If I Woke Up Broke

riskThe Mr. Money Mustache you see today is flabby and weak. Although consumers often compare themselves to the Mustache family and determine they aren’t ready to become “so extreme”, in reality the only extreme thing is how far we are from living a truly frugal lifestyle these days.

The reason for this is of course that money is no longer a concern. We started out with an already-cautious retirement savings plan, and then ended up earning more money than expected after retirement, which naturally leads to an ever-growing surplus.

In this situation, as I argued with my brother recently when attempting to pay for his stuff at Costco, the logical behavior is to make most of your decisions as if everything were free. The catch is that you still have the same environmental and social values, which means you will still avoid blatantly wasteful consumption or personal pampering when you know your money could be used more efficiently elsewhere to improve your world. But you might find yourself splurging on organic groceries, giving more gifts, or taking the expensive toll road to avoid a traffic jam.

One of the keys to a resilient life is reminding yourself that you currently have it very good compared to how things could be, and that if the going ever got tough, you could easily re-train your Frugality Muscles to be bigger than ever before. The moment you convince yourself that your current life could not be improved and you are entitled to everything you now have, is the moment you become a helpless Consumer Sucka.

So what if I did wake up one morning and find that everything was gone? All my bank accounts, investments, 401ks, mortgage-free houses and other assets. Let’s assume that this blog disappeared too, since this thing alone is now producing enough income to fund a family’s lifestyle, meaning the exercise would be meaningless if you left it in.

It would be a shock, to be sure. I’d mourn the loss of so much savings. The proceeds of a lifetime’s work, reversed. And most importantly, the freedom to not work for a living, removed. Suddenly I would have no choice but to start earning money, because without it,  my family would be out on the street within months.

The first thing would be to assess our goals. We would be 38-year-old parents with a 7-year-old son and not a penny to our names. Not an uncommon situation today, as some people of this age actually have negative net worths. The first priority would be to maintain a healthy environment for the boy – somewhere he could continue to get a great education with the support of a warm community around him.

Note that I didn’t say “we would keep our current house and not consider changing schools”. This would be locking in an assumption that really should be challenged. But since we already live in an affordable, bike-friendly area with a great school system, we would probably stick around, but just move to a smaller house in a less expensive neighborhood nearby. Since owning is cheaper than renting in my area, we would still apply for a mortgage and buy a house if at all possible.

Current house: $400,000. Monthly cost (mortgage + taxes) if financed: $2100
Replacement house: $170,000. Monthly cost (mortgage + taxes) if financed: $911

Of course, in order to even qualify for such a mortgage, I would have to start earning some money. Mrs. MM and I both value financial independence, so we would probably both take full-time jobs in order to rebuild our savings as quickly as possible. But in this parenting stage, careers would still come second. So instead of going back into engineering ($100-$150k/year), I would probably just be re-open my general contracting business ($80,000/year) instead. The Mrs. would either work part-time in finance ($60k) or start accepting all possible customers for her local real estate business (which would probably bring in about $100k). Instant high income … in exchange for very little free time. And, of course, I’d probably start another blog.

Combined Gross Income: About $150,000/year

If you’re not comfortable with the easy money we are earning in this example, substitute your own value – even $25,000 if you like. From our perspective, we would be “broke” either way, because we measure wealth by assets rather than income. Which means that at least initially, we would be spending as little as possible.

Next we’d want to trim some of the fat that has accumulated on the rest of our lifestyle. We keep two vehicles in the fleet at the moment, but since we’d be starting from scratch, we would have no car and no savings to buy one. If possible, we would just operate car-free, since our city has high-paying jobs, groceries, and schools all within a 5-mile radius from home. But if a car were a necessity, we would set aside our first $5000 of free cash, and use it to buy a good mid-2000s manual transmission hatchback.

Monthly car cost (depreciation, registration insurance, fuel, maintenance) for 330 monthly miles of driving:  $125 – note that most families drive about 5 times this amount and spend about 10 times this amount.

Groceries would be scaled back from the current “Retired Millionaire” style of eating to more of a nutrition-and-cost optimized one. More potatoes and peanuts, less organic chicken breasts and almonds. More Costco, less Whole Foods. We’d still make fancy salads at every meal, which I feel are the foundation of good nutrition. Even so, we could probably cut our budget in this area down by 50%, leaving about $250 per month

Travel, one of the biggest budget items right now, would be brought down. Winters in Hawaii might be cut, but camping trips in Colorado would be increased (there are even epic spots close enough to access by just throwing your gear in a bike trailer and pedaling for 90 minutes!)

Luxury items like gadgets, new clothing, furniture, gym memberships and other things could wait for financial independence. So our miscellaneous budget would be close to zero.

Given this suite of lifestyle improvements, what would our new annual spending be, if we one day woke up broke and theoretically decided to spend as little as possible?

If we refer back to the latest MMM family spending report for guidance but plug in our new numbers, we’d end up with the following totals:

CategoryAnnual AmountComments
Housing12000Including maintenance (all DIY, of course)
Utilities1200Water, electric, gas, trash
Transportation1500Mostly bike, occasional car
Vacations1000Not strictly necessary, but living it up a little given the high incomes in this example
Phone240Two $10 plans at Airvoice or Ting
Internet300City wifi at @25/month
Cable TV0Haha.. obviously this would be zero..just threw the category in for your amusement
Restaurants0Sorry, not while broke
Beer/Wine240One good Bota or Black Box per month to share with friends - another luxury. Transfer to restaurant category if you don't drink.
Clothing200You can look incredible, from that thrift shop down the road...
Everything Else1000Books, activities for kids, whatever we forgot above.
Total20680Not too bad.

At almost $21,000*, you can see that this total approaches the current MMM family spending – but the difference is we get “free” housing right now due to having a large chunk of money tied up in a mortgage-free house, whereas the broke family has to pay interest on theirs – meaning housing accounts for over 50% of their budget. Yet in real life, we squander this subsidy and more on additional voluntary expenses.

But in my Broke lifestyle above, the equity would start to build in that little 2-bedroom house, and I’d fix it up on the weekends, and we’d be working hard in our office jobs every day.

Given the income above, and combined with the tax savings provided by maximum 401(k), contributions this would lead to roughly an 80% savings rate, on an after-tax basis. And when you look up what happens with an 80% savings rate, you can see that we’d be financially independent yet again in about 5.5 years. As the financial cushion built back up, we could let our foot off the brakes again and become sloppy as we are today. But only when we could truly afford it – because that’s just how getting wealthy works.

Heck, with this level of expenses, even a dual-minimum-wage family would approach a 30% savings rate, before even taking into account various low-income subsidies like food stamps that kick in at that level.

Investments: Of course, a high savings rate does not lead to financial independence if you leave the money in a savings account or a mattress. There, the value of the ‘stash would be eroded by inflation on one end even as you nibble away at the other end for your grocery shopping. Thus, you need to invest it to generate passive income (and eliminate interest-bearing debts, which is just another form of investing).

In this example, we’d allocate the savings as follows, going for a mix of security and higher risk/return:

First $35,000 per year: 401(k) plans: this represents maximum contributions for each of two income-earners. If at all possible, we’d invest it in whole-stock index funds with an expense ratio under 0.2%, like Vanguard’s VTSMX. Note that even if you’re planning on early retirement, you can get your money back out of a 401(k) penalty-free, as shown here.

Next $30,000: Extra Mortgage Payments: This would get the mortgage paid off approximately at the same time we reach the other savings goals, which is a nice time to lose a mortgage. I assumed a 4% mortgage interest rate in the initial scenario, so the economic effect of this is similar to buying a 4% bond.

Everything Else: A rental property (2-to-4-plex**)

In exchange for a bit of local real estate and business knowledge, rental properties in the right area can yield over 10% after inflation and expenses, or more if you leverage them by locking in a low-interest mortgage. Since this is considerably more than you can expect from the the stock market on average, rentals are a way I don’t mind trading some interesting effort for higher yields.

I’m not saying living a spartan lifestyle and investing everything else is completely easy.. but it gets easier when you let go of assumptions like “I must have a car that I buy on credit and drive 15,000 miles per year”.

When you compare my personal barebones estimates above, based on 15 years of careful cost-tracking while living in Colorado, with this cost of living calculator put out by the Economic Policy Institute that tells me I’d need $58,000/year to maintain a basic lifestyle in the similar Fort Collins/Loveland area, you can see that challenging assumptions can make all the difference.

 * this budget assumes that health insurance would be covered by an employer, which is likely in our case. However, at lower incomes the Affordable Care Act kicks in with considerable subsidies, which can help balance things out if you are self-employed and not raking in the big bucks described in this hypothetical story.

**For even more efficiency, you could change this example to have us buying a 4-plex and living in one unit while renting out the rest!

  • Mrs PoP @ Planting Our Pennies July 10, 2013, 7:36 am

    Just out of curiosity, do you guys have a big support network that would provide free child care if you guys had to go back to FT employment? I know he’s old enough to be in school now, but what about summer? I know that’s a challenge for many working parents who don’t have family nearby and didn’t know what you might plan if your time were otherwise occupied and you couldn’t hang with your little guy for most of the day.

    • Andrew July 10, 2013, 11:01 am

      Good point! Maybe MMM can take him along on the general contracting trips and thus teach him the ways of the force.

      • Emily Allred July 10, 2013, 2:06 pm

        Talk about an investment in the future! Plus a little free labor (light, safe work of course).

        • Andrew M July 12, 2013, 1:48 pm

          I sure wish that my dad had brought me along on some of his work repairing properties. I wouldn’t be so lacking in practical skills, like I am today.

    • CincyCat July 10, 2013, 1:06 pm

      I was wondering the same thing. During the school year, they can probably swing being home when their son is home (as a GC, I would imagine MMM can set his own hours). During the summer & school breaks, though, they would need some sort of child care.

      Being the original Mustachians, though, I bet they would probably figure out how to trade child care for services, or set up a babysitting co-op in their neighborhood. :)

      • Mr. Money Mustache July 10, 2013, 5:14 pm

        This is a great point! I forgot that people with jobs have to find somewhere for their kids to go in the summer! :-)

        We’d probably have at least one parent take the summers off, so the income would be slightly lower.

        • CincyCat July 10, 2013, 6:38 pm

          Yes, and summer camp providers know that they can totally take advantage of this; if you do not have other options. In our area, a YMCA day camp can cost upwards of $140 per week/kid (9am to 4pm), and that is WITH a membership ($100+ per month). Zoo camp is $210 per week, and other private camps can be as much as $250 or more per week! Private sitters/nannies can sometimes be less expensive, IF they are also caring for other kids. You can get creative by trolling church vacation bible schools, but most of them are only half- or part-day programs. For those of us currently stuck in traditional office jobs, half a day of care isn’t an option. :-(

          • Diedra B August 6, 2013, 6:39 pm

            yes! If one doesn’t break out in hives at the mention of religion, VBS’s are often pretty safe and fun places for kids to hang out in the summer.

            • May Poppins August 12, 2015, 5:11 pm

              My cousin as VBS down to a science. She doesn’t work, and has a spread sheet that tracks every VBS program in her city and quite a ways out. She pays not a cent for part- time child care in the summer and shops and does her errands while she’s away from her four kids. We’re a pretty religious, Protestant family, so it fits with her beliefs, entertains the kids and is cheap, cheap, cheap.

