Reader Case Study: I’m Rich and Life is Perfect – Now What?

These reader case studies sure are fun. First you get to engage in a little voyeurism as you peek in on another person’s life. Then you can actually compliment them, offer advice, or throw out a few Mustachian Face Punches as you see fit. All to a real person, and all from the comfort of your own office chair.

Because of the popularity of this series, I’ve tried to mix things up and share reader stories with widely varied situations. We’ve had everything from Minimum Wage up to Big Law Firm workers. But in general there has always been some problem that needs to be addressed.  Massive student loans, cars bought on credit, people hoping to save for a house, or people trying to find a way to quit their jobs.

There’s still a category that has remained untouched. But when I think about the essence of Mustachianism, it’s not a rare situation at all. In fact, it’s a situation that is many readers of this blog are already in, and most of the rest will eventually get there.

The situation is of course having a great life with no monetary problems whatsoever! But there’s still an unusual twist in this one, so read on:

Dear MMM,

We are young couple (early thirties) with two children (early teens). Through a combination of hard work and good luck, we are very fortunate to have healthy finances. We paid off our mortgage, student and car loans off as early as we could, and our only debt is a charge card that we pay off every month (in order to earn the rewards points). We have about $1,000,000 in assets: we own our own home, we have savings for college, our retirement is partially funded and we have a substantial buffer for emergencies. We spend a very large amount, but still save between 40% and 60% of income each year.

Me: About $7300/month (after tax, health care and max 401k savings), plus about $300,000/year in bonus (fluctuates depending on business success).
Spouse: $0 paid income, but works a heck of a lot harder than me!

School Fees: $3667/month
Misc.: $3250/month
Travel: $2500/month
Food: $1500/month
Children Activities: $1500/month
Summer Camps: $850/month
Social: $700/month
Car Repairs: $475/month
Legal Fees: $417/month
Charity: $417/month
Car Running Costs: $300/month
Insurances: $300/month
Phone: $270/month
Dog: $200/month
Cable: $200/month
Water: $200/month
Dry Cleaning: $100/month
Power: $100/month
Security: $32/month
Gas: $30/month
Total: $17,000

Items in italics are the emergency budget: $3179/month.
Annually, we earn about $400,000, and spend about $200,000.

As I said, our profile is quite different from the average. Our expenditures are very high, but here are a few caveats:
– About 40% of our expenses (esp. school fees and activities) could be considered “investments” in our children, their education, skills and hobbies. (my wife gave up her job to take care of them full time, I spend 1-3 hours a day with them, they do lots of activities and are fortunate to go to an excellent school), and they are 8-10 years away from being off our payroll.
– We have structured our bills so that we could quickly cut down to about $3200/month if I lost my job – a level that could comfortably be covered by savings and my wife returning to work.
– Our expenditure is funded out of past income: no way would we be spending this much is we had debt.
– We spend primarily on experiences and not on stuff: our house is small (about 1500 sq ft) and our garage is empty except for two cars (average age, 8 years). We are not people who buy lots of expensive toys. Instead, we buy expensive holidays and activities.
– I enjoy my job and my life: I am in no hurry to retire. If I did leave my current employment, it would likely be to do a similar thing for my own company.

So, what do you think? We could obviously spend much less and save much more, but to what end? We have no debt, ample savings and I am not in a hurry to retire. We enjoy the things we spend our money on, especially the children and the travel.

It is a very pleasant dilemma, for sure, and we were wondering what your thoughts would be.

Well, that’s an interesting one.

I can’t really hound this guy for any sense of whining or entitlement, since he has acknowledged that he spends a lot and has a healthy attitude about it. But it’s still a shock to see a number like “Bonus: $300,000” just slapped onto the end of an already gigantic income statement. So where could he improve?

1: Figure out if You’re Missing Anything

I suppose my first question is “are you SURE you aren’t missing out on anything by living such an expensive lifestyle?”.  I will not question that you are having plenty of fun right now. But with a budget so large that even your “Misc” category is 50% larger than my “Everything” category, it is certain that we are living very different lives.

When you live a life like that, you’re probably spending very little time doing things that are free. But as I’ve contended in the past, many of the best things in life are free. Things based on using your own body to its fullest, and Nature.

I’ve often said that my own family couldn’t imagine spending any more than we already do right now, even if we had way more money. In fact, we do have way more money, and yet we still don’t spend more. So it is possible to lead a happy life on less.

So why might you want to do it? I can think of one big, great reason:

2: Break out of your Comfort Zone at least Once a Week

To live life to its fullest, you need to be challenged. With a job like yours, there is obviously plenty of challenge and satisfaction in work. But with no need to be efficient with money, you might be missing out on golden opportunities to expand your comfort zone. Do you ever travel to non-luxurious areas? Camp? Hike to the top of mountains? Walk through poor areas in third-world countries? Ride your bike in a blizzard or carry your groceries home without a car? Difficult things make life exciting and worthwhile, and with too much money, you might miss out on precious difficulty.

3: Are your Kids Learning about Scarcity, Hard Work, and Struggle?

One of the worst punishments you can give a kid early in life is the reassurance that they will never have to be careful with their money, stay up all night to work hard on projects, or save for their own retirement. I believe that people do best if they are forced to make their own way in life. Sure, you want to offer love and practical and emotional support.. but cash handouts can often backfire.

Also, do your kids know how unusual their situation is? Will growing up rich affect their ability to get along with people who had less wealthy upbringings? Are you dooming them to lives of hanging around with only big spenders, meaning that they’ll end up very poor if they don’t happen to choose careers that also pay $400,000+ per year?

