Why the Middle Class Keeps Giving Itself the Shaft

stash_signalOh man. I was halfway through writing a nice, technical, do-it-yourself article about Radiant Heat for you, when the night sky over Longmont lit up with the giant ‘Stache Symbol*. It seems that our national network of Antimustachian Media Drivel detection volunteers sounded the alert based on this incredible doozy of an article about retirement in the US version of the Guardian. We need to make fun of it before we can go on with our regular lives.

The article is crippled by a few financial errors, but much more important is the hopelessly self-defeating tone of the thing. It manages to advocate shitting your own financial pants for the entire course of a lifetime, while simultaneously being sassy and witty about it so that you think the advice is perfectly reasonable. Just take a look at this early paragraph:

Indeed, all you need to do is save 22 times the annual income you hope to have when you retire. That means if you make $150,000, and hope to retire on $100,000 a year, you only need to sock away $2.2m in a bank account to be able to retire comfortably.”

Yes, that is all you need to do. If you make $150,000 per year, not only is it easy to amass 2.2 million dollars, but you should soon find chunks of that size floating all around you. You might have this much just sitting in your sock drawer waiting until you next get to the ATM machine to deposit it.

But wait.. this is necessary so you can retire on $100,000 per year!?! Are we planning to retire to the president’s suite of the Hyatt Regency? Or live in a Monaco Dynasty RV which we park on a 75MPH treadmill during vacations in order to maintain maximum fuel consumption? Who the hell needs $100,000 per year to retire?

So the article bakes ridiculousness right into its opening argument. Not a good start for a publication which supposedly has a reputation as “an organ of the middle-class.” But let’s read on.

“It’s simply a math problem. Let’s say you are in your 40s, making $150,000 a year, a generous salary in almost any city in the country. The taxman cometh, does he not? That $150,000, after taxes, becomes the slightly less dazzling sum of $100,000 a year.”

Okay.. except let’s assume you’re not a total idiot and that you contribute to your 401(k) plan, which shields the first $17,500 from taxes, or more likely $35,000 since most people in this age and income demographic are part of a couple filing jointly and sharing the $150k income. After all, we can at least assume that the $100,000 retirement budget mentioned earlier was not for a single person, right?

“Now you have to save that money as well as living on it. How much can you save? A standard and sensible budget, advocated by LearnVest and others, is to use a simple formula called 50/20/30. This means that you spend 50% of your salary on expenses. Another 30% goes to lifestyle expenses – the things that make life liveable unless you prefer living in a hut: cable and phone plans, clothes, books, gym fees, childcare and pets, restaurants and entertainment. “

Wait a minute here. You say I am spending 50% of my salary on expenses, and I make $150,000 per year, which is much more than average. So that’s $75,000. But then how do other people who make $25,000 live while spending only $12,500 on expenses? And what about $1.5M earners – do their expenses automatically rise to $750,000? Something is fishy here.

Then the final 20% goes to saving for retirement.  This is a reasonable budget. If you save more than 20% of your salary for retirement, you’re giving up enjoying your present life: you’re dedicating yourself to living in holy denial of all worldly pleasures like a monk or a nun, in the hopes of a lavish, or at least an exceedingly comfortable, life when you’re over 60-years-old. Twenty percent for retirement is, by the way, an aggressive goal. Most people save much less.

OK, this is getting ridiculous. I would define “Living like a Monk” as somewhere around $3,000 per year in the US. That is more than enough for food and a place to stay where you do some of the upkeep in exchange for a bed. And monks don’t need to budget for leather coats, dogs, children, or iPhones. At $25-30k, you are living like the Mustache family. Beyond that, it gets even crazier. What level of insanely plush luxury is required to achieve a meaningful human life? According to the Guardian and the standard “Waah, Waah, the Middle Class have it so hard!” script, the higher the better. No need for exceptions and no need to think for yourself.

The article goes on to rightfully make fun of the study from which it quotes, advocating investing your money instead of putting it into a “riskless” savings-account mattress and hey, look at that, they even mention Mr. Money Mustache in a paragraph near the end**, although I see the word “retire” is in quotes, suggesting affiliation with the Internet Retirement Police.

But here comes the conclusion:

“The other major issue: the retirement issue in this country is less due to personal failure than structural failures. Saving enough is not the primary problem with our retirement system. The primary problem is that wages have been dropping for decades, leaving people with much less to save – especially people who live on far, far less than $150,000 a year. That’s largely because corporations are hoarding profits, raising CEO salaries and skimping on what they pay employees.”

No! Cover your ears! 

Let’s be clear about this,: The retirement issue in this country is because people are buying way too much shit they don’t need, pampering themselves with ridiculous lattes, restaurants, shoes and massages,  and riding around constantly in huge bullshit bank-financed trucks for no reason. 

And many, many more closely related factors. Our problem is with our spending, so of course it can not be solved with additional income.

If you believe that the middle class has it even remotely hard in this country, you need to print out a picture of me, make it punch you in the face for 30 minutes and then reconsider the issue.

It’s not the CEOs and the pension plans that are giving you the shaft. If this were true, I would have had to become a CEO in order to become financially independent. (And even then, if that’s what it takes, nobody is stopping you from becoming the CEO!)

Sure, the pension system was a nice pleasant artifact of the olden days when the economy was a stable and slow-moving thing and people worked at the same company for decades. But those days are gone, and I say good riddance. Who wants to work at the same auto factory for 30 years? This is complacency.

If you put a human in a permanently comfortable situation, he will adapt to it and live a stagnant, boring life. Given enough comfort and convenience, we become huge water balloons with lazy grinning faces, expanding and becoming more delicate until the first sign of trouble, at which point we squeal and spray whiny fluids all over ourselves and our politicians. What kind of life is this?

In this much better new world, everything is in your control.

Your spending rate is not a percentage of your income. It’s whatever you want it to be, and your happiness grows right alongside the Badassity you develop every time you chop another thousand from what you thought was your “cost of living”.

Your city does not impose a cost of living upon you. You get to choose both the city in which you live, and how much you spend once you get there.

Your health and belt size are not determined by your age, being a parent, or “the terrible food they make for us these days”. For most of us, those things depend on what you choose to eat and how often you use your barbells and your bike.

Your retirement date is not “65” or “Never”. It is the day you have 25 times your spending invested, or sooner if you develop other sources of side income. For a motivated 18-year-old, this could easily mean age 25.

An unfortunate part of the standard liberal argument is that the middle class is in decline and it’s all the fault of the greedy rich people. The argument of this blog is that it’s better to adapt to the system than to complain about it. The Internet has made education and opportunity much more widely available. Knowledge about how to live efficiently and invest the proceeds productively is staring you in the face.

It is thus much easier to leave the middle class, become one of the rich, and then change the system to your liking from that position of strength, rather than to hold yourself down in that class, paying for cable TV even as it indoctrinates you to spend away your ticket out of the self-imposed prison. Or reading articles that tell you that you’ll never be able to retire. Or writing them.


*yes, just like Batman! Thanks to Mr. Frugal Toque and the others who have emailed me with this concept.

**My apologies to Guardian writer Heidi Moore who will probably see this article and not be pleased with me. But come on! Why not write an upbeat retirement article instead of just copying all the rest of the mainstream media, making money by sympathizing with people instead of telling them to shape up? People like feeling empowered, not defeated, and feeling empowered is the only way to get anything done around here.


  • FI Pilgrim February 4, 2014, 11:54 am

    Do you think people write articles like that just for the shock value of them? I see it with estimates on how much it costs to raise kids all the time, and it makes me angry. No way it takes $1m/kid. I’m the oldest of 7 and my dad’s probably not made $2m in his entire life.

    • Dividend Growth Investor February 4, 2014, 12:10 pm

      I agree with you that these articles are usually written to scare people away. Of course, newspapers need to create sensations, to sell more copies.

      I mean most people would much rather read about how everything sucks, and not how you can improve your life. Most also prefer to watch reality TV, than spend time educating themselves on how to achieve better health, more wealth and more happiness in life!

      • Miss Growing Green February 4, 2014, 12:28 pm

        Maybe not necessarily to scare people away, but to reinforce their already bad habits and pat them on the back.
        I mean, anyone who has retirement figured out (e.g. the mustachians) are going to ready this article and laugh at how ridiculous it is. Anyone who doesn’t have it figured out, and is still blind to the damage that their over-indulgent current-self is doing to their future-self will read this article and think “yeah! My situation isn’t my fault at all! It’s the system, the CEOs, and everyone else, not me!”
        They can then continue consuming without regret or self-awareness.. What a vicious cycle!

        • Brooklyn Money February 4, 2014, 3:54 pm

          I read the 22 or 25x expenses and think “sweet!” that’s so much lower than what my financial planner says I need to save.

          • Free Money Minute February 6, 2014, 6:40 am

            Isn’t is refreshing to know you may only have to save $625k ($25,000 expenses x 25) rather than $1,875k ($75,000 income x 25). I can see myself saving the first amount in a reasonable timeframe. Almost $2M can seem very daunting!

          • Holly February 6, 2014, 9:49 am

            Our former financial planner told us that we needed to have enough funds to supply 80% of our fairly-high income for up to 40 years. Not doable, but thankfully not true either.

        • phred February 5, 2014, 9:01 am

          Such articles could also be reinforcements for brainwashing so that people continue to feel powerless. This will make them more obedient when the expert from the government or the corporate world appears.

          • Anthony McDougle February 5, 2014, 9:47 am

            I honestly doubt it’s a conspiracy. You may or may not necessarily be wrong, but…..

            I’m more inclined to believe that the author himself is probably someone who spends big and lives outside his means. I bet this article is probably more of an attempt for him to validate his own lifestyle than anything else.

    • BNL February 4, 2014, 12:11 pm

      Unfortunately, I think it’s the opposite of shock value. A lot of people (non-Mustacheans) like to feel sorry for themselves and blame “the system.” In fact, the last sentence of the article was the only part I would argue MMM may have gotten wrong:

      “People like feeling empowered, not defeated, and feeling empowered is the only way to get anything done around here.”

      Most people I know who struggle with money prefer to blame the system. Feeling empowered is a lot of pressure that many people prefer to do without. But with that said, it doesn’t mean we shouldn’t keep preaching the message of empowerment (and, of course, changing the system where we can).

      • kiwano February 4, 2014, 8:17 pm

        “The System” also publishes articles like this in order to breed dissatisfaction, support the belief that typical western levels of consumption are somehow desirable, and generally keep people aspiring to more. We can go around all patting ourselves on the back to have gotten free enough not to fall for this sort of crap anymore, but the world would be much better off if we spend that energy trying to break these consumer-suckers free too (and getting ourselves freer, of course, bthrough steady efforts to ratchet up our own savings rates).

    • Johnny Moneysed February 4, 2014, 1:35 pm

      I honestly don’t think articles like that are written for shock value. I think the writer feels like they have an opinion that resonates fairly well with the intended audience. And considering how complainy most people are whenever the topic of money or retirement comes up, people probably eat shit like that up and show their friends while they complain to each other about the economy over a Nice dinner at Outback Steakhouse

      Kudos on calling bullshit MMM.

    • Ed February 4, 2014, 7:27 pm

      It seems that there are way too many financial articles that are written today that are based on hypothetical needs, hypothetical numbers and hypothetical people. Too bad they don’t actually use any real data from real people (MMM) who have actually really retired (only 10,000 people each day are turning 65). We are all doing just fine raising respectable financially literate kids on a lot less. I work with people who are going to work way too long not because they want too, but because they are afraid to retire because of crappy articles and crappy financial planners who scare them with advice like this. Our grandparents invented living within your means and they didn’t need some article to tell them how to live rich rewarding lives to do it.

    • Novacek February 6, 2014, 11:37 am

      “If it bleeds, it leads”

    • Kevin May 1, 2017, 1:17 am

      no, i think a lot of people love being told how bad they have it, and clever writers know exactly how to exploit that (and they may themselves identify as the oppressed middle class themselves). it makes them feel good (“look at all this bullshit i’m putting up with! It’s amazing how well I’m doing!”). giving people the proverbial punch in the face and telling them they are actually dumb and not managing their lives effectively (not in so many words of course), is a far less endearing message, even if it’s the more valuable one.

  • Doug B February 4, 2014, 11:59 am

    That was a very poor written article. I found it craze to say the least when she said “The other major issue: the retirement issue in this country is less due to personal failure than structural failures. Saving enough is not the primary problem with our retirement system. The primary problem is that wages have been dropping for decades, leaving people with much less to save – especially people who live on far, far less than $150,000 a year. That’s largely because corporations are hoarding profits, raising CEO salaries and skimping on what they pay employees.” That was just…… a stupid statement.


    • Dividend Growth Investor February 4, 2014, 12:12 pm

      I know, what happened to personal responsibility that made this country so great?

      You come here to the US, work hard, and you are the one to shape your life and live the dream you have designed for yourself!

      My dream is to build a portfolio of dividend paying stocks, that will generate passive income that exceeds my expenses and increases above inflation for decades. This would leave me with time to dedicate to what I am passionate about.

      • HealthyWealthyExpat February 6, 2014, 5:07 am

        And that’s the way to get some of the “profits the corporations are hoarding”. Last I checked, most of them were increasing dividends, which always makes me feel happy;-)

        • Joel February 6, 2014, 8:54 pm

          Makes me happy too! Record profits by the energy company because of cold weather? That means more money in my pockets, not less. (Heat is including with my apt). Seriously, there is at least 10-50 great priced, proven, high-dividend stocks out there you could invest with and not worry WHILE getting more than zero interest playing it “safe”.

      • Tom Womack February 14, 2014, 8:08 am

        This year I achieved Level One Capitalist: I have enough stock that the dividends pay the equivalent of job-seeker’s allowance (£72 a week).

        Next level will be the equivalent of the State Pension (£144 a week).

    • Barclay February 5, 2014, 8:31 am

      And yet … corporations ARE “hoarding profits, raising CEO salaries and skimping on what they pay employees.” The same corporations who cry that raising wages will reduce the number of jobs, have no compunction about raising the salaries of their CEOs. Risk is the tariff paid to leave the shores of predictable misery: Companies will have to start relaxing their death grip on cash stores, and begin to create more jobs, in order for people to have money to buy their products. Look at Costco if you think a reasonable wage for employees has to break the bank. It’s bootstrapping to expect it to happen the other way around. Workers are more productive now than ever for much smaller pay raises over time, while management pays itself more and more … and pays lobbyists to encourage policies that work against the middle class.

      • Steven February 5, 2014, 2:11 pm

        That’s not the point. The very effort you just spent getting worked up about this truth was wasted energy.

        Your complaints are just noise. Show us how it should be done and let the world benefit from your actions.

        In other words:

        “become one of the rich, and then change the system to your liking from that position of strength”

      • Opus February 5, 2014, 2:21 pm

        I agree with Barclay I don’t think that was a stupid statement it’s a true statement that’s hopefully being said more and more. I’m not saying it’s a cause for people to not save for retirement and it shouldn’t be used as an excuse but it’s still a problem.

      • Pete February 6, 2014, 12:03 am

        I think a lot of business organisations work on the Thomas Sowell “Basic Economics” principles of pay your employments as lowly as you can, market forces will tell you when you’re paying too low and they go elsewhere.

      • MandyM February 6, 2014, 6:24 am

        While I agree that corporations are greedy, this article was talking about someone making $150,000. If that person can’t retire it isn’t the “system’s” fault, it is squarely their own.

      • Stacey February 6, 2014, 8:19 am

        Love your comment, Barclay: “Risk is the tariff paid to leave the shores of predictable misery”

      • elmaque February 26, 2014, 5:19 am

        Agree – Barclay. The statement in the article that corporate profits are THE problem is disingenuous, our spending and consumption are also part of the problem. BUT….hoarding corporate profits does not give, for example, Walmart workers (or Amazon warehouse workers, etc, etc, etc) much opportunity to get very far ahead – even with Mustachian living standards exacted. The previous comment that hoarding profits is “great for me – thanks stock dividends, I’m laughing all the way to el banco!” feels a bit callous, although one could argue very American.

        • Ted Hu April 11, 2014, 4:41 am

          Yes, this is where the piece falls down for me. It drives home the need for self-reliance and personal growth in the 21st century all the while callously and naively dismissing the very real problem of income inequality.

          Walmart workers making 25k a year would find the MM blueprint hard to abide by. Otherwise, I challenge MM himself to arrive at a case study for a typical Walmart worker.

          Putting on my economist hat, income inequality is also going to screw up capitalism, making the next depression all the more likely. Despite suggestions to the contrary, investing is not the only requirement for economic growth. Prudent consumer demand is on the other side of that equation.

          The index fund investing participating in the income stream of hundreds of businesses so often proffered on this site requires a healthy middle- and lower-class for it to work, and for capital to sustain a reasonable yield in the long-run.

          The current trajectory of productivity rate increasing far faster than wages accruing instead to the top 0.01% is a recipe for economic stagnation. The 0.01 accumulate wealth which stifles the velocity of money necessary to sustain economic growth. Once the productivity and cost cutting hits hard diminishing returns, the stock market will responding in kind.

          The right’s obsession with supply side policy – that is, it’s always tax cuts for wealth accumulation – promotes hoarding for the haves and siphons the kinetics necessary for balance economic activity and demand

          • conchita April 14, 2014, 6:22 pm

            Brilliant analysis Ted.

          • Mr. Money Mustache April 14, 2014, 9:37 pm

            Sounds good to me – lower velocity of money, slower economic growth, decreased consumption for the middle class. Exactly what our ecology is calling for!

            Although it would be even nicer if their reduction in consumption was done by choice rather than through a drop in income.