        • Michael July 11, 2013, 7:58 am

          Let’s be honest here… It sounds great to just say “meh, one of us would just take summers off,” but how realistic is that, really? If you’re each working a $75k/year job (as stated), then chances are you will both have enough responsibilities that your employer won’t be cool with you punting for three months in the summer. Unpaid or not, that’s disruptive and a pain in the butt for the employer to deal with.

          Of course, $75k/each is way more than you’d need given your lifestyle, so perhaps one of you could just take a lower paying, more flexible job — but this in itself represents a cost. Lower salary plus 3 months of unpaid time per year.

          Don’t get me wrong, I love the philosophy outlined above. I’m just pointing out some holes in the math.

          • C July 11, 2013, 8:52 am

            He says that he would probably do GC work and his wife would likely get a part-time job or build up her real estate business. So they both have the option of being self-employed and therefore have much more flexible work schedules. So they could probably work out a schedule where they both cut back on hours during the summer, or have Mrs. MM doing childcare during the day (while MMM gets out and does contracting), while she does mostly evening/weekend showings of houses or has a job from home where she can do most of the work at night. I imagine they would probably need a backup option for times when their schedules just could not be made to mesh, but I don’t think they would necessarily need full-time care. Of course, curtailing their schedules in this manner might seriously limit income potential, so they might find it cheaper to maintain more “normal” schedules and rely more on childcare. Depends on the options in their area and how much they are earning, as always :)

            • Luis July 11, 2013, 12:32 pm

              You mentioned a scenario where you woke up broke and lost everything, then listed most everything that included in it but you didn’t indicate home equity. I’m assuming that you were not including equity because no mention of a short stint at an apartment after losing your mortgage free home. After about five months of saving (assuming you could regain employment quickly enough at that desired salary) you could then put 20% down on a home (I’m assuming your FICO assets were wiped too) and be on your way to home living again.

              Several moving trips later, related costs for moving/breaking apartment lease, etc. would help add to the feel in painting such a scenario of having to regain and re-establish one’s life.

            • Des July 12, 2013, 12:27 pm

              But both GC work and real estate sales peek in summer months, so those would be the hardest months for them to work less hours. With that income, though, it would be easy to pay for childcare and camps and still come out ahead. At ages 7-12.5 any supposed detrimental effects of childcare would no longer be an issue for the child, and the camps and such might even be beneficial. It would mostly just suck for the parents to be away so much, but it is temporary. If their income was $25k, though? That would be harder…

          • Lindsey July 11, 2013, 9:45 pm

            I work for a small non-profit and since they are always close to the bone in terms of finances, I worked out a deal where three months of the year I work half time and that is from home four days a week—I go in one day just to stay in touch and attend staff meetings and pick up mail and so on. They are happy to have that much financial flexibility and I stay even though I am over-qualified because I like how they accommodate my needs. Meaning, arranging part time work during the summer can be done.

          • sdp July 13, 2013, 10:56 pm

            that’s exactly what I am doing now. In exchange for my freedom and as much vacation time I want every year, I have ended up working a job for 16 bucks an hour, no benefits. Work my ass off for several months a year and not so much the rest of the year. I work about 1100 hours a year. I could go back to the 75K job, but there is no way I would be able to remove myself for more than a coupla weeks a year….. Infact that is why I quit that damn job in the first place!

    • Michael July 11, 2013, 7:51 am

      I was thinking the exact same thing. If they both go back to work, what about Junior? Surely there would be some costs associated with his care — unless there are family members close by that could handle this.

  • Mark Ferguson July 10, 2013, 7:37 am

    Very good article! I think people worrying about money constantly is a reason they don’t have it. I’m not saying spend it all without a are in the world, but don’t beat yourself up over it when you make a bad desicion or something expensive breaks.

    I love the idea that a successful persons most valuable asset is not their money, but the mind that got the money. A very successful person knows if they lost all their money they could get it back again.

    I also love the rental property strategy. That is my plan to get financially free. My 7th rental should produce over a 30% cash on cash return, but that was a great deal. I haven’t found any like that recently.

    • GamingYourFinances July 12, 2013, 10:01 am

      That’s was my key take away too Mark. Once you have the financial skills and mindset to reach financial independence you can easily recover from any setbacks that might occur.

      It’s reassuring to know that even from zero the MMM would be financially independent in just 5.5yrs.

      No need to worry about money if you’ve got the right financial skills and mindset!

    • Auratus October 29, 2013, 9:28 am

      What if I woke up broke? F*** it. I will remake it.

      Just argued with a random guy online which said “Without money, you are nothing *insert random rant here*” and I replied… Gotta make my own word looks better.

      “Without money, I am myself, Capable of making value. No matter if it is measured in money or not.”

  • Kevin Worthington July 10, 2013, 7:41 am

    Great post, MMM! I love the posts where you break down the Shockingly Simple Math. More of these posts will turn would-be-Mustachians into *real* Mustachians.

    • Free Money Minute July 11, 2013, 6:24 am

      I agree. It really is more about a behavior change than the actual math. The math equation is very simple and straight forward. If we can only control our day to day actions, we can turn our financial life into a Mustachian life!

  • hoob15 July 10, 2013, 7:43 am

    As a fresh engineering grad (like yourself) with a significant amount owing to OSAP (student loan), you, my good sir, inspire me to be as fiscally responsible as possible.
    Meet up in Hamilton you say? I shall try to be there!

  • BeatTheSeasons July 10, 2013, 7:43 am

    I’m sure you’d do it all again, and probably quicker than the first time. There are plenty of millionaires in the world who have lost it all and then made it all back again because of their supreme tenacity and abilities, which you are helping us to develop for ourselves.

    As Jacob says on ERE, the kind of frugal lifestyle that you describe would be seen as normal by our grandparents’ generation. To put it another way, this is “normal” and everyone else has become extreme in their wastefulness!

    By the way, in the picture that accompanies the article, are you playing some weird variant of Risk with multiple armies sharing each country, or are you making a subliminal political point?!

    • Mark July 10, 2013, 11:31 am

      My guess was Seinfeld and Risk on the subway…

      Newman (I think): “The Ukraine is weak and vulnerable!”

      Angry Ukrainian – smashing the board: “UKRAINE IS NOT WEAK!”

      And neither will your frugality muscle be, if you follow the via Mustachius.

    • Mrs. Money Mustache July 10, 2013, 3:45 pm

      Haha! We didn’t have enough armies of one color, due to some of them getting lost, so each player used 2 colors.

  • Katie July 10, 2013, 7:45 am

    Just wondering if you are doing any special things do keep those utility costs so low? Right now for electric, water/sewer/oil I pay more than double that. Also, for someone who lkves in an area where the average home cost is over $400,000, os renting advisable?



  • Kraig - Young Cheap Living July 10, 2013, 7:49 am


    Nice detailed walkthrough here. I like the challenge right out of the gate on possibly moving out of the area if needed and to go completely without cars or down to just one cheap one, which is hardly driven. Things like housing and cars seem to not get challenged very often.

    This would surely be a crappy thing to have to endure during the prime of your life and while your son is growing up. It’s funny how normal being in that situation is though. As you said, many people that age actually have a negative net worth. Losing everything and being at zero again doesn’t even approach how bad the situation is normally for many people in their thirties. What would be a huge blow to someone like you or even me would be a huge improvement for that person or family in the red.

    Thankfully, we all have you to show us how it’s done. I’m a believer in this approach as I’ve been living it. I’m not at FI yet, but it’s sure to happen soon enough.

  • Stephen at SE July 10, 2013, 7:56 am

    I really enjoy this concept and I’m sure it will lead to some entertaining discussions tonight with the wifey. I think the idea of what we would do if we ‘lost everything’ is a fascinating theoretical discussion. I think, for us, the benefit we get of thinking through this thought process is the peace it gives us knowing that we would be perfectly alright if we woke up tomorrow with nothing. Many of our assets are in the form of knowledge and opportunities. This is also useful if you are trying to ‘trim a budget’ or spending plan when you really need a paradigm change to get your savings to 80%+.

  • Mr. 1500 July 10, 2013, 7:58 am

    “So instead of going back into engineering ($100-$150k/year), I would probably just be re-open my general contracting business ($80,000/year) instead.”

    The thing that makes the scenario possible is that you invested in yourself. Engineering and home construction are both awesome skill-sets. Young people should keep this in mind when contemplating their life’s path.

    I’d like to know how you picked up the construction skills. I know a lot of engineers and even more blue collar construction type people, but it is rare to meet someone skilled in both.

    • Emily Allred July 10, 2013, 2:09 pm

      That is exactly what I thought when I read that section! I wept a little on the inside for not having such a great options (clearly my own fault).

    • SZQ July 10, 2013, 6:38 pm

      It really is a great feeling to know and have enough confidence in yourself and your skills & abilities that you could self-support yourself if need be the case. While we are already early retirees like MMM, I’ve always said that if we had to start from scratch we could. In addition to being frugal and minimalists, we could survive on using our talents/skills to bring in income. My husband was an electrical engineer, and could do consulting or even side gigs related to electrical, in addition to his woodworking, plumbing, tiling, etc. abilities. I have a great little side job that when I choose to do it brings in about $1500/month. People need to really THINK about and develop skills/talents that could be used for income if and when needed. And learn to live on less, so that if the time comes, it’s not going to be quite as painful for you.

      • Jane Savers @ Solving The Money Puzzle July 10, 2013, 7:29 pm

        I had to restart financially after my marriage exploded in my early 40s. Now I am in my late 40s and still digging out of the debt I got myself in to trying to live while I retrained myself.

        It is harder when you have nothing and only yourself to rely on and children to feed.

        I started over once and I can do it again if I have to.

        • Jane Savers @ Solving The Money Puzzle July 11, 2013, 5:55 am

          Waking up broke is different than waking up broke and in debt.

          I have debt and that would make starting over much tougher than just being broke.

          • Julia July 13, 2013, 10:58 am

            I was thinking the same thing.

            I would like to see a scenario of: multiple children, massive debt, and low income!

            That would be a challenge!

            • Mr. Money Mustache July 13, 2013, 11:46 am

              Yeah – I have to obey the laws of arithmetic just as much as the next person. If your expenses are already rock-bottom and you still have no surplus, you’ve got to earn more – which everyone CAN theoretically do, as difficult as it may sound.

              But what we can do is help others before they get into that situation: don’t go into debt, and don’t have children when you can’t yet afford it (which includes the condition of being in debt). Everything relating to money and work is so, so much easier before kids.. use the easy times while you have ’em, to get ahead.

            • Pete July 15, 2013, 12:02 pm

              I have an idea for you if you have a spouse and a house. Since you seem to like kids, are reasonably ambitious (or you wouldn’t be reading here), why not provide daycare for some other people’s kids as well? If you limit your customers at first, I don’t believe you need to be licensed. During the kids nap-times you could be studying for a better paying position

      • laura July 19, 2013, 12:19 pm

        what is your side job? I’ve been wracking my brain trying to come up with side gigs. thanks!!

    • Aaron L July 11, 2013, 8:00 am

      Awesome skill-sets but on average people working in the those fields, especially construction, aren’t pulling in that kind of dough. You’d work for years in the industry to become a contractor and then wouldn’t even make 80k, and software engineering isn’t something you can just jump into.

      I would agree that STEM jobs are the ticket if you’re attending college, and construction and union jobs if you don’t plan on going to college.

      • Dave July 12, 2013, 9:02 am

        I see a lot of guys in the construction field making over 60k+ and could definitely see a well put together general making that. However, unfortunately it seems like a lot of contractors fall prey to the E myth and while they may be great at construction, they really suck at the business side of things (based upon my experiences).