Every young adult should be able to comfortably sleep on somebody’s floor, drive an old manual-transmission car with rust holes to a concert, and eat leftover pizza for breakfast. Without complaining. Be sure you are not creating any new Paris Hiltons.

4: How Long until you’re Covered for Retirement?

To support $200,000 in annual spending at a 4% withdrawal rate, you’d need $5 million in savings. With only $1 million right now, you might need to work for about 15 more years even if you save $200,000 per year until then. As shown in the Shockingly Simple Math post, financial independence depends solely on your savings rate rather than your income, and my own savings rate was higher than yours through my late 20s even though I earned less.

This might not be a concern since you like your job so much. But as a cautious person my natural tendency is still to suggest that you place a higher emphasis on buying your freedom  first. With an asset base of only 5 years of spending, some would say you’re jumping into the high life just a bit too quickly.

If you experiment with living a less costly life, you just might find that you like it more, and you have less of an interest in spending so much on yourself. Since your urge to work and produce will be unaffected, this naturally will increase your interest in spending on others and the betterment of society, the planet, or any other causes that become important to you. Then you open up a whole new area of life satisfaction – that of service to others. I know, it sounds crazy initially, but it has been know to catch on for many ‘a’ rich person.

The advice above should be viewed as just some friendly knuckle rubs rather than any sort of serious punching. I’m glad you’re doing well in life and you’d be fine even without lifestyle advice.

But from what I’ve read, I see an opportunity for greater Badassity in your life by finding a way to bring back at least a teeny bit of good old-fashioned Hardship.




  • RiskyStartup.com May 3, 2012, 2:06 pm

    My suggestion would be to do “fasting” once or twice per year – try to live frugally for 1 month (say $4K for 1 month) and see if your theory of being able to live of $3700 is true.

    As an added benefit, you will be able to put away that month’s extras into your retirement fund – 1M net worth seems too low for your situation – especially considering that 1M includes your primary residence. I advise against including primary residence in your net worth unless you plan to live in a tent when you retire.

  • Ron May 3, 2012, 2:16 pm

    Money quote, pun intended: Every young adult should be able to comfortably sleep on somebody’s floor, drive an old manual-transmission car with rust holes to a concert, and eat leftover pizza for breakfast. Without complaining.

  • Ryan May 3, 2012, 4:07 pm

    I’d like to see a case study (even a fictional one) based on what I thought this was going to be, from the title alone. Say, late 30s, $800k assets, $70k income, $25k annual spending, neither hate nor particularly enjoy their job. Sort of a take on the “what’s the point?” thread from the forum. (I wasn’t describing my own situation).

    • jennie May 3, 2012, 8:38 pm

      Yes! This is also the kind of article I was expecting based on the title. I’d be really interested to read about someone figuring out how (if?) they can best enjoy their newfound free time (due to deciding to work reduced hours or reaching complete FI).

      also, congrats to the case study! 40-60% savings rate is impressive (although I agree even more impressive as income goes down…).

  • LC May 3, 2012, 5:50 pm

    My advice to this person would be “You have enough money to be able to do whatever you want to do, so ask yourself what it is that you want to do.”

    Right now, it seems like they are providing their children with every opportunity money can buy, which is certainly admirable. But they have the opportunity to give their kids experiences that not everyone does, such as spending time abroad, volunteering at a soup kitchen rather than getting a minimum wage fast food job, etc. I would also recommend giving the kids an allowance and making them budget for their own clothes, entertainment, etc. Even if they give a generous amount it will teach them that money is not infinite.

    I would also think about the values they want to pass onto their kids. This man obviously got to his position by working hard, so I would make sure that their kids are learning this. I also agree with giving more to charity, or at least making sure the kids realize how fortunate they are. There are many people who make a tiny fraction of his salary but give away 10-15% of their income.

    As Warren Buffet says “I want to provide my kids with enough so that they can do anything, but not so much that they can do nothing”

    This person may not want to retire or work less, but he may want to become more involved in his kids’ lives. Many people can work as contractors for their companies and take several months off at a time while still maintaining their career position and a good portion of their salary.

