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.


  • Vic February 5, 2014, 3:50 pm

    According to the “wealthometer” a couple who accumulated $2.2M in savings would fall in the upper 4% of people in the US.

    See where you fall on the scale:


  • jestjack February 5, 2014, 5:21 pm

    MAN…Gotta tell ya would love to read that article about radiant heat….as I am about to go down this “crazy lane” on a rental property. Pulling the radiators…dumping the oil furnace (heating oil here has reached the insane $4,35/gallon level) and installing electric baseboard to compliment the effecient woodstove insert. look forward to reading your article…and learning something.
    As for the whole retirement thing …like you I think some writers are just trying to get us to “crap our pants”.. The average guy complains about the lousy hand he’s been dealt and not being able to get ahead…lack of choice…etc. Whereas the “the mustachian mind set” is that you always have a choice and embrace the challenge of finding one’s own way. ….

  • John February 5, 2014, 6:26 pm

    Wow! I’m late to this party but what a hoot! I especially got a kick out of the “owning an RV and parking it on a 75 MPH treadmill.” With the numbers presented here, you would think that would be the case. A sad part of our culture has become, “Let’s complain about how hard this middle class life is! Dammit anyway! We can’t get anywhere with these wages.” Would they rather go to South America and pick sugar for $.05 an hour? The people who sympathize with the article on the guardian need to shut the fuck up and realize that if they are reading that article, guess what else is out there on the web!? The aggregate of our human knowledge! All for (nearly) free.

  • John Repsher February 5, 2014, 6:34 pm

    Does anyone remember this old article from the New York Times? I think it appeared back in ’98, It’s a very inspiring piece:


  • George February 5, 2014, 7:47 pm

    Haha, wow I have not seen this style of writing since you wrote about the crap that came into your mailbox about the french toast sticks dunked into the high fructose corn syrup in: http://www.mrmoneymustache.com/2012/11/09/grim-comedy-from-mr-money-mustaches-junkmail/

    For some reason, these articles resonant more with me (and probably others too) compared to when you are calm and peaceful; please keep the aggressive, intense style;

    Of course, we have to remember that this a mainstream press article aimed at the general public at large; these types of articles are not meant to convey accurate, useful information at all whatsoever; instead these types of retirement articles are meant to bring comfort the average citizen; the underlying theme is that “it is not your fault you suck, it is external outside factors keeping you down”; the tone of the article is the general common man is a righteous but helpless victim who can do no wrong financially

    the truth I have found is that many people do not want to hear the truth that the reason they are poor is due to their own habits and their own actions; instead, they just want an excuse to blame it on someone else so they can get their conscious off the hook and kid themselves that they tried everything they could; that is the reasoning behind this article; please remember that many reporters and press write articles to make people temporarily feel better about themselves, the articles are not written to genuinely help people

  • PrasannaK February 5, 2014, 7:52 pm

    Hey, This is off-topic, but I’d love to see your thoughts on https://training.kalzumeus.com/newsletters/archive/do-not-end-the-week-with-nothing

    Apparently he’s also an MMM fan, and I thought a holistic approach of building financial capital, while building human, social, and reputational capital could works wonders for those of us looking at 5+ years of corporate wage-slavery.

    That’s kind of what Jacob of ERE says too – ‘hobbies’ that are productive, but I thought patio11’s presentation was much more inline with the MMM face-punch style…

  • WilliamR. February 5, 2014, 9:21 pm

    Thanks, I thoroughly enjoyed the rebuttal. Don’t get me wrong, I’ll find a great article on the Guardian from time to time, but I’m growing sick of reading the generic base BS on the major sites such as Forbes giving financial advice. I first started reading Learnvest as advised from a friend, but now, it seems to pump out the same boring, general, crap with no depth or realistic expectations.

    I completely agree about people’s reluctance (families, single, rich, poor, middle class, whatever) to live within their means. People spend way too much money on absolute trash. Though I’ll admit to falling victim to stupid unreasonable spending habits of my own.