        I mean, I don’t think that I have high standards, I just want the job done right the first time, but I utterly dislike dealing with contractors as many of them are quite unprofessional. Of the recent interactions I’ve had: 1 gave a quote but didn’t do everything I wanted, 1 came to take a look but has yet to get back to me with a quote, 2 haven’t returned my initial contact calls. The last one I hired ended up leaving the house unlocked after leaving for the day.

    • Mary July 11, 2013, 7:00 pm

      DS 18 y.o. lucked out this summer. A friend, who’s a general contractor, needed extra help and has taken him under his wing. DS is working side by side with his boss and learning lots. Pity he’s going back to college though because contractor friend begins building a house late August. These skills will be invaluable, not to mention knowing his way around a whole host of tools!

  • Beth July 10, 2013, 8:05 am

    I had something like this happen to me: at age 40, my ‘quirky’ husband’s mental health issues took a nosedive and he became convinced I was pure evil. He’d been home with our small children while I worked. I’d paid off my house before I met him – he got half its value and half the growth of other assets during the marriage. The kids are with each of us 50-50, but he has spent 5 years trying to get full custody (I’ve supported joint custody thoughout, don’t want to fight) and he refuses to work – the judges are rather angry at him, but seem powerless to force him to make an income. Add 150K in legal fees and $1900/month I pay in child support and alimony to your budget above… and welcome to my life of starting somewhat from scratch. I do have a great job, strong pension through work, and wonderful family and neighbours and friends, so life is happy – it just involves a lot more/longer working than I’d hoped.

    • TheHeadHunter July 10, 2013, 9:29 am

      That’s nothing new, men have had to deal with this same situation for decades. Statistically, for every 1 woman this happens to, it happens to 950 men. The system is broken.

      • Beth July 10, 2013, 3:55 pm

        I agree completely – for men, women and kids, the system is broken. I was mostly commenting on the shock of going from very financially secure to (somewhat) starting from scratch at 40; the ‘waking up broke’ thing happens to frugal, careful people for lots of reasons. I can’t imagine how I’d be supporting two households if I’d started with debt in the first place.

      • Heidi April 16, 2020, 2:27 am

        Where do you get that statistic? I’m asking because I know of 2 men and 3 women who have ended up in this situation (losing half their pension savings, house etc to ex spouse). One woman’s business went under because of claims her ex made on what she’d built up.

    • Ann July 10, 2013, 11:56 am

      Hi Beth, this has also happened to me. My mentally ill ex-husband refuses to put his 3 college diplomas to good use, when we divorced he had a sudden change of career and is now is a full time freelance ‘photographer’ who declares making 16K/year. After 50K of legal expenses and a lot of emotional pain my youngest son now lives with me full time. My daughter is college-age and he bullies her into living with him so he can collect her child support while he is busy training for ironman triathlons (yes, he has all the expensive equipment – nothing but the best for him). Like you I would be much further along if I wasn’t saddled with the complete financial support of 2 children in 2 households but i have followed some of MMM’s advice and things are pretty good all in all, I am grateful. MMM has helped especially for the investment side; I feel much more empowered in managing my money.

      To the guy who said for 950 men it happens to one woman, that is no longer true in these times. It’s one thing if you enter a marriage with an agreement that one parent would not generate any income, but quite another if the expectation was of equal effort in terms of revenue generation – I agree, the system is definitely broken. I wish someone could force my ex-husband to use his education to adequately provide for his children.

      • Beth July 10, 2013, 4:49 pm

        Quite the parallels Ann! My ex also has 3 degrees, including a very prestigious MBA. He got fired just after we got married, then I found out I was pregnant and he just never got around to working again. He also does ironmans, I paid for him to become a certified triathlon coach and a life coach – the return I got on that investment was the entertainment value of seeing his business cards, listing “Strategic Wealth Management” as one of the services he offers… He bullied our 7 year old into telling a social worker she wanted to live with him full-time “so that daddy can get a nicer house” (obviously the social worker figured that one out pretty quickly).

        Anyway, like you, I’m grateful to have what I have, and enjoy a simple frugal life. Freedom will take a bit longer and will taste all the sweeter for the hard work it takes to get there.

  • Rich Uncle EL July 10, 2013, 8:11 am

    These Ideas make going broke look easy. I’d have to say that many people do not have the skills readily available to make 80 – 100 K in self employment income. But when your back is against the wall you must do the impossible to get by without losing your shirt. On a side note how reliable are those 10 a month wireless plans?

    • Xtal July 11, 2013, 5:20 pm

      I’ve been with Ting for a couple of months now and have *no* complaints. They use Sprint’s network and so coverage is the same as Sprint’s.

    • shadowmoss July 12, 2013, 4:53 pm

      I’ve been with Consumer Cellular, which uses AT&T coverage, and I’m very happy. I can taylor my plan as the month goes along, dopping down to a lower level of voice or data if I’m not using as much or upping to one of the larger plans if I am. I can change plans the last day before the bill cuts off to pay as little as I need to. I think I’m down to $35 for 2 phones with voice and one of them using some data. The only thing I lost was the ability to call internationally. If I needed that I’d find a different provider.

  • Lucas July 10, 2013, 8:12 am

    Funny you posted this, as I was thinking similar thoughts over the last couple weeks in creating my “backup plan” in case everything went south. It was mostly from the perspective of thinking through how bad things would actually be if I had to go back to work. Not to bad actually and I would probably be doing something I enjoy more :-)

  • My Financial Independence Journey July 10, 2013, 8:28 am

    This is kind of an interesting thought experiment. I’d probably do something similar to you and go back to work and start all over again. The only problem is that if I ever retired from my job, my skill set would atrophy and I would probably be substantially less employable making rebuilding efforts difficult.

  • Done by Forty July 10, 2013, 8:31 am

    First off, thank you for posting a picture of Risk. I purchased a bunch of used board games on craigslist recently, and a complete, oldschool version of Risk was in there. My wife had never played, but I can tell already she has a knack for world domination…

    I’m bookmarking this post for the times when I’ll inevitably doubt the FIRE path we’re on, and when I start to worry about a worst case scenario (even an impossible one like you’ve described). Even the worst (im)possible case is not really that bad. One need only adapt & optimize. As you’ve written, optimism is the right outlook.

    • Mr. 1500 July 10, 2013, 10:23 pm

      I love Risk. Its all about Australia of course. Fincon tournament? Oh wait, I just revealed the secret.

      • Done by Forty July 11, 2013, 12:36 pm

        I like Australia but find it tricky to expand out. I much prefer South America and trying to push north.

        • Mr. 1500 July 12, 2013, 7:02 am

          Yes, with Australia, you have to capture it, but then have armies somewhere else.

          I have noticed the topic of Risk come up on other PF blogs as well. Coincidence?

      • Fred Patel July 12, 2013, 11:22 am

        Please expand on the Australia strategy, I had often thought of re-visiting my strategies based on calculating the number of armies one receives vs borders one has to protect for the given country by way of progressing through world domination.

  • hybrid July 10, 2013, 8:39 am

    Great mental exercise. Really makes you consider what the need to haves and what the nice to haves are. And while YMMV may apply for most people in the above scenario (as in, our health care costs would be considerably higfher), the same overriding theme applies – are you spending too much for things that don’t bring real value to your life.

  • Debt Blag July 10, 2013, 8:43 am

    This thought actually goes through my head a lot. I like to think that I have the power of my experiences and the knowledge I’ve picked up along the way. I’d also have more resolve having seen both sides.

    Great post.

  • Derekh July 10, 2013, 8:54 am

    Right now, I am an unemployed college graduate. I have a three-month emergency fund, and other than that, I am completely broke! This was extremely inspiring- I now know what I have to do!

  • Christine Wilson July 10, 2013, 9:37 am

    Not feeling too bad now.. your plan sounds closer to my current life! Owning a low cost house is great with higher incomes. So much easier to accomplish goals and cheaper than rent! Although you have some crazy optimizations going on like city wifi!!

  • Martin July 10, 2013, 9:38 am

    You’d be better off buying the admiral class shares VTSAX over VTSMX, expense ratio is .05 vs .17, as long as you have over $10k to invest

    • Joe July 11, 2013, 10:33 am

      The nice thing is that once you pass the $10K threshold in savings, Vanguard will automatically switch you to the lower cost share class. I was very pleasantly surprised when that happened to me. Another great thing to love about Vanguard.

      • Miniwing May 16, 2016, 9:33 am

        Wow, that is really good to know. So no manually switching to admiral shares, wonderful!

  • Frugal Canadian July 10, 2013, 9:45 am

    I’m interested in your plan for child care for your son… if he’s in public school, you would probably need before and after school care?

    • CincyCat July 10, 2013, 1:25 pm

      If MMM is working as an independent GC, he would probably have a lot of flexibility regarding his own hours. Also, he would probably swap services for child care to save or eliminate the cost entirely. The only reason most of us still pay for care is that we have never been forced to look at the situation any differently. Sadly, many of us find that it’s easier to write the check than it is to get to know one’s neighbors these days.

      • Lindsey July 11, 2013, 9:59 pm

        True, but not everywhere. My neighbor on one side is 60 plus, alone and disabled to the point where she can use only one of her arms and walks with a cane. She watches the six year old for the young neighbor on my other side, after school, on holidays and all summer—at his house, so he kid doesn’t have to leave his home and doesn’t mess up her home. In exchange, the young neighbor (single male parent), plants and tends her garden in the summer and in the winter he shovels her roof and sidewalk and driveway. This has been going on for about three years now and is great for adults and kid, who calls her grandma. Plus, she is Korean and speaks to him in Korean so he is getting fluent in that!

  • Mia July 10, 2013, 9:48 am

    Really enjoyed the post, MMM!!!!
    What I see as biggest advantage of Mustachianism is that it gives you path and create a faith in your own capabilities. Math is so simple that it is almost scary to think why not all use it. Everyone can do it, and if done once – you can do it again and again, faster and better. That is resilience, it gives piece of mind and confidence in the bright future in any circumstances.
    I wish they would teach children in schools that there is way to wealth and abundance for everyone, no matter where you start and consumerism is not it.

  • SavvyFinancialLatina July 10, 2013, 10:07 am

    This is why I need to develop more hard skills. I have a lot of soft skills. Basically my greatest asset is my brain, but I really wish I had developed skills like fixing things around the house. My dad, engineer who turned electrician, fixed everything around the house. Wish I had spent more time figuring it out.

  • DK July 10, 2013, 10:27 am

    Not to be a complainypants – and it might just be because of the locale I’m in – but I’d be interested if you could take this one step further and get an offer in one of these ubiquitous 100-150K jobs?

    Keeping up with things like salary.com, dice.com, etc it does not seem there is that many out there for the picking.

    It could make for an interesting article or two. Applying, interviewing, negotiating an offer…..and then instead of accepting saying you would rather stay retired.

  • mediocre mustache July 10, 2013, 10:28 am

    Part time $60K in finance? May I ask what career could possibly pay that much in finance that doesn’t involve robbing naive consumers (investments), insider-trading, or laundering money in and out of Iran (if you haven’t read it, look it up)? I must be a gigantic loser working 50+ hours a week for $40K.