  • Ross May 3, 2012, 5:52 pm

    As the subject of the case study, we thank Mr. and Mrs. MM, and all of you who posted comments. We appreciate the feedback, and are a little surprised that you let us off so easy ;). We didn’t expect to be in this situation so soon, and it raises some dilemmas that we are not sure of, so we thought we would reach out to a group of people who we trust more than MSN Money. Here are our responses to a few of the issues raised.
    The Car: Agreed, this seems high. The repair budget is probably an overestimate based on some one-off repair work we did last year. We are probably approaching the time when it is more economical to get a new car than to repair an old one. I do cycle to work (as encouraged by Mr. MM!), and we walk around our neighborhood.
    The Dog: The dog costs are ridiculous. We adopted a puppy who turned out to be sick, and so required surgery and on-going medication. We are her steward and we can afford it, so we decided to keep her alive.
    Travel: Our extended family is unfortunately scattered around the world, and flying four people anywhere is expensive (we fly economy). When we do travel, we stay in nice hotels and do fun things, on the theory that experiences make you happier than buying things.
    Private School: Our kids are currently in public school, where my wife volunteers. We are moving them to a private school for High School, to get more teacher attention and better preparation for college. This has been a difficult decision, but we have decided it is a good investment. The Summer Camps are academic programs.
    Food: No compromise here. We eat out about once a week, and buy organic groceries. We see a direct correlation between the quality of what we eat and our health: our kids are by far the healthiest in their peer group, and have always eaten organic.
    Teaching the Kids: As identified by Mr. MM, this is one of our biggest struggles. How do you balance the need to teach your kids the importance of hard work with the desire to share your success with them? As it happens, our children do know what it means to struggle and live with restricted means: we lived for years on less than 2.5k a month. A work ethic is non-negotiable in our house, and the kids get frequent lessons on the need to appreciate what they have. It is one of the main reasons we live in a much smaller house than most of their friends.
    Misc. This budget item is crazy, and one that we definitely need to take more accountability for. Recently it has been filled by home improvements as we have improved the energy efficiency of our home.
    Charity: Our charity budget is low. We made a decision that the biggest and most cost-effective way we could help society was to raise productive members of society and take care of our own, rather than to make financial donations to charities we know little about. We frequently help out family members who need assistance.
    We find some successful people do seem to think their success is a reflection of their value as a person: we find this not only false but infuriating. Like you, we have very little time for those on six figure incomes who complain that they struggle to get by. We applaud the efforts by Mr. MM to shake people out of the delusion that personal debt is anything less than an emergency.
    For the record, I do not work in banking or on Wall Street, and we live in the South. Our effective tax rate last year was about 28%. This is total tax payments divided by taxable income; our marginal tax rate was of course much higher.
    As you can sense, we have achieved some of our life goals early, and are casting around for a new set of dreams and reasons to do things. As Mr. MM puts it, how do you have a great life with no monetary problems? There have been some great suggestions on this blog and we will be making some changes. We appreciate you all taking the time.

    • Mr. Money Mustache May 3, 2012, 6:44 pm

      Wow, what a guy. Maybe I need to give out a second Most Mustachian Comment Award!

      Thanks Ross, both for submitting your story and for the very real and down-to-earth response to this admittedly harrowing trip through MMM Mosh pit.

      I think you’ll end up influencing thousands of others in a positive way because of how you’ve handled this.

    • Shanna May 3, 2012, 10:20 pm

      Double Woot!

      Since I am mostly unaffected by smarmy attempts at class warfare your more in depth explanation was just about what I expected from your profile.

      My first thought was, if I could travel or pay for my family to travel to me as often as we all wanted, I would have a huge travel budget. Living far from my family gets more painful, not less. Same with the food- all organic, all the time, I would love to not have to look at prices! Although I would never have a pet again, I paid dearly to properly take care of the ones I had until the bitter end.

      Our income is similar (not the awesome bonus though!) and it took extremely hard work to build up to it. My husband often worked 100 hours a week (because he was awake for 3 in row) and his longest stay was 4 days before I went to drag him back home. You just don’t get a big salary dropped in your lap for nothing.

      Cheers to you and your family!

    • rjack May 4, 2012, 6:37 am

      Wow! I really appreciate your balanced, rational response given that some of the comments were…ah…harsh.

      Anyway, the only other advice I would give is to make a strong effort to become FI ASAP so that you are free to do whatever you want with your time.

  • W May 3, 2012, 6:31 pm

    I’ve been thinking a lot lately about “loving your job”. I think I love my job but I’ve realized recently that as long as I need a job to support my current spending I don’t think I can really be honest with myself.

    If the reader really wants a next goal I think he should strive to have your actual monthly expenses be covered by his investments. While you could go into “emergency” mode and probably get by with what you have saved so far it would take some pretty drastic moves (pulling the kids out of their current school, and not traveling the way you are used, to just to start) So you have a lot more flexibility to make a change then the guy down the hall (I would say in the next cubical over but I’m guessing 400k gets you a door :) who has the same salary but is mortgaged to the hilt. But you don’t really have FU money. If thinks took a turn (new ownership starts making some questionably ethical decisions, the hours start to creep up and you start not seeing you kids at all some days) you have some real pressure to stay employed.

    If you can lower you spending a bit and up your savings you could quickly be in a place where losing that income would have no impact. Then you are really in a place where you can evaluate how much you love your job. I know that is one of the reasons I want to be FI. I don’t plan to quit the day I get there, but if I realize that once I’m there things might look a bit different.

  • bigato May 3, 2012, 7:01 pm

    Hey MMM, I don’t know if you are gonna read this comment out from this crowd, but I just wanted to say that I respect you a lot more and that means deeply, after reading your reply to the guy. You really showed what you are made of.

    I wish luck for the poster in his seek for meaning and satisfaction in life. I hope he finds life-long sustainable satisfaction and realization for him and his family, specially the children.

    My advice would be, if you are not finding hardship in life, you should seek for it. If you need to, you should even pay to find difficulty. That’s the source of all personal growth and evolution, and that’s what does bring sustainable satisfaction in the long run.

  • George May 3, 2012, 9:38 pm

    Based upon the fact that this guy has such a high income yet lives in a such a small place (1500 sq ft) leads me to believe he lives in an urban environment, probably NY city or San Francisco. He is probably in Finance or banking or executive.

    If he lives in NY city, the private schooling makes perfect sense. Any one who has a decent amount of money sends their kids to private school in NY city. Supposedly the public schools there are bad, but then again I have no real accurate knowledge of this.

    Personally, if I were him, I would move out to the country or a smaller town for a simpler, quieter life; you’re spending would drastically drop in such a case (i.e. you could use the public schools instead); also you could spend more time with family; you could rely on passive investment income as well from savings.

    He also says he likes his job, thus, he should probably start up an investment boutique or small biz along those same lines. Of course, it will pay much less, but if you really like your work, you can still work even after moving out of the big city. Plus with the small biz, you set your own hours, and thus spend more time with the family.