    But storing away 20% into savings is such a minor figure. Is this author pulling these facts and opinions out of their ***? It’s remarkable to me.

    Well, once again thank you for the insightful article. I enjoy and look forward reading each new post.

  • Elisabeth February 6, 2014, 5:29 am

    This is hilarious, but I am still hoping we can get the DIY radiant heat essay :)

  • Susanna February 6, 2014, 11:44 am

    I appreciate your financial methodology and in fact share with you the approach of minimal consumption, however some of your leanings regarding ‘just get yourself out of the middle class’ seem to smack of white privilege. Have you read The Distress of the Privileged http://weeklysift.com/2012/09/10/the-distress-of-the-privileged/?

  • serious coinage February 6, 2014, 1:19 pm

    I really like your blog and ideas, in general, Mr. Money, but I’ve found your posts recently seem a bit dogmatic and one-sided. I agree, many Americans are whiny and entitled and need to take more responsibility for their financial lives. However, calling rising income inequality and the shrinking of the middle-class a “standard liberal argument” is misguided. It’s not a liberal or conservative argument, it is an economic fact. By any measure, income and wealth inequality have grown in the country in the last 50 years. There are profound structural changes occurring in the US and around the world. Yes, there are a minority of people, like you and I, who swim against the tide, but to put the entire blame on individuals is to ignore reality. It also shows a lack of empathy and a surprising ignorance of economics.

    Let’s look at the great depression in the US during the 1930s. Unemployment was 25% and poverty was widespread. Did a huge chunk of americans suddenly become lazy whiners who couldn’t live within their means? Or was there something else going on in the economy that was beyond their control?

    While it didn’t come across in your blog article, I think we would both agree that an individual’s financial success is determined by BOTH the economic environment and their personal character and attitudes.

    I respect and admire you and your blog, but I think you may be alienating some readers with absolutists articles like this one that fail to appreciate the nuances and economic reality of the US in 2014.

  • Refinerr February 6, 2014, 1:48 pm

    This was an epic and highly enjoyable debate. For those that feel Heidi was being attacked – don’t. There’s nothing wrong with conflict as long as it’s productive and I think this was.

    Heidi seems to be saying that we should be sympathetic towards non-Mustachians. I don’t know about you but when I started calling myself a Mustachian/saving towards financial independence I didn’t start punching people in the face when I heard they didn’t contribute to their 401k. In all seriousness this is a lame excuse for her article.

    Having your financial shit together does not mean you’re judging others or should make other feel badly about not having it together. I think a great majority of the FI blogs I read, including my own, start from a place of recognizing bad financial behavior in our own pasts. The difference is we changed it along the way by taking responsibility for our actions.

    Talking about being financially responsible should not be taken are as direct statements against those who aren’t. Sometimes we talk about things in black and white like looking at science as an argument against religion. This doesn’t have to be the case. Take everyone’s comments here for what they actually are: case studies in the possibility of making small changes to add up to a life changing difference.

  • Alexander February 6, 2014, 4:25 pm

    “Don’t be defeatist, Dear. It’s very middle class.”
    –Lady Violet (Downton Abbey)

  • CanuckExpat February 6, 2014, 4:43 pm

    Everyone (by which I mean Heidi Moore and MMM) seems to be beating up on the original study, “A Pension Promise to Oneself”. I just gave it a quick glance, (PDF here: http://www.cfapubs.org/doi/pdfplus/10.2469/faj.v69.n6.4) and it didn’t seem that bad at all. Perhaps the fault lies with the original WSJ article that summarized it in an overly simplified terms.