            Now if we can only get more of the richest people to invest that incredible surplus of cash in bettering the fate of humankind, we’ll be all set.

            • Ted Hu April 14, 2014, 11:55 pm

              There is a empowering quality of the blog that is appealing. There’s a bunch of microeconomic advice that is useful day to day. On a strategic macro policy level it is lacking founded on a level of wishful populist thinking of an emperor that is a bit naked and over idealistic.

              Allow me a few hard macroeconomic counterfactuals to your ecological assertions. The 7% return historical average you rely on and presume will continue for decades to come as it did decades before factors in World War 2. The biggest artificial economic expansion in modern economic history.

              That has since continued due to the technological progress and investments from WWII which was then replaced by credit expansion and overfinancialization of the economy, as % of GDP. Without a world war to boot, you would be lucky to have half that. Try retiring with those ratios.

              You conflate imbalanced financial over leverage with the need for balanced economic growth. You knowingly or not rely on the continuation of said evil system for your continued retirement. It’s easy lambasting systems of control you know little about unaccountable and unawares of its mechanics yet so reliant on its perpetuation.

              It is at least ironic and more heat than light. Putting on my economist hat, it is also a bit disingenuous – playing dumb as it were, seemingly staying outside the system yet in reality ever so immeshed and dependent on the capitalist system which you know far too little about, Wizard of Oz like.

              In any event, the American family has not had pay rise for over a decade now. Thus they resorted to credit. Regulations were removed thanks to profit maximizing 0.01%-serving financial sector and consumers were led to believe free lunches exist. That they decided to maximize their self-interest after prolonged deprivation isn’t surprising to me.

              Since the rich 0.01% were and are the only class of folks that saw any wealth and income gains for the past two decades while 99.99% literally experienced a flatline isn’t healthy whatsoever.

              Post great recession, credit has deleveraged. People are living within their means, Americans especially; thus the slow recovery as people watch their credit lines and spend more judiciously. The great recession has left a deep imprint that will last several generations. Europe is going through austerity and encountering 0% inflation. Growth is anemic except for germany which exports to red hot China. UK is growing because of a overfinancialized froth economy (again).

              But the crowning counter of all is Japan, two decades frugal and non-existing spending with said period of deflation – that is prices falling year after year – unwilling to try Keynesian macroeconomic stimulus until recently, you see an anemic patient barely able to keep an economic blood pressure, with a calcified velocity of money, ecological, frugal, efficient and slasher of waste as can be.

              These are inherent flaws of capitalism for which Keynes tried to prescribe solutions for over leverage and even materialism. He thought by now technological progress would mean leisure would trump work hours.

              You too often conflate financial over leverage with “evil over consumers” when instead it is income inequality that is engendering credit vs wage growth as means to [balanced] economic growth.

              It’s imperative the 0.01% get taxed at the same marginal rate as the 99.9%. Me and mine at the top 7% just finished taxes yielding an effective 9.87% tax rate. Like Warren Buffet often cites, his secretary pays a much higher tax rate than him. Without deductions and capital gains, 25-30% is the norm. Factor in state and local sales tax, half the income of an average family is taxable.

              Yet billionaires often pay negative rates all the while hoarding the productivity gains garnered for them by the 99.9% that work and till their capital while they live semi-retired working ever so hard collecting capital gains. Until they pay fair parity tax rates and invest in minimum wage undoing decades of income inequality, your much vaunted 7% is ripe to crumble.

              You can expect to see future decades of 3-4% stock growth at best. Anemic deflationary Japan is America’s future – currently we are barely keeping 1% inflation – which is worrying the Fed and appropriately so because decades long deflation and zero growth go hand in hand. And dare I say that is not a future you want to have, if your presumed economic historically founded, Monte-Carloed arithmetic series is to continue working and function to successfully power your ongoing perpetual retirement.

            • Ted Hu April 15, 2014, 12:15 am

              The Shocking Rise of Wealth Inequality: Is it Worse Than We Thought?


            • Ted Hu April 15, 2014, 12:46 am

              FWIW, my current strategy is a bit risky albeit leverages my comparative advantage. I’m a macro investor that focuses on sector level informed by the real business cycle. Last year my portfolio yielded 47.8%. That won’t last forever obviously. I’m persistently riding through this tough first quarter as expected from the rough winter.

              The goal is to have a couple of years of outsized returns before I ratchet it down a level to 3-14% returns. Those initial two years of outsized returns will have a superior compounding effect for the remainder of our lives. It is a goal fraught with risks which I believe manageable given my economics background.

              At age 38-39, we are worth 7 digits. Our family of 3’s steady state of 36k a year reflects our needs – for example, I don’t see autism therapy for a 3-year old in any of your scenarios, which I quite assure you is intrinsically valuable necessary in our lives.

              The world is a complex nuanced place. For those that live in such a world, this blog sometimes comes across a bit dogmatic and special corner cased. It needs to be more open minded if MM is generalizable for the world at large.

              You don’t readily admit this but I will. Though I worked my ass off growing up poor, I was lucky ultimately garnering an education coupled with my real world experiences to arrive at my current station in life, semi retired with more choices than the average family.

              The difference is I empathize with the average family and do not conflate my said luck with brilliance all the while snubbing the rest “who don’t get it” – a common libertarian refrain. It is misguided simpleton mantra that shows a lucky misguided philosophy that relies on bubbles of ignorance which shield you from the measurable world of facts that paint a grimmer reality of families not as lucky as you.

              I won’t rathole into evolutionary economics and biology and talk about people’s innate craving for certitude. But I believe such cravings mask reality and forces folks whose brains are wired conservatively that way to stereotype the rest of the world away that don’t conform to their worldview. It yields a series of convenient truths that crumble upon closer examination and contact with measurable evidence based reality.

              Anyway, I don’t take the risks above lightly. Yet I am so concerned about the macroeconomic imbalances I cited and the trajectory they entail that I am taking such a risk for another year or so in order to address possibly anemic long-run growth that is potentially subpar, below 14%, below 7%.

              Keeping this worse case scenario in mind juxtaposed against my confidence interval of where things stand in the real business cycle for the upcoming 1-2 years compels me to this strategy. As they say in the biz, past performance does not guarantee future performance; and indeed that cuts many ways.

              It is not for the faint of heart. Though ignorance is bliss, I just don’t have that luxury. I want to provide for my autistic son as any parent would, resilient to any probable economic future that is likely to come our way.

              And before one cites how risky and unmustache my risk taking ways are, consider this –

              Academics reveal the secret to 14% returns

              “Investors can massively outperform big global stock market indices simply by analysing publicly available economic data, according to academics in the UK and US.

              A strategy based on going long on an index when macroeconomic conditions are improving and shorting the market when conditions are deteriorating would have delivered an average annual return of 14 per cent between 1997 and 2011, the academics claim. In contrast, a static position in the same indices would have delivered returns of essentially zero, assuming the same level of risk.”

  • Matt February 4, 2014, 12:11 pm

    I completely agree with your comments, we could easily spend less and save more so we could retire but unfortunately we pray to our commercial gods at the church of the mall. Your “typical” person probably won’t be able to retire with the level of spending they have. I think there is a huge lack of basic financial knowledge out there let alone miss-information. We have become so bloated with shit in our lives that if we were to keep it up then the articles tone is about right.

    • Kenneth February 4, 2014, 12:23 pm

      Matt, I think about “bloated with shit” every time I pass by one of the way too numerous storage locker farms. I’m old enough to remember when there weren’t any of these – they are a recent “invention”!

      • Matt February 4, 2014, 7:06 pm

        They were around but definitely not as common as they are now that’s for sure. Now it seems like having a lot of shit is a good thing when it couldn’t be further from the truth.

    • Will Murphey February 4, 2014, 8:49 pm

      Picking a target monthly spending amount and sticking to was one of the major factors that led to my family’s financial independence. Why is lifestyle inflation so rampant?

  • Ryan February 4, 2014, 12:11 pm

    “The argument of this blog is that it’s better to adapt to the system than to complain about it.”

    This x100000. I find that there is a big persecution complex among many in the US that holds them back from taking their lives into their own hands and making it better. People never want to think outside the box, and instead continue to live like the people on TV tell them to. I make far, far less than $150k a year and still save ~50% of my income without living “like a monk” or by sacrificing my current happiness. Happiness is not the newest iphone, the biggest TV or luxurious (and terrible, overpriced) cookie cutter tourist vacations.

    I understand that on the scale of things, I am much better off than many and am lucky that I had a good upbringing and no severe genetic health issues. However, there are still many people out there in the same or even better positions than myself who would rather keep on living a pre-packaged lifestyle that has been sold to them at the cost of their own lives and complain about the powers that be when they no longer like the deal they continue to make.

    • mysticaltyger February 4, 2014, 2:35 pm

      Ditto for me, Ryan. I couldn’t have said it better.

    • Spectra February 4, 2014, 3:26 pm

      I take exception to the “living like a monk” negative tone for several reasons. First monks seem to be a very content people at peace with their surroundings. second the idea of a monk to me is the idea of self-sacrifice. I am not ready to take vow of silence or renounce all possessions but I am happy to sacrifice most non-essentials to improve my lot.

      That is the whole point of personal economics. What do my choices lead to?

      Am I willing to work a few more years to have a larger family and a larger house?
      Yes I am.
      Am I willing to work several more years just to drive a BMW to the job I hate?
      No I am not.

    • Liam G February 4, 2014, 7:12 pm

      I also make significantly (far, far) less than $150,000 and my wife is a stay at home mom to our daughter. As MMM says, it’s a mean punch in the face when you realize that all you’ve been doing is meaningless consumption. Since finding MMM’s blog in September/October 2013, I’ve gone through the initial depression stage to feeling quite empowered to save rather than spend. I’ve actually found that as I live on less, my wife and I are actually happier. We’re not spending money to be happy, we’re doing things to be happy.

      It also never ceases to amaze me what my coworkers consider ‘necessary’ spending, even though they can’t afford it.

      • Scooze February 5, 2014, 4:31 pm

        “We’re not spending money to be happy, we’re doing things to be happy.”

        EXACTLY!!! Well said, my fellow Mustachian! Keep up the good work! So thrilled you’ve finally seen the light (and talking like a true Mustachian, already!!) Taking responsibility to turn your finances around is probably one of the best things you could ever do for your family!

      • David February 18, 2014, 5:31 pm

        Yes there have been all kinds of psychological studies that show that materialism makes us unhappy. They did a study on housewives that found they felt the most stressed when dealing with their possessions. They’ve also found that buying lot of things makes people more anti-social and less empathetic. It is just a disaster all around. And yet somehow we would be sacrificing to much current happiness if we save 30% of our 150,000 dollar a year income.

        • frugalparagon February 18, 2014, 5:51 pm

          I haven’t seen that study about housewives feeling stressed about their possessions, but it makes sense to me. We have moved often during our adult lives and every time, I feel this tight ball of anxiety that our possessions will be destroyed–especially that our delicate little knickknacks will get bent out of shape. I hardly ever buy new stuff but it’s hard to break the sentimental attachment to my old stuff.

          • Lily April 23, 2014, 7:06 pm

            I’ve got packing down to a science and I don’t worry about losing or breaking things in a move because I never entrust the important items to the movers. But since I inherited many fine possessions from my mother, I feel weighed down by the responsibility of keeping them safe. We live in an impoverished area now, and yes, I probably should invest in a safe that is bolted to the floor, but that’s not the way I want to live. I want to wake up and see my grandmother’s silver hand mirror shining on my own dresser, not visit the mirror at a vault. And I don’t want to sell it to get $20 for the value of the silver, because that does not honor the craftsmanship that went into it or the family connection. Knowing I would inherit a lot kept me from buying a lot over the years. I just did not realize how much stress it would cause me to be the caretaker of family pieces. No wonder old people’s homes are filled to the brim.

    • theFIREstarter February 6, 2014, 2:15 am

      Yea that line of the article was particularly annoying for me as well. If you are going to go on and talk about living like a monk, don’t start off with an example of making $150,000 and saying you need to spend 80% of your income to avoid that sort of lifestyle. Utterly, utterly ridiculous.

      The bit about the fat cat CEOs seemed clumsily thrown in at the end in an attempt to get lower wage earners back onside, preempting maybe the comments that you can live a happy life on far less and attempting to turn those into comments about how we deserve more pay instead, externalising peoples problems as pointed out!

  • Mrs PoP February 4, 2014, 12:12 pm

    I never understood percentage based budgeting methods , and the misunderstanding has only been compounded by Mr PoP’s move into commission sales with highly variable compensation.
    Just because we had a good month income-wise last month doesn’t mean that our spending should shoot up to accommodate. Instead, our spending stayed pretty level and our savings rate just increased significantly this month. (It was actually >85% after tax savings in January! Yay!)
    And we’re certainly not living in a “holy denial of worldly pleasures”…. if someone really believes that I’ll just take my 82 degree day today and ride my bike to the beach for a sunset tonight to try and make up for everything my life lacks. FTLOG…

    • Renaite February 5, 2014, 4:31 pm

      I thought the percentages were so helpful when I first started taking control of my finances. Now that I’m a Mustachian-in-Training, those emails with “Tips to trick yourself into saving” are just a daily laugh. (Love the POP blog too!)

      And this is still the only place on the interwebs where I keep coming back to read all the new comments.

    • Clint February 5, 2014, 5:50 pm

      I had to look up FTLOG. I thought it was “f**k that logic.”

      • Stacey February 6, 2014, 8:24 am

        Ditto, I had to look it up, too. Showing my age I guess…

        • Alistair February 7, 2014, 10:09 am

          For any others it’s For The Love Of God

  • thegoblinchief February 4, 2014, 12:14 pm

    I saw that linked on Twitter yesterday and thought about writing my own response. As usual, yours is so much better. :)

  • Mike February 4, 2014, 12:14 pm

    MMM, you deserve every bit of success that has come your way. Another great article that brought a smile to my face. “Given enough comfort and convenience, we become huge water balloons, expanding and becoming more delicate until the first sign of trouble, at which point we squeal and spray whiny fluids all over ourselves and our politicians.” Classic.

  • Done by Forty February 4, 2014, 12:14 pm

    One of the best reactions ever posted on this blog, MMM. It is dangerous for popular media to write pieces like that, because they invite complacency from people who need to take action. If insufficient retirement savings are a serious issue, and it seems Heidi Moore thinks they are, then her article ought to call her readers to take reasonable action to solve the problem, rather than blaming corporate executives.

    We are the problem. We are also the solution.

  • Heidi Moore February 4, 2014, 12:15 pm

    Hello Mr. Moustache!

    I believe your quibbles are very much misplaced. If you bothered to click through to the study I was citing – and the WSJ article that advocated those techniques – THEY advocate those numbers and a “comfortable” retirement of $100,000 a year. Frankly, this study is absurd.

    Also, while I know you have a lot invested in making people believe they can retire on $25,000 a year, the truth is that many cannot. The only reason YOU can is because both you and your wife had high-paying tech jobs that allowed you to sock away hundreds of thousands of dollars at a fairly young age, and because you choose to live an unrealistically monastic life for most people, including no rent or house payments. You must acknowledge, if you are honest, that most middle-class people cannot live like that.

    Thanks for reading my piece. I do wish you had read it a little bit more closely instead of going off unhinged in an attempt to defend your lifestyle and retirement dogma. Cheers.


    • Kenneth February 4, 2014, 12:27 pm

      OMG, this better NOT be the REAL Heidi Moore! If so, MMM and all his readers, including myself, are popping our gourds right now! Spraying our water balloons all over!

    • Anthony C February 4, 2014, 12:29 pm

      Heidi, I don’t see a link to the study in your article. Can you please provide it? Thanks.

    • Phil February 4, 2014, 12:34 pm

      Your second paragraph assumes very early retirement. A public school teacher or blue collar worker could work for 25-30 years and then retire on 25,000/year. The 25,000 figure is also very reasonable if people pay off their home first, which again is quite possible if people are either software engineers or middle class workers who wait until 50 to retire.

    • Emily February 4, 2014, 12:51 pm

      Ms. Moore, you are wrong. Wrong. Wrong. WRONG!!! My husband and I live VERY comfortably and happily with our three kids on 26K and we put money away every month. We do not own our home, we pay nearly 50% of our income in rent.

      We won’t be retiring in five years, but we will have significant retirement savings before necessary.

      If people would develop their skills instead of practicing their complacency they’d find themselves getting ahead instead of falling behind.

      It’s not being middle class–it’s being mediocre that is dangerous.

      • Linda February 4, 2014, 4:32 pm

        “It’s not being middle class–it’s being mediocre that is dangerous.”
        Brilliant, love this line!

        We also live on a very low budget, and rent is unfortunately half our expenses. Buying a house would be even more expensive. Our current goal is saving aggressively until we can afford a big down-payment on a mortgage. Interest is high here (6%+) and prices are ridiculous, so mortgages aren’t cheap.

        Would love to hear from MMM any ideas on saving on rent or mortgages. Ideas I’ve had but aren’t feasible for us – moving to another city (no jobs in our industry elsewhere, already moved country for a better life), moving far away from work (long commute), persuading my employer to let me work from home (A possibility…) or moving into a garden shed. I guess I need a face punch on the garden shed idea… :/ We’re just too fussy to move into an apartment/4 block unit.