  • Financial Samurai May 3, 2012, 10:28 pm

    Very cool to point out this profile. This is a very common profile in big cities like San Francisco and NYC as another pointed out.

    $300,000-$500,000 in income is common after 10-12 years of work in the finance sector.

    I hope people get inspired and know that there’s more money out there than you think. No need to make less when you can make more with the same amount of effort.

  • Drew May 3, 2012, 10:48 pm

    Mr.MM why Almonds?

    • Mr. Money Mustache May 4, 2012, 9:32 am

      Well, you need to have a picture of SOMETHING for every article. And since we were talking about a perfect life and balancing complexity with simplicity, I thought a simple handful of raw almonds would be suitable. It’s a minimal but highly satisfying way to eat.

      • Kathy Abell August 10, 2015, 4:52 pm

        Now that’s an elegantly creative connection: the perfectly satisfying life illustrated using a perfectly satisfying food. :)

  • Kris May 4, 2012, 7:55 am

    I recently discovered ERE and MMM: I’ve flirted with frugality, but not really believed FI was in my reach. My eyes are opened, thankyou so much, and plans are being forged. My upper lip will never be the same.

    As a relatively high income earner I relate in some ways to the case subjects, and congratulate them on their hard work. He asks “what do you think?” If I were in their shoes I would:

    1. Make spending more time with your teenagers a priority. They will be grown before you know it. Time is more valuable than money. Most people on their death bed say “I wish I spent more time with my family”. Often workers in your income bracket have no choice but to put in long hours, but I would try to be creative with coming up to a solution for this. There is a way for sure. You may drop income, but you can afford it.

    2. Set a finite goal for FI. You may not need to try for a 200k FI: generating just half that (100k) really should be more than enough.. and if you keep working your nest egg will grow anyway. According to the MMM formula saving 50% will take 17years, but if you save 75% you are down to 7, and still living on 100k/year. You say you already are part way there, so it may not take that long. I believe it would be complacent to not take the opportunity to nail this in the near future: life circumstances are actually often out of our control, grasp the opportunity whilst you can.

    3. Buying experiences can be as wasteful/addictive as buying stuff. You seem very grounded but just do a double check that you haven’t substituted buying experiences for stuff. “Experiences” are subject to hedonic adaptation just as much as “stuff”.

    4. There’s a lot of fat in that budget…..plenty of options open to get 1. and 2. happening.

    An acquaintance of mine watched his 6 year old daughter die crossing the road to school, struck by a car. He most regretted that he had been working long hours to get his business up and going, and had not spent enough time with her in her short life. He accepted invitations to talk about his experience and this was his message.

  • Tamara May 4, 2012, 9:28 am

    We could have been this family, though in our 40’s, not our 30’s, and my thoughts are therefore as follows . . .

    This family needs to be careful what they get used too, because once they get used to something, it becomes a deprivation to cut it out. They also should calculate how much they would need saved in retirement to sustain their current lifestyle (about $6.5 million at a $200,000 current spending rate, not including the house – you have to live somewhere – using a very rough 3% withdrawal rate) and decide if they are willing to work the years necessary to save that amount before reaching Financial Independence (FI).

    Given their current income flow, they really don’t have as much saved as they think when they pull out the value of their home. And with no guarantee as to how long they’ll be able to pull in this income, it’s a bit like the grasshopper vs the ant – they are playing with their money now rather than working to save it for a brighter future. Right now they have an absolutely golden opportunity to throw money left and right into savings to bring down the point at which they achieve FI. Assuming they are starting at $500,000 after the value of the house is removed, they are still a long, long way from $6.5 million (or whatever their actual FI number is.)

  • Heidi May 4, 2012, 10:00 am

    I’m super excited to hear that food money is going to organic foods. Mustachians are the best eaters in this country in terms of both health and frugality. Keep spending there and just work on buying as much of that organic food in the form of whole foods and cutting down on any packaging.

  • TLV May 4, 2012, 10:39 am

    Every time I read a case study it makes me want to send in my details for a critique by MMM and the public. (I’m not going to, but I do have a journal thread on the forum for anyone interested.) Kind of like how every time I read a construction-themed article I want to go buy some power tools.

  • Mrs. Case Study May 4, 2012, 10:53 am

    As Mrs. Subject of the case study, I am very happy my husband decided to come to MMM for some insight. I am impressed with many of the great ideas and perspectives people have offered. I’m looking forward to sitting down and drawing up a new family game plan.

    I do notice the concern about our charitable giving. For as long as I can remember we have tried to follow Goethe’s advice: “If everyone swept in front of their own door step, the whole world would be clean.” By raising our children well and looking after our own, we feel we are relieving society of a potential burden. We do give locally, which is what you see in the charity category.

    We have been more generous with family and friends (We do not put this in the charity category, since we cannot claim it against tax). We also follow Mr MM’s leading in strongly counseling people we know about the urgency of paying off debt; you would be surprised (or perhaps not) how many high income people still have piles of debt.

    So here is a question back to you: is it better to give money to the traditional charities, or does taking care of those close to you count as charity? Or are you obliged to do both?

    On a more philosophical note, we hear complaints that the American dream is dying, and that the middle class can no longer afford to live the good life. The thing I have noticed is that the American Dream is still attainable, as long as it is the 1950s dream of a 1300sq ft house with 3 beds, 2 baths on the edge of town. Where the family owns one car, does their own yard and housework, takes vacations camping in the national park.