    Both Heidi and MMM seem to be criticizing this study for “not trusting the stock market”, but the article doesn’t say that at all. It offers the pure bond portfolio as a benchmark for “The rare investor who wants to shun all avoidable risks” and then states that “with a risky preretirement
    portfolio,” (read including stocks) “accumulating it may require less saving”.
    So there is nothing evil going on here. They are working under the model that the savings rate you need will depend on the market risk you are willing to take, they only choose the risk-free portfolio in their example “because because we need a clean reference point. We realize, that in practice, investors will choose other portfolios”

    Also, the outrageous examples that everyone is beating up on (needing 100k in retirement income) seem to come from the Wall Street Journal and not the original study: The first example I saw in the study was “a public high school teacher early in his career and earns $37,328 per year”. Taking expected salary increases into account, they assume the teacher wants to retire with an income of “$55,933.16 Of this amount, Social Security will provide $24,912, so he will have to generate the $31,021 difference from savings and investments”. To achieve this, they calculate that over 40 years, he will have to save “$666,111”. They suggest doing this from a “starting savings rate of 10%”, and then saving “a large portion—52%—of the real (inflation-adjusted) portion of his raises”. (still assuming zero percent real-return, with an aggressive portfolio, less of the raises would have to be saved). So I don’t see anything outrageous here. From an ER point of view, the savings rates are low, but this example still allows for quite a bit of lifestyle inflation (half the raises can be spent), so it’s not quite monastic as Heidi claims.

    Anyways.. read the study, it doesn’t seem bad at all.I like I said, I only skimmed it, so please correct me if I am wrong on anything. This just goes to show: Don’t read the news, especially not summaries of articles/studies when you can read the original sources yourself…

    • Gen Y Finance Journey February 10, 2014, 3:13 pm

      I already tried pointing this out a couple times and everyone seemed to ignore my comments. I have to admit I find it really disheartening that even on this blog where I assume most of the readers are highly intelligent, independent thinkers, nobody bothered to read the original study before commenting on it. I’m not even sure MMM read it himself. And I know for sure Heidi didn’t.

      • MDM February 26, 2014, 5:22 pm

        Kudos to CanuckExpat and particularly GenY for actually digesting the original article.

        Some other comments (and the Guardian article itself) took things out of context: somewhat like…let’s see…listening to nightly news soundbites instead of understanding politicians’ actual views before voting.

        Seems the Sexauer & Siegel article is saying “it’s only math” and makes many Mustachian points. One point is the need to start early: they use 25 as the starting age in the article. For the Guardian then write “Let’s say you are in your 40s…” as a basis to impugn the original article is disingenuous at best.

  • Sara February 6, 2014, 5:05 pm

    I get why you’re hating on the 50/30/20 budget, but it’s a good stepping stone. My initial version started with 50% expenses, 20% “wants”, and 30% savings. My savings rate has only gone up from there, and I make less than $40k/year. It’s a good way to start focusing on where to reduce expenses to up savings.

  • Catherine Jean Rose February 6, 2014, 9:05 pm

    MMM – great rebuttal – well written as usual. A quick story. I actually rode a bus today thanks to you. That’s right, public transportation. Why? Well, every year I attend this convention downtown. Every year I drive my mini-van 23 miles into the city, pay $15/day for parking (it’s a two day convention) and then drive my 22mpg van home w/out any thought about it whatsoever. Well, this year, I discovered MMM who teachers others to be environmentally and financially responsible and to push themselves out of their comfort zone. I’m almost 40 years old and have lived in this metro area for 15+ years…driven all over it as a matter of fact…and never thought to take the gosh-darn bus around. I was a little scared, thought I might read a schedule wrong and end up in Canada or something, but I figured it out. Ha. Quite exhilarating to stretch out of my comfort zone and try something new. Something I quite honestly (and irrationally) looked down upon. Can’t wait to do it all over again tomorrow. Liberating! Thanks, MMM, for changing my perspective and outlook on life.

    • Mr. Money Mustache February 6, 2014, 10:11 pm

      Right on! I love taking the bus – it is always my next choice after biking. Alas, the inter-city bus service is spotty here so the car still gets used, but when it does work out, I am happy to be a rider.