    As long as I’m being a complainy-pants, I’ll just state that this is my major gripe with the site. You assume that people are either as smart, lucky, and employable as you are, and if not they aren’t working hard enough or making the right decisions. There is plenty I could streamline in my life, and I’m making big strides to get there, but with my second child just born we are accepting the fact that one of us has to be home. And since I want to be honest in my career (I made more earlier in my career, doing one of the three scenarios mentioned above) that means I’m earning $40K, saving 25%, and not seeing my family enough.

    Still love the site and what you do, but is too often feels catered to an upper, upper-middle class salary that every smart and honest person I know finds unachievable.

    • Mr. Money Mustache July 10, 2013, 12:00 pm

      Mediocre Mustache – did you miss this sentence that I had carefully put into the original post, JUST FOR COMPLAINTS LIKE YOURS???:

      “If you’re not comfortable with the easy money we are earning in this example, substitute your own value – even $25,000 if you like.”

      The post is entitled “If I Woke Up Broke”, not, “If someone in every reader’s unique individual situation woke up broke”.

      So, yes, I do believe I could get another tech job, although I didn’t do so in this example (I’m relying on my table saw and compressor here, just to make it more challenging). And Mrs. MM could get another job too, probably for more than $100k, but I only gave her $60 here.

      Remember, though, posts like this are supposed to be examples of how to use your financial imagination, not places to nitpick details.

      As for catering to the middle-incomes and above: YES, you are right – remember the secret mission of this blog: to reduce rich-world consumption and create a more balanced society.. for it is not the poor people who have the financial might to either destroy or save the world.

      • mediocre mustache July 10, 2013, 12:15 pm

        Fair enough, as I’m the complainy-pants and you are the guru.

        I would still like to hear what part-time finance job one can get to earn $60K that doesn’t involve being incredibly dishonest. If it is that easy I must simply be living in a terrible location, and I’ll simply up and move to your neck of the woods. I’m pragmatic, especially if it meant more time with the family. Heck, it would be worth a big loss on the house to do so.

        • CincyCat July 10, 2013, 1:31 pm

          I may be missing something, but I think the level of income that he describes is beside the point.

          The annual expenses he describes are what I find intriguing. Living well while only SPENDING $20,000-25,000 per year is the main idea.

          Anything over and above that is gravy, whether it is a take-home of only $100 extra per month, or $5,000 extra. The point is, it is EXTRA. Superfluous. Unnecessary.

          For his particular family, he describes planning *ahead of time* (crazy talk!) to use said “gravy” on a very specific saving & investment plan, rather than blowing it on more “stuff” (as most of us do every time we get a raise).

          • mediocre mustache July 10, 2013, 2:29 pm

            To me, the income isn’t beside the point. My spending isn’t too far off his, but the income levels he is citing are somewhere between +$20K (part time) to +$120K more.

            I am keenly intersted in doing honest work, but $60K for part time work, in my field, seems like so much talk of unicorns. For that pay, part time, I’ll even remove the ‘honest’ requirement. Heck, for $150K I’ll club baby seals for 40 hours per week by day and take a 2nd-shift job cutting down old-growth rainforests while starting a profitable ‘side-hustle’ blog informing children that there isn’t a Santa.

            All tomfoolery aside, I’d prefer to just know if perhaps I’m a wage-sukka, or if Mrs. Money Mustache is simply way better/smarter than me, or if his location is far superior. Maybe its all of the above. But I’ve got guys I work with here with Master’s degrees and 10+ years experience making less than $60K, full time, and they don’t let honesty slow them down.

            • Mrs. Money Mustache July 10, 2013, 3:28 pm

              For those who are curious, I was a finance manager of a company (working from home) and was earning $60K per year before I quit. Since I left, much of the work I was doing was taken over by a payroll company and another employee. I also originally helped get the company established in the US as a business, so I was being paid $60K for my knowledge, experience, reliability, and understanding of how everything worked internally.

              I don’t think this is an outrageous amount to be paid as a manager/accountant, particularly since I was doing most of the work and the replacement cost for me after I left was similar to what I was being paid.

              Also, since I was pretty good at my job, I was able to do things quickly and efficiently, which allowed me to work part time.

            • mpbaker22 July 10, 2013, 3:42 pm

              Granted this post is about your specific scenario, but I think most people are looking at it thinking, “how the hell could I replicate this.” And for most people, the answer is probably that they can’t.

            • mediocre mustache July 12, 2013, 7:03 am

              My wife, who is your biggest fan (and turned me on to the blog) finally got around to reading this post. On my honor I had not discussed it. Here is her take:

              “The basic premise is what his course of action would be if he woke up broke, no job, no assets, no savings, etc. And how him and his wife could recuperate from total loss and become financially independent in just 5.5 years (something I think is totally ridiculous because we almost have our house paid off and have a decent little start on our retirement savings) and we couldn’t be financially independent that quick starting from where we are now. I have to completely discredit this posting because of his wage earning assumptions…

              “Ok, you’ve been in finance for 10 years and don’t make what he assumes his wife (who is a computer engineer and has never worked in finance) will make – part time no less. And I who am a CPA and have been in accounting for 7 years (CPA for 4 years), barely make what he thinks his wife can make working part time, only I work full time to make that money. I generally like to keep an open mind to what he says, I try not to be a complainy pants or bemoan the good fortune of others, but come on this assumption is just not realistic. Maybe his assumption of what he can make as a general contractor is, I don’t know squat about contracting, but what he says his wife can make in finance seems like a ‘load’ to me. And $100K/year working real estate – seriously?”

              Anyway, still fans, but great minds think alike.

            • Rob aka Captian and Mrs Slow July 12, 2013, 11:10 am

              I’m not sure why you’re nitpicking on the salary numbers, it’s clear both of them have stayed atuned to the market, perhaps it might take 2-3 years to build up to that point again but the numbers are realistic.

            • CounterofBeans July 12, 2013, 1:31 pm

              @mediocre mustache – Do you live in an economically depressed area? If so, then perhaps you are receiving the going rate for accountants in your area, but are also benefiting from a low cost of living. Here in the DC area, the cost of living is high (it’s going to be a long time before I pay off my 1-bedroom condo), but a CPA with seven years’ experience could expect to gross at least twice what you are getting. As a government auditor with 10 years’ experience, I make $100K, but I have seen colleagues go to the private sector as controllers or audit managers for even more money and hefty bonuses. And although there is a certain amount of stupidity in the government bureaucracy, I have never had to violate my ethical standards.

          • NCoffey July 10, 2013, 5:42 pm

            I agree. This sounds great but the income part is huge. I net only $20,000 a year. I get through life fine. I afford my stuff and try to be frugal in many areas. The part that I am unable to do that makes this so important is the investing. The entire point of doing all of these things is so you don’t have to work your entire life. If you can’t invest though, you are doomed to do so. There are some basic things but really the only true way to improve my situation, as stated by many others, is to “get a better job”. I am trying, but that isn’t really possible for a lot of people.

            So maybe a better thought experiment, without having hindsight, would be “what if you woke up one day, had wasted a huge amount of money on college in an area that cannot get you gainful employment, what would I do?”

            • Emily July 10, 2013, 7:07 pm


              I can understand your frustration. I spent $35K in student loans to get a master’s degree in…drum roll…social work. A career that doesn’t even pay that much in salary most of the time.

              But, all is not lost. The key to growing a mustache (IMHO) is lifelong learning. In the past year I have taught myself wordpress, website design, advertising, marketing strategy, event coordination, and presentation design, among other things. I can get paid for all of these skills and frequently do.

              Figure out what you love and then either monetize it or create at least somewhat passive income through hard work toward the goal of living it, regardless of it’s lack of profits.

              Good luck!

            • Justin July 11, 2013, 1:06 am

              Emily – Good to see another social worker here! I have an MSW, and I’m planning on becoming financially independent in about seven years. The trick in the field (for me) is not working for agencies any more than you have to – that is, until you can get a license (depending on the state it may take 0 to 3 years) and set up a private practice.

              Granted, I went to the cheapest good school I could so only graduated with a few thousand in loans, but I paid them off pretty quickly working as a social work grunt at an agency before going independent. Working as a private practitioner you can keep your business costs lean and use your business acumen to build a practice. Based on current growth, I expect to make at least $70K per year seeing 25-30 clients a week, and that could easily grow to $100K if I wanted to get really busy. What I like about my plan (besides the fact that I enjoy the work) is that I don’t actually have to “retire”. I can just decide to see fewer and fewer clients if I want. Maybe it will reach zero, maybe it will stick at 1 or 2 while I live mostly off savings.

              The main drawback to this is that many went into social work in order to help people who lack opportunity, and making a profit in a practice means you can’t fill up your schedule with sliding scale clients. That said, I feel that the more my business grows the more freedom I’ll have to take on clients that need help but can’t pay a full rate.

              I write all this not to convince you to stick with social work if you like the website work you are doing, but to just counter the stereotype that we social workers need to be stuck being paid insulting wages at dreary and dysfunctional agencies in order to survive. We can take control of our own situation, help others, and thrive!

            • Sister Paul July 11, 2013, 10:05 pm

              Emily, you need to move to another part of the country, if your MSW salaries are that low! Except for my first two years after grad school, I have never made less than $60,000 and I now make $73,000 plus health benefits, vacation and sick days. And that is for an agency, not a governmental entity…

            • Emily July 14, 2013, 10:49 am

              (Couldn’t reply to the two replies to my comment)

              My only point was the stupidity of racking up $35K in student loans for a degree that lacks a high expected return. The average salary nationwide is just $56K and that includes experienced social workers who have worked their way up the salary line for years as well as many who are making great money with a for-profit.

              Working with a non-profit, I rose to nearly six figures within 3 years of graduation because I went into administration. I received a six-figure+ offer the second I left from a for-profit (granted I also had an MBA at that point, but I don’t believe it was a deciding factor). Good money can be made with or without any degree. It’s all in your attitude and determination.

        • Jen July 10, 2013, 2:28 pm

          @mediocre mustache – I work in the financial world – I’m a tax lawyer – and I’m about to go to a part-time schedule where my salary will easily exceed $60k working three days a week. Of course, I’ve invested heavily in my career, primarily by taking on the most challenging clients I can find until now and building up goodwill with my firm. But I’m only 33 and have been practicing for 7 years (plus 3 years of law school), so it’s not like it took forever to get to this point. And while my work is certainly not saving the world, I am confident that it is entirely ethical and honest.

          Again, not telling you this because I think my situation is realistic for everyone, but there are lucrative jobs out there. MMM’s career path is a far better financial choice as he and his wife did not have to spend as much time in school as I did, but the point of this article (and every other one I’ve read on here) is that increasing your frugality will improve any situation without impacting happiness (except to possibly increase that as well).

          • Bryon Brooks April 22, 2014, 2:02 pm

            I graduated college and went into the finance field, and I started out with a $55k salary and bonus target of 10%. I have managers making WELL into 6 figures. All it takes is perseverance. I work about 50 hours a week and study for exams (work required) for about 10-15 hours a week. I could definitely see a manager being worth 70k part time.

        • sleepyguy July 10, 2013, 9:40 pm

          That’s the 2nd time you said, that, lol.

          “I would still like to hear what part-time finance job one can get to earn $60K that doesn’t involve being incredibly dishonest.”

          Anyway, move to Toronto :). My Spouse is in finance, F/T she takes in about 130k… she’s taken a p/t + work from home role now to have more time with our son. Takes in about 75k. No she hasn’t worked for 30yrs or doesn’t do anything “dishonest”, lol. She’s 34, BA grad and has worked her way up slowly over the years.