    The modern American Dream seems to be for a 5000 sq ft house with 2 high end new model cars where you outsource all of your home labor and vacation in Europe. That is difficult to attain and sustain even on a 1%-er income, and always was.

    I would also just like to publicly say how much I adore my husband, he is the most amazing man I have ever met.

    • Tanner May 4, 2012, 12:36 pm

      I appreciate your willingness to post and respond as well as your sincerity to hear what advice others have, good or bad. To your question about supporting family and friends: I think it is good to support family and friends in need, but there are so many others that you may never come in contact with that are in much more desperate situations. Also I admit I strongly disagree with the quote you used on giving:

      “If everyone swept in front of their own door step, the whole world would be clean”

      It’s nice in theory, but the problem with this quote is that it is simply not true. There are just too many people born into poverty and ungodly situations that they truly need someone to help “Sweep their door steps”. Children that need clean water or are sold into sex slavery. Horrible things are happening even in America that do not get fair attention. Also for many people they feel hopeless and need someone to encourage them to “sweep their own door step” to know that is possible to rise above their circumstances.

      Our family income is maybe 20% of yours but we give almost double what your family gives financially (although I don’t know about to your family and friends or your time?). Although many mustachian’s might disagree, I believe if you giving doesn’t hurt a little (financially, time, or other resources) then you are not doing enough. In a way I believe it’s building your frugality muscle. If you don’t want to give more financially you can give your time there are tons of good causes that need volunteers to spread the word and or support their mission.

      I encourage you to find something you strongly believe in as a family and pursue it either financially or with your time. Whether that is building an orphanage in South America, building clean water wells in India, reducing Aids in Africa, supporting those fighting against human trafficking, etc, etc There are so many worthy causes and your family could have a significant impact on helping.

      For many people it is easier to give money than time because of their situation but another idea is instead of sending your kids to education camps in the summer, visit an impoverished nation with the challenge to meet those in truly dire conditions to see how you can help. I had the opportunity to do this when I was in junior high and high school and it has left a significant imprint on my life and my world view.

      • vwDavid May 4, 2012, 2:36 pm

        Nice Tanner, good stuff..

    • Liz May 9, 2012, 3:22 pm

      I agree with everything here except the American Dream of owning a 1300 square foot home with 3 beds, 2 baths on the edge of town. This is very difficult for many as the average income is $22,000 a year per person. For most people on this forum who are at a middle-class income level, it’s very attainable, but I think saying that people can’t afford to buy because they want 5000 square feet is incorrect and just a tad bit “judge-y.” I haven’t been able to save for a down payment yet because I am still paying off my student loans. I’m not whining and I expect to be financially independent due to my frugal habits in a few years, but to say it’s attainable by snapping your fingers is a little out of touch.

      For the charity bit, I think that people like us should give outside of our own families. There are millions of people living on 99 cents a day who are destitute.

    • BC June 7, 2013, 12:04 pm

      Thank you again Mrs. Case Study for so graciously handling the MMM “mosh pit”. To add a bit more to the charitable giving idea since not many responded:

      1. It’s your money, so ultimately YOU get to/have to decide what to do with it. Anyone can have an opinion about how to spend YOUR money but at the end of the day it’s yours.

      2. I think it is important to meet the need of those in your own community. I would guess that the reason you like giving in your own community is the connections that you have. You know and understand the need, you know the difference that it will make, and there might be greater accountability for those who recieve it knowing that it’s their friends, neighbors, etc that are giving (not that that would be necessary, but it almost makes it more valuable because they know that at least some of those people are sacrificing to help them).

      3. Volunteer with an organization before giving them money. Perhaps the reasoning for giving to those in your own community and family are a hint to what makes a good “traditional charity” to give to (since I don’t actually know your reasoning, this is based on the above assumption but I think it is common amongs givers). You want to know that the money is actually going to what you intend, you want to know that it is a good investment, that it is actually helping, etc. I want to know that too. I agree that starting on your own doorstep is fantastic, but if YOU choose, you have a very powerful amount of money that you could do great things with. I think the key is finding organizations that you understand, that are willing to be somewhat transparent with their needs and their spending, if you get involved with the organization as a volunteer, you can see much of this, with the added benefit of becoming even more connected to the vision and mission while being able to give fully of yourself financially and from your heart with your labor or a special skill (and it sounds like you and your husband might have some awesome skills that a non-profit might not be able to afford but a few hours of your time could bring them a huge benefit). Don’t undersetimate special skills, when I worked for a non-profit I remember how exciting it was when we had someone volunteer some time using skills like welding, decorating (for fundraisers), cooking, marketing, law (for writing good release forms, etc), construction, the list goes on. Extra materials are really valuable too, like construction supplies, office equipment (your husbands office might upgrade to a new copy machine, there IS a non-profit out there that needs one).

      4. When you volunteer with an organization and find it to be a fantastic one, you will quickly see the needs they have, and you will be able to give where you see the highest need. I volunteer and give to a non-profit that works with youth and get a ton of joy out of seeing a need and being able to fill it. You can attach expectations along with a gift, and they can choose to accept it or decline it. If you know that you want to give $500 so that they have a commercial washing machine or for x number of mosquito nets to prevent malaria, then offer the gift with that condition. If that is not in line with their goals, they can decline or suggest an alternative.

      4. Traveling with your kids to do a service project with an organization in another country can be an amazing learning experience; often more significant to those “helping” than those being “served” it gives amazing perspective. Do research to make sure it is an organization that is working to bring up leaders in their own communities and with respect to the local culture.

