a bunch of silly paper. It only when you spend it..” comment, but still try to battle the misuse of that common idea.

            Some people say that as a justification for spending money with abandon, figuring, “Money is for spending, so I might as well lead a good life!”

            Whereas I consider the purpose of money is to provide freedom. The money provides freedom only when you DON’T spend it. Well, to be exact, you don’t spend your principal, you only spend the free cashflow it provides for you for life.

            As young Mustachian trainees, people start out with NO principal – no employees. So I suggest they spend very little of that – in order to get the principal built up as quickly as possible. Then they will have the freedom for the rest of their lives to enjoy the benefits of money – along with a well-developed set of frugality muscles to allow them to distinguish between wasteful and useful purchases.

            A good future article – I saved the idea in my drafts folder!

  • Jason @ Frugal Dad July 1, 2011, 4:05 pm

    I very much enjoyed the post, and I know most of my readers did as well. I think you are on to a great concept here and I look forward to following along.

  • Jenn July 4, 2011, 8:17 am

    I found MMM through the guest post on Frugal Dad. I have only one complaint- I’ve spent way too much time this 4th of July weekend reading old posts. :-) I love your writing style and point-of-view. I’ve been a financial hobbyist for many years but am nowhere near the black belt of knowing how to fit spending to priorities like you & the Mrs. I’ve ready tons of blogs- many that I have loved- but yours is the best by far. I think you are to be commended. we- as both a planet, a country and individuals- would be much better off if we all followed similar principals. Bravo! I can’t wait to read more!

    • MMM July 4, 2011, 4:37 pm

      Thanks very much Jenn! I can’t wait to write more. Right now I’m enjoying a night-and-day construction binge at a beautiful lakeside cottage near Ottawa, Canada. So internet access is sparse, and it is quite refreshing, actually!

  • aleksandar November 11, 2014, 5:35 pm

    A little bit off-topic…..I love how people tune up to your blog in different time period and it feels like time travel with comments in 2010 and replies in 2014……..nice


  • JadetheStudent August 22, 2017, 12:54 pm

    Hi there Mr. Money Mustache! I know…I’m a little bit late in news since we’re now in 2017 and I just finished reading this article! Blame it on my mother, she waited ALL this time before introducing me to your fantastic blog! In fact, I decided to read all posts since the beginning and dam! it is so interesting! This particular post catch my attention since I’m…19! No debts, except my student loan for University. No car, since I can borrow my boyfriend’s or mother’s car. No rent to pay, since my mom still want me at home. A great job, since I’m working as a student in the Government of Canada. And, finally, Some investments that I just made this month with my financial advisor… I just want to say thank you because, you completely changed my mentality. I want to retire early too, and with articles like this one, I will! :D

  • Ani June 29, 2018, 9:08 am

    Wow, I am sold. This has to be the most inspiring blog post I have read in my lifetime. I just graduated with my master’s degree 2 months ago, and started a full time job earlier this year, so it feels like you are talking directly to me in this post!! I am reading all of your posts from the beginning, and I am fired up! I want to retire in my 30s… if you can do it…then I can too!!

  • Elina Bystritskaya October 10, 2018, 7:24 am

    MMM, this is an amazing blog. In the two days I’ve been reading it, I’ve committed to learning to drive manual cards, biking everywhere once I move to California this year, cutting back on all extraneous spending, etc. Question for you – when you say “…and then beyond that to more low-churn growth investments that don’t generate taxable gains….”, what options are available? I’m already maxing out my 401K and IRA and need a place to stash my cash!

    • hans4797 April 6, 2021, 1:11 pm

      I think the “low-churn growth investments” he is referring to are index funds that don’t generate much taxable income. People who invest in index funds are generally buy-and-hold investors looking for long-term gains and not short term. This means the tax consequences are much less because any investment sold under 1 year is taxed as ordinary income rather than long-term capital gains. Some specific examples would be VTSAX or similar funds.


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