“Yeah, I guess Mr. Money Mustache has a point. Spending less than you earn really is a good idea. Too bad he’s so hardcore, though. I’m not ready to cut back my own life to the bone like he has, so I could never live on less than $40,000 per year – let alone raise a child on that budget!”
This lament comes up again and again, no matter how many times I insist that the Mustache family leads a pretty fancy lifestyle, with no cash constraints of any sort. People still don’t believe me, and they don’t have time to read the older posts which explain things step-by-step. So let’s just present a summary of what life is really like when a family of three lives on well under $30,000 per year in early retirement. This post will then become a piece of reference material, so I can link back to it whenever the topic of how deprived our life must be comes up again.
Please don’t take this as a celebration of materialism and excessive spending. My point is not to say “Yeah! Look at all the fancy things we have!”. It’s actually with a certain amount of guilt that I present this series of pictures, because I know it’s far from the minimalist ideal that many of the happiest people of the world pursue. All I can say is, “this is where we are now, it’s obviously more than enough, and over time we’re finding we want less and less, rather than more and more”.
Following the style of those Forbes Magazine top ten lists, we’ll cover each aspect of the lifestyle with a picture and description, then follow up with notes on how we try to get the most out of each area of life while minimizing the cost. After all, just as important as the amount of money you spend, is how efficiently you are able to spend it.
This is our most excessive piece of lifestyle, as we live in a 2600 square foot house worth about $400,000, in a city where the average is a little over $200,000. Around here, that buys you a 4-bedroom house in great condition, in any of the nicest neighborhoods of the city. The house has four bathrooms including a master suite that is straight out of a design magazine. All of the city’s best amenities, as well as high-paying jobs and fast bus lines to other cities, are within a short walk or bike ride.
A quick note from 2021, nine years later: WOW, things have sure changed! Due to a long housing boom that is still happening, the house we lived in back then would now be worth over $700,000, and even tiny houses in this neighborhood start in the mid-400s.
Of course, to early retirees this housing “feels” cheaper than ever because our investments have grown even faster than housing prices. It’s a lesson to invest early, and often, in assets that appreciate (both houses and stock index funds). But it’s also a lesson to shop around before settling down somewhere: there still plenty of other nice cities where houses are still cheap.
How we get it for less: We bought this house for $350,000 about six years ago. At the time, it was underpriced by almost $50,000 due to a motivated seller and a lack of market research on the part of the agent. We toured the house on the first day it went to market, and had the offer in on the same day. Since then, I’ve spent almost a thousand hours of my own time renovating the house to add upgrades like wood floors instead of carpet, ornate tiles instead of plastic shower pans, and other details that make me happy. It all came at minimal cost due to the fact that carpentry is my idea of a good time – it feels like play rather than work to me. This also means home maintenance and repair costs virtually nothing – I can often find the materials through Craigslist and the labor is free.
The house is also strategically located: property taxes are only $2400 per year. Good solar design and insulation in a sunny but moderate climate keeps our combined heating and cooling bills under $450 per year. Understanding our electric use and low local electric rates means electricity bills are under $25 per month. Is housing much more expensive where you live? I had the same problem – I had to move here deliberately to find the right combination of good and affordable.
We have all the stuff we need. Too much stuff. Five working computer systems sharing a high-speed wireless network system stocked with movies and music. A video projector in the basement with an 11-foot screen for movie nights. A stereo system that can reproduce the richest and most detailed music you’ve ever heard, and five other systems which also play music. A complete Ludwig classic 1994 maple drum kit. Two guitars. Microphones and mixers. A frickin’ five-foot-long Didgeridoo bought directly from its Aboriginal maker in Australia, who also taught me how to play it. A set of carpentry tools complete enough to build an entire house from scratch. An enviable set of educational toys for the little boy. Six bicycles*. A Sevylor inflatable kayak. Great camping gear. Workout gear. Snowboarding gear. Too much!
How We Get it for Less:
At 37 years of age, I’m getting old. I’ve been earning adult wages (and/or investment income) for about 17 years now, and every year I have been tempted or tricked into acquiring more of the luxury items listed above. I bought most of the things used from Craigslist, inherited them for free from friends or family or rental house tenants who abandoned them, or traded for them through barter arrangements. For the rest, I did agonizing comparison shopping, considering each purchase for months before making it. Everything is of fairly high quality, which means it tends to never break, which means it ends up accumulating over the years as you get older. I’m not proud of having so much stuff. But I’m mentioning it just to show that we do not lead a life of deprivation.
The Place in the World
The Money Mustache Family lives, in my own humble opinion, in one of the nicest places on Earth. The Boulder County area of Colorado sits on the edge of the Rocky Mountains, where constantly sunny weather lights up the sparkling glacier-fed streams. You can ride your bike out of your driveway and soon be in a canyon where 2,000-foot cliffs tower on each side of you, a river rushes along at their base, and rock climbers look like tiny ants strung up in the sky above. Bike just a little further and you can set up a tent in an area of wilderness that shows absolutely no sign of human influence as far as the eye can see. Yet you’re surrounded by cities and small towns which connect you by trade to the richest economy in the world with minimal taxation and regulation. And yet, it costs almost nothing to live here relative to the wages available, since food and housing are so cheap and land is plentiful. As with many places in the United States, this place is Pure Freedom, expressed as a series of geographical features.
How We Get it for Less:
We settled down not in the city of Boulder itself, (where a house like mine goes for over $1 million), but just 12 miles down the road in Longmont. It is drastically less hip and fashionable, and the richer Boulderites mock it endlessly, imagining it as a dim expanse of mullets and meth labs. But they’re dead wrong: living here for six years I mostly see towering trees, clear streams, natural people and happy families. And even a little bit of hipness creeping in, if the growing number of cruiser bikes, Subarus, beards, and packed microbreweries can be considered a measure of such things.