      My point is that having a CONNECTION means that you not only know that you are giving to a good organization but also that you know what the needs are and can give with purpose and once you know what the needs are, you WANT to give more. Seek out organizations that are doing things that speak to your heart. My husband and I give 10-12% of our $60k income to different things including people we know in need (last month it was for a friend with cancer), non-profits, etc, but other than our sponsorship of a World Vision child, we KNOW all of the people/organizations personally and that makes all the differnece. We are rooting for them to succeed at what they are trying to do (in places from WA state to Africa, to Central America).


  • andrew May 5, 2012, 3:51 pm

    Looks to me like he’s made the classic mistake of letting his expenses rise to fit his income. The questions I would ask are, how secure is your job? Are your skills transferable (like in Medicine)? How would a major health scare affect you? I would in his circumstance aim to save my entire bonus. Unless my job security was very very good, as in- owned my own business with minimal debt. He would only need to save and invest his bonus well for a few years to be independent of the rat race.
    I have been in this exact circumstance, after a few years I decided to change direction and seek out what really matters in life , not as easy as it sounds.

  • joe @ Retire By 40 May 7, 2012, 10:19 am

    I’d like to say congratulation on earning a big paycheck and living a great life only a few people can. I do have some input.
    You say you can cut down your monthly expense to $3200/month. Is this true? Can you really do it? It’s easy to say, but what happens if you really lose your job? That’s how so many people get into financial trouble right? Most of us can’t reduce our expense that quickly.
    I also think you should save more for retirement. With your lifestyle, you will need a lot more than $1M.

  • FreeUrChains May 7, 2012, 1:48 pm

    So with over $6k-$9k/month “investing” on your children’s education and activities, you could actually set them up with an “Emergency Financial Independence Trust Fund” for every child you have and more you plan to have. A child’s motivation for Education and Knowledge is Essential for a Happier and better life, I fully agree. But hard working doctor’s or Millionaire entreprenuers come from the public education system all the time because of their parents TIME spent with the children exploring science, business, mathmatics, biology, etc. Not necessarily thousands of dollars/ month.

  • The Voluntary Worker May 16, 2012, 12:15 pm

    I second the suggestions that this family should try living on their version of a shoestring budget (maybe minus changes to schooling, for obvious reasons), just to make sure that they can actually do it / stomach it.

    Who knows, they might like the little dose of asceticism so much that they stick to it…

  • Paul June 2, 2012, 1:59 pm

    I’m a little late to the party, but here’s my advice: Try to live off of your salary only and start treating your bonus as “found” money that can be saved instead of as additional salary to be spent. If your bonus is truly a bonus, you have no guarantee that you will receive it from year-to-year, so setting the size of your fixed expenses to depend on your bonus is risky.

    What’s the first thing that will happen if your company doesn’t make its numbers? Well, the bonuses will go away, of course! What happens when new management doesn’t agree with the structure of the bonus payments? Again, the bonus goes away. (Do I sound bitter? Luckily, I’ve always followed my own advice!)

    Of course, it’s hard to make these changes all at once, but you might get started in an incremental fashion, ratcheting down the spending over a few years until you reach your goal.

  • Army Colonel K June 3, 2012, 7:50 am

    Since a reasonably large portion of the commentary to this post involved the public v. private school debate, I’d like to provide the perspective of someone who has experienced both options. I’d also like to point out that the most significant factor in the decision (which the MMM community seems to have glossed over) is the quality of the public schools locally available.

    I was raised in a family of modest means and attended public school through the sixth grade. Through fourth grade we lived in North Carolina, where the schools are about average compared to the nation as a whole. I had no particular problems in the North Carolina public schools and would probably have stayed in them through high school if we had remained there.

    However, in the summer before fifth grade we moved to South Carolina. My parents, as you would expect, enrolled me in public school there.

    And this is where reality differs quite starkly from the Mustachian ideal of public schools. South Carolina public schools are among the worst in the nation, ranking 49 of 50 almost every year (thank you, Mississippi). And in schools such as these, there is no ability to “pick your problems.” Far from it. Your problems pick you.

    I was a reasonably studious child, but also athletic and physically competent. By no means was I a kid who invited victimhood. But I couldn’t hide the fact that I was relatively undersized (I grew later), and I was new.

    From the first day, I had at least one fight a week. These ranged from relatively minor scuffles to full-blown punchouts involving black eyes and bloody noses. Against kids my own age I won more than I lost, but all that meant was that I would attract the attention of some older, meaner kid. I can still vividly remember the process of getting my ass kicked by a seventh grader who was at least eight inches taller than me.

    At the same time the learning involved in the school was nonexistent. Some of the teachers might have been trying — I couldn’t tell you. The mere fact that I could read and regurgitate basic facts meant that I was one of the best students in school. I wasn’t a problem academically, so I required no further attention, not when there were so many disruptive and truly challenging kids to deal with every day.

    This went on for two years. The fighting dropped off somewhat once I established my spot in the rankings. But the education never picked up in any way.

    In the summer after sixth grade I took a test for a scholarship at an elite prep school. My parents did care and suggested that I take the test, even though they couldn’t afford private school. Although I actually came in second on the test, the first place finisher was unable to accept the scholarship due to a family move and I, as first alternate, received the scholarship instead.