          MMM, fantastic article and site btw. We’re both 34 and both wanted FI by 50… but now we’re really pushing for about 42. Your site has been a fantastic influence!

          • mediocre mustache July 11, 2013, 9:56 am

            And she does what?

            • sleepyguy July 12, 2013, 12:33 pm

              Sr. Financial Analyst at F50 company

            • emperor joh July 12, 2013, 1:40 pm

              I agree with sleepyguy and Mrs. MMM, there are honest jobs to be had at $60k P/T in the finance world. In fact not just in finance, but property management, sales operations, hospitality etc…My friends and I are all either 30 or 31 working in these industries earning a minimum of $90k a year so $60k P/T does not seem unrealistic.

            • Jen July 24, 2013, 1:44 pm

              Not sure what part of the country you work in but my husband and I are both CPAs with not 5 year’s experience and we are both making more than double what you’re pulling in and doing honest and ethical work.

      • WageSlave July 10, 2013, 2:37 pm

        MMM, having said that, I’m still curious about the particulars of a part-time gig that earns $60k/year. :)

        I don’t ask from the ComplainyPants perspective, but rather from the “idea incubation” perspective. That is, FI is getting close for me. I don’t want to do nothing when I retire, but want a “hobby job” like you. I have a couple ideas, but I’m always interested to learn about what other people do for fun and profit after they reach FI.

        On the forums, it seems like people often say, “When you retire, you’ll have so many opportunities to earn money you’ll wish you’d retired five years earlier.” I don’t doubt them, but I would like to see more examples of non-obvious “hobby-jobs” that people keep after giving up working for The Man.

        I know you already have a monstrous backlog of blog post topics, but in case you want another… I’d be interested in seeing a post that profiles some folks in a similar position as yourself, who have interesting post-FIRE gigs.

        • Mrs. Money Mustache July 10, 2013, 3:35 pm

          I have randomly walked into stores and been offered jobs after chit chatting with the owner just because of my knowledge of quickbooks, accounting, bookkeeping, etc (it’s happened 3 times that I can remember). I also get asked to help people buy/sell a house when I mention I’m a realtor. I don’t seek out work, but it does sometimes come up in conversation when you’re out talking to people — assuming people like you and feel you are trustworthy, etc. So, it is true that you end up getting opportunities sometimes out of the blue when you’ve accumulated knowledge and experience.

      • nunayo July 10, 2013, 5:05 pm

        Sure, you can substitute a $25,000 income, but that puts FI out for decades. We manage fine on $15,000 a year for 2 people, but we earn the US average income. You are not catering to middle incomes, ie me, you are catering to high incomes, based on the stats.

        When you calculate the time to re-FI above, maybe it would be more fair to include the time you have already spent building up the side businesses and skill sets.

      • Dan July 10, 2013, 9:16 pm

        I tend to agree with the complainer. I’m inspired by MMM but think the lessons do not apply universally. Those with lower income earning potential who want to save up should draw their lessons from newly arrived immigrants who live in “family hotels, renting a mattress in an apt for $10/ day and getting by on $5/ food– for years and years until they can scrape together enough $$ for a small family business that while more lucrative than slaving for others never really gets the owner “f__ you” money. Both the lower income people and the Mustache people have similar ambitions but they have fundamentally different strategies for getting there. So you can’t really just substitute your own earnings into this formula.

        • Christine July 11, 2013, 4:50 am

          Yeah not if you want the same savings rate. Roommates or sharing with family would come into the mix on lower earnings.

    • MilwaukeeMN July 10, 2013, 12:22 pm

      Yeah, there’s very little chance of getting a $60k part-time gig in anything around here. I wouldn’t enjoy finance anyway even though I like money. It’s interesting what he would do but for most we have no way of ever seeing 6 figures in our chosen careers, other skills, interests or hobbies. I do similar thought studies along the lines of what if I were to lose one or more of my jobs, how would I exist. It helps alleviate the worry and focus on the present. Then if I would give up [blank] when in dire straights, why don’t I just do it now and save the cash for a rainy day?

    • Dillon July 10, 2013, 12:38 pm

      I could’ve swore the title used the word “I” and not “every person”. Oh wait, it does use the word “I”. MMM does seem to have a unique skill set and job experience that put him on the upper ends of salary potential, as the salary should reflect scarcity (or lack thereof).

      I get what you’re saying but this is free information. If you can take even a sniff of his optimism given a worst-case scenario and apply it to your own life (even if you couldn’t make 100k/year out of the chute or fix up everything in your house), then your utility gained from reading the article will surpass the costs invested ($0). Or you can dismiss it and try to find other ways consider the “what-if” situations. I myself acknowledge the odds of me earning those figures (and adhering in the exact same manner in the other categories) is quite low even though I work in a technical/professional field but it is more a matter of age/experience (at least for me with respect to the salary, I imagine location and job field would be big factors for many people) than anything. I still get the main point and don’t care if I can’t replicate it or even if MMM is fudging slightly on his numbers because that is irrelevant. YMMV.

    • Joe July 11, 2013, 3:57 am

      I don’t know the specifics of your skills or experience. But, I can tell you with alot of confidence that your feelings about other people’s salaries definitely hold you back. Those are some VERY limiting beliefs to think that anyone earning over $40K is somehow extremely dishonest or a thief of some sort. That’s just not simply true.

      • mediocre mustache July 11, 2013, 6:10 am

        I’ve never been accused of being an optimist, so that is probably part of it. As Mrs. Money Mustache noted above, ‘assuming people like you’ opporitunties open up in this world. I have to increase my badassity in this area to be sure.

        As to everyone earning over $60k being dishonest, I don’t belive that is true. For example, Dr.s, nurses, engineers, and other professions probably have few ethical ambiguities in thier jobs. However, I beleive that the somewhere close to 100% of people earning over $60k in the fields I have worked in – branch banking, mortgage finance, the payday lending industry, investment advising – are dishonest. The only other option is that they are so ignorant that they ‘know not what they do.’ However, professionals don’t have the luxury of feigning ignorance.

        To give two quick examples, branch managers teach thier bankers to become very good at selling credit cards and justifying high overdraft fees to customers; investment advisors become very good at justifying high loads and expense ratios for managed funds dispite overwhelming evidence that people would be better off in passively managed index funds. If you want to work in those industries and tell your clients to live a lifestyle free of debt, or tell your clients to invest in Vanguard funds, you don’t make $60K, period. If you tell someone else to do something that you know is wrong, or isn’t the advice you would give your grandmother, your are being dishonest. If you do something knowingly wrong for profit, maybe ‘thief’ is the wrong word, but let’s just say you are closer to a thief than a social worker.

        I don’t want to hijack the blog comments, so I will sign off officially taking away Mrs. MM’s lesson of working to expand my skill sets, networking in the community, and other posters’ advice to become generally more likable.

        • Jimbo July 11, 2013, 6:21 am

          Your self-exploratory skills are high. This is very positive. Know thyself and all that.

          Clearly, you’re not starting from scratch. Keep it up and things will improve. Every day, every week, every year.


        • tori July 11, 2013, 11:50 am

          You can also work in a finance position that isn’t sales oriented. I am 29 and I have been working in a corporate finance role for about 8 years now and I make over $80k in a mid-sized city.

      • Sarah July 15, 2013, 2:06 pm

        I’m with Joe, your salary can be hugely affected by your location. I am a mere secretary in the Washington, DC area, but with 28 years of experience and glowing reviews I currently earn close to $60k a year. No college degree, no student debt and I’m putting my son through college with no student debt either. (The prepaid college tuition program is fabulous here in Virginia.) There are 300 people in my office and I can assure you I am at the bottom of the salary pool and I have never worked with a smarter, nicer group of people, so I’m pretty sure they are not crooks or thieves.

  • Albert July 10, 2013, 10:43 am

    Do you feel you could get another engineering job if you really wanted having been out of profession for some years now?

    I’m a medicinal chemist by profession and in our profession it’s very difficult to return after you’ve been doing something else for some years. Employers tends to think that your professional skills have suffered too much…

    • Mr. 1500 July 10, 2013, 11:39 am

      With computer engineering, it’s pretty easy to demonstrate your skills. Develop a cool mobile app and deploy it on Apple or Android’s App Store. Develop a web app and deploy it on Google’s or Amazon’s cloud (App Engine and AWS respectively). It may take a month or two to get back up to speed, but the fundamentals are the same.

      With that said, I definitely see your point with most other jobs. If you don’t lose it, you lose it.

    • Jim July 11, 2013, 6:51 am

      I’ll offer myself as an example: I am a network engineer who was making six figures in the late 90s, then left to go to school for something else (that didn’t work out) and kicked around for a few more years doing stupid stuff until I got married and had to “straighten up and fly right”. All told, I was out of the business for almost 8 years.

      My first job that I was able to find only paid me 66K, but 5 years and 3 jobs later I’m back up to 130k. You won’t generally go back in where you left off, but as long as you’re willing to take a junior role to demonstrate you know your stuff you should be able to get right back into things.

      Just remember that companies generally don’t give significant raises to current employees, so you will probably have to jump ship a few times t get where you want to be…

      Of course, I was in my late 30s when I got back in – if it had been ten years later I would most likely have had a lot more trouble. And I also had the good fortune to be looking in the spring of 2008, not the fall…

  • Pretired Nick July 10, 2013, 11:33 am

    Funny I was going to suggest moving into one unit of a fourplex then I saw your note. Well played, sir!

  • cv July 10, 2013, 11:34 am

    I am a fan of the page, but I have to agree with some aspects of the the complainy pants above- I work in the medical profession, even after taking about 6 months off and finding a new job, I took a 40% salary reduction; and there was no employer matching of 401 the first year. The above is based on a lot of assumptions; and you are factoring in that 30% of households with children are single parent, many of those do not receive adequate child support from their partners. If you have never worked 40+ hour a week AND doing all the house chores on your own AND taking care kids at the same time, you’ve got no credential to carve realistic path to wealth with the header “If I were to lose everything.”

    • Rob aka Captian and Mrs Slow July 12, 2013, 11:48 am

      as an aside that is the number 1 reason for the lack of work/family balance, single parents, but let’s destroy the myth that the working poor are stuck in ghettos with a simple but anecdotal story.

      My niece whom is mildly learning disabled lives on her own earns minimum wage yet has managed to just about travel all over the world. Currently she’s in Israel and in February traveling to Finland for her brothers wedding. Then perhaps two years later it’s off to Italy.

      How does she do it sure she gets a bit of help from family but it mostly comes from apply habits of frugality


  • mpbaker22 July 10, 2013, 11:36 am

    Just remember that this family wouldn’t be receiving food stamps. Once you have $2000+ in net worth, you aren’t eligible for food stamps, so this family would be ineligible within a month or two.

    • TOM July 12, 2013, 5:56 am

      Not always true. In my state there is no resource test for food assistance. You simply must earn below 130% of the federal poverty level. For a family of 3, just about $25,000 per year.

      • mpbaker22 July 12, 2013, 8:49 am

        Good point, this does vary by state. I’ve never used the program – forgot the details.

  • StillWorking July 10, 2013, 11:55 am

    Interesting that you make paying down the mortgage such a high priority. This has been debated endlessly on your own and other forums, but the general gist is: at least right now in time, with interest rates so dramatically low, the math favors keeping the mortgage and instead funneling any extra money into investments. Not to mention, a 30-year fixed loan is a great inflation hedge (inflation is a “gift” to those with debt).