  • MoneyAhoy February 7, 2014, 5:15 am

    Spot on MMM,

    That article sounds like complete crap. And I agree 100% – this country is F-ed because people spend way more than they have and are scratching their heads wondering what went wrong!

  • Jess February 7, 2014, 9:36 am

    The biggest problem I have with the article is the inherent materialism. The author claims that life is not worth living if you don’t spend at least 20% of your income (of a $150k income). on life style expenses such as cable TV, DRV and dinning. Apparently anything less than that is a miserable monastic existence.

  • RealisticSpender February 7, 2014, 11:48 am

    I don’t normally comment but felt I needed to on this one. I can’t agree more with MMM and totally disagree with Heidi’s comment to this article.

    I often compare myself to a girl I work with. We are in very similar situations:
    -Work for the same company, hold similar positions, and I imagine we make similar salaries
    -We were both looking to buy a house at the same time (about 6 years ago)
    -Both are married and have kids
    -Live in the same area

    That’s where our similarities end and here’s where we are different:
    -I purchased a house 6 years ago while she decided to rent-to-own and has moved several times since then
    -She takes yearly vacations to Mexico with her family, while I make a choice not to vacation in resorts and take less costly vacations.
    -She spends quite a bit of money on new things (everything ranging from new workout clothes every month, her kids have the latest and greatest, etc.) I, on the other hand, make a choice not to buy tons of things.
    -She drives a big gas-guzzler vehicle, I do not.

    This isn’t everything where we are different but you get the picture.

    So where are we 6 years later?
    She’s in massive debt. I nearly have my home paid off. It’s not because I earn more it’s because I’m making a choice to pay extra on my mortgage instead of buying an extra set of work out clothes.

    I do not live by any means a frugal lifestyle but it is a CHOICE on what we are spending our money on. We are the ones responsible for the money we spend and how we spend it.

    I am so thankful I see this while I’m young and not in my 60s wondering how in the hell did I just work for 40 years straight, and have absolutely nothing to show for it.

    I do also have to say that some people might have financial hardships for very valid reasons: health issues, etc. but I can’t believe that is the majority.

    I should also add that our “jobs” have been in jeopardy for the past few years. I wouldn’t be surprised if later this year our positions were dissolved. Luckily, we’ve had plenty of notice (about 2 years) and guess what I’ve been doing for the past 2 years? Saving an emergency fund for when it happens. Guess what she’s been doing? Nothing. So when we’re both unemployed am I suppose to blame being unemployed for her financial situation? It is a CHOICE!

  • LH Gervais February 7, 2014, 1:07 pm

    RE: Living like a monk.
    My wife and I have had an income that has averaged $150K for the last 10 years, in a high COL area, and we have always managed to save 40% of our gross income. And we both drive nice, reliable, used cars (purchased in cash)… though, lately I have been taking the bus more. We also own our home (6 years to paying it off! 3 miles from my workplace and 5 from my wife’s!) and travel at least one month per year to warm places like Hawaii, Mexico, and Palm Springs. We only buy used clothes or deeply discounted sale clothes, and we prepare our meals at home. We have internet, but no cable. We have a more luxurious life (in terms of our stress level and our leisure activities) than anyone else we know, including those who earn much more than we do. And, in a few years, we will both be part-time or off work. I’m not living like a monk, I’m living according to basic principles of prudence and budgeting that were cultural norms in the 1930s-1950s. If this country returned to those norms in the area of decisions around consumption, saving, and investing most of the economic distress would go away in just a few years. We need a higher minimum wage to help those in truly desperate circumstances, but that won’t help the middle class. They need to decide that their grandparents were on to something and stop outsourcing every conceivable need (cooking/cleaning/repairs) to the highest bidder. Our cultural norms around spending, saving and consumption are unhealthy and unsustainable, and until we realize this middle-class people will continue to live needlessly desperate and wasteful lives while they seek to blame others.