        • Michelle February 5, 2014, 7:35 am

          Linda, I do not know if this is feasible for you, but here is the solution that my husband and I used. We purchased a rental house at auction that would rent for enough to pay for itself with a 10 year mortgage. By talking to the auctioneer, we found that there was an extra acre of land behind the house that came with it. We lived in the tiny rental house for a year (5 people in a 1 bedroom) while building a 2400 square foot house behind the rental house. When I say built, I mean with our own 2 hands. We did not hire a contractor. We built the larger house for 40% of the appraised value when completed. We moved into the larger house and rented the small house. As a result, we were able to live in a nice house for about 1/4 the normal mortgage since the land was essentially “free”. Ten years later, we have a mortgage free home and a rental property. Think outside the box, and look for a house with a large enough lot to subdivide and you are on your way.

    • Mr. Money Mustache February 4, 2014, 1:02 pm

      Hello Heidi, and thanks for taking the time to comment here!

      I did dig up and read the page from the Financial Analysts Journal, called “A Pension Promise to Oneself”. It made a lot of sense to me (except anything to do with risk-free investments with 0% return – on that we definitely agree).

      I also read your article carefully several times, and it really seemed you were supporting the proposition that it is difficult for most people to save more than 20% of their incomes.

      I think if you dig around the early retirement scene a bit further, you might get a pleasantly different perspective:

      My own retirement (after about 9 years of work) was made easier by higher-than-average salaries (an average of $62k for each of us per year), but it is still a lot less than many people with “no hope of retiring” currently earn.

      We spend $25k/year right now, but this for an incredibly lavish and ridiculous lifestyle that we maintain only because we have so much surplus we don’t know what to do with it.

      Equal happiness could easily be attained at $15k (which would leave $1000/month to pay for rent). And sufficient wealth to have the full $25k+ buffet could be attained even by lower-income people, simply by working a bit longer than 9 years and/or spending less than we did during the savings period.

      Have you ever seen this post? It makes the point with a short table of savings percentages: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

      The real root of our disagreement is what is an “unrealisticaly monastic” lifestyle. I argue that not only is a $25k (or lower) per family budget easily attainable, but it is more enjoyable, rewarding, and responsible way to live.

      It’s just a matter of learning a few skills – skills which take much less time and effort to learn than shuttling to an office for an extra 30 years just to maintain a high-spending lifestyle.

      • Henrik February 4, 2014, 5:20 pm

        I have to defend Heidi some.

        While we save approximately 65-70% of our income and don’t really have to lower my spendings we still could not go below 30.000$/year in spending. Our flat is a small flat just around 550sqf. It is located in the heart of downtown Vancouver. It is a very nice flat, as in modern, I’d say we pay around 100-200$ premium to live in a nicer flat. We pay 20.000$/year in rent including everything. We have a gym and a pool for that price in the building. On top of that we eat cheap(Vancouver standards) every month and spend around 300$/month. We’re both from Europe and try to go home twice a year, which unfortunately means unpaid time off. Since we always try to go home around Christmas and summer since that’s the only time our relatives have off(And my grandparents really want us to meet together with the whole family during the holidays, before they kick the bucket, they value that time extremely highly). That’s another 3.000$/year or almost 10.000$ if we factor in our lost salaries for 4 weeks.

        We also like skiing and snowboarding and spend around 500$/year on that. One trip to whistler(crazy expensive but worth it). And 3-8 to Cypress depending on available time.

        On top of that we also go golfing and that’s another 500$/year, we do approximately 15 rounds or so per year.

        We buy some clothes, don’t have a car, tend to go out and have some fun with friends but nothing crazy. We have had some medical expenses(not everything is free here unfortunately).

        All in all I’d say our yearly expenses add up to some 40.000-45.000$.

        While we could cut it down I can see no reason to remove skii-ing/golfing/traveling just to get off the wheel a bit faster.

        I wouldn’t move to a cheaper place because I enjoy living 3min away from work, I still move around a lot on the evenings and weekends. But I prefer to be in doors in the gym in the mornings rather than commuting to save some money.

        Point being that depending on where you live 25.000$/year would be a very small sum of money and wouldn’t mean luxury. Having lived in Norway(Oslo) for a few years one realize exactly how little that could be(wouldn’t cover rent in a decent flat), but also having lived in cheaper areas I know it would be more than enough to live like a king.

        To me it feels as if MMM is just trying to create some commotion by ignoring the fact that there are price fluctuations. Granted that salaries tend to go up in those areas as well that’s not always necessary.

        That being said, I don’t agree with that article either… And I agree that we should try to be positive. I just hate how it’s turning in to a black and white campaign when it’s a very gray-scale area how much any one can actually save.

        cheers / Henrik

        • MMMFan February 5, 2014, 12:20 pm

          Henrik….i think your post actually supports MMM instead of Heidi. Your spending of $40-45k per year includes 20k per year for rent. MMM doesnt have that housing expense because he has no mortgage. So comparing apples to apples….your spending is $20-25k per year (ex housing)….right in line with MMM.

          Golfing, skiing/snowboarding, trips to Europe, eating out, living in expensive Vancouver seems to me more luxurious than monastic.

          • Henrik February 5, 2014, 8:46 pm

            I completely support MMM more then Heidi since she wasn’t talking about percentage based on cost rather than earnings which MMM brought up, but I still felt that I needed to defend her due to many of the comments here as well. I’m just saying it’s not a flat black and white.

            Trips to Europe is not luxury if it’s going home to visit your folks, unless you consider visiting family a luxury?. Unless people would advocate ignoring family to save 70% of the income instead of 65% which in my world at least would mean that there’s something seriously wrong with that person. Luxury to me would be if I would upgrade the seat, or don’t care about the cost of the trip in general, which of course I do. And since we’re living in a global world this is definitely not uncommon, many people travel great distances many times a year to visit their family.

            Point was only that some expense-levels with a similar living standard will vary greatly depending on the country and city one is living in.

            I’ll give you that golfing in skiing isn’t monastic, but that was why I mentioned that as well. Sorry if that didn’t come through. I just meant that many people enjoy some activities that cost money(Such as Hockey/soccer and so on). And in my eyes that’s a very valid thing to spend money on and it can be done fairly cheaply if one just ignore the need to have the latest and greatest equipment. But say that you have a few of those activities, it will definitely add up. Of course there’s a limit to how many activities any one person can actually have time for so the cost won’t really sky-rocket unless it’s a really expensive hobby.

            cheers / Henrik

            • EricP July 1, 2014, 2:28 pm

              Yes, visiting relatives in far away places is a luxury. It’s also an expense that can easily disappear in retirement if you choose to live closer to them. And your point about costs changing based on where you live is pretty off base. If costs are higher, there should be a corresponding increase in salary. If there isn’t, then you should consider moving to a place with a lower CoL. If you choose not to do this, then continuing to live in the expensive place is now a luxury, and not just “higher CoL.”

      • phred February 5, 2014, 9:21 am

        Ha! If Heidi has troubles with your lifestyle, she should view Jacob Fisker’s

      • Steve February 5, 2014, 12:15 pm

        Hi Mr. Money Mustache!

        Long time reader; I believe between Heidi and yourself, you each are taking the information as ‘literal’. Here is what I mean:

        I read your website information, strategies, formulas and adjust it for my style of living – meaning, you (The Stash Family) are able to live and live happily/lavishly on what you set as a comfortable income (2k-ish a month)… that’s AWESOME! But, I don’t believe what you’re really teaching is a literal lifestyle for others… what you ARE teaching and sharing is for people to pay attention to their spending, criticize their own spending, be aware, think long term, understand the impact or true cost of the decisions we make with regards to money. I take these steps and apply your formulas so we can come up with a number that suits us..

        For me, I take your concepts and base my calculations off what I believe I would be comfortable living on: 3k living expense and a 1500/mo over my living expenses for continued investing (generational wealth – pass on to my family) and emergencies like a furnace replacement or roof for my home (NOT FOR SPENDING). To accomplish this, I save approx 45-65% of my income (depending on how you calculate it (against gross or take home)..

        If I didn’t have a house payment, I would be saving more towards the 60-75% range.

        You and I aren’t far off for living expenses… You are around 2-2.4k/mo, I want to be around 3k per month…

        Thank you for everything you do… I hope my writing makes sense… writing isn’t my strong point. Would be great to chat sometime, I use your teachings and couple it with savings strategy that allows for continued living during long periods of down time in the market without having to sell any of my index funds or stock positions and realize the loss… it’s a conservative strategy, but the end goal is to be able to continue to live at a predetermined lifestyle for periods of 2, 5, and even 10 years (long term goal) without risking (selling) what I’ve invested, but actually continued investing during those times.


      • Farmer's Daughter February 6, 2014, 5:25 pm

        Ok, I am torn about this — I am very Mustachian in many lifestyle ways, but I also agree that there are things that cost more than MMM’s entire annual budget. Like the taxes we pay to keep our several hundred acre farm. In the Northeast…

        “Who the hell needs $100,000 per year to retire?”

        Well… We currently pay ~$16,000 per year in property and school taxes on said farm (this is not a working farm, more like an oasis, and we are already getting a reduction on that tax rate to keep chemicals off the fields, since it is near a river). That said, with rising populations, and increasing property values, I fully anticipate (fear?) that by the time I reach “official” retirement age (though I plan to reach FI much sooner than that), those taxes will have increased to something much higher than what MMM spends for his entire yearly budget. This is very concerning, and when considering inflation, this makes me think that I will need even more, perhaps $45,000 per year JUST to pay the taxes to keep the family farm.

        Now, I know the Mustachian response would be, “just sell the farm.” But some people have much more commitment and loyalty to place than it seems other Mustachians have on here, and for someone who was born and raised on this said farm, it is my life’s goal to protect it from development, etc. So that’s out of the question. Therefore, I must factor this RIDICULOUS expense into my retirement plans. This is not a “complainypants” statement. It is just a realistic factor of my plans.

        So in response to MMM’s question, there are legitimate reasons that some of us must realistically plan that we need $100,000 per year in retirement, yet still live otherwise very Mustachian lifestyles. (add the property taxes to the $25,000 that MMM currently lives on, which after inflation will be near double that in 30 years, so this brings the total from taxes and actual expenses up to roughly $100,000 per year, when accounting for inflation.)

        As such, I have made some special considerations, like going partially off-grid, etc. so that I do not have the typical person’s monthly utility and other expenses. But I’d be interested to know if others who own significant parcels of land have the same concerns — and any potential solutions — to the loss of farm land (which non-Mustachians don’t seem to understand they need for food?), the rising tax rate due to urban sprawl, and rising property values caused by single-family homes in once-rural areas.

        Thanks for reading.

        • patti February 7, 2014, 10:51 am

          Rent out a portion of the farm to a organic farmer for a csa. The land must pay for itself. Otherwise its like having several vacant rentals. Also if its farmed the taxes are usually lower do to an agricultural exemption- check with your local assessor. Sounds like your being assessed for recreation land.

        • Emmers February 8, 2014, 5:40 pm

          One of the least endearing facets of the MMM commentariat is that they seem *completely* incapable of imagining that maybe, other people (like you and Henrik above) have different circumstances in their lives that indicate different expenses. It’s great that the Mustachian family lives within walking/biking distance of all of their friends – not everyone does. Etc.

        • Matt August 20, 2014, 10:09 am

          I would definitely recommend you seek out a sustainable agriculture organization in your state. There are a couple around here who help farmers and conservationists with legal/tax advice, and you can also list your land to see if someone wants to rent it from you. There are so many aspiring farmers who would love access to land, I bet you could find one you could work with.

          You might also see if your state has a Homestead Exemption. Where I live, it only kicks in when you’re 65+, so it won’t help you now, but could down the road.

          Another option would be a Conservation Easement, where, in a nutshell, you give up your farm’s development rights to a conservation group who holds them in perpetuity, and substantially reduce the property value/taxes, as well as estate taxes. You also get a federal income tax deduction, based on the difference between the previous and new assessed values.

          My situation is different (obviously), but might give you some ideas. I have about 60 acres in upstate South Carolina, with a 50k mortgage on it (I inherited part of it and had to finance the purchase of the rest from another heir). The houses on it do not add to the value, as they were stripped during a period of vacancy (this will change eventually when I fix one to live in and move out there to semi-retire/homestead/farm). I appealed to the county to have it zoned agricultural, and the property taxes are less than $300 a year. I also applied for a “Farm Number” from the USDA, naming timber as my main enterprise (I don’t do anything for this. The land is mostly wooded, and the trees grow without any help from me). This allowed me to file a Schedule F for my taxes and claim my mortgage interest as a business expense.

          Good luck!

      • chc4444 February 8, 2014, 12:04 pm

        Excellent reply. I think an important key to happiness is living creatively. The reason people who live on less are often happier (in my opinion) is that they must live creatively. People who spend more can skirt creative living because they simply spend money to meet their “needs” and don’t do the creative work of figuring how to spend less. Yes, creativity is work but it is so, so satisfying and happiness producing. And, like so many habits, the more you live creatively the easier it gets.

      • daniel diaz February 18, 2014, 2:09 pm

        Hey mom. Bug fan of your blog, my question is you mention the possibility I’d retiring sooner than 65 if you save 20x expenses but you mention maxing 401ks. I thought that you could not withdraw from these accounts until you are 65 without taking an early withdrawal penalty. How do you draw an income on a 401k before retirement age?

    • Philip February 4, 2014, 1:05 pm

      Heidi, based on your responses to MMM, I’m not sure you’re completely familiar with his story based on the inconsistencies about his situation. I’m also not sure you understood his “math”, especially about the amount to contribute to a 401k. His $35K contribution was based on 2 people working and both contributing the max.

    • LMaS February 4, 2014, 1:11 pm

      The reason he can retire on $25k a year is because of his high income? I don’t quite follow the “high income leads to low spending” logic. I suppose with regards to having a fully paid off house, even a cheap mortgage in the Boulder area would increase that spending by at least 30-50% (depending how you counted the principle payments).

      A closer look at the MMM dogma would show it is one of sustainability and anti-consumerism which leads to the freedom of financial independence. As a relatively left leaning person and a supporter of organized labor I do wish for a better distribution of income, but there is also living within the world as it is. People need to buy less junk, and the way it is going in America I personally have a hard time believing that increased incomes spread to the masses wouldn’t just amount to increased consumption. Hmm, what’s my point? I don’t know, but I definitely don’t like the lack of personal responsibility and the accompanying income victim mentality in a country of such excess. So there.

    • Stephen February 4, 2014, 1:21 pm

      I’m quite glad of this reply. Being based in Ireland, I do regularly get to read the “real” guardian and this article came across to me more so as poking fun at the so called study.

    • No Name Guy February 4, 2014, 1:25 pm

      Heidi, Heidi, Heidi….

      I live a great life. I’m an engineer at a major aerospace company in the Pacific Northwest – hardly a cheap part of the country. I would have been better off financially had I been one of the line mechanics, since they hit top scale in 6 years and top out by the age of 25. I only caught up to the mechanics about at the age of 40 (granted, I’m now starting to leave them in the dust, but the blue collar guys make top scale a lot earlier in their careers). Hummmm….I guess I just falsified your line of BS about how it’s only high paying techies that can earn 6 figures a year. Also, why don’t you look into the trades – last I hear a journeyman electrical lineman (the ones that put it back together after a wind or ice storm) make low 6 figures.

      Anyways – I hardly live a monastic life. I paid off my modest house. I take vacations. I rock climb, hike, mountain bike. I like micro beers and wine.

      Oh, and I spent under 30k last year….including work expenses (my biggest single expense is commuting).

      I LIVE on under 30k. Retiring on 25k will be a snap. Anyone in my position could have. Those that “cannot” in your words, in reality “choose not to”.

      They CHOOSE to live in a McMansion instead of a modest but nice house.
      They CHOOSE to have a Harley Davidson.
      They CHOOSE to piss away money on Prada handbags or “spring” style shoes and the rest of the BS and financial sink hole that is “fashion”.
      They CHOOSE to drink $200 / bottle (or even $50 / bottle) wine.
      They CHOOSE to fly off to Paris or Italy and stay in $200 / night hotels for a week.
      They CHOOSE to lease a BMW for “only $429 a month for 36 months” (with 5000 due at signing) instead of buying a late model good fuel economy car used for cash.
      They CHOOSE to get a 72 month loan on the F-350 dualie 8.9 liter diesel truck that gets 14 MPG (and then drive it 40 miles, each way, to work).
      They CHOOSE to drop 30k on a new bass boat, or sleds, or jet skis to pull behind the truck.
      They CHOOSE to go out for dinner 4x a week, dropping $30 / person on a steak dinner and two beers when they could do the exact same meal at home for (calculating – 1/2 lb steak @ 9.99 lb = $5, potato at 50 cents, broccoli at 50 cents, 2 bottles of micro beer at $9 / 6 pack is $3) for $10.
      They CHOOSE to pay big bucks for a “health club” instead of running the local trails, biking the local routes, lifting kettleballs at home, etc.

      Yeah, that’s right there Heidi….you keep on telling yourself how it can’t be done. Here, let me call you a waaaaaaaaambulance while I go and do it. Hopefully, the waaaaambulance folks will have a mirror, so you can see where your problem is. Oh, and go see Jacob at ERE for remedial ER / FI math.

      • Jamesqf February 4, 2014, 2:13 pm

        Just this. And it’s perfectly true about what a journeyman electric lineman makes – the neighbors’ kid is one.

        With some minor changes in places and interests, I can repeat that story. My non-monastic under $25K/yr life includes a house with large garden near one of the top scenic/outdoor recreation areas in the US, a couple of decades of keeping a private plane, recently the support of a horse in addition to a couple of dogs, and more. What it DOESN’T include is much of that long list of stuff that consumerist society says I’m supposed to want.