    But the flip side of that is, everyone puts a different price on the good feeling you get from having no debt. Do you want to sleep well or eat well? :)

    • Leslie July 10, 2013, 1:14 pm

      The way we thought about that was: do we want really want to leverage our house in the equities market when we could save money on the interest payments and invest that amount? We paid it off as soon as possible, while investing the 100K that would have gone to interest payments.

  • Emily July 10, 2013, 12:00 pm

    Great exercise! I am currently living a similar scenario, having traded a six-figure income to write full-time. It all comes down to confidence and gusto. You can’t nibble at your debt or your expenses. They grow like weeds. You must slaughter them. Thanks for the 10,000 foot perspective.

  • Jeff July 10, 2013, 12:03 pm

    So the first step is earn $150,000 per year? What’s the median income in the US?

    • MilwaukeeMN July 10, 2013, 12:26 pm

      Year 2010- $29k

      • CincyCat July 10, 2013, 4:29 pm

        Aaaand, if you are only *spending* about $20K of that, you get to pocket the difference (after taxes).

    • c July 10, 2013, 1:11 pm

      ~50k pre-tax

    • WageSlave July 10, 2013, 1:20 pm

      @Jeff – The median *household* income is around $50k/year in the USA. Household is appropriate here because MMM is talking about a family unit, rather than an individual. Of course the median individual income will be lower, but individual expenses should be much lower than the $20k budgeted for a family of three.

      Sure, earning $150k/year and spending only $20k/year gets you FI very quickly. But go back to MMM’s June 9, 2013 post, “Getting Enough… and Then Some” to see that a 50% savings rate gets you FI fairly quickly.

      So if you have “only” the median household income, but can follow MMM’s budget, you can still reach FI in a relatively short amount of time.

    • Eric July 10, 2013, 1:24 pm

      `Why would you expect Mr. Money Mustache to only earn the median income? Clearly you know not of the badassity contained within this man.

    • Wanda July 10, 2013, 1:41 pm

      • Joe July 11, 2013, 10:55 am

        Right. So by definition at least half the households are making *more* than $52,762.

        • Geek July 11, 2013, 11:21 pm

          These folks might be complainypants-ing because they want a more basic spoon-feedy Mustacianism than is offered here, because they’re probably also too lazy to develop extra skills that will help them succeed.

          Or they might be tossing out red-herrings which is a known troll hobby to derail good conversations. (not you kind commentors replying with actual data… which is so easy to look up I’m surprised the questioners didn’t do so)

          MMM, I suggest a tougher moderation policy. If someone asks a question that can be clearly answered by reading your blog, click the “read the fucking post” button on the comment and mod them away. They will get their answer and the rest of us won’t have to roll our eyes right out of their sockets.


          • lecodecivil July 13, 2013, 11:55 am

            I’m not sure tougher moderation is the answer. Not everybody who disagrees is a troll, and unless someone is being really obvious I’d say that the blog is better off for having their criticisms welcomed and answered in the comments. A comment section that’s void of criticism isn’t very useful at all – it’s just a bunch of people patting each other on the back.

            • Geek July 13, 2013, 2:13 pm

              Perhaps. I’m in a bit of a “RTFM” mood this year!

        • lipfuzz July 12, 2013, 9:23 am

          not to be picky, but if half are earning more and half less, then what you want is a median, not an average…

          for example
          The average would be 32,500 and three people would be earning below average.
          always good to understand the numbers!

          • Joe July 19, 2013, 7:23 pm

            I think if you look closely each of the posters above you was referring to median income, not average, and have represented the meaning of the numbers properly.

  • Da55id July 10, 2013, 12:11 pm

    This actually happened to me. I retired at 45 and after 6 years got tripped up by the 2000-2003 IT collapse and had to start over pretty much from scratch. Starting in June 2003, we’ve recovered it all and then some. It was very very difficult at first and of course got much much easier as we went. I re-semi-retired again this March…and WOW did I learn a lot from this!

  • Sean July 10, 2013, 12:22 pm

    The fucked up part is I’ve been waking up broke for the last 15 years and didn’t realize it until this year.

  • Cole July 10, 2013, 12:46 pm

    I love the math on this post, very nicely explained.

    If I had found myself in this scenario, I might have leaned a bit more on the investing end rather than the paying off mortgage end.

    Your numbers are an average which I believe in the long term, but if something major comes up in the short term and there’s not enough capital available to cover it that’s when the easy route is heading to the credit cards. I am assuming that you haven’t built up anything appreciable in your 401(k) and you can’t borrow more money against your house yet.

    Maybe you’re comfortable betting you won’t have to deal with that level of variance in your costs at the outset? Just some food for thought!

  • Travis July 10, 2013, 12:54 pm

    Are your utilities really $100/mo? I’m just outside Ann arbor Michigan and my gas/electric alone average $164/mo in a newly built (2010) house. My water bill runs $55/mo when not watering the lawn and that’s with low-flow everything inlcuding .5 GPM on the bathroom fixtures, 1.25 GPM on the showers, and 1.5 GPM on the kitchen sink. Trash then runs $12/mo for a grand total of…$231/mo.

    • CincyCat July 10, 2013, 1:34 pm

      My million-dollar question (literally!) is why would you spend money to water your lawn? Is using grey water or rain barrels not an option where you live? (I’m curious – some neighborhood associations require “green” lawns & prohibit things like rain barrels.)

      • Travis July 10, 2013, 1:54 pm

        You got it. The HOA requires a certain level of lawn maintenance and I have always done the minimum required up until this year since we are selling the house and wanted a green lawn for showing (I hate wasting water on the lawn). This includes me monitoring the weather and shutting off the system when it rains. The cost of the lawn is minimal compared to our monthly in-house usage. Peak month for lawn increases the bill by $20 and the sprinklers only really run from June-August. That being said only a single rain barrel in the back of the house is allowed per association guidelines and I’m not sure if there is a size restriction on it.

        • CincyCat July 10, 2013, 6:22 pm

          Thanks for the kind reply! I was wondering if that was the case. This might be something to look into… I got Mr. CincyCat a computerized watering system for Father’s Day last year. It hooks into a regular hose bib & measures the amount of rainfall, and turns on (or not) the connected hoses accordingly. He has since expanded the “network” to include our veggie garden, and flower gardens via a series of ordinary garden hoses that he buried under the grass (the lawnmower WILL chew hoses up, otherwise). So far, it has totally been worth the investment. When we travelled on vacation this year, our tomatoes were bearing fruit upon our return instead of being shriveled up, half-dead vines. Is this something that might work for you?

    • WageSlave July 10, 2013, 3:03 pm

      Re: $100/month utilities.

      The climate in MMM’s area seems to be such that it gets cool enough in the summer evening that he can “air condition” his house by simply opening the windows, then closing them in the morning before it gets hot. His house is apparently well-insulated enough to remain cool throughout the day. Repeat at night. That combined with some good ol’ fashioned badassery of not needing a 60 degree house in summer and 80 in winter.

      See also his post on LED lighting. High upfront cost, but cheaper in the long run. In short, he’s very frugal with energy usage as well. He’s said before that when he rents his house out (while on extended vacation), the tenants incur significantly higher utility costs (I want to say something like a 3x increase).

      But I think his area also has relatively low utility costs… for example, in Chicago, just being hooked up to the city gas line (whether you use any or not) costs about $50/month. Note that in real life, he voluntarily pays more for green electricity (wind power IIRC).

      Intentional or not, MMM is an implicit salesman for the Boulder, Colorado area. :) Check the blog archives to confirm my numbers, but another advantage of this area is low property taxes. I think MMM’s are around $2k/year for a house valued at $400k. I have a rental house worth around $175k in small-town Illinois with $5k/year property taxes.

      • Katie July 10, 2013, 6:22 pm

        geez, 2k? A house like that would be closer to 12k in property taxes around me.

      • CincyCat July 10, 2013, 6:25 pm

        Even in uber-muggy Cincy, taking advantage of cooler nights has its perks. You can get a window-mounted exhaust fan that sucks hot air out, and then automatically reverses to take cooler air in via a built-in temp gauge. It works great with central air, especially on upper floors. Our electric bills in the summer (while not as badass as MMM’s) were considerably lower last summer, and we are on track for similar savings this summer.

      • TK July 11, 2013, 5:50 am

        Your point is valid and applies to me as well. I have done the math to compare my location to his and equates to roughly a $11,000 annual difference due to property taxes, utilities, and auto insurance rates. Property taxes are most of the difference and my house is smaller, older, and is valued a lot less than his.

        Furthermore, a similar high deductible plan here costs about $500 per month more than it would in his location for my family.

        So just by moving I could shave $17,000 of year off of my FIRE needs – location matters and MMM has said that too.

  • StillWorking July 10, 2013, 1:38 pm

    I like how you implicitly answered the common, recurring question of, “How do I achieve FI on an income of $X?”, where X is substantially lower than your six-figure example. Using the $20k-ish budget you presented means that half the USA could be saving over half their income given that the median household income is around $50k/year, i.e. over twice the budget you propose.

    The only real criticism I have is that you present a money budget but not a time budget. I’m sure a significant number of your readers find themselves in a situation similar to mine: they didn’t catch on to the possibly of early-FI until after they had kids. I won’t even argue that kids are money-expensive, but they are *very* time-expensive. The challenge is that many frugality tactics (particularly the DIY variety) save money at the expense of time. Look at it this way: parenting itself if a full-time job. That’s on top of the wage-based full-time job that one (or both) parent(s) has (have). Where is the time for DIY home maintenance and renovation, assuming neither parent has any real experience with these things? (Hmm, maybe I just answered my own question: perhaps it’s better to rent in this case, until one gets closer to FI and can afford the time to invest in the DIY “tuition”.)

    Just for kicks, I humbly request that you provide *time* budget along side your money budget. And just to add challenge, assume you woke up broke with a toddler and a fussy/colicy newborn instead of a seven-year-old. :)

    • mpbaker22 July 10, 2013, 1:51 pm

      I don’t see why ‘parenting’ is the problem here. What’s the true time consumption of parenting? Isn’t it teaching your children things and having fun with them? Why can that not be incorporated into fixing the house – by showing them how to do it?

      • StillWorking July 10, 2013, 2:11 pm

        @mpbaker22 – “Why can [teaching your children things and having fun with them] not be incorporated into fixing the house?”

        Older kids, sure, I agree. But in my case, I have a newborn and a two-year-old. It should be obvious that a newborn is a huge time sink, and isn’t compatible with doing home maintenance. (Actually, our older kid wasn’t too bad, she often slept quietly by herself; but #2 is very colicy, and pretty much fusses unless held… all day every day. And yes, we’ve tried the sling, she doesn’t like it. Harvey Karp’s 5-S techniques work only in that they keep her from screaming; but we still can’t put her down.)

        So, at least in my case, one parent is always tied up with the baby.

        And I would love to teach my toddler about home maintenance, but given that her speech isn’t yet developed enough for a real conversation combined with her short attention span, I don’t see that as a real possibility.

        And then at some point I envision my wife or I will be helping them with their homework. And what if the kids are involved in extracurricular activities? I think it would mean a lot to our kids if my wife and I were involved as well.

        “What’s the true time consumption of parenting?” No offense, but do you have kids? What am I doing wrong such that my kids take up so much of my time?