    I’ll close with this quote:
    “If everyone accepted that doing something because other people are doing it is a stupid reason to do anything, we would have a much better world.” – Charlie Munger

    MMM, please keep up the good work.

  • greg February 8, 2014, 2:43 pm

    First, I know it’s not my place to demand or even request such things, but having the blog auto-generate links to each paragraph would be great! I would personally love to bookmark the one starting “The article goes on to rightfully make fun …” to keep in my back pocket to avoid having to repeat my own thoughts to others if they happen to ask.

    Second, from the article’s quote “less due to personal failure … largely because corporations are hoarding profits” …

    That is something so prevalent within my generally liberal circle that I really just keep my mouth shut about. But it’s also a very shrewd message if the aim is to win influence — absolve individuals from fault and even thought, and demonize The Other. It’s quite a simple–and unfortunately very effective–pattern.

  • Cody B February 10, 2014, 1:11 pm

    This blog has been uber-inspiring. My wife and I set a goal to pay off our anti-mustachian $25,000 car in a year and cut our food budget in half. Then I started learning the Mustachian ways a few days ago and realized just how much spending I was doing. I now hope to sell my car within two months and downgrade to a late 90s camry or accord. But I do have a problem…I’m underwater on it by about $8k. Any suggestions on how to proceed with an underwater car loan?

    • Mr. Money Mustache February 10, 2014, 3:09 pm

      I’d suggest just going into emergency mode to get the loan paid down to the point you can do an easy sale. Sales are even easier when you have the car paid off outright.

      Whoo. So many new people still getting sucked into this car financing pipeline. It needs to stop! Your vehicle should be something that you trade a few weeks of labor for. A month or two tops for lower income earners. This idea of giant loans that tie people down for years, just for a giant enclosed version of a bike – without pedals, is preposterous.

      • Cody Boorman February 11, 2014, 10:00 pm

        Thanks for the reply!!! Quick (probably dumb) question though. I did a quick search to try to find the answer myself, but what do you mean by easy sell? Do you just mean to undersell the car by $500-$1,000 and sell it quickly?

        And yes, I was definitely suckered in by my stupidity. I thought I was being smart by walking out of the dealership twice until I got the monthly payment I wanted, but didn’t realize they tweaked some things that made it even worse on me. This blog is showing me how to learn from my mistakes though, as opposed to trying to complain about them or rationalize them. Looking forward to retiring in 17 years after this pesky car loan and these lovely student loans are paid off!

  • Little House February 11, 2014, 7:49 am

    It’s a mainstream-based article for mainstream Americans. Perhaps the author, Heidi, is mainstream herself and the idea of moving off the grid (to use a similar phrase) is too scary and extreme for the middle class folks that read The Guardian.

  • Stan February 11, 2014, 12:04 pm

    If a person has a paid off house and no debt at retirement and enough money coming in to live month to month there is no reason for a multimillieon dollar buffer account. Frugal living should be the norm and not the exception. People retire owing more than they paid for their mortgage, have to have a 2nd vacation house, a new car a year and lavish parties and vacations just don’t get it. You can enjoy your retirement without having to impress anyone else.

  • Nick February 11, 2014, 7:09 pm

    The really scary part of this equation is the prejudice against the money conserver this kind of article breeds. It is always easier to sell the idea that somebody else has done something wrong, not that you are responsible for your own problems. That is my problem with most liberal ideology, no offence meant. It seems like it is always somebody else’s fault. Although, in actuality, my republican aquaintences are no different. They fundementally mistrust people who are content to live on less, drive less, spend less. I mean, shit, shouldn’t that be what “conservative” means, that we conserve? I really think if times get hard all the debt ridden, spend crazy American populace (right and left) will come to drain us dry. After all, we are the “other.” We saved a million bucks. Obviously we cheated somehow.