        • PFgal February 6, 2014, 10:28 am

          I figure I’ll add mine to the list. I live on about $32k in one of the most expensive parts of the country. I am single, but I also have very high medical expenses. If I take out medical expenses (except for insurance premiums, which I assume we all pay) then I spend about $25k. Take out rent (for the apples to apples comparison with MMM), and that drops to $8400 per year. My life is not super luxurious (I don’t travel now due to health issues) but it’s very comfortable. I certainly don’t lack for entertainment or feel unduly deprived. MMM’s specific lifestyle wouldn’t work for everyone, but I see no reason why the vast majority can’t come up with their own version for around the same cost.

          • frugalparagon February 6, 2014, 10:31 am

            PFgal, if you are spending $8400 on just you, that actually seems pretty comparable to MMM-level spending, since they are around $25K for a family of three. Of course, it’s always easier to keep costs down per-person when you’re talking about a family (for instance, the gas to get three people to a hiking destination is about the same as for one person), so it sounds like you’re doing great!

    • SS February 4, 2014, 1:25 pm

      I usually don’t comment but here it goes.

      I am on track to have a Net Worth of 100k by the time I graduate College with my B.S. degree in 2015. I am married in my early 20’s and we have never made over 58k a year. I got scholarships out of high school and after two years of College I was able to land a lob in my field where my employer offered great benefits that would pay for the rest of my College tuition. I had this plan coming out of High School and stuck with it. Most of my peers will be graduating with a nice amount of student loans and other consumer debt but from the start I wanted to avoid that. It’s been a tough journey working full time and going to school full time but it is totally possible, you just have to be determined. The fact is that ANYONE can modify their spending and work on increasing their income in order to increase there savings. Does making 160k a year help your savings rate? Sure it does, but what is keeping me from making 160k a year? Nothing, and eventually I’ll get there! I have loved the last 6 years of my life and wouldn’t change anything about it. Keeping my spending low has not diminished my quality of life; heck, It’s most likely improved it greatly because I have learned to be happy and content with what I have. Eventually I will have the ability to do whatever I want while others are still stuck in the daily grind of “normal life”.

      So last but not least. Thank you MMM for all of your advice in this blog. It has encouraged and helped me greatly.

      • Johnny Carpayment February 4, 2014, 11:03 pm

        SS, you are one young bad ass. Keep killing it, keep buying those dividend stocks and retire by 35. Teach your kids, family and friends how you did it and the whole circle continues.

      • AllChoptUp February 6, 2014, 9:11 am

        You are an awesome badass!

    • Spectra February 4, 2014, 5:01 pm

      I understand that perhaps MMM’s situation was different than many and allowed him to retire very early but most of us here gain positive emotion from MMM. I’m 31 and I don’t read this site so I can have a pity party and point out the many differences between MMM and myself. I read his advice and try to apply it in my life toward my early retirement goals.

      I had many friends with your attitude in college, just baffled at the way I went about my finances. But I graduated with a Ph.D in chemistry with a paid for Condo and 100k in savings. How? my wife and I lived off my $21,500 stipend and saved every penny she earned. And my wife gave birth to our third child before I graduated.

      My wife and I could have both graduated at 22 and been retired by now and start our family, but we made different choices and now we’ll be able to retire at 40 instead of 30. But that is whole lot sooner than 65!!!!????

      Remember it’s 80 percent attitude and discipline and 20 percent knowledge

      • AllChoptUp February 6, 2014, 9:12 am

        And you are also an awesome badass!

    • Moooooser February 4, 2014, 6:26 pm

      I almost feel bad for Heidi Moore, because I’m not sure she realized she was stepping into a hornet’s nest! In the spirit of kindness, I’m going to try and identify what I view as a few key points that might not be obvious to people unfamiliar with MMM.

      The biggest, as I see it, is that the house is paid for. If the opportunity cost is 7% (although the exact percentage is negotiable), then having a $400k house actually “costs” $28k. (Granted, it doesn’t require the cash-flow, but had the same $400k been in the market it would have produced that cash). If we take $28k plus the $25k budget, we arrive at a spending of $53k per year. This matches the US household median income of $52k per year fairly well. So literally ½ of American households are making this much or less and are somehow making it. To many people, living on $53k/yr is much more reasonable than living on $25k/year, even though the math works out roughly the same (I ignored taxes for simplicity sake).

      The second point I’d like to make is that many people underestimate the true cost of going to work (commuting, larger wardrobe, frequent lunches out, etc). If you retire early, some of your costs go away, reducing your annual spend (and thus reducing your required retirement funding).

      The third point I’d like to make is that it isn’t an all or nothing approach. I haven’t given up my car or started biking to work (more than occasionally for fun, which had nothing to do with saving money). But reading this blog has helped me realize just how wasteful I was being, and I have since increased my savings rate dramatically with a very minimal impact. I was already set to retire at 65 (thanks to my parents instilling a savings mentality), but at this rate I’m probably shaving 10-15 years off of my retirement with no real sacrifice, at least as I perceive it.

      To be fair, Heidi does have a point that MMM and his wife had great paying jobs, which helps to speed things along. One doesn’t have to make that much to retire before 65, but to ignore the effect would be disingenuous.

      • Mr. Money Mustache February 4, 2014, 10:39 pm

        Yes, yes.. everyone likes to calculate the opportunity cost of my house and add it back into my budget.

        But remember that I have a RIDICULOUS house as well. $400k in a town where you can live for under $200k? Nobody needs this sort of luxury to be happy. So if you are planning to live frugally, do not look at me as some beacon of frugality. Make fun of me, and do much, much better for yourself. If you do choose to spend as much as we do these days, do it only when you can truly afford it.

        • moooooser February 5, 2014, 7:46 am

          No doubt! But even if you lived in a $100k house, the $7k opportunity cost still increases the $25k by 28%, which isn’t insignificant. I’m not trying to troll here (promise!), just trying to demonstrate to Heidi (or others) that they too might be able to get closer to your spending than they initially suspect. Your blog has certainly helped me rethink things, and I’ve started taking wussy baby steps. So hopefully my comments can help push someone else along the same path. Cheers!

        • Diana February 5, 2014, 12:09 pm

          Right there with you, and so excited to be reaching this goal! Thanks to some market appreciation, the 3,600 sq ft behemoth we currently reside in will just about cover paying off the existing mortgage AND buying the new, 1,700 sq ft replacement in cash.

          From that point, it should be about 3-5 years to retirement. Our average annual spend is about $28K/year without a mortgage, but our property taxes are higher here. We live a full life with lots of “upgrades”, but we optimize our spending and do it in the most frugal way possible.

          Will there be an opportunity cost to having a paid off house? I guess so, but for us, the freedom cost of not having a mortgage is worth so much more.

          • Daniel February 5, 2014, 4:06 pm

            In full disclosure, it should also be mentioned that health care and (property) taxes have a significant impact on the FI deadline. Although you can change locality to a better suited state, FI in eg New York is harder to come by thanks to high property taxes and limited availability of high deductable health care plans – the latter now improved thanks to Obamacare.

            The major spending factors are housing, food, health, transportation and than a whole lot of nothing….so any saving in those categories is giving you an edge.

            Of course, for the yuppie in the city, the majority of these items are considered fixed costs, where in truth they are livestyle choices – not necessarily easy ones, but choices nonetheless….

            The Question Heidi should ask herself is: ‘what did my article contribute to make peoples life better ?’ – venting and complaining is easy – does it change anything ?

            • MountainMom February 20, 2014, 10:26 pm

              As a Yuppie in the city, I just had to comment on our position :) You are right that even in the city there are lifestyle choices to be made! I live in a major US city. My husband and I are both in our mid 30s. We live in a paid off $450k house, own a paid off $225k ski condo in the mountains, drive two nice paid off cars, take fun family vacations around the world, have completely saved for our two little ones’ college educations, and volunteer and donate $ passionately. We could technically retire, but are still enjoying our careers and so we choose to work. The interesting comparison is our neighbors who outwardly “look rich.” They are still working in their 60s at jobs they haven’t liked for decades and they do not see an end in sight due to their lack of savings/high consumption lifestyle. The primary difference between us and them is that we starting living off of less than one of our incomes (saving more than 50% of our combined income) when we were married in our 20s and have continued to do so for the past 10 years. We both make over $100k now and we are saving $120k+ per year. When you create a debt free life and live well below your means, it is much easier to accumulate wealth regardless of where you live. Creating a legacy is fun!

      • phred February 5, 2014, 9:26 am

        yeah, but most don’t really need a 2600 sq. ft house, do they? So, your opportunity costs can be a lot lower.

    • Ed February 4, 2014, 7:47 pm

      Ah, the classic income equals expenses argument. The reason you can live on $X is because you earned $Y in the past? Huh? Your living expenses (past, present or future) do not equal what your earn! Personal choice determines your expenses. And this is from a finance writer?

    • conchita February 5, 2014, 12:14 pm

      Hi Heidi, than you for that wonderful article and for taking the time to reply here. Some of us “mustachians” are able to actually see that for a lot of people, it is very hard to save for a decent retirement and not just because they are lazy or stupid or caught up in materialism. There are people who work hard, have very few luxuries and fall in the cracks. the causes are numerous: bad luck (yes, there is such a thing), mental/physical illness, dysfunctional families, poor paying jobs. I’m lucky enough to be able to live frugally and save but I know lots of people who struggle with this. The real culprit here, is, indeed, the widening income gap and other larger socio-political issues at work. I am not advocating that one should just blame these issues and use this as an excuse. By all means, we should all do the best for ourselves–but that is not sufficient. We should also be advocating to improve the social net for everyone (so everyone has access to health care, recreational facilities and safe housing) and raise wages for those at the bottom. Articles such as yours are a way of advocating for change at a systemic level which is just as necessary as making personal changes in lifestyle. As a physician I have people in my practice working multiple jobs and trying to raise their family and unable to afford a healthy despite their best efforts.

  • Vasco Da Lama February 4, 2014, 12:15 pm

    I had to stop reading the article after the ‘saving less than 20% when making $150,000 a year’ part. Totally ridiculous! ‘Twenty percent for retirement is, by the way, an aggressive goal.’ *facepunch* :{D

  • Mark ferguson February 4, 2014, 12:15 pm

    That is an absolutely horrible attitude to have! The article of course. It’s all the systems fault, wha wha wha wha. I agree with almost all of yor points mmm, except I want to retire on much more than 100k a year. I hve expensive Tastes and I’m okay with that. I also feel the traditional retirement model is flawed. The sooner you want to retire the more you have to save. I have 40k a year coming in off my rentals and hat is increasing very year. The nice thing is that number will keep going up as I get older and retire not done. I never eat away at the principal.

    • oddohomes February 8, 2014, 10:11 am

      Hi Mark,
      As a fellow owner of rental properties (6 sfr’s at this point) I’d be interested to hear more about how you acquired yours. Your “income property story” if you will. I really want to acquire 6-8 more, but am averse to investing any more of my cash (I’m now taking mmm’s great advice and parking my money in vanguard mutual funds to diversify). All 6 properties are owned with a partner in our llc, and are paid off. I thought I’d be able to get a bank to give us a line of credit against the paid for homes, but haven’t had much luck. Any ideas for funding? Thank you in advance for any help you can offer.

      • Michelle February 12, 2014, 4:47 am

        Dear oddohomes,
        Have you tried small local banks in your area. They have more ability to give lines of credit to local investors in my area compared to the bigger banks. Also, the LLC could be the problem. Banks prefer to give loans to individuals. My local bank was still able to give a line of credit even after the real estate crisis caused our other one to dry up. However, they were required to have an appraisal on our paid for rentals that are not in an LLC. Keep shopping banks and you will probably find something. Talk to other investors in your area. They probably know which banks are loaning. If you need to remove a property or two from the LLC, you are still protected from lawsuits getting your equity. It has already been extracted via the line of credit. If they sue, they get a house with no equity. Let them have it. Good luck!

  • Phil February 4, 2014, 12:23 pm

    Sadly, more people click on “doom and gloom” articles than ones that make sense. It also fits well with most people’s personal life narrative that there is nothing they can do to improve their financial life, because things just aren’t as good or easy as they used to be.

  • Neil February 4, 2014, 12:28 pm

    I’m still trying to figure out how base expenses are a percentage of salary, and “lifestyle” expenses are extra. If it’s related to how much you earn, doesn’t that by definition mean it’s a reflection of lifestyle? Shouldn’t base expenses be a fixed amount?

    Anyway, just wanted to say that I can’t quite figure out how to get my expenses down to the kinds of levels your family lives on – but I certainly can’t understand why people assume expenses have to rise as income rises.

  • Joe D February 4, 2014, 12:32 pm

    Even if you raised salaries this way of thinking would say that is never enough because if you make 300k you need to spend 150k then you need to save more to retire to spend 150k. So with this percentage thinking the math would never work.

  • Rob February 4, 2014, 12:36 pm

    The best thing about thee Guardian article is The Jetson’s pic. Jane and Judy are hot.
    Love your comments on the article. People need to do what works best for them. Not some arbitrary way from an article. I make good money for the DC area ($105k) But I don’t spend it all. I save 30%. I’d save more but I’ve got these 13 things called kids, 12 still at home. And they do enjoy eating daily. But I probably spend less per meal per person than most. In 2013 we spent an average of $41 per day on food and drink (that includes any eating out). That is just under $1 per meal per person. And we eat well.
    We also spend a lot less per kid on activities, clothes, schooling etc….than our friends do.
    My point being that you can control a lot of what happens to you financially. You don’t have to live like everyone else does (or tries to do).

  • Heidi Moore February 4, 2014, 12:38 pm

    Hi, this is for the person who asked for the study.

    Here is the WSJ piece: http://blogs.wsj.com/moneybeat/2014/01/31/retiring-on-your-own-terms/

    And here is the link to the study: http://www.cfainstitute.org/learning/products/publications/faj/Pages/faj.v69.n6.4.aspx?intCamp=$topic28

    Note also that the study assumes everyone will live to 100 years old, or even 105 – by no means a standard age at death outside Okinawa!

    I think if you take a sensible, unemotional look at this, you’ll see that you should focus your outrage on this unrealistic, absurd study that offers silly advice based on unrealistic life expectancy, unrealistic retirement income, and unrealistic market investment strategies.

    Yes, everyone could cut their expenses. We can all do better, and should. I said so in my piece. But I think you need to acknowledge that you are fervent supporters of living far, far below your means – in fact, for a family of 4 living on $25,000 a year, that would be considered nearly poverty level. For most people, the purpose of working is NOT to retire at poverty level.

    You have to acknowledge that you are all outliers. Most people want to live WITHIN their means – and more importantly, to enjoy their lives with an occasional trip or night out.

    Could people save more? Yes, probably. Our national savings rate is nothing to be proud of. But can they save every single penny they make? Probably not. They may well die before they retire. They’ll certainly likely to die before they hit 105 years old, living on $100,000 a year that whole time.

    Cheers all.

    • Diane C February 4, 2014, 1:06 pm

      Ooh, Heidi, that’s the nicest thing I’ve been called all day! In fact, it’s the only thing I’ve been called all day. That’s because I’m FIRE (which I’ll define for you as you may not know the meaning of this acronym, much less believe in its existence).

      “Financially Independent, Retired Early.”

      After a week of heavy volunteer activities, today I have blessedly nothing on my schedule. Feels great. Hey everybody, I’m an Outlier, Yippee!

    • Mr. Money Mustache February 4, 2014, 1:11 pm

      Aha, but what most people currently want to spend on themselves is irrelevant – the purpose of this blog is to CHANGE the spending desires of those people.

      We are only outliers because we are ahead of the curve at the moment.

      There’s no sense to me, pandering to the current habits of an irrational society by writing about them as if they were rational and immovable. Much better to fix things – it is just a larger case of the middle class person’s ability to fix one’s own lot in life.

      As for the definition of “Poverty”, which gets assigned around the $20k level just because it is below the national average.. what if we changed the word to “On the lower end of still-fucking-ridiculous Abundance”? Now many people would be happy living at that level of spending!

      This is not to make light of the real social problems that exist in the country. But I think they are spending and habit problems rather than income problems.

      • phred February 5, 2014, 9:39 am

        I’m wondering if it’s all about luck. You and the Missus were lucky to be born with a certain genetic heritage, lucky enough to have a childhood where you had to work for things, lucky enough to pick a college major that would pay off instead of one being self-indulgent, lucky enough to have a brain that could conceptualize planning for the future, lucky enough to not be too fearful about life.
        The typical American seems to have a planning brain area the size of a pea. He/she would rather carpe diem as the excuse to frequently indulge themselves in self-created rewards and frivolous “enjoyments”.
        Is it all about genetics? I’m a bit down because certain lessons never seem to be learned. Charles Dickens told us to repeatedly spend less than you earn. This was back in the 1800s. Even earlier was the fable of the ant versus the grasshopper.
        As long as we continue to have a market economy it will probably always be thus.

        • Spectra February 5, 2014, 10:46 am

          Yes some genetics play into the equation but you go a little to far with the everything is luck vibe. This is why I loved MMM article about % savings vs. years to retirement, there was no discussion of income. I admit that many have gotten themselves into terrible situations that they need help to get out of but the moment you start thinking that your troubles are not your fault then you just blame others and don’t try to improve you lot.

          If you’d like fabulous satistics on wealth read the millionaire next door byt stanley. There he discusses under achievers of wealth (UAW) vs. prodigious achievers of wealth. Doctors are some of the worst UAWs around even though they have extremely high incomes.

          another example. I have a brother-in-law who is extremely smart and just graduated and got his first job several months back. He spent about $200 on my family and kids for Christmas even though we all agrred to the secret santa thing. When we told him it was too much he said, “hey I make $5000 a month, I have money to burn”. I said, “wow 5 grand”. I think he missed the sarcasm in my voice. He’s 29, single, and saving less than 10% of his income. Ridiculous. Even though my wife and make a lot more than he does, it doesn’t matter because we live on so much less and save such a high percentage.