    There is no way to adequately convey in this short format the difference in environment that I found when I arrived in seventh grade. No, not all the kids were nice. There was a definite social pecking order based on money, with me, as the scholarship kid in my hand-me-down clothes, at the very bottom. But no one physically attacked me. The teachers were not one level above the public school teachers, but many levels above. And scattered throughout the student body were the kids who, though I didn’t know it at the time, would become my best friends for the rest of my life, kids who, though they came from money themselves, truly didn’t care what my background was. Along with this came an education and opportunity for experience that can only be described as phenomenal, superior in many ways to even the excellent public university which I later attended.

    So I have first-hand experience with decent public schools, terrible public schools, and a top-flight prep school. But even though my wife and I can afford private school now, we aren’t knee-jerk about it. Currently we’re fortunate enough to live in a part of the country with some of the best public schools in the entire nation, and my kids attend public school. We are very happy with it. If I lived in Longmont, CO, with MMM then my kids would be in public school as well. But if we moved somewhere where the public schools are abysmal, my kids would be in private school the next day.

    Don’t kid yourselves. If you live in an area of average or worse public schools, there is no comparison whatsoever with a top private school. Of course not all private schools are created equal; if you pick one where the emphasis is on teaching the kids that Jesus is coming back tomorrow, then don’t expect a high-quality science curriculum. But if, like the subject of the original case study, you live somewhere that the schools are bad (and they are bad in most of the American south, where he lives), then an excellent private school is a very worthwhile investment.

    Kudos to him for making it a sufficient priority to spend the money.

    • bwall March 6, 2014, 9:32 am

      I’m late in responding but I just wanted to say that I can identify with your tough school experience. I remember fighting from the first grade through sixth grade, every year I knew there would be somebody wanting to fight. Every year, there would be about three or four fights every year per class of 30. Most times, there wasn’t much of a reason behind the fights.

      Years later in college a friend told me that he had never hit anyone in his life. I couldn’t believe it–I viewed it as a sign of his Wussypantsy-ness, not an indication of how violent my rural, country school was.

      Fortunately for me the education wasn’t bad and the fighting stopped around 7-8th grade.

    • ov December 22, 2014, 10:40 pm

      I didn’t have the terrible experience that you did, but I did public K-9 and private 10-12. My public school system was supposed to be really good, but I can’t even compare the two academically. The public school was boring and not at all engaging. The private school was a whole different world. The homework was real and hard instead of something I could squeeze in between classes. Academically it was harder than most of my university experience. One of the best experiences of my life.

      Don’t know what I’ll do for my kids. Very torn. But, like you, I agree that it needs to be an evaluation based off the local schools.

  • Wes June 18, 2012, 8:06 am

    I’m guessing he own’s his own small business. He’s reporting the 85k as “salary” and the rest as a distribution from the small business, so that he doesn’t get in trouble with the IRS. The 300k “bonus” is variable because it depends on how well the business is doing.

    You, too, can have this situation by either starting a business or buying one. I’ve done both.


  • Pat March 11, 2013, 5:55 pm

    Lots of good comments. Three thoughts here – first, if you are actually doing things with your dog, it is easy to spend $200/month. There is food, regular ongoing medical costs (i.e. vaccinations),say $40 -60 depending on the size of the dog, and then the activities – puppy kindergarden, obedience, agility, flyball,herding, whatever you and your dog like doing together. This is not the “show dog” scene, although showing a dog in conformaiton can be fairly inexpensive or incredibly expensive, just depends on how it is done. We spent $100 every 5 weeks for agility classes, and they were worth every penny. Second, there are lots of reasons for private schools. Our daughter went to public French immersion (Quebec) for elementary school, but both the English and French High Schools in our town were good, not great. We invested $3000/year to send her to a private French school, and she came out so bilingual that French kids think she is bilingual French. She has never had a problem finding a part-time job during her College and University years, employers in our area love bilingual people, Third, the children’s activities. Hockey is expensive. Some dance activites (think Irish dance, Highland dance) are expensive at competitive levels. Riding – a friend of our daughter’s was into competitive jumping, and that is inrcedibly expensive. That was all she did outside of school, the whole family supported her goals.
    So without knowing the activities and priorities of the case study family, we may look at some of their expenses as high where they may actually be low in context.

  • Hayley June 27, 2014, 3:14 am

    “Every young adult should be able to comfortably sleep on somebody’s floor, drive an old manual-transmission car with rust holes to a concert, and eat leftover pizza for breakfast.”

    Young adult? I’m 32 and that’s still my idea of a great weekend!

    • Mr. Money Mustache June 27, 2014, 7:51 am

      Same here, a few months before turning 40! .. but we are still young adults. I think “regular adulthood” starts around 50, but I’m sure I will be revising this definition about 9 years from now :-)

      • kathryn September 3, 2014, 1:25 pm

        Started at the beginning, and after a couple of weeks, have arrived at this point.
        I remember watching a Lisa Ling’s America show, where it portrayed a family similar to this one, but it was after the father lost his job. It was the hardest on the kids, because they really didn’t have any control over anything. It also stated the families with highest incomes had the hardest time adjusting to being frugal.
        I never think enrolling a child in private school is a good idea. If it’s good enough for the ‘poor’ kids, it good enough for everyone. If that was the case, maybe pressure would be put on schools to improve them by the wealthier parents.
        Charity begins at home. Mindlessly giving money away, only makes the ‘giver’ feel better. Whatever you give, even with best intentions, will rarely reach the intended group. Most is eaten up by beaurocrats/administration.

        Maybe give charity where you know good is being done.
        Mow the lawn of a family in need. Provide childcare for a family who is suffering an illness.
        In our case we repaired the home of a neighbour, that she planned to abandon, because she couldn’t afford a repairman.