  • AD Casillas February 12, 2014, 4:24 pm

    Just find this website a few weeks ago, and first time commenting, and I would say it’s been delightful! Love your writing style, and I found some really helpful advice and found out that I’ve already doing a lot of the stuff MMM suggests (or enforce :P) .
    I’m from Mexico, I live in one of the most populated city of the world (Mexico City.. 20 million people), in a third world country…. so I really laughed when I read the article subject of this post and the comments of some people that say that they can’t live WELL in 20,000 usd per year (like you do) … my boyfriend and I combined earn around $20m USD per year, before tax… that’s a really nice income here, I know, (minimum wage is equivalent to $6 USD per day, $2160 per year aprox ), the government take away like 30% of that by the way… so net is much less, but still, it is so much less for similar work in the US (I’m a Chem Eng) and I will say that we are living pretty pretty good :) we save like 30% of our income (probably more soon because we also saved separately for our wedding, we already have enough money to pay everything and its like 2 months away),
    We don’t have credit card debt (well, like 200 usd max, and about to vanish ), we found a really nice and cheaper than average used apartment, small, but really close to both jobs…. It’s almost imposible to find a house, if you do are about $500m USD for 150 sq meters… apartments are really expensive also , average around $100m USD for a 2 bedroom, 1 bathroom, 50 sq meters apartment, and ours is around $60m, in a nice neighborhood (just a few blocks from the nicer neighborhood) and it is just fine for the 2 of us, and we think is more than enough space if we have a child.
    our mortgage payment is around $400 usd per month, much less than others because our 10% rate – the smallest we found (some people has 12% and so) and 20% down payment, a lot of people don’t pay anything in advance.
    Commute times are around 1-2 hrs per travel to work (usually more returning home), I do 30 min tops each (my boyfriend much less, we live like 10 blocks from his job) my boyfriend bike to work (like 5min), and I use the subway (10min) and walk (20min) …
    we recently sold our used car (a 2005 1.6 chevy 4 cylinders) , because we don’t really needed that much, we only used on weekends LOL to visit family that live far (inside the city)… now we take the subway and bus to do the same :)
    I don’t know how to bike myself, but i’m learning … maybe later I’ll bike too to my job.. our city really encourages people to bike instead of driving (there are like 4-5 million cars, and traffic jams are a really horrible thing here… that’s why the insane commute times, because distances aren’t that big), there are a really good automatic rental bike system (ecobici) in the most heavily offices areas, there are programs that give you points you change for movie tickets and stuff like that for using the ecobici and communal car rides (“aventones”) and they are changing roads to be more bike friendly, and close every sunday some avenues for bikers. the last sunday of each month it makes a 32 km circuit only for bikers.
    maybe we will buy a similar car later, if we a have a kid… and just for the really- really long distances, like visiting my parents that live in another city like 1000 km away :)
    we cook at home a lot (i love to cook) , we buy groceries in a small local supermarket really close, when wan to eat out, we eat in a lot of cheap places … you can find delicious restaurants here , inside our barrio of traditional food mainly, but also pizzas and stuff like that:) but they aren’t “cool” places (so a lot of people don’t like them)
    We’re not close to early retirement (I wish) but we live free of financial stress, and with the probability of being able to reach some day your master level :)
    Here you can find an obsession of living the american way…. you find the same Chili’s, Applebees, Ihops, and every chain of restaurants and fast food you have there in the States.. at more or less the same prices (I lived in Texas for a year)… but for less average income… these are the “cool” places
    I know people who earn the same or more than us and have enormouus debts, lives check by check or worse, because they want to have designer bags and clothes, and live the american way here… and use credit card for everything…
    I get calls almost every day for new credit cards… it seems that bank are giving them away like candy
    I know people who earn the minimum wage and have 42″ TV’s in their unfinished house… there a lot poverty here, but they still want their iphones, new fancy car and big TV’s and satellital TV because is a symbol of status. It doesn’t matter you don’t really own it, the bank or the store really did, but you “have” it, so you are “cool” and looks rich. And there companies and banks that help them with easy credits. and people later can’t pay them
    It’s insane :(
    I probably don’t look rich but I feel great :)
    But people like you MMM (and other you can find in the internet, some in Spanish :D that’s how I got here… a link from a blog in spanish) that try to change people’s minds and make them more conscious of this insanity, gives me hope that the world would change… for good :)

  • Steveo February 14, 2014, 11:17 am

    This year, thanks to Affordable Care Act, my annual expense for Healthcare Insurance (something I just can’t afford to leave out of the budget) is $15K!!! (Up from only $7500 last year.) This is for a family of 6 who have NO health issues. So much for living on a $25K budget eh?