      • Scooze February 5, 2014, 10:12 am

        Definitely spending/habit problems! If anyone could explain to me the thinking of the couple I was behind in line at the grocery the other day. They were a young couple with 2 young toddlers checking out ahead of me. They were using their public assistance food card for their groceries. Maybe not employed (?) as it was the middle of the day. Let me state that I have no issues with folks who use/need a bit of assistance when the going gets rough. BUT….following them out of the store, they stopped at the fricking LOTTERY MACHINE and put a $20 bill in it!!!! I wanted to stop and give them a good lecture…..but kept on walking, shaking my head all the way to my car. I’m not sure I will ever understand. Is this a family-cycle mentality of “spend every dime you have?” I think we need to start educating children much younger about money – earning, saving, etc. Because with the role models children have today………..the majority of them don’t stand much of a chance becoming financially responsible/independent. And to me, that’s just damn sad – because it’s totally preventable.

      • amyb February 5, 2014, 2:42 pm

        “On the lower end of still-fucking-ridiculous Abundance”? That about sums it up!
        “Poverty” implies a lack of the basics…food, shelter, weather-appropriate clothing, water, medical care for most parts of the world. Those folks would love to sign up to be impoverished in the US where we define poverty as “the state of one who lacks a usual or socially acceptable amount of money or material possessions” (Merriam Webster).People around the world are strapping plastic water bottles to the bottom of their feet for shoes. Isn’t it such a downer when we are “so poor” that we have to cut our cable back to basic channels and use the iPhone 4?!…that sounds simply dreadful…are you okay?…

      • Tracy February 5, 2014, 5:09 pm

        I am not left-leaning or liberal in any sense of the word. But are you really comparing “the lower end of still-fucking-ridiculous Abundance” to what is defined as poverty as defined by what a minimum wage worker with a family would earn a year?

        “Now many people would be happy living at that level of spending!”

        Well maybe someone who had the ability to save at a relatively high level of income for 9 years like you and your wife and voluntarily decide to live at the poverty line while having a true safety net. You should think twice before bringing up the term “poverty” in defense of you’re decision to supposedly live in “poverty” and how that’s somehow cool.

        Sure I’ll be a lone voice on this because I doubt there are many people here truly living in poverty visiting your site looking for retirement advice. And I do admire the folks here who are living their dream. But please don’t equate yourself to living at the defined poverty level. Because you’re not poor. You’re doing it by choice and have a bank role to insure against the typical things that buffet a family living in true poverty.

        • sage antoine February 6, 2014, 9:22 am

          You are so right. In my university days the poverty of a student in training for a rapid move into the higher income levels after graduation was called “genteel poverty”. And that totally describes the choices made by highly-educated othewise high income people with a solid cushion to fall back on.

    • Catherine February 4, 2014, 1:29 pm

      Look, I’ll acknowledge that the WSJ article was silly. I am also bothered by the general stagnation in wages we have seen in the US over the past few decades. But Heidi, here’s the thing. If you are smart about what you do with your money, you can have a really NICE lifestyle with only “poverty level” spending. Many items that the middle class spends money on do nothing (or very little) to increase their happiness or well-being. If you eliminate those pieces of useless spending from your life, suddenly your spending will plummet, while your actual sense of happiness will remain stable (maybe even go up!). My family spending is not that much above poverty level, yet we live in a really expensive part of the US. And we’re really happy and quite easily “passing” as middle class.

    • jab February 4, 2014, 1:44 pm

      Heidi, relax, have a home brew and read this blog. It just might change your life.

      • Tyler February 5, 2014, 11:38 am

        Agreed!!! It just might…Now I literally feel guilty when I step into my car (which is about twice a month) and I’m proud of that!

    • Tara February 4, 2014, 3:15 pm

      I am living very comfortably in Montreal, Canada on $23,000 a year. My home is paid off and I have a net worth of $1M at 47 years old. I have never earned more than $65,000 a year. Clearly what you are saying is BS. People waste far too much money on eating out, buying stuff they don’t need. I am saving 50% and it is not causing me to live like a monk. Bzzzt!

      • Matt February 6, 2014, 11:25 am

        Sounds like a very similar lifestyle to me. Also Canadian, with similar wage and expenses but only 26. Hoping for a similar financial situation as yours.

        Very encouraging.


    • Mrs. Renaissance February 4, 2014, 5:27 pm

      Damn straight we’re outliers. Smart outliers. We reject most of the marketing efforts that have the middle class locked in vicious cycles of debt. Can you imagine how much you could save, without a lot more effort, if you eliminated payments from your life? Have you actually read MMM’s blog by the way? Living well on 50% or even 25% of your income doesn’t require herculean efforts: http://www.mrmoneymustache.com/2012/10/08/how-to-go-from-middle-class-to-kickass/

    • Omaha February 4, 2014, 7:38 pm

      We the outliers are the people who are/will be “rich.” All you have to do is note the difference in perspective: “rich” people focus on what they can control, live below their means and accumulate wealth. For this “sacrifice” the rich receive true freedom based on their financial power.

      On the other hand, your definition of “most people” spend more than “rich,” have more stuff than “rich,” but still feel victimized by the “rich.” For their indulgence, “most people” receive a life of servitude based on their need for more money and are not content/happy. Ironically, “most people” think they are emulating the “rich” when they are actually displaying their complete lack of financial sense. High income spenders perpetuate this myth with flashy spending and no accumulated wealth.

      There it is: spending more gets you less (happiness).

    • 9 O'Clock Shadow February 5, 2014, 10:02 am

      Hello Heidi,

      Your emotional tone resonates throughout the article. It was triggered by the WSJ’s Fear Factory article, in which you correctly sniffed out the three main ingredients:


      BULLSHIT – Don’t Worry! Investing boatloads of cash in easy to pick investments will yield an outrageous retirement income!

      SUNSHINE UP-YOUR-ASSERY – And keep investing until you are near-rotting stage, ‘cause you’re gonna live to 100!

      Juxtapose with your 100% correct statement “…corporations are hoarding profits, raising CEO salaries and skimping on what they pay employees.” And the middle finger response is almost involuntary.

      BUT WAIT! Add the many people on this site who live on about $25K per year and the results? Those companies and CEO’s can further justify their squeeze on wages and benefits because, “..well, anyone can live on $25K per year, so screw ‘em!”

      I truly believe you can keep your middle finger(s) extended at the WSJ, Scaredy Cat Cash-Rich and Risk-Averse Idea-Poor companies, Corporate Boards that approve of massive performance-disconnected CEO salaries AND accept the fact that you can live a meaningful, healthy, happy life on about what it costs to cover, housing, food, health and education. Lots of people here have (see the breakdown of your hypothetical $100K salary by readers – esp. Dan’s). BTW MMM vehemently opposes paying people shitty low wages.

      The only thorn I’ve had (and you seem to have) with this site is how easy it can seem to live like MMM and others who retired early – It is TOUGH.

      But once a tough choice has been made, and you are stronger for it, then you are in a position of strength. And from that position of strength you can make easy, rational decisions about what to do next, or how to live, or what to buy/not buy. And in fact there are 3 excellent articles on this site about small efforts over time, the joy of hard work, and the incomparable advantage of doing things yourself.

      So you see, it’s a tiny thorn… in a rosebush! 

      There is genuine compassion in your position & it got a bit clouded by the assumptions of what MMM did to get where he is, & how much money it takes to live well.

      Time to write an antidote to the WSJ article, (if you haven’t got the draft in your head already ;)

    • Daniel February 5, 2014, 4:31 pm

      I am not sure Heidi, calling so many people as are on MMM blog outliers …..does that not make us not outliers….just saying (btw: Americans love to be special, being average sucks – so thanks for the outlier :-))

      The real issue is summerized in this:

      ‘you are fervent supporters of living far, far below your means ‘

      That sounds like some accusation that I am intentionally not fulfilling my god given talents ? What are my means exactly and why does my income come into play ?

      I would argue, people squandering away their current income like there is no tomorrow (maybe there is not) are actually deviating a lot from their means.

      And yes, maybe I will drop dead the second I wrote this and all my savings will fall to my family – I would still not reverse course since the journey trying to get to FI was actually much more fun and interesting than running behind the consumerism herd and I percieve my current life as luxurious

      Perception wins every time…..so work on it.

      • Tom February 5, 2014, 7:07 pm

        I would argue that it is not us “living far, far below” our means. Rather, it’s a society that currently tries to live far above their means. If your credit card is constantly accruing interest and your car is financed or worse, leased, then as far as I’m concerned you are living a lifestyle you can’t actually afford.

        • steve adams February 10, 2014, 9:01 pm

          Exactly – too many living far, far above their needs, but thinking this is how everyone does it so it must be OK.

    • Joel February 6, 2014, 10:49 pm

      I agree with Heidi that the WSJ article was beyond stupid. I would have used a kinder word but it was deserved. The best advice was at the beginning about the MyRA but that is still useless. Any saver/investor/citizen can buy IBonds direct from the treasury with all the same benefits as the MyRA AND with the added ability to withdraw the money, if needed, before retirement age. The only thing useful about the creation of MyRA is that it might encourage two or three more people to actually save something, anything.

      Mustachians, although some times a little heated, are trying to prove to people that if they or MMM can save for retirement than any one can. Yes, choices need to be made but that is life and part of being an adult. I spend so much less than the people (even students) who rent FROM me it is ridiculous. When showing to prospects they haggle or get excited about a $10 per month difference but nine times out of ten purchase new furniture and toys for hundreds or thousands of dollars soon after moving in.

    • cwebb February 7, 2014, 9:57 am

      I couldn’t disagree more Heidi.

      “Most people” live beyond their means and hope that they’ll be able to retire in their mid to late 60s. They would like to save money and retire earlier, but they don’t even know where it is all going. This blog, along with others, provides a punch to the face and helps you realize that if you change your spending habits you can change your financial future without sacrificing happiness. In fact, you will probably increase your happiness.

      You also have to realize that relying on your current employer to provide for your livelihood does not equal living within your means. A lot of people have learned this the hard way. If you “have” to work, you are poor.

      Also – MMM lives on $25K/year. That said, $35K/year could easily supply an occasional trip or night out.

    • John February 8, 2014, 10:24 pm

      Gen Y does a pretty good job defending the study. But I want to do so again briefly and approximately. It uses the example of a teacher starting out at less than $40k rising to $80K over a career of 40 years who wants to be able to retire on $50K with SS being $20K of that. The teacher uses TIPS and therefore 0% real return. To achieve her goal and starting by saving 10% of her salary, she will need to steadily increase her saving rate to 33% by the time she retires. If she is willing to take some risk and gains a 2% real return as a result, the teacher only needs to be saving little more than 20% right before retirement. It does not make any outlandish requirements like high investment rates or living to 105 years; it assumes using TIPS to cover 20 years of retirement with a deferred annuity purchased at age 65 to cover the possibility of living longer than 85.

      It is an extremely conservative plan and still shows someone of moderate means starting off with just a little bit of guidance towards savings can retire comfortably. It is not a study on how to retire early or with 100k in expenses. But it should be taken as good news by just about anybody. What are the problems with the study?

  • Daniel February 4, 2014, 12:45 pm

    Great point about the 50-30-20 rule. While it may work for most people and if people follow it, they will likely increase their savings rate, it’s not the only situation where it means saving enough. This past year, I saved 50% of my salary, which comes out to more than 20% of $150,000 (which I don’t make). So there is more than one way to survive and save for retirement.

    I imagine my lifestyle in the future (I’m 26) will be much more expensive than yours, but I’m working toward being able to afford it without giving up everything in the future. Work hard and prioritize and remember that there’s no one way to make it in life. Don’t let the media write your opinions for you.

  • Tom February 4, 2014, 12:48 pm

    It sounds like satire or web trollery just to irritate mustachians!

  • Petey Stiltskins February 4, 2014, 12:48 pm

    Great Article. I completely agree that most Americans overspend. I am young and all my friends who are my age constantly are making financial decisions that are not setting them up for success for the rest of their lives. Loans, credit card debt, you name it.

  • Heidi Moore February 4, 2014, 1:04 pm

    Hi , I think you are taking the STUDY’s straw man and incorrectly attributing it to me.

    For one thing, a family that lives on $100K (net) is not going to live like a family living on $45K a year. They will have a nicer house or apartment – not lavish, but nicer – as well as higher school costs and likely car costs. It’s true that some families manage to live on $15,000, $25,000, or $30,000 a year. It makes absolutely no sense that all families, no matter their income, should live that way. Surely you understand that? Please say yes. There is a concept such as “affording” something – which is that, it is within your means. You have radically decided that NOTHING is within your means, even transportation. That is not the typical or desirable experience for the middle class.

    As for the expenses, if you have a family of four, that $100,000 goes fast. Assume, for one thing, that $30K goes to savings as everyone wants. Assume another $1500 in mortgage or rent payments (conservative in most of the country) for another $18,000 a year. That’s already $48,000 out of the $100,000. Then calculate transportation (let’s say $2000, or around $180 a month, for two adults, including car and metro passes) , internet connection (necessary for schoolwork) of another $1200, food ($15,000 a year according to USA estimates for family of four). That brings you to another $18,200, or $66,200 out of your $100K. Then utilities. Then school fees and school clothes for two kids. Then college savings. Then one vacation.

    The bottom line is, you may find ways you can limit these expenses, but it’s unfair and judgey to tell other people that they can’t live their lives and have to live with no discretionary income in order to be completely virtuous. For one thing, it increases the chances people will fail, in the same way that a starvation diet guarantees someone will binge later. For another, it’s just unrealistic to expect everyone to live your life – down to your same life expectancy, goals, and life priorities. We are not Stepford retirees. It’s dismal to act as if we are.


    Good luck, though.

    • Dan February 4, 2014, 1:11 pm

      Heidi, I understand that much of what you reported in your article was the study itself, not your opinion on the matter. And you did point out areas where the study was not very realistic. But overall your tone seemed to agree with the finding that retirement savings is nearly impossible.

      I think you will find that the users of this site have a very different definition of “within your means” than you seem to have. You say someone making 100k can afford a nicer house, car, etc, because it is “within their means” but then you say they will never be able to retire because they now have that nicer house or car payment to make every month and can’t save enough. I, and others here, will argue that that means that the nicer house and car are NOT within their means because it is sabotaging their future for unnecessary luxuries that, in the end, don’t really add that much enjoyment to life.

      You can’t have it both ways…either you are living with your means and ensuring a secure future, or you are spending too much and may never be able to retire. I hope that clarifies some of the differing opinions you are encountering here.

      • Pete February 4, 2014, 5:55 pm


        I agree with Dan that if you are spending too much to ever retire, then *by definition*, you are not living within your means.

        Heidi, you also have several fundamental misunderstandings about the early retirement lifestyle:

        1) you are retiring after your home is paid off, NOT retiring on $25,000 a year with rent or a mortgage

        2) assuming $1,250 a month savings from a lack of housing costs, or $15,000 a year, living on $25,000 in a paid off house = living a $40,000/year standard of living (and more if you count the extra 40 hours a week of time you have freed up)

        3) this $40,000 is *SPENDING*, NOT income. assuming 25% in taxes, $40,000/75% is equivalent to $53,333 of pre-tax income

        the median US Household income in the United States is less than that

        • Ruth February 5, 2014, 12:38 pm

          I don’t think # 1 is a given at all. I retired early and spend less than $25k a year and still have a mortgage. I can do this because I bought a house that cost a lot less than I could “afford,” but which I love and is perfectly suited for my needs. And I have a roommate.

          • Pete February 5, 2014, 6:23 pm

            you are right. I was talking about the hypothetical 4-person family in Heidi’s example, which has a $1,500 mortgage ($18,000/year), or MMM, who has a 3-person family and lives in a $400,000 house.

            The budget doesn’t make sense; a mortgage that lasts forever? children that stay dependents & students forever? (I guess if we are talking about the Simpsons: Bart, Lisa, and Maggie are still going strong after 25 years),

            Heidi counted the $30,000 savings as part of the $100,000 per year you need, but if you are saving $30k, then you are only spending $70,000 and only need $70k, not $100k. And at some point, after 30 years at the most, the kids (food, savings for college, healthcare, other costs) should be gone, and the $18,000 mortgage should be gone, commuting costs should be down.. then you can comfortably retire on $25k a year in a $400k house

            Also, there are different ways of looking at your roommate situation. You seem to be looking at it as reducing your costs, but another way to look it is that it is income you are getting and then spending, since you are the owner/landlord. But your point is correct, a person could live on $25k a year with rent or a mortgage, especially if they share housing costs with a mortgage.

    • Eric February 4, 2014, 1:15 pm

      Everyone is allowed to live as they please. But what they’re NOT allowed to do is complain about how it’s impossible to retire when they’re wasting money hand over fist. You know, like spending $1250/mo on food. Holy. Shit. Are they eating gold plated carrots and diamond studded beef?

      I also disagree with your diet binge example. It actually gets easier to spend less money the longer you do it, not harder. You soon find you’re not actually depriving yourself of anything. Watching your investments grow because of your kickass savings rate is way more satisfying than any trip to the mall could ever be.

      • Spectra February 7, 2014, 1:42 pm

        I agree with you on the binge diet. My wife an I moved states last July and it took several months to reestablish the budget spendning clear all the new insurances, retirement, housing costs, and everything but now that we have our goals and settled in it so much easier to stay on task and reach goals.