        Anyways, I am enjoying reading this, and still only half way through…but hey, I’m already retired (4 years ago, at age 50) so just wanted to say thank you MMM

        • IAmNotABartender March 29, 2015, 9:43 pm

          “I never think enrolling a child in private school is a good idea. If it’s good enough for the ‘poor’ kids, it good enough for everyone. If that was the case, maybe pressure would be put on schools to improve them by the wealthier parents.”

          But that’s the point – it’s NOT good enough for the poor kids. And change doesn’t happen that quickly – and risking your children’s safety and futures is quite a big ask in order to try to enact change. I think, if you have the opportunity to give your kids a better education – whether that involves private school or moving to a better public school – you should take it.

  • EMML July 8, 2014, 10:40 pm

    Hmm, I may be new here, but I’ve gone through all the posts from the beginning of time to this point, and I must say I’m a bit disappointed. I don’t think they need to go extreme and send their kids to public school, but don’t see a lot of exercising the frugality muscles or badassity here either. Although I’m impressed by the income, I’m not impressed with the savings rate or total saved on this income. I think there is room for easy improvement, and I thought MMM was all about continuous improvement.

  • Top 1% Skeptic July 14, 2014, 12:00 pm

    Enjoyed reading the case study, the advice of MMM, and all the comments that followed. My husband and I earn more money than this couple and are the same age, in our early 30s. We have worked long and hard in our careers and our professional educations. That combined with good luck, being born in the right country (USA) etc has lead us to be high-earners. We spend less than the Case Study couple resulting in a savings rate of >60%, but our spending would still lead to lots of scorn from the Mustachians (around $140k a year)

    And yet I’m still drawn to MMM because a big part of me yearns for a simper life. For lots of reasons I won’t go into here, despite high earnings, I’m going to have to work for about 13 years more. I guess we’ve had a somewhat typical road to get there: college, worked a bit, grad and professional schools, then professional jobs, then babies, recently.

    Some other commenters have noted some inconsistencies that make them think some stuff is made up. Well, here’s the one JUMPED out at me.

    “We are young couple (early thirties) with two children (early teens).”

    “they are 8-10 years away from being off our payroll.”

    If off your payroll when they graduate college at age 22, that means your oldest is 14? And early thirties means 33 or 34? So you had kids when you were 19 or 20? Then went on to earn $400k/yr and have $1M in the bank?

    I suppose very possible, but not so common. I’d love to hear the story that leads down that path!

  • AC September 4, 2014, 12:20 am

    I’m a new and avid reader of this fantastic blog. I’ve followed some of the main Mustachian principles for years without realising it. Others, I haven’t.

    If this guy was made permanently unemployed today for some reason, within 10 years this family would be screwed IF, and only IF they carried on spending at the same rate they do now.

    If you’ve read “The Millionaire Next Door” you’ll understand that this guy plays great offense, but almost zero defense. His position isn’t as strong as you’d think.

    However all he needs to do, as someone else has already pointed out, is live off his salary and invest his bonus. Which I presume probably never drops below $50k, even when times are tough.

  • TonyV. August 10, 2015, 11:29 am

    Wow, so many comments!!! I didn’t spend the time to read them all but i read a few and skimmed through quite a few more. Someone may have mentioned this, but i faked to notice. This guy says he spends 1-3 with his kids everyday. As someone without kids, that seems kind of low. Maybe on the high end at 3 hours a day it could be understandable, but is this guy missing out on a lot of his children’s lives because he’s working to bring home such an astonishing annoy out money? Would he maybe be better off investing more than his current rate so that he can retire and savour what’s left of their childhood?

  • Suhaila November 20, 2015, 9:02 am

    All I can say is that I’m jealous of this person’s fortunate situation. If I ever found myself in their situation I would probably live off my monthly income alone and bank the bonuses. And I’ve been thinking about private vs public and I think that if I had that kind of money it would make more sense to place the kids in public school and hire a personal tutor(s) for them to reach their maximum potential with one on one sessions. I think they’d learn more and about more things than private school that way plus they’re around normal people which is grounding. (Been to both, though my private schooling was under unusual circumstances.)

  • Garrett July 16, 2017, 11:25 am

    I love your assessment of their situation, MMM. When reading about their $17,000 / mo expenditures with a ~$32,000 / MO income, and looking at my own (albeit me being a single 30-something man, with no dependents) $1500’ish / mo lifestyle… and after re-reading that they only had $1MM in assets, I wondered, “Why DON’T you prune your expenditures down to ~$3500 – $5000 / mo, and allow your amazingly high paying work to flood your coffers with tons of cash?”

    That makes the most sense. Create a massive cash buffer, and THEN play with higher amounts of cash outflow. As someone who is just starting out their Mustachian journey (I’ve only been reading the blog for a year, and gotten serious about applying things since early 2017), I can’t FATHOM burning through $200,000 / year unless I was fantastically wealthy. Multiple 10’s of millions of dollars at least! Just the raw earning potential of $200,000 at 7% is a free ~$14k / year in income. More when compounded. If he can pull his expenditures down to $5000/mo, and invest $340,000 / year, at 7%, with his $1MM in assets, he’d be singing to the tune of almost $7MM in 10 years. And at the 4% rule, $7MM is throwing off $240,000 / year. Or compounding higher each year, if he wants to keep working.

    Damn. Now I want to get up to those amounts of money, just to see the raw compounding numbers! :D

    • Garrett July 16, 2017, 11:32 am

      Correction: $7MM throws off $280,000 / year.


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