    Anyone have any solutions to this? My annual income is around $100K so it is a significant % of the budget.

    BTW, I am a big fan of the MMM site and am very impressed with the volume of the comments and how helpful everyone is to this community. BRAVO MMM!

    • Mr. Money Mustache February 15, 2014, 11:25 pm

      Ouch, that must be a tough bill to pay. You might consider a higher deductible, a direct care physician, and/or moving to a state with cheaper insurance as some options. On the positive side, a high income like that still allows a lot of savings.

    • Emma July 21, 2015, 7:52 pm

      I am speaking as a Brit here and extrapolating from what I’ve read on the American healthcare system/buying insurance for other things here, so if the details are wrong here, please ignore!

      Have you done the maths and played about with the deductible? I understand that super high deductibles ($5k-$10k) are being done away with, but have a look at three points. The Maximum deductible you could have, the minimum and the midway point. One of these is going to be cheaper than the others.

      If having a £5000 deductible will get you down to $7.5k, then you will have enough to pay your deductible within a year, with change to spare. Similarly, if it only takes your bill down to $12.5k, it would take you two years of saving the money (that you would have ALREADY been throwing at the healthcare company) to make up your deductible – assuming of course that you don’t have the money in a bank account or other semi-liquid form. Then you just have savings from that point on, no?

      Frankly, it’s challenging to correlate medical expenses with insurance/for-profit groups as a Brit. I have been ill for well over a year, and my out-of-cost expenses have been about £150 for multiple pills, consultancies, tests. scans, nurse-administered injections, regular check-ups, referrals, counseling for life stuff, specific counseling for pain-related matters and a referral for help with pain medications/exercises/diet/side-effects/possible diagnosis etc etc. on the NHS. I also choose to have private health insurance for £15/ month and paid out-of-pocket for a consultancy in a private practice about £200 for a second opinion.

      But I also realise there is little that you, as an individual, can do for now in that regard.

  • Tom Street February 15, 2014, 9:29 pm

    While I was able to retire at a fairly young age and got out of the formal employment system as soon as I could, part of the reason was that I was able to live comfortably on a lot less than my peers felt was necessary to live their all important high level life style.

    The ability to retire is in part a choice about what is really important in life but a lot of people will never make near enough to retire under any set of assumptions.

    Yes, we must deal with the system we have, not the one we would like to have. But that does not change the fact that inequality is out of control in this country as the middle class is in the process of evaporating.

    It would have been more interesting and more useful if the article had laid out how one can live comfortably on $50,000 or less. To apply an arbitrary percentage to one’s current employed income is of course absurd.

  • David March 17, 2014, 2:21 pm

    I just saw this complaint on NBC news by a 63 year old baby boomer who was having trouble making ends meet:

    “Her $4,000 pension plus social security were not enough to cover her expenses.”

    Oh, gawd, I couldn’t stop laughing.

  • Michael July 14, 2014, 8:28 pm

    I agree with you 100% on the silliness of that article in regards to retiring. And all the other points you made (the percent of the income bit, the not understanding how good the US middle is is bit, etc).