As your life changes, your travel preferences will probably change as well. As twentysomethings, my wife and I saw a bit of the world including Australia, New Zealand, Italy, Hawaii, Mexico, and of course Canada and a great amount of the US. Now that we’re parents to a six-year-old, we keep things a bit more tame by staying mostly within North America. But that doesn’t mean sitting at home at all times. Even at this age, our son has been to four countries and about 20 US states. We spend about 3 months traveling each year and plan to do more as he gets older.
How We Get it for Less:
Mrs. Money Mustache is a travel planning enthusiast. Travel is one of her interests, which is why we do so much of it. She combs the Internet and gets ridiculous deals on flights and hotels. We use high-reward credit cards to get free flights and cash back. We sometimes travel by road in a fuel-efficient small car, bring our own food, and camp out in Nature for some of our US-based vacations. We aren’t impressed by valet parking or $20 drinks and $100 steaks, but we ARE impressed by 14,000 foot peaks, coral reefs, wilderness preserves and untouched beaches.
I write about bikes pretty often, so I must be one of those wacky car-free people right? Wrong again! I actually love cars and am a closet gearhead. Throwing aside practicality, I would own an all-electric Tesla Model Y (a practical 7-passenger crossover which also just happens to be one of the fastest cars in the world) and a custom-built Mercedes Sprinter cargo van converted into an RV for extended travel.
How We Get Them For Less:
But instead, I have forced myself to acknowledge that expensive cars are a big drain on the wallet and don’t actually deliver lasting happiness, so I focus on practicality rather than the latest luxury. We have a 2005 Scion xA (“Xena”) for most of our rare driving, and I also have a 1999 Honda Odyssey minivan (“La Mujer Azul”) for hauling the tools and lumber for my part-time construction business. The Scion can carry us all in great comfort at over 40MPG. The van occasionally gets to come out on camping trips, which makes her happy as well.
Both vehicles were bought used, and yet are in nearly-new condition and have never broken down or demanded much beyond oil changes and wipers. Part of this is the fact that combined, we drive less than 7,000 miles a year and it’s mostly for long highway roadtrips. Despite a combined current value of less than $12,000, they are far more than we could possibly justify needing.
Oh, the luxury of good food. We don’t need it to be happy (I could live just fine on beans, rice, fruits and vegetables), but somehow we manage to buy fancy food every week and go to great lengths to prepare it in entertaining ways. We invite people over for parties and feed our expensive food to them frequently as well. Most of our food is organic these days, and gluten-free due to my wife’s dietary needs. All of these things cost more. I enjoy and appreciate them, but they are far beyond being basic needs, which is why I’m acknowledging them here. Dig in!
So What’s Missing?
Many people who are new to this blog add up their own budget, and find it’s a lot bigger than that of the Mustache family. So what are we doing so differently that allows this seemingly-normal lifestyle to occur at such a low cost?
Most notable is the virtual absence of a “miscellaneous” category. We have a lot of stuff, but it was bought only once, and most of it long ago. I often go for months with no need to visit any store beyond the grocer, and the hardware store for construction supplies. We don’t buy high-heeled shoes or massages, and probably eat out at a restaurant once a month on average.
Then there’s the absence of driving. We drive only when it’s time to go to another city, which is only once every week or two. No trips to the store, no commuting to work back in the working days, no driving just for fun. That shit is what BIKES are for. This paragraph alone can cut some people’s expenses in half.
Then there’s the child-raising. Having only one kid is obviously less expensive than having more (child-related stuff has averaged $300 per month for us for the 6.5 years of his life so far). But there’s great variability in how much you choose to spend on being a parent, and spending more doesn’t make you a better parent. I like to call it Avoiding Ivy League Preschool Syndrome.
Finally is the absence of interest payments. I’ve never been in debt, with the exception of one year of car-related foolishness when I was young and a few years of paying off a mortgage. A lifestyle like the one in this article could easily cost $60,000 or more per year if you jumped into it by borrowing for everything. But by owning the stuff you use, life becomes much cheaper.
Of course, owning things is not exactly free either: besides the annual spending, there’s real money tied up in this house and stuff. If we sold it all and moved to a rental house and rented the cars, bikes, and furniture too, living costs would rise. But in the end, it’s just one of the two parts of the savings required to pay for a lifestyle:
- the stuff you own outright (the things in this article cost somewhere in the mid-$400,000s, mostly in the house)
- the income-producing assets you own (stocks, bonds, real estate, businesses, etc.), which pay for your annual outflows. To provide $27,000/year in income using the 4% rule, you need an additional $675,000. (Since I have a rental house as part of my income that provides at a much higher than 4% rate, I could get by with even less than this).
In other words, a lifestyle like this can be sustained indefinitely on around $1M in savings, with no need for any additional income. A million dollars – remember that number? That’s the amount that used to be big, but that everyone says is far to little to retire on these days. My whole point here is that it’s still way more than enough.
Life is full of change, and I’m looking forward to lots of it myself. We’re still only beginners in this life of not working for a living (although still working plenty for other reasons). And there’s still lots of baggage left over from the days of being more consumption-oriented.
In the long run, I’d like to live a simpler life in a smaller house with less stuff. As our boy gets older, we want to involve him in more work and adventure, so he doesn’t grow up knowing only this life of easy material abundance. So while the doubters will continue to accuse the Mustache family of living an overly frugal lifestyle, you’re only going to see it get simpler from here. Even as income and happiness is rising over time, excessive spending and materialism can drop away as you figure out what’s really important in life.
* after hearing that part of the article, my son informed me that I should count his new bike in the total and be sure to include it in the picture. So make that seven bicycles.