        It was so bad a few years ago that when my wife and I paid off our first condo it was actually difficult to get us to spend some money on ourselves.
        Discipline cannot be replaced

    • Done by Forty February 4, 2014, 1:23 pm

      True to form, your response is also rife with strawman arguments. Who, exactly, stated that everyone should retire early, is telling others they should deny themselves the basics, everyone should live on the same amount, or is telling others how to live their lives? As far as I can tell, these are simply your own imagined retorts to your article.

      Of course people should live how they want, and retire as they want. But if they want to retire, then, shockingly, they should save now for that retirement.

      Surely you understand that. Please say yes.

      • Mr. Money Mustache February 4, 2014, 1:53 pm

        Actually DB40, I DO think everyone should earn financial independence early and live on the same amount regardless of how much they earn. And I AM telling people how to live their lives here. So she is right on those accusations :-)

        • Done by Forty February 4, 2014, 2:36 pm

          Ha! True. But you’ve also argued for a relative approach, with the shockingly simple math of early retirement, for example.

          But point taken.

        • Spectra February 7, 2014, 1:45 pm

          One of my favorite days of my life was when my wife got a huge raise and we both thought immediately, “great more money thrown at the mortgage”. It didn’t change our spending or goals at all.

          Discipline first riches second

    • Adrian M February 4, 2014, 1:45 pm


      You are incorrectly assuming that your lifestyle spending needs to rise according to your rising income. That’s called lifestyle inflation.

      1.)”It’s true that some families manage to live on $15,000, $25,000, or $30,000 a year. It makes absolutely no sense that all families, no matter their income, should live that way. ”

      A person making 100k does not need to live in a fancier house than someone that makes 30k. Where is this rule of which you speak?

      2.)You have radically decided that NOTHING is within your means, even transportation. That is not the typical or desirable experience for the middle class.

      So you wouldn’t consider using your own two feet and a bicycle as transportation? It isn’t desirable to get up off the moving leather sofa(a luxury car) and use human powered options to burn off fat, enjoy the view, have fun, and save money?

      3.) “internet connection (necessary for schoolwork) of another $1200, food ($15,000 a year according to USA estimates for family of four).”

      The $100 internet is not needed by 99% of Americans. The bill can safely be reduced to about 50-60 a month and the speed difference would be noticeable by no one except power users. Food at $1250 a month? What are you eating for every meal? Digorno pizzas? Sturgeon caviar? My family of 6 eats for 800 a month in groceries and even that’s way too high, admittedly.

      I can’t sit here going on about every single point you’re making, lest nightfall approcaches, but there are far lower cost alternatives to simply going at the rate of the “Average Joe”.

      • Mr. Money Mustache February 4, 2014, 1:52 pm

        Thanks Adrian, I fully agree and just wanted to add, “HOLY SHIT, A $15,000 ANNUAL FOOD BILL FOR FOUR PEOPLE!?!?!?!?!?!”

        Damn. Our bill got up towards $7k this year, but that was truly millionaire-style living and I am embarrassed by it. The massive all-organic banquets and months of house guests visiting with us. The tiny packs of $8.00 cheese from other countries. The dark chocolate squares and berries in the offseason. With ANY money constraints at all, that number would drop to $3k or less overnight. Seriously.. suckas need to stop buying $15.00 single serving meals from Whole Foods and doling them out nightly to their flock of ten children and learn about good ol’ fashioned Potatoes, which I like to call “Retirement in a Bag”.

        • Alex Fields February 4, 2014, 7:27 pm

          Oh man, a post or forum topic on some awesome millionaire-style recipes would be an excellent idea… I’ll start right now with something the lady and I are enjoying tonight as we read this hilarious thread:

          1 cup organic frozen fruit (we are using the antioxidant berry blend that you can get in the frozen section at your local costco–but any frozen fruit will do–mango, etc.)
          2 Tbsp organic creamed coconut
          1.5-2 cups water

          BAM! Just like that, from almost any city in America (and in any season), you can be enjoying a tropical smoothie fit for kings and queens.

        • Mark Curtis February 6, 2014, 2:29 am

          I just boiled up 4 pounds of spuds, a dozen eggs, and mixed the lot into a $7 Costco potato salad to make 2, which thereby became very cheap meals for the two of us.
          Even better, because of the resistant starch inherent in the cold potatoes, I fed my gut biome and will be mucho healthier for it. Call it retirement in a plastic container.

      • Allen February 4, 2014, 10:07 pm

        $100/month for internet is quite outlandish. $50-60 is even high and probably unnecessary.

        I pay $14.99/month for Time Warner’s cheapest plan (2mb down/1mb up) and have NO PROBLEM streaming netflix or xbmc video in HD… no buffering or lagging. The trick is to set up QOS (quality of service) on your router that gives bandwidth priority to specific devices (like video players). This way when your phone or tablet starts updating apps or checking email on your wifi, it is only using the small amount of downstream it was allowed and doesn’t cause your video to suffer.

        Can’t beat that cheap ass internet and no cable TV. It’s bad ass. Republic Wireless is next for my wife and I, that will be another $100/month saved. That’s what I call STICKING IT TO THE MAN.

      • deepseafalcon February 6, 2014, 5:15 am

        … good point about the internet. I was also surprised, but assumed she meant a complete cable package incl TV

        now that you say it:
        broadband internet is one area where in my experience lots of people overspend, falling victim to the misleading information provided by many MSOs who want to push higher bandwidth plans.

        I currently pay 29.- USD p.M. to TWC, and that supports all our family of 4 home communication needs:
        – 3Mbit cable is sufficient for Netflix or Amazon streaming in HD (most people think they need 10,15 or 20Mbit for that … utter BS!)
        – this also gives us “landline” through Google voice and a little VoIP box
        – no cable TV needed, streaming gives us more than we want

        Not sure if a 29.- plan is available everywhere in this country, but when I signed up I noticed that TWC didn’t make it visible on their website. I had to explicitely ask, and resist various upselling attempts :)

    • Eldred February 4, 2014, 2:19 pm

      I am by no means Mustachian, but why would my spending automatically go up if I doubled my salary? I mean, if I’m making $50,000 now, then I’m *living* on probably $38,000 after taxes. So if my boss suddenly decided to pay me $100,000 for the same work, Then I’d have an extra $50,000(minus applicable tax, of course) to bank. I have a decent house in a nice neighborhood, and I haven’t had a car payment in 10 years. Why would I need to go out and buy a bigger house and/or car, when the only thing that changed was my salary?
      Granted, I can’t retire in 10 years while making $50,000. But if I could somehow make $100,000? I’d be out of the rat race at 10 years + 1 day.

      • Ken February 7, 2014, 1:08 pm

        It’s called “The Marginal Propensity to Consume”: http://en.wikipedia.org/wiki/Marginal_propensity_to_consume

        As your disposable income increases, your level of spending will increase right along with it. This happens to most people without them even realizing it. With vigilance, it can be minimized.

    • backyardfeast February 4, 2014, 2:35 pm

      I hate to disagree here, but your numbers in fact prove MMM’s point: a family that makes $150000/yr DOES NOT NEED $100000/year in RETIREMENT! And therefore, needs to save much less to be comfortable.

      Using your figures above, a retired couple would have the house paid off and no longer need to save, so there’s $48000 gone. Then commuting costs are lower, without kids at home food and other costs are lower. Are we creeping close to the $25-30K mark yet?!

      As a household, we make about $100000. We don’t save 50% of our income, and are working our way toward 30%. We live in a high COL area, commute stupid distances, eat like kings, and are working on the mortgage. We often feel trapped in the middle-class slog. But we also know that our CORE expenses, those that would still be in place after retirement, are around $30k/year, and we’re confident that we can meet those expenses in a way that will NOT require a multi-million dollar portfolio.

      • Pete February 4, 2014, 6:06 pm

        backyardfeast ,

        thanks for pointing that out.. I didn’t even analyze that.. according to her own math, the $30k in savings and $18k mortgage that you would no longer have would already cut $48,000..

    • Brendan February 4, 2014, 2:36 pm


      You just listed everything. You had $30,000 for savings at the beginning and $33,800 lumped into “Then utilities. Then school fees and school clothes for two kids. Then college savings. Then one vacation.”

      I’m just saying all that stuff does not cost +$30,000. Lets say it cost 50%.

      That leaves you with another $15,000 to add to your original $30,000 (TOTAL $45,000). You are almost at 50% savings. Cutting back a little bit (Maybe taking a vacation every other year) and BAM you have EARLY RETIREMENT.

    • Kathleen February 4, 2014, 6:41 pm

      One can afford more stuff if they want to trade the 30-40 years working for it. But if I make 100k and want the freedom to choose what I want to do with my time, then I can’t afford it. Its all choice whether or not you raise your spending with your income. It isn’t forced upon you.

    • Sister X February 4, 2014, 7:44 pm

      Yeah, we all get what you’re saying. But I don’t think you’re understanding US. “$100,000 goes fast!” Says who? Why does it have to? Why can’t those school clothes for the kids come from a thrift shop? (Which, in case you haven’t heard, is cool now thanks to Macklemore.) Why do you have to drive everywhere, when it’s often far more enjoyable to bike or walk places? (Not to mention healthier!) Who says you have to spend $15,000 on eating, especially if you start eating at home? I feed myself (a nursing mother, so lots of calories), my husband, the baby, and our two pets on about $400/month in the part of the country which I’d estimate has the highest average cost of food. (Alaska.)
      Hi, I’m SisterX. I live on about $30,000/year (including $1100/month rent) and I don’t feel deprived at all, nor do I feel exceptional for this. If you’d like to write an inspiring story about retirement can-do, rather than a doom and gloom, whiny story about how impossible it is to live well in the richest country on earth, I suggest that you pick one of the fine people who regularly comments on this blog, rather than poking fun of all of us and whining that we just don’t get it. I really think that the person who doesn’t get it is you.
      Stay a while and look around. Read some of the blogs other people have linked to. And, welcome to our little online community.

    • FIRE36 February 5, 2014, 4:18 am

      I have an issue with the use of the word “afford”. It can lead to a lot of unnecessary spending. A “better” car, house, vacation, food, clothing, school, a boat, media room, new kitchen ?. All these wants are unlimited and boy can they ADD UP . To finance any of these just compounds the problem. To me if your definition of “living well” means you have no choice but to work till you are 65 is tragic. You do not know what is going to happen, you or a family member may become ill, you may lose your job or really start to hate your job and have trouble finding another, especially when you are older. People need to realise the ability to work to 65 may not be in your control. And it’s certainly nothing to aspire to. I retired at 36 and have been FIRE for the last 12 years. My expenses were $26000 last year and I do not do without, I live in Australia, most of my costs are higher than the US, I am so jealous. My income is actually a lot more than this. I continue to invest the rest. I can truly afford all the “wants” above, to me this means I can pay with cash and not jeopardise my ER. KNOWING I CAN is more enjoyable than doing. If I indulged, yes it is indulgence, in my twenties and early thirties I would not be where I am now. I have something much better than any amount of material possessions. FREEDOM. I did not post this to brag but to support the fact that it can be done and in my case on a single much lower work income than MMM and Mrs MM.
      P.S Love your work MMM

    • phred February 5, 2014, 9:57 am

      All income is discretionary. In the long run you decide where to live, what lines of work to pursue. If this family of yours making 100k would live the same lifestyle as one living on 45k, then that would allow 55k per year to save and invest. Why do you keep making the assumption that spending just has to increase just because your wages increase? Does money burn a hole in your pocket that much?
      A spending diet is hardly a starvation diet. You just need to focus on better things in life than shopping

    • Daniel February 5, 2014, 4:49 pm

      Heidi, I am impressed that your are still aguing your case on this site – credit for you for that. But your arguments are circular – no one dissagrees with what is…the question is how can you change it ? And do you even want to ?

      MMM offers a different way of approaching life’s expectations, what do you offer ? Or what did your article contribute ?

    • Cincy Stache February 6, 2014, 1:46 pm

      It looks like your HIGH amount is $36,200; NOT $66,200. So of that $100k, you’ve saved over $40k! You’re on the right track. ;) That looks to be FIRE in like 10 years!

    • Aussie Outlier February 6, 2014, 1:54 pm

      Dear Heidi.
      I live in one of the most expensive places on the planet (Australia) and do so quite luxuriously on $36k per year. So luxuriously in fact, that this blog has made me feel guilty about my spending on expensive meals out, European designer clothes and shoes, international holidays twice a year, and a top end cable TV package. So I have cut my budget back to $30k a year (luckily I have already eaten at all the best restaurants in town and have a shoe collection to rival SATC Carrie’s).
      I no longer work for a living, it took me 10 years to go from being in debt to being retired at 40. While others are mortgaging themselves to the hilt to buy their million dollar suburban homes (told you it was expensive here) I live in my fully paid for 2 bedroom townhouse (cheap at only half a mill!). While others buy or lease the latest new car, I drive the same car i purchased 13 years ago. My flat screen TV is over 5 years old and once repaired.
      My $30k is your US$27k so I can only imagine how easy it must be to live on that in America where housing is so much cheaper and everything is about half the price of what it is here (thanks to the Internet I know what stuff costs over there). (And before anyone goes on about healthcare costs I pay $180 a month for private health cover).
      I have a million stashed away, and plan to live on my $30k a year that is 75% funded by dividends while the rest is a drawdown of capital gains. Early retirement and living on $25k is not a poverty pipe dream, even when you are living in the world’s 15th most expensive city (New York is ranked #33 for comparison).

    • cwebb February 7, 2014, 12:51 pm


      I don’t understand why you think MMM is trying to tell us to live his life. I’ve consumed every post in the last several months and I’ve never felt like this. My spending habits are greater than MMM’s and probably will be for a long time, but I’ve gotten a lot out of this blog. Since reading it I have cut cable, changed cell phone plans, started eating out less, planning meals, hypermiling and other things that have saved me close to $400/month. None of these things have reduced my happiness one bit, and I’ve just scratched the surface. Maybe you’re interpreting his posts as being preachy or forceful because you have a lot of guilt about your own spending. That’s not meant to be a snarky comment.

      I think the opposite is true. Everytime we turn on the TV advertisers are telling us that we have to live the life THEY want us to live. They want us to drive 2 SUVs, eat at Chilis twice a week and have a TV and DVR in every room.

      • Amanda M. November 21, 2014, 4:05 pm

        I think one point that you made that I disagree with is “They will have a nicer house or apartment – not lavish, but nicer – as well as … likely car costs.” I don’t understand this issue, and it surrounds me daily. I’m an engineer and my co-workers and I make pretty good salaries. In the last year, I’ve seen at least 5 people buy nice cars – BMW, Audi, Subaru – and they love them. I’ve had my Ford for 7 years. Each of these people have complained about the high cost to maintain these cars. I realize that some parts will be more expensive because of “better engineering,” but $750 for scheduled maintenance after 1 year of ownership is ridiculous. It’s as if these new car owners don’t realize that the higher expenses don’t stop at the cost of insurance. Tires cost 3X my Ford standard tires, an oil change is over $100. People, they are charging you more because they think that you could afford the car, so you can afford higher costs.
        Stop spending more on things that don’t really deliver better value; sure you can speed up to 60 mph 5 seconds faster than me, but my crash ratings are as good as yours, which is all that matters to me.

  • Heidi Moore February 4, 2014, 1:08 pm

    Also, to be clear, I am not advocating a high-spending lifestyle. I myself save more than 50% of my salary regularly, and I don’t think it benefits anyone to buy things on credit, for instance. I have no debt. But that’s my personal belief, not something I expect everyone to adhere to.

    I just believe in compassion for people who live different lives than I do. For a family of four living in a city, I don’t begrudge them their lives or how they want to live it. That’s the point of my article. It’s great if you can get to 20% savings. But am I going to stare down a parent with two kids, and tell them they’re a failure for saving less than 30% for their own retirement when they have other goals like a home, college and car to save up for? I will not. Retirement is not everyone’s only savings goal, and I respect that.

    • Jamesqf February 4, 2014, 2:42 pm

      Heidi, you’re missing an important point. I (and I think most here) don’t begrudge that hypothetical family of four their lifestyle. I pity them. To me, it seems such a horrible way to live, even aside from the fact that they’re living in a city.

      • datdreamsofearlyretirement February 5, 2014, 8:37 am

        Agreed, Jamesqf. I sometimes lack the compassion/pity you both have, but I try to give folks the benefit of the doubt. I observe people making objectively poor financial decisions on a daily basis (I’m in banking). In order to maintain any compassion towards them, I have to attribute their poor decision making to ignorance….an ignorance perpetuated (in part) by a society that holds their hand and tells them…”it’s ok, its just too hard to get by these days,” instead of telling them that a better, free life is attainable (at some point) for most of them if they simply shift their thinking.

        Heidi, I’m not trying to be too hard on you, as I believe your compassion, as you put it, motivates your thinking…But when did we become a society that feels entitled to a certain standard of living….borrowing to finance “necessities” that used to be luxuries? I’m sure there are other parties who bare some portion of the responsibility, but the system is not so rigged against us in America that we can’t still succeed. We, as a society, are doing this to ourselves.

    • Kathleen February 4, 2014, 7:03 pm

      I think one definition of compassion is showing people there is a way out from under the burden of an ever increasing need for stuff and the bondage to the rat race that it creates. Compassion = more time with your kids

    • CRP February 5, 2014, 8:23 am

      Sorry to hear the treatment you have received around here, Ms. Heidi. I sort of see where you are coming from and get your point. I also believe you and the audience are talking past each other here.