    The only part I might slightly disagree with you, is the not casting blame on CEOs and the like. I *dont* think what the CEO makes has much bearing on when we retire. But I do tend to think corruption and excess at that level is something we should be concerned about, simply because its not healthy for a society. In terms of 1) these people as our role models and the economic leaders of the US feed into the mentality that is very anti-mustachian when it comes to how we view money and workings. Plus mmm. It creates a dangerous precedent in terms of what the leaders of this country care about and put their energy into (and I would put CEO’s as the elite of america with a great deal of political influence). Namely profit and bonuses as opposed to quality products and fairness.

    But none of that has anything directly to do with retirement I grant you!

  • Roughcut Apiaries January 9, 2015, 2:36 pm

    OK, I need to point out some incorrect information about newspapers and newspaper writing, as well as news business models that pop up everywhere, especially in the echo chamber of the blogosphere. 1) Newspapers are and have been for nearly 200 years in the U.S. charged with writing about THINGS THAT GO WRONG. Our job, and I say this as a reporter for 15 years, is NOT to write about things that are going right. When people follow laws and behave ethically, it’s NOT NEWS. 2) Believe me, no newspaper or online news service makes money by selling copies of the paper or downloads of stories or even reader subscriptions. Those fees do not even cover the paper used to print newspapers or the servers that put it online. Newspapers make money from advertisers, who look to see how many people are willing to pay for a publication before they buy an ad. So the notion that sensational stories or headlines make money or in any way contribute to a reporter’s salary is completely wrong. But back to the function of news writing — it is not to make a bad situation seem good to be “empowering.” We empower people by telling the public when things go wrong, when they change for the worse for a sector of the population, when corporations are doing well but the average person is not, when elected officials break laws or ethics rules and cozy up to monied interests. This empowers citizens to take action, to participate in their government, to make informed voting and buying decisions. Our mission is also to be a watchdog of the government and corporations, and to point out when wages have been flat since the 1970s and yet major corporations have so much cash they can’t find things to do with it, except maybe send it to foreign tax shelters. That is a form of worker exploitation that we have a duty to bring to light. So is the destruction of dignified retirement. And while I agree that every person – of sound mind and body – has to take responsibility for their own spending and live within or beneath their means to build wealth, that doesn’t make the destruction of the middle class and the further degradation of more vulnerable people in our society right, or good for democracy. Talk about complainypants — please stop jumping on the bandwagon of scapegoating “the media” as “sensationalists” and assuming you know what you’re talking about. That’s no better than saying commercials made me eat a whole pepperoni pizza.

  • Pablo March 19, 2015, 11:19 am

    Brilliant article! We need to wake up and realize that our lives and how we chose to live them is up to us, not the gov’t, not the “economy”, just you!! No excuses.

  • CJ Love April 21, 2016, 11:29 am

    Question: When you say to retire you need 25 times your spending invested, what is that exactly? Is that 25 times my annual spending or something else? I’m trying to figure out how much I need to retire. I live on $20,000 a year. Are you saying I need $500,000 to retire? Thanks! ~CJ

    • Mr. Money Mustache April 22, 2016, 7:58 am

      Hi CJ – welcome to the blog! You got it: $500k is enough to produce $20,000 a year in passive income. Keep reading from the list of all posts (linked from the main page) and you’ll find out how to amass such a sum of money.

      • CJ Love April 22, 2016, 10:14 am

        I was just returning to this page to tell you that I found my answer as I kept reading =)
        Thanks for all the information! I wish I’d found you along time ago!!


Leave a Reply

To keep things non-promotional, please use a real name or nickname
(not Blogger @ My Blog Name)

The most useful comments are those written with the goal of learning from or helping out other readers – after reading the whole article and all the earlier comments. Complaints and insults generally won’t make the cut here, but by all means write them on your own blog!


welcome new readers

Take a look around. If you think you are hardcore enough to handle Maximum Mustache, feel free to start at the first article and read your way up to the present using the links at the bottom of each article.

For more casual sampling, have a look at this complete list of all posts since the beginning of time or download the mobile app. Go ahead and click on any titles that intrigue you, and I hope to see you around here more often.

Love, Mr. Money Mustache

latest tweets