        • Mpbaker22 July 10, 2013, 2:31 pm

          Don’t get me wrong – Parenting obviously takes a lot of time, but I think people do a poor job of optimizing their parenting time. Our culture says that every child who is crying needs to be coddled, but that isn’t always true. It’s like, yes, the baby is crying, but do you need to hold him/her immediately? no. Perhaps a baby with colic systems is a bit different if it could actually be a danger to health?

          With the homework comment – yes, they should do their homework, but I’d rather the child learn how to fix a leaky pipe than get an extra 5% on their 5th grade homework. The former will teach them to really think whereas the latter will just solve a manufactured problem. Also, I personally think most extra-curricular activities are a waste of time.

          • LovingBeingAlmostDebtFree July 10, 2013, 6:01 pm

            There is a book on this topic by Kohn “the homework myth” — I think the govt should make homework illegal — if the schools were doingtheir job properly there would be no need for homework…….. We save money there by homeschooling — all of life is the kids school…

          • Melissa July 10, 2013, 6:17 pm

            Oh my, I must dissent here. University studies reveal that yes, they do need to be held and holding is not coddling. It leads to a much healthier child in every way. I’d cite examples but you can likely Google University studies on children who were held vs. those who were left to figure things out on their own. In fact, there are quite a few revealing studies on children who were not held (coddled) in orphanages in other countries. I have a 4 yr old and a 22 yr old. Both had colic. I walked or rocked both-the first for several hours and the 2nd for at least 45 mins each night until they got over it (about 4 months old). There is no way I would leave them screaming and feeling abandoned. Babies are time suckers, there’s just no getting around it. But that’s if you are mentoring them with A,B,C’s, reading books, teaching them to throw a ball, giving them baths, teaching them to pick up their toys, etc. Sure if you’re popping them in front of a video or leaving them in the playpen, you’ll have lots of free time-not my style since I had them because I wanted them and knew exactly what I was in for as a parent. Each year you get a little more free time-the kitchen gets cleaned a little better, the bedroom gets painted. It all comes with time, just do your best with what you’ve got. If I was your neighbor, I’d watch your colicy baby for an hour so you could get something done. :-) I don’t care if they’re crying, they’re still cute. And p.s. spending time with the kids is not only fun, but free. Choose time at home with ’em over spending that extra hour and $100 at Walmart. There’s some optimization.

            • Heidi July 16, 2013, 9:35 am

              Well said, Melissa! “Little takers grow up to be big givers” is my parenting motto, esp. with the little ones. And my kids aren’t spoiled. They are now 10 and 8 and are amazing little people and star students.

              I NEVER let them cry it out as infants and toddlers.

        • TallMike July 10, 2013, 9:54 pm

          SW- I had a newborn and a 2-year old two years ago. It is hard, hard work. It gets way, way easier. Not easy, just easier. Give it some time and good luck managing all the advice that is sure to flow your way from every direction.

        • chc4444 July 11, 2013, 1:39 am

          Still Working: It will get better. You are in the trenches and will have more time in a year or so. We also had a second child that was colicky and it was really tough. One of us had to be holding her most of the time and she still screamed. Just keep doing what you’re doing. Our colicky baby turned into a fantastic, easy child and is now a great adult., but at 3 months I was wondering if we’d ever get a chance to really love her. Claudia

  • Herr Handlebar July 10, 2013, 3:06 pm

    Dear MMM,

    When you state housing costs equal to 12000 (Including DIY maintenance) I’m assuming this is interest, taxes, insurance and maintenance. Principal is part of your saving rate? Correct?

    P.S. Frau Handelbar and I are not FI yet but towards this end we just purchased a $170,000 house. A fun coincidence that can perhaps motivate us to push our already high (70%+) savings rate into the stratosphere. I think we still have plenty of waste we can eliminate.

    • Mr. Money Mustache July 10, 2013, 5:30 pm

      This is a good point and something I deliberately skimmed over: that mortgage payment includes $150 or so of principal payoff, which is really savings. Sorry for the laziness – you should really subtract $2000 or so from the annual spending.. or boost up some other categories to address any complaints :-)

      • Herr Handlebar July 10, 2013, 10:20 pm

        For 2014 our 15 year mortgage principal payments will add up to $7,854.84 while our interest payments will be $5,013.05, or $417.76/mo. To this interest payment we need to add taxes ($174.82/mo), insurance ($33.50/mo), utilities ($120/mo???) and repairs ($???/mo) to our housing budget. This means our housing cost for 2014 is $746.08/mo + maintenance. It just keeps getting better every year after that.

        In the last, full, year of our mortgage our principal payments sum $12,372.39 while our interest payments are reduced to a mere $495.49. This makes our 2027 housing costs drop to a mere $369.61/mo + maintenance (without adjusting taxes, insurance and utilities for inflation). We will probably have paid off the house before then but it is a neat thought experiment.

        • Herr Handlebar July 10, 2013, 10:29 pm

          I did not state that super well. In 2014, my first full calendar year of paying off a 15 year mortgage with a 20% downpayment on a $170,000 house, my payments will include $654.57/mo in principal payoff, which is really savings. $654.57! Every month! And every year the proportion of principal in the payment increases! It increases!

          I caught Mr. Money Mustache being not nearly optimistic enough!

          • Jan July 11, 2013, 7:36 am

            Complainy pants a bit. If MMM were to wake up tomorrow broke he would not be putting down 20% nor would he be able to obtain a great rate on his interest. In fact all of his insurances would also rise, because if something happened and all his money were gone- so would his FICO score.
            That would, most likely, bring his mortgage payment up closer to 1,100 a month (PMI). Then add on that, most likely, a 170,000 house in that community would need a bit more work.
            I agree that you can live on much less anywhere, but there is a large disconnect with those who are actually living that life in this article. The working poor pay more in more ways then those of us who are past that point remember.
            BTW- taking a seven year old to a construction site is rarely considered “teaching a trade” and more often considered a health and safety hazard if doing it on a daily basis- bringing in the poor’s notorious enemy – SRS.

            • WageSlave July 11, 2013, 8:25 am

              I think the post is really just a template or primer so to speak. There’s not enough room to fill in all the nitty-gritty details; I think that’s left as an implicit exercise for the reader. And it’s probably a useful exercise anyway, as it forces you to look at your own situation and determine, could I slash expenses as dramatically as Broke MMM would? How do my own personal circumstances dictate a different solution that what he has laid out? For example, a lot of people will say, “But my area has much higher cost of living!” Have you considered moving? Maybe you don’t want to, but if you woke up broke would it change your perspective?

              But yes, there are a lot of details that are kind of glossed over. He says he’ll bike just about everywhere, but completely broke and zero assets means no bike. He’ll work as a general contractor, but he has no tools. How far do you take it? Does his family wake up naked as well, with no clothes at all? What about a bed and basic home furnishings?

              I suspect all these details are also left as an exercise to the reader. My personal take is this: if my family truly woke up naked on the street, with zero assets to our name, then it would probably take a year or two of living ultra lean just to re-establish ourselves enough to execute MMM’s plan. The first month we’d probably have to live with friends or family, and even borrow clothes. The next step is living in the smallest possible apartment and/or shared housing (i.e. roommates).

              But, while all that is interesting to think about, I think it perhaps taking the idea too literally. It is a thought experiment after all, so he gets to pick the parameters on which he builds his solution. Not to mention, leaving out details gets your creative juices flowing to fill in the gaps and come up with your own novel ideas.

            • Dulcimina July 12, 2013, 8:03 am

              I agree. The things that MMM describes are the things that I might do a year or two out.

              On day 1, I wouldn’t have that $150k income, but would still need to find food and shelter. So on day 1, I might be calling up my parents or siblings or a homeless shelter to see if I can have a place to stay for a night or a month.

              I would start up my business, but not on day 1. On day 1, I would be trying to get a job to get cash, or scrounging around to get some tools (creatively, without cash), or putting up fliers/Craigslist ads to get jobs, or calling friends in the business to see if they could sub some work to me so I could get started.

              In this scenario, I wouldn’t be able to buy a house until near the end of year 1. I’d need that year to save up the downpayment and closing costs. In the meantime, I’m living somewhere else (still with family?? a small apartment?? In a van by the river??) and would need to contribute something to the roof over my head while saving up the downpayment.

              I love outrageous optimism, and I realize no one is going to read a minute by minute blog post. “10:47 am: responded to Craigslist ad for handyman. No one picked up; left msg. 10:53 am, printed 50 fliers at library, 2 per page…” But I still think inclusion of the short term, immediate plan would have been helpful

            • Herr Handlebar July 11, 2013, 9:52 am

              I’m shooting MMM with an optimism gun and a complainy pants is calling me a complainy pants! Your post oozes with negativity. I’m assuming MMM still believes that PMI is for suckas and that with his and the Mrs’ income level and saving rate they would acquire 20% of $170,000 in no time flat.

              This isn’t the 1983 American comedy satire film Trading Places. Although, I’m certain that MMM would come out on top as Louis Winthorpe III did in the movie. MMM hasn’t been stripped of of every conceivable asset (the shirt on his back?) and his good name. The title of this post wasn’t “What if I woke up destitute with my reputation and FICO score destroyed, in a heap of debt, with a debilitating medical condition and one hand tied behind my back?”

              My point was that principal is a major portion of a mortgage payment on a modestly priced house. Principal payments are savings. This is good news to those of us who scoff at bankers that try to get us into mega-mortgages. You would do well to chill out and revel in the math that makes FIRE possible.

  • LovingBeingAlmostDebtFree July 10, 2013, 3:27 pm

    We did a bare bones budget and saw that we could live on $12,000 plus mortgage. We are in Australia, so the basic cost of living is higher than the US. Still, there are so many assumptions of things we think we need that are really optional extras…

    Children can survive on free activities…
    cut out the donations to third world causes,
    get rid of pets ($80 per month),
    get rid of vehicle ($250 per month in govt charges, maintenance, insurance, roadside assist.. and we own a vehicle that is cheap to insure! that isn’t even factoring in petrol)
    get rid of health insurance($176 per month) (we have a decent free system here)
    Have no homephone or internet – and use mobile phone plan — $25 per month unlimited calls and 6gb of internet per month. (Saves about $80 a month)
    Wear more clothes instead of putting the heating on (We currently wear our superwarm jackets inside… saves us $1000 off our heating bill per quarter).

    It isn’t hard to cut down – if you have the right mindset….. It is just ignoring consumerism and expectations that is most peoples problem.

    • wb March 23, 2015, 1:09 am

      I realize this is an old reply, but casually implying that you would get rid of your pets like they are just commodities of some sort is really disturbing. Iguess it demonstrates the throw away culture at its very height. Dumping your poor bewildered pet on some agency is not cool. Pets are family.

      • Glen August 24, 2016, 6:48 pm

        It is quite possible that the poster meant, “Find loving new home for pets we can no longer afford,” and not, “Dump them at a shelter,” or “Feed them to a Dingo.” Pets are not family. Family is family. Pets are pets.

      • LLBigwave August 25, 2016, 9:51 pm

        wb, I agree with you. My pets are part of my family. As Glen and others have showed, not everyone feels the same way.

    • EarningAndLearning June 8, 2017, 1:30 pm

      GET RID OF YOUR PETS? TO SAVE MONEY? Dependent animals are a commitment, for the life span of that animal, and the fact that people see them as a commodity to be given away or sold off when cash is needed is just horrible, and is the reason shelters are full of abandoned, bewildered animals.