      I am neither a retiree or financially independent myself, but having got married while both me and my wife were going through graduate school, I know a thing or two about living frugally. This whole debate reminds me of a conversation I had at the time with a good friend of mine. This guy said something along the lines of: “You cannot compare yourself to the average guy down the street. Even if you two make roughly the same (income), you have got skills, and connections and a support network of family/friends that won’t let you down if you make a costly mistake. Things would need to go really bad for you to experience what it means to live his life”.

      So, I think this argument about 25K income being poverty level or not, it misses the point completely. I know you are using it as an standard indicator, but the fact that it is a standard indicator for “the system” makes if prone to the same kind of blindness and biases the system have. Poverty is a very complex issue, which gets simplified as Low-income in order to make it tractable in economic terms, but then the baby get thrown out with the tube water.

      Poor people are not poor because they have low income. In part they are poor because in order o get their meager income they enter into huge time commitments (low paying jobs or financial “aid” with lots of regulatory strings attached, either of which may also come with long commutes to add insult to injury). So in this sense, at least the “working poor” can be better modeled as “time poor” (and thus not that different from high-earning, sleep-deprived, routinely-high-stress professionals).

      But this is not the whole story either. Lack of practical knowledge, lack of critical resources, emotional distress… there are multiple reasons why people make suboptimal decisions in their lives (either financially or in every other aspect too). I don’t want to extend to much, but I would leave an example from a blogger, Sharon Astyk, about how cooking on a budget may not be an option for those that would benefit the most out of it: http://scienceblogs.com/casaubonsbook/2013/11/18/why-i-wont-do-the-food-stamp-challenge/

      To summarize, I do not thing it is fair for you to receive all that criticism from people that claims “look, I live this lavish life on a shoestring. *everyone* can do this” (MMM included). On the other hand, I do not accept your premise that living frugal equals deprivation. The real problem is lack of knowledge, which is evenly distributed across income brackets.

      • Crazyworld February 5, 2014, 11:28 am

        Great perspective CRP

      • Emmers February 8, 2014, 6:12 pm

        YES. So much this. Thank you for writing, CRP. I think you’ve identified exactly why people keep talking past each other here.

    • Chuck February 5, 2014, 4:01 pm

      Heidi, I think there is a bigger issue with this entire pseudo-debate. You have mentioned that “Retirement is not everyone’s savings goal”. Ok, if that is not their true goal, then why sympathize with them?

      I am not going to console someone that never became a professional athlete when they never even tried to do so.

      The entire point of the Mustachian lifestyle is to offer not just a glimmer of hope, but to blow the walls completely off of the jail-cell that many middle class Americans have found themselves in. My goal is to retire at some point, but I am not a high earner by any means. MMM showed the glaringly obvious avenue that suddenly turned me into someone that earns 2x what I spend. There are 2 options to increase your Annual Profit: Earn More or Spend Less. You have far more control over one than the other.

  • scott Johnson February 4, 2014, 1:25 pm

    Heidi is right. Let’s be honest. I’d say for a family of 4 or more, it is impossible to live on 30K/yr. I think some of us go too extreme.

    • Lucas February 4, 2014, 1:54 pm

      Better not use the word impossible around here ;-) I am right at 30k with a family of 5, and there are many others who do better than I do.

      I will point out that most of you forget that principal payments on a house is savings, so that doesn’t count as an expense for most people (not saying renting isn’t a good idea though in many cases).

    • Mr, 1500 February 4, 2014, 2:03 pm

      Well, I think it depends. If you have no debt (and I mean no mortgage either) and live in a cheap area of the country, $2500/month is entirely doable. I acknowledge that there are an awful lot of variables at play here, but it is entirely possible. Here is my quick list: get by with 1 or 0 cars, live in a place with low property taxes, maintain your health, live in a small home, do things yourself, and live a frugal life.

      Certain things can throw the 30K number out the window like a chronic health condition. Again though, I think that the 30K goal is not crazy for most.

  • Al February 4, 2014, 1:28 pm

    MMM, couldn’t agree with you more on the article. But I’m REALLY interested in your DIY article on radiant heat!

    • Aaron February 6, 2014, 10:11 am

      Ditto! Ever since you mentioned it I’ve been super curious on your version of radiant heat also!

  • Rachel Erin February 4, 2014, 1:37 pm

    I can’t get over that you think his lifestyle is monastic. Our spending is very similar to his (except we have rent), and we live in one of the nicest, safest (and most expensive) little towns in the greater Boston area.

    I also don’t think you can accuse him of not reading your article carefully, when you clearly haven’t read his blog carefully at all.

    This is TL;DR, but I’m too irritated by Heidi’s responses to care.

    For example, you point out that middle-class families consider a car a necessity. Let’s grant that for the moment. Now, what kind of car? We recently moved back to the US and had an $10K budget for a car (let’s pause while the rest of MMM community punches me in the face). We bought a used Mazda5 for 7.5K, or 8K after fees and pick-up. We put around 2K of repairs into it over the summer. We now have a great car that should serve us for several years right at our budget. We can get to my parents and back on one tank of gas. We can seat our three kids plus a ton of luggage/groceries/another friend. We have space for kid #4.

    Or we could have put the 10K down on a new mini-van, which most US “middle-class” families consider essential when they have their second kid. The high ranked ones start around 25K, going up to 45K. That would have left us with a car payment of around $450 a month, higher insurance, and much higher gas costs. And let’s not even get started on the fact that most people choose to live in places where it’s nearly a necessity to have two cars.

    MMM looks at this and says, hmmmm Rachel, not bad. You probably could have done better, bought a manual (we tried!), found something cheaper, but at least you bought a reliable used car that is no bigger than you need, without taking out a loan.

    Your writing shows no recognition of the long term financial differences between these choices.

    If anyone tries to tell me our choice was “monastic” or “unrealistic” or “self-denying”, I have 95% of the world’s population to introduce you to, who would more accurately recognize that I have the luxury of owning my own car. To take me where I want, whenever I want. I don’t just mean poor, developing countries, try some of the highly educated, wealthy cities in Europe.

    His whole point is that what most people consider necessary or normal is neither of those things. The things are are truly necessary can usually be bought at a fraction of the price most people spend. He thinks people who write articles reinforcing bogus standards of living should be called out, and he has a blog where he can do it.

    This is the longest comment I’ve ever written on the internet. I’m moving on.

    • Crazyworld February 5, 2014, 11:36 am

      This is one that seems to not work for me. We both drive 2000 nissans, our commutes are short. Haven’t had car payments in more than a decade. Still, that does nothing for early retirement. Sure, I’d be much worse off if we bought fancy cars every three years. But eh, its not a giant windfall or anything so far. Plus now, repairs are being required more and more often and I am wondering if it is worthwhile to hold on to them.

    • Spectra February 7, 2014, 2:00 pm

      Just had to say I love your avatar picture. Go Chemistry

  • Elyse February 4, 2014, 1:45 pm


    Hi, I just wanted to comment on the 401k part.
    He was saying that $17,500 is the max per person. So if the $150,000 is from two workers that file taxes jointly, they each can contribute $17,500 to their own 401k accounts. So, that would be $35,000 that is tax deferred.


    I would also like to note that I am single, paying for a two bedroom apartment (huge luxury here that I pay a lot for), rent in an expensive city, buy organic expensive foods, and I have somewhat expensive hobbies. I make $46k a year post-tax. I still save $10k outside of maxing my 401k. I take vacations, I go into the city for nights out.

    I’m saving 21.8% of my take home before counting my retirement vehicles. And I have a fun, exciting life. I drive a lot, I camp, I go on vacations. I do a lot of fun things. But I also budget. And I save a lot less than the people on this blog.

    I understand a family on $46k take home wouldn’t be able to save $10k on my same budget, but you gave an example of $150k pretax. I already have a 2 bedroom place, so rent wouldn’t go up. Food would go up for a family. Going out and vacations would increase. School fees. Without a higher rent, that still wont hit above twice my current spending. I go on cruises on such, so no counting expensive vacations. I already go on those.

    At twice my current spending for a family, they can save $30,000 a year easy. That’s 30% of the income. To get down to 20% savings, they would have to spend 2 1/4 times more than I do. While paying the same rent that I do.

    But, they were saving in the 401k, so lets see what it takes to get to 20% overall in terms of takehome.

    $17,500 is already 17.5% savings. So, that would mean we would only need to scrape up 2.5% to get an over all savings of 20%. A tiny $2,500 a year. That is $212.50 a month on a $100k take home.

    I’m middle class right now. I’m saving 22% of my take home not including 401k EASILY. If someone saved only in the 401k by maxing it out, they’ll still have a decent retirement. Not fancy, but decent. When I get married, that entire other paycheck is going towards savings.

    I’m not super mustachian. I have some things that are hard for me to give up at present. But living a normal life is not expensive if people just budget! By knowing what money I have spent and what will be spent, I can save much easier. I may not be hitting the 50-75% ranges my co-readers are… but I am living a “normal” life much cheaper than a “normal” person all because I track my spending.

    Too many people I know don’t save because “what is the point”. I know my coworkers and I all make the same amount. I also know I save much more than them. But I go to the same movies. I have nice furniture. I drive a nice car. But I budget out the small things. I know how many movies I’ve seen. I know how many beers I ordered. I know how many songs I downloaded on iTunes. Because I track it, I can plan. Because I plan, I can save. Because I save, I will be able to retire earlier than my coworkers.

    The point is if you do it, it works.

  • test February 4, 2014, 1:46 pm

    You should have done the radiant heat article. Part of winning the war is ignoring the chaff.

  • Lucas February 4, 2014, 1:48 pm

    This article appear to have been written to promote President Obama’s agenda out of the state of the union address which highlighted two key points of the article.

    1) Save money in a “safe” investment – ie the My RA returning ~2% a year
    2) Raise the minimum wage because the system promotes companies not to pay enough

    So suggestion #1 is ridiculous as your money will just get eaten alive by inflation. And while it is obvious that the rich are using their power to amass more weather, i don’t think raising the minimum wage is really going to solve anything, and is more likely to backfire like the ACA has with regard to worker hours and full time jobs.

    I totally agree with Mr. MM on all of the amazing opportunities that are available to the middle and lower class, if you only reject the lie that stuff will buy you satisfaction in life. Teaching this and getting people to make changes in their lifestyle is not always easy though.

  • Zeb February 4, 2014, 1:51 pm

    While it is true that the middle and working classes can take control of their personal spending and saving habits, it is also true that they can take control of their collective economic interests. Sure, people can and should live cheaper and retire earlier. But the capitalist classes have been siphoning off more and more of the working class’s productivity over the years, making life harder for them. Articles that point that out and raise awareness of the problem and fervor for its solution are important. The fact is, it is harder to enjoy life and retirement because we’re getting screwed by the rich. But like MMM says, we can solve that problem better by achieving financial independence. So I agree with both perspectives here – both Ms. Moore an MMM point out important truths.

    • Jamesqf February 4, 2014, 10:20 pm

      Which is another reason we save, and invest our savings in the stock market: so we can be part of that ‘capitalist class’ :-

  • jlcollinsnh February 4, 2014, 1:57 pm

    Hi Heidi…

    It might be useful to review the numbers on a taxable income of 150K. Since you refer to this as “the family’s salary” let’s use the filing status Married Filing Jointly.

    $150,000 income
    -$12,200 Standard Deduction.*
    -$7800 for two exemptions**
    -$35,000 in 401k deductions***

    =$95,000 in AGI, Adjusted Gross Income.

    Assuming they have no other credits or deductions, this is also their taxable income and it puts them in the 25% tax bracket, rather than the 33% bracket suggested by saying “On a salary of $150K, your gross (after tax) pay is $100,000”

    $15,604 is the Federal Income Tax due on 95k using the 2013 IRS tax tables. That is a tax rate of 16.42%. Or using the 150k gross income which is more accurate, 10.4%.

    Many people get confused about this.

    Your Tax Bracket only applies the the the dollars you earn over the threshold. That threshold for the 25% bracket is $72,500. So, only the amount over $72,500 is taxed at 25%. Everything under $72,500 is taxed at progressively lower rates.

    Your Tax Rate the actual, calculated percentage due on the total income. It is, of course, less than the tax bracket percentage. As we see in our example 10.4% v 25%.

    If they live in a high tax state, the total taxes would be higher, but then they would likely itemize further reducing the federal burden.

    *Of course if they itemize this deduction could be greater. Typically taxpayers who carry a live in a high tax state, own a home with high real estate taxes and/or pay mortgage interest itemize.

    **If they have children under age 19 or under age 24 and a full-time student, each child also qualifies for another $3900.

    ***Based on both maxing out their 401k contributions to the full $17,500.

    So, after paying their $15,604 tax bill and saving 35k in their 401k plans, they have $99,396 to live on and after 23 years they will have a nest egg of 2.337 million dollars. Here’s how:

    If they start in 2014 with those 401k investments and they continue investing 35k in them each year:

    Plugging the numbers into one of the many calculators out there (I used this one: http://www.globalrph.com/invcomp.cgi)

    The account will have 2.337 million assuming an 8% return.

    Projecting a more modest 6% return it will take 26 years to reach 2.195 million.

    Of course, with 99k in after tax and after 401k money to spend each year, they could chose to spend more of it buying their financial freedom sooner. It all depends on what they chose to spend their money on.

    Hope this helps!

    • LMaS February 4, 2014, 2:40 pm

      JLCollinsNH! I like this calculation clarification, but what about SS and Medicare? Unless I’m missing something that 8% knockdown leaves this poor family with less than $90k to spend. BUT! that doesn’t account for generous 4-6% employee matching in the 401k’s…

      • jlcollinsnh February 4, 2014, 8:10 pm


        good point and catch, LMaS. Adding those would have been more complete.

      • Jeremy February 6, 2014, 12:47 pm

        One of my favorite parts about retirement is the taxes

        We are retired in our 30’s, live a ridiculously lavish lifestyle of world travel and fine dining, and pay $0 in taxes. The tax system is incredibly kind to retirees… no social security tax, no medicare tax, no state or federal income taxes… on up to $90k of dividend and long term capital gain income. While it is important to be factually accurate on the taxes paid while working, focusing on this does miss the bigger picture

        A side effect of paying no taxes is that we would qualify for nearly free health insurance under the ACA. We used to pay for insurance because it was cheap, but recently decided to self-insure while outside the US because healthcare is relatively inexpensive. I had an outpatient procedure done in Mexico with a surgeon for $60 cash, for example. The common complaint that health insurance and health care are expensive doesn’t have to be the case

        We spend an incredible $1000 a month +/- on food, but then again we eat out every single day, sometimes more than once. Yet our total cost of living is similar to the MMM household

        I think few people would compare our lifestyle to that of a monk, and it is for this reason that I am commenting. With a few simple changes in lifestyle, bringing savings rate up well above average, it is possible to “afford” what few others can. And based on tax laws, it’s Uncle Sam approved

    • Tim February 4, 2014, 7:26 pm

      I would have thought that a comment whose sole purpose was to point out math mistakes would be pretty careful about not making math mistakes.

      In addition to LMaS’s comment about Social Security and Medicare taxes, there are also state taxes (in my state, an income tax and an unemployment insurance tax).

      Also, neither JLCollins nor the author addressed health insurance, which for a family of 4 and a 150k salary is likely around $10k per year. Even a modest employer contribution on health insurance would likely be a few hundred dollars per month.

    • Derek Frei February 5, 2014, 3:33 pm

      Great comment jlcollinsnh. If you might allow me to wax nerdy for a moment, do the deductions you mention actually lower your AGI? I realize that they most definitely decrease your taxable income, but I thought that the AGI is usually a higher number than taxable income. (For example, AGI, not taxable income, is the number used to compute your long-term capital gains tax rate, an important fact to keep in mind for early retirees. But if I am wrong, please correct me!) I was under the impression that 401(k), traditional IRA, and HSA contributions were some of the few ways of decreasing your AGI, and that other deductions further decrease you taxable income, but not your AGI.

      • jlcollinsnh February 5, 2014, 4:12 pm

        Thanks Derek!

        Nope, you are exactly right.

        AGI is figured on page 1 of the 1040 and 401(k), traditional IRA, and HSA contributions are found in the “Adjusted Gross Income” lines 23-37. The calculated AGI then appears on line 37 and is carried over to line 38 at the top of page 2.

        From there Standard or Itemized deductions and Exemptions reduce it to Taxable Income (what I should have called that 95k)found on line 43. That in turn can be further adjusted by various credits and the like.

        Glad you liked it otherwise!

  • Kevin February 4, 2014, 2:08 pm

    I’ve never responded to an article but I just had to. Having been a reader of MMM for about a year I can say that I have EASILY cut my spending in half while improving my life in all regards. “Things” do not equal happiness and never will. If you look at Maslow’s hierachy of needs you will not find BMW’s or massive mcmansion’s…. there is probably a reason for that.Keep up the great work MMM. love the site.

  • GradMinus February 4, 2014, 2:10 pm

    “It’s not the CEOs and the pension plans that are giving you the shaft.”

    I feel that many in the middle class have not adequately considered the relationship between their (our) consumer spending habits and increasing CEO salaries. Rather than complain that executive salaries are unfair, it may be worth examining how our financial decisions affect CEO compensation, and make changes accordingly. For example if you are upset about the $20 million Jamie Dimon (CEO of Chase) received for 2013, have you considered your relationship with Chase? Do you have their credit cards? Are you carrying a balance and paying 15% interest? Do you have Chase checking? Are you paying fees? Is your money setting dormant in one of their low-interest savings accounts? Who’s giving who the shaft?

    The above example is similar to that of a sports fans complaining about the ridiculous salaries of the athletes on his favorite team – and doing so dressed in a team jersey and hat at a game in which he bought tickets, a $6 hot dog, and a $10 beer. Oh yeah, and he also pays for expanded cable to be sure not to miss a game at home.

    I’m suggesting a rather simplistic view, but it may be worth contemplation.

  • Steve February 4, 2014, 2:13 pm

    Hear, hear!

  • Heath February 4, 2014, 2:16 pm

    Bravo, good sir!!

    I very much enjoyed the tone of this MMM post, and laughed pretty hard several times. I also like how Heidi steps in and gives us more details on her argument. The (civilized!) back-and-forth is priceless, and allowed me to more see where they agree and disagree.

    While this comment doesn’t add much to the discussion, it DOES allow me to get emails on the replies :-)

  • Robbie February 4, 2014, 2:18 pm

    You nailed it! But I think your response should have been in “bold & all caps” not just “bold” :). Your sounding like a conservative like me ;). Been reading your blog for about a month and love it, but can’t figure you out. On some issues you sound like a conservative, but on others you sound like a liberal. Anyways keep up the good work, seems like there is something conservatives and liberals can agree on :)

    • Mr. Money Mustache February 4, 2014, 5:54 pm

      Now you’re getting it, Robbie. A thoughtful person should identify neither as “conservative” nor “liberal”, and instead should evaluate each issue on the basis of its own merits, after doing research as objectively as possible. Otherwise you’re just a clown to whatever politician pulls your heartstrings in the right way.

      And NEVER get your political news from the TV. Read economics books if you want to figure out if your current president is “liberal” or “conservative” in the fiscal sense. The answer you come up with will probably surprise you.

      • sig February 5, 2014, 10:51 am

        And this is exactly why I can’t tune in Fox News or MSNBC or the like. I’ve taken the liberty to rename these so-called “news” shows “newstainment”. The incessant name calling, self aggrandizing, overbearing commentaries are meant to polarize and drive page views.

        It’s impossible to stay sane in a swing-state during election campaigns. Just give me a matrix with ten questions answered by candidates and let my own answers correlate to one of them.

        Anyhow, it seems there is confusion in Ms. Moore’s article about what is truly a choice and what is seemingly necessary. While I preach this often in my own house, we are sadly reluctant to fully buy in. Here is to hoping for improvement in 2014.

        /side note: Love the content of your blog and forums, MMM, but the forum/comments are hard to consume. Discourse is a new forum software being developed by some sharp folks that created Stack Exchange.

        • jlcollinsnh February 5, 2014, 3:16 pm

          Hi sig…

          love your newly coined word “newstainment”

          Not sure how you are choosing to pronounce it, but for me this works:


      • RetiredAt63 February 5, 2014, 1:07 pm

        How true – for Canada, go online and read the platforms of all the federal parties – to my mind the Green Party is by far the most fiscally conservative. They take the word “conserve”, as in conserving all our resources, seriously. The Conservatives, on the other hand, have been spending the way they say Liberals spend. Now that the budget is way worse than Finance Minister Martin left it, they have finally started cutting back. But carefully, can’t have the PM without his own limo on a foreign visit. Cut Veterans Affairs Offices instead.
        For the record, I do not belong and have never belonged to any federal political party. I usually vote for whoever offends me least. And I do vote.

      • Leslie February 5, 2014, 2:19 pm

        I agree. I never understood why environmental conservation is considered “liberal”. It is conservative in the true sense of the word in that you don’t change something but leave it as it is. Also, a new acquaintance at a party asked me if I watched FOX or MSNBC. I said, neither because I don’t get cable in order to save money, which I guess is really conservative.

  • Edward February 4, 2014, 2:19 pm

    I take issue with Heidi’s comments, “$25,000 a year, the truth is that many cannot. ” “…most middle-class people cannot live like that”. They “cannot”?! What does that mean? Some can, but others can’t? I hear this often from the anti-Mustachian devil’s advocates. “I cannot give up my Starbucks.” “A wedding on less than $30,000? I can’t do that.” People are getting the word “won’t” (will not) mixed up with can’t (have no alternative in the universe but to do something).

    Before 2008, I bet a lot of people said they couldn’t live on less than $100K a year, but then finding themselves laid off and still walking around on their legs and breathing air into their lungs realized that they could actually be alive on less.

    “Cannot” is just a rubbish word for spoiled, entitled, and stubborn.

    Great article!!

    (And it’s weird–the “living like a monk” angle. Like monks have it really bad or something? Since cutting down expenses and waste I’m truly happier than I’ve ever been in my entire adult life. While eating a delicious homecooked dinner, I often think to myself, “Damn, I live like a bloody, heathen, gluttonous king!! Life is grander than ever!”)

  • Richard February 4, 2014, 2:21 pm

    You all may be a bit hard on Heidi. I think that she and MMM can be reconciled. Heidi deals with the way most people are. MMM is aspirational, but not everyone is going to buy into MMM’s values (although they should – but “should” is a loaded word). Give Heidi credit for focusing on real problems; give MMM credit for focusing on solutions (that not everyone can execute). There’s a third imperfect path here – a compromise between a consumer society and an ascetic one: we can’t all be as disciplined and smart as MMM, but we don’t have to waste our money, time and spirit on trying to keep up with the Joneses.

  • Troy February 4, 2014, 2:21 pm

    While it seems like everyone is piling on author Heidi, I’ll stick up for her. You would think with so many “I agree, great post” replies, some dissension would be welcome.

    It’s true. This blog and most of the readers are outliers. And all of you together add up to a whopping .001% of the US middleclass population. And that is one of the main points.

    Yes it is true that anyone can do it..retire early. It is also true that realistically, virtually no one actually does it, other than the less than 1%ers here. So what is more desirable. Speaking to the obscure minority about the possibility of FIRE, or speaking to the vast majority about what is realistic and likely which is no FIRE for a long time.

    And while it is very true that anyone could retire on under $25K, or have roomates, and bike everywhere and live frugally, only the 1% actually have that desire.

    I appreciate value. I try to find the right balance of value, frugality, and pleasure. But there is no way I would want to try living on $25K per year. I don’t even understand the badge of honor the boast conveys. Call it poverty level, or “the lower end of abundance” Call it whatever label you want.

    It’s still at the bottom end of where most people want to be including me. As Office Space so adeptly stated, “you don’t need a million dollars to do nothin.” What I want to do costs money.

  • Jon Maroni February 4, 2014, 2:31 pm

    I’m a little flabbergasted by this article (I clicked on the link to the Guardian article so I could read it). My wife and I only make about $50,000 per year before taxes and that $2.2 million dollar number for retirement is one we think we can definitely hit. If we were pulling in $100,000 a year we would get there in no time, probably retiring in our 40’s. I think something we have found interesting is that while wages have gone down over time (in terms of real dollars) our expectations for lifestyle have skyrocketed. The size of the average American home has doubled since 1950, because our expectations have gotten higher. It’s time for us to be honest about what we want and what we need. My wife and I did that and we moved into a much cheaper place over a year ago, saving thousands each year in the process. Temper your expectations and so many financial possibilities are opened up for you.

  • David C February 4, 2014, 2:48 pm

    Dude, if your lifestyle is “Monastic” ,then count me in and call me “Brother Dave”. I’m not off the treadmill yet, but I am encouraged by what you have accomplished.

    This has been one of my favorite posts from you. Thank you for shining a light on bullshit articles like this and guiding others to drink from the “Fountain of Mustachism”.

  • Bethany February 4, 2014, 2:48 pm

    My favorite part was when she said that saving 20% of the net would mean living like a monk (for a person making $150K!). I’ve learned, over the course of about 5 years, to save 40-45% of my net income (about half goes to retirement, the other half goes to various savings priorities); it was baby steps for me – start saving some, figure out how to cut more expenses, watch the magic happen when I paid down debt, etc. So I know that not everyone can save half of their paycheck or even 20% right now, if ever. But what’s wrong with telling people straight up, no question, cut your expenses and save as much as possible?

  • Debt BLAG February 4, 2014, 2:57 pm

    This line was absolutely perfect:

    “Your spending rate is not a percentage of your income. It’s whatever you want it to be, and your happiness grows right alongside the Badassity you develop every time you chop another thousand from what you thought was your “cost of living”.”

    You only benefit from increased income for as long as you’re working. You benefit from decreased spending forever :)

  • Chris February 4, 2014, 3:07 pm

    Just an aside – I am looking forward to the article on radiant heat!

  • Leslie February 4, 2014, 3:34 pm

    We are not living in a monastery by any means but were able to save over 30% of our income when we were in our 40s. Camping trips and volunteer projects for vacations were not seen as hardships. (Of course, when we were in our 20s we hardly had any income as minimum wage workers so I discount those years for saving much more than 6%.) The bigger savings started 20 years ago and once you are used to saving that much it seems strange to spend more. It is all about what you get used too. The secret is automatic deductions which you don’t really miss as well as contributing to employer sponsored 401Ks. If you employer doesn’t offer that you can set up a Roth IRA at a low cost brokerage house (Vanguard) or SEP IRA if self-employed.

  • Bohemian_Lady February 4, 2014, 3:43 pm

    That’s if you can get to the middle class! My partner and I got hit hard in ’09 (I was young and stupid and he is terrible with money), neither of us had jobs and we have been in a string of work trade situations just to get by. It’s only been in the last year that he got a stable job, we were both working odd jobs and I have since taken over the side work. Together we make about 14,000 a year, and have 9,000 squirreled away in savings. We’re just now recovering. I’m now 29 and he’s 34…

  • Adelina February 4, 2014, 4:00 pm

    So much of our society has it backwards. We should really be saying “it’s not how much I want, it’s how little I need that is the key to true happiness”. These guys say it so much better than I can: http://www.theminimalists.com/money/

  • CB February 4, 2014, 4:03 pm

    This is super selfish and short sighted…but sometimes I hope everyone else doesn’t snap out of it and get this stuff figured out. Because honestly, it just makes it so f-ing easy for the rest of us to rise above the pack.

  • Linda February 4, 2014, 4:11 pm

    I was quite upset by this statement:

    “Older workers, particularly women between the ages of 45-54, are currently leaving the workforce in the greatest numbers, partly because there is no work for them”

    Well OK then! Give me 10 years or so and then throw me into the bin because by then I’ll obviously be kid addled, unemployable and useless! Really? “There is no work for them”? This comes off as sexist and ageist…

    My over 45 colleagues are the wisest, most experienced, most dependable software developers you will ever find. Give me a 50 year old any day over a starting out worker with little work or people experience.

    Sure if a woman decides to become a SAHM and doesn’t keep up with the latest developments in her career, she might struggle to get back in at 45 when the kids are old enough to look after themselves. But that’s no reason to assume there’s no jobs for them. And I’d assume that person would have kept in touch with her “network” to ensure an easy transfer back into the workplace.

    But if a SAHM is doing her job, she’s probably used her home network to cut down on expenses (trading her skills with other moms to share lessons and babysitting), finding ways to save money on groceries and utilities, and picked up a few money-making skills on the side. Or maybe at best, she’s very busy looking after kids, but is saving on the day care and house work. She’s helped the family cut down costs and supporting working partner, who is bringing in the bacon. Family retires at 45 = no need to worry about “finding work”.

  • Gen Y Finance Journey February 4, 2014, 4:13 pm


    you keep claiming that everyone is confusing your views with those expressed in the study or the WSJ piece. The problem is, I’m not convinced you’ve actually read either of them.

    I could nitpick every little detail of your article and your comments on here, but this is in fact the only quote that matters. It’s from the study you continuously refer to, but perhaps you missed this page:

    “This simplified, almost-riskless rendition of the personal pension plan assumes that investors make no attempt to increase investment returns through risk taking and that they use longevity pooling to minimize the savings requirement. Although almost no one invests this way, the riskless strategy can be understood as a benchmark, or measuring stick, by which investors can gauge their progress in a riskier strategy… Therefore, we use a riskless rate as the investment assumption in the accumulation period, as well as in postretirement decumulation, because we need a clean reference point. We realize that, in practice, investors will choose other portfolios.”

    In the first example of a teacher who at her peak makes just under $80k, the study shows how she can risklessly accumulate enough money to retire at the standard retirement age of 65 (with Social Security) if she starts saving at 25 and never saves more than 32% of her salary in a given year.

    It then goes on to show that if she can manage a real return of 2%, she will never have to save more than 22.3% of her salary to retire at 65. And live to 105.

    This is the most ridiculously optimistic study and if your takeaway was that it set absurd retirement goals, I don’t see how you could have possibly actually read it. You yourself claim that saving 20% for retirement is perfectly reasonable, while also chiding at the study for advocating risk-free investments and the presumed 100-105 life expectancy. Yet if you ACTUALLY READ THE STUDY, you would see that (a) it doesn’t advocate risk-free investments, and shows how a normal middle class person can, while assuming a little risk and taking Social Security into account (which you completely ignore in your article, by the way), retire at 65 never having saved more than 22.3% of her salary; and (b) the 105 life expectancy is a worst (best?) case scenario. If you can save enough money to make it through until 105, surprise! you have enough money to make it through if you pass away at 80 too!

    So… tell me again what part of this study is absurd?

  • DM February 4, 2014, 4:23 pm

    Couldn’t resist commenting on this article from the US Guardian (more commonly known as the ‘Grauniad’ in its native UK because its spelling mistakes and typos are legendary !). The US version may well claim to be the voice of the middle-classes, but it gets short shrift on serious economic and financial topics in the UK, being generally most widely-read by those of a liberal and left-wing arts education or by administrative civil-servants living the high-life on the largesse of the taxpayer and with no concept of private enterprise or the requirement to make their own pension provisions. I’d usually say just ignore this type of article, although I must admit it’s entertaining to watch the author squirming under the pressure of MMM’s logic !

  • marie February 4, 2014, 4:33 pm

    While I do agree that consumption, esp. of the conspicuous variety, is a huge threat to financial security, I also think the article which you reference is “shocking” people by demonstrating the power of inflation.

    As an example/anecdote, one of my relatives retired about when I was born. He was middle-upper mgmt in a Fortune 100 company and at retirement (30+yrs experience) made $27K. My first job (21 years later) after college was $35K, in the same town in a very entry-level position. To buy the same house would have cost me 2+ years salary as down payment. It cost my relative <$10K (~6mos salary) down payment when he bought it.

    And for those mustachians that think they need only to save and live frugally/invest wisely/keep expectations grounded in reality to plan for retirement:(1) none of this will matter if when we retire, the market is in a slump or (2) we are forced into early retirement due to layoffs/illness/life. Thinking these scenarios won't happen to us in particular is a fallacy. It's an illusion of control.

    So while I do think that you are correct to say that $100K in 2014 dollars as retirement income seems excessive, I seriously doubt any of us will consider $100k an excessive income in 2045 or 2065 (which is what life expectancy suggests we plan for).

    What I wholeheartedly support is the need to live within one’s means, and take pleasure we have in the lifestyle that is accessible. Spending != happiness.

    • Mr. Money Mustache February 4, 2014, 5:07 pm

      Marie, you bring up some points that are worth reviewing for the benefit of other new students to the idea of early retirement:

      – inflation does not in general make things take more months of salary to pay for. In your particular town, it sounds like houses appreciated faster than inflation, and/or your relative earned more in inflation-adjusted dollars than you currently do. But many things have been going down relative to inflation, for many years: food, the cost of access to information, clothing, transportation via bike, high productivity tools like computers and table saws, and other manufactured items. The consumer price index applies mostly to typical consumers.

      – When I suggest taking early retirement on under $30k of income, I assume investments that will keep up with inflation and provide an ongoing lifestyle at this level indefinitely. A plan like this is barely affected by stock market fluctuations, which are very short-lived.

      – The earlier you prepare (building skills and spending less of your money NOW), the more immune you are to things like changes in a job market, health events, or anything else. It’s an illusion of control if you think a job will provide for you in a time of need, and thus you can safely go out and borrow against future income for current luxuries. But there is no illusion in the control you get from becoming financially independent.

      • marie February 4, 2014, 8:03 pm

        good points, on the whole. My comment was more to the fact that (a) in future dollars, $100K/year is entirely reasonable – one can save/invest current dollars and let time handle the needed growth (real or inflation), which effectively allows the savings challenge to be divided over many, many decades; (b) models that explain the majority of cases will most definitely be wrong sometimes

        fwiw, statistical predictors (and their associated confidence intervals) may explain a majority of cases, however they do not provide a measurement of an individual’s likelihood of being an outlier. That is, if a model measures X +/- Y (e.g. the amount of $$ to save in 2014 allowing retirement with a median quality of life) at a 95% c.i., it means that 95% of cases will need X +/- Y. But these models do not say whether an individual will be part of the 95% or part of the 5%. Which brings me to point (c): assuming that one will not be part of the dreaded 5% is a fallacy that comes from the illusion of control.

        • Elyse February 5, 2014, 2:51 pm

          @ Marie

          Remember, all numbers MMM gives is adjusted to be in current dollars. So when he says retiring on $100k is ridiculous, he is saying that $100k is 2014 money.

          It will obviously be more in whatever year it is you retire. His calculations are already taking all of that into account. So whenever you see him give a number, we are speaking in current dollars.

          Also, how would saving as much as we can now not the be perfect way to prepare if a job loss occurs? True, you may not be able to retire on the timescale you want, but it is still way better than the alternative.

          There are no certainties, so you go with the most reasoned answer. The most reasoned answer is to go with the highest chance of success. The highest chance of success is by saving and investing.


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