      When I started reading this blog, and read MMM’s “Newsflash — Pets Are Optional” post, I realized that yes, pets are a luxury item, and should probably not be acquired by most people who acquire them (and I had no business getting a dog when I did, funds were tight, but I loved and cared for my dog and never denied her medical care when she needed it). But if you already have pets, financial education should not prompt you to GET RID OF THEM!

      Knowing what I now know from MMM, I will NOT be getting another dog until I am FI. But I made a commitment to care for a pet bird (abandoned by someone else) who will probably live another 10 years. She cost me $850 this past year (reading MMM motivated me to tally that total). But that realization just made me stop impulse shopping at the pet store, it didn’t prompt me to get rid of her!!

      I sincerely hope you didn’t axe your family pets — what a lesson to teach your children, that animals are disposable, like unused lawn furniture. :(

  • Frugal in DC July 10, 2013, 5:03 pm

    Am I the only one who thinks we need a video of Mr. & Mrs. MM singing a Consuma Sucka rap with lots of Waa Waas in the chorus? Charge for mp3 downloads for a new revenue stream. :)

  • Mrs. Piggy Bank July 10, 2013, 5:23 pm

    Good example of how you would handle what is real life for most people. We cut our spending and started saving when we had kids. We now make a lot less and have a lot more. Plus I get to stay home with our kids. Life is a balancing act and it is not the same for any family. But if everyone could learn to be happy without spending more, it would not matter if you make $25,000 a year or $125,000.

  • claire July 10, 2013, 5:48 pm

    I love the MMM blog and it really inspires me to live differently. Is the $3000 annual food figure correct??? This equates to 3854 New Zealand Dollars a year which works out at $74 NZD a week. You would be able to get very little food for a family for $74 NZD week in NZ. Our University of Otago NZ Human Nutrition Dept does a fantastic yearly estimated food cost survey and in my area to feed the MMM family according to them it would cost a minimum of $188 per week for the most basic diet and this does not include personal care, cleaning products and other household supplies.

    • Annamal July 10, 2013, 11:37 pm

      *sigh* living costs in NZ are really really high (and about to get higher since the dollar looks likely to plunge shortly).

      Although having said that, living in Wellington I can pick up my entire weeks’ worth of fruit and veges for 2 or 3 people people for under $30, add in some buk rice & beans, oil and spices from Moore Wilsons and that’s a really basic diet for 2 + people for $74 or under. Not a fun diet, but doable if we absolutely had to.

    • PH July 12, 2013, 2:29 am

      I agree, the cost of living is extremely hight in NZ compared to yours (with lower wages) My costs for groceries alone come to approx $4000 US a year for one person

      • Mr. Money Mustache July 12, 2013, 7:33 pm

        That’s an interesting stat – any frugal New Zealanders want to weigh in and compare? After all, I have also heard US residents insist it costs at least $12,000/year to feed a family of four, and others right here in the MMM comments claim they do it on under $3000. It all depends if you are busting out your calculator and working out cost per calorie.

        • Rob July 29, 2013, 9:13 pm

          It costs us approximately $120NZ ($96US) per week for two adults. This includes personal care, cleaning products etc and plenty of luxury. If we had to trim the fat (by eating more of it!), it could be cut to $80NZ/week without too much drama.

          • Dave July 30, 2013, 3:37 am

            Our food bill is NZ$77 per week (US$62) for a couple plus our 3 year old boy (so we’re marginally smaller than the MMM family). We don’t miss out anything in our diet, we get our 5+ servings of fruit & veg each per day and we eat meat every day. That is about as low as I can sustain it long term, though.

            • Mr. Money Mustache July 30, 2013, 6:41 am

              Wow! That’s a pretty big contrast, Dave.. you might have some of your countrymen flooding your email for advice if this gets out :-)

  • City Girl July 10, 2013, 9:18 pm

    MMM makes a great point once again. It’s all in your mindset and how efficiently you use the skills you’ve developed and connections you’ve made. What if you woke up broke? Maybe it’s time to focus on you and the skills you’ve developed and maybe develop new ones. Can you build a house like Mr. MMM? Can you sell a home like Mrs. MMM? Is there something else you can do well that will pay out over the long run?

    My personal answer was no. I was just a consumer consuming all the time and didn’t really realize it until a few years ago. Now I’m starting to learn a self sustaining lifestyle, i.e. how to garden, care for sheep and will probably be having some chickens very soon. May not pay money but it can feed my family and the skills I’m learning will pay out over the rest of my life.

    If your answer is no, maybe it’s time to look at your options. There are too many programs out there where you can learn how to do new things. The internet has connected us in such an amazing way and people are willing and able to answer any and all questions.

    I’ve got a 2 year old, a 4 year old, 10 sheep, a kitchen garden, supportive friends and family, and a wonderful hubby.

    If I woke up broke, I would be just fine.

    • Lindsey July 11, 2013, 10:16 pm

      Thank you for bringing up gardening!! We have no lawn, only a garden and four chickens and the Mr and I grow enough to feed ourselves all summer (lots of egg and vegetable dishes), plus can and dehydrate and root cellar. Plus, we trade vegetables for deer meat and salmon caught by various friends. I can bake a loaf of bread for less than 50 cents, I make our yogurt, so mostly we buy milk, toiletry items and sugar and flour. In the winter we buy more food, but we can live on $100 a month for food and eat like kings. It is good exercise, all the gardening, like working a second part time job but for ourselves.

  • Cat Alford (@BudgetBlonde) July 11, 2013, 12:02 am

    Ahhh that’s a scary thought to process on! I don’t know what I’d do if I woke up broke. Well I guess I wake up broke every day given my student loan debt, but if all my savings and my blog and everything else was gone, I’d probably freak out a little then find a computer and spend a few hours applying for staff writing jobs and try to rebuild it all!

  • Doubting Thomas July 11, 2013, 6:32 am

    I’ve been reading the blog for awhile but never see you lay out budget assumptions for “paper/household goods” (things like light bulbs, paper towels, soap, cosmetics, laundry detergent, bleach, etc.). I track my “grocery” bills very closely, and while my food budget (for my wife and I and our 9-month old baby) is not much different from your assumptions (a little higher, more like $350/month), my “household goods” budget easily doubles that. I take issue with many of the cost assumptions you’ve made here (your healthcare costs are completely covered by your employer with no co-pay or insurance premium – come on….), but that’s the one that stands out most to me. I honestly think a more realistic budget would be closer to $30k (and would still be rather frugal for this “middle class” lifestyle you describe – a $170k house?) than the $21k you are laying out.

    • WageSlave July 11, 2013, 10:49 am

      “Household goods” is an expense category for which I’ve struggled as well. Here, and on the forums, it seems most people with MMM-caliber frugality have negligible amounts of “household goods” expenses.

      Mine over the last 18 months have averaged about $300/month, which I think is high, but you are implying $700/month! Part of the problem is that this can easily become a “catchall” category, so I’m sure its definition varies greatly from one person to the next.

      But… I know non-trivial portion of mine comes from diapers and baby wipes. Do you use disposable as well? I’m sure a broke (and probably even non-broke) MMM uses cloth diapers. Cloth is cheaper and more environmentally friendly.

      For other household goods, random info:

      – Light bulbs: MMM uses LED bulbs, which have a higher upfront cost, but much lower TCO over the long run.

      – Paper towels: pure speculation on my part, but I’d wager that the MMM family rarely uses these (if at all), and instead uses cloth products. There is nothing a paper towel can accomplish that a rag or towel can’t; they are purely convenience/luxury items, and have not only a budgetary cost but an environmental one as well.

      – Soap: IIRC, I think MMM (and presumably the rest of his family) might bathe less frequently than every single day. Let’s say every other day: that alone cuts your soap cost in half. And I seem to recall on the forums mention of these “soap rocks” that, like LED bulbs, cost more up front but last long enough to save money in the long run. (Or maybe it was a deodorant rock?)

      – Cosmetics: It’s been said many times that Mrs. MM uses little, if any.

      – Laundry detergent: Check out The Simple Dollar blog, it seems like he’s always talking about making his own laundry detergent.

      – Bleach and other cleaning products: many, if not all can be replaced with vinegar. Cheap, safe and environmentally friendly.

      – Grooming products: cut your own hair (or have your spouse do it). Depending on the job, some men might be able to get away without shaving. Otherwise, this was discussed on the forums, and I think the cheapest solution is to learn to use an old-skool straight razor and maintain it properly.

      We certainly don’t do all these things, and that in part explains our high monthly “household goods” cost. In this particular category, I feel we (meaning my family and I) are examples of hedonistic adaptation.

    • Dee July 11, 2013, 10:53 am

      MMM has some entries on this but I would also suggest Zero Waste Home for ideas about avoiding items like paper towels, commercial cleaning supplies, etc. Also I recall Mrs MM opted out of cosmetics. These are more “mindset” issues, not necessities.

  • Million Dollar Journey July 11, 2013, 6:50 am

    MMM, Looks like your practising some stoicism here (I picked up the book you recommended in another post – great read), where if everything went wrong, it would still be ok. I appreciate the optimistic viewpoint in your posts.

    All the best!

  • Nine-O-clock Shadow July 11, 2013, 8:28 am

    MMM – I think a series of “How To Recover From Wipeouts” would attract a few more converts to this philosophy – particularly those that have experienced broken marriages / illness etc. The philosphy or basic tools don’t change, but a perspective on how they can help would be great. It might be uncomfortable to write a post entitled “What if I woke up divorced or widowed?” by Mrs MMM, but it would pull in people who may feel their situation is hopeless and turn them around. 2 housesolds per divorced family, plus competing with an ex for kids attention with consumer shite has a tangible effect on your philosophical concerns too, (which I admire; makes you a well rounded mustache instead of just an inspiring frugal bastard)

  • Freeyourchains July 11, 2013, 9:16 am

    Someone should program a fun wealth educational video game, that goes from broke to wealthy, with a tremendous replay-ability factor for switching around your input “character” values of incomes and expenses; and lifetime rewards such as liberty to roam around the world questing at leisure instead of working, or on a campus college, on your FI budget.

    • ShavenLlama July 11, 2013, 12:25 pm

      Sorta like The Sims?

  • Joe July 11, 2013, 10:46 am

    This is a good exercise to do regardless of where you are in your journey. In early 2008 the company I worked for was going through multiple rounds of layoffs and we had just spent the majority of our cash on a renovation project. Figuring out how to cut everything to the minimum required in a spreadsheet helped quell any fears by demonstrating how little you actually need once you pare back on lifestyle.

  • Jay July 11, 2013, 11:14 am

    Hey MMM, what’s your opinion on these folks’ lives?


    I think sometimes you discount what assets your intelligence/adaptability/ judgment are. Some people work extremely hard all their lives and don’t get anywhere. It’s interesting, but not even one generation ago, both of these families would have easily had the opportunity for early retirement that us $100kers have.

    • Margie July 12, 2013, 8:14 am

      Thank you for sharing this. It gives a clearer picture of what being broke truly looks like. I respect Claude Stanley tremendously. Imagine what he could have done with just a little luck and a few advantages.

  • Freeyourchains July 11, 2013, 11:41 am

    This scenario is exactly what happens on Discovery Channel’s “The Colony”, except in a test environmental worse case apocalyptic scenario. With consistent hard work, knowledge, and survival tactics, the group of 10 become financially independent, without ever spending $1 in expenses. in less than 16 weeks.

    Plus they laugh at the term “inflation” because DIY, self-sufficient, automation means you are free from other people’s business or tax inflation.


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