340 comments

Early Retirement is an Impossible Dream for Most

safety piratesWe’re about four years into this blog, and at this point I finally have to admit I am a complete and total fraud.

I mean sure, saved enough to retire in just nine years and have had a great time running around like a free man in this subsequent decade. But that was an isolated incident, which is a useless model for the average American. Above-average incomes, an appreciating market for stocks and houses, an unusually cooperative girlfriend-turned-wife, and of course plenty of White Person Privilege* came into the picture. It was really luck and fate that got us here, rather than individual effort and choices.

Just look at the bleak picture that the average person faces today in comparison. A dying economy**. Stagnant wages since the 1970s. Sky-high healthcare costs that just keep on rising. Long, congested commutes that could become unaffordable overnight on the whim of any Saudi oil minister. Poor school systems that necessitate private school if you want to live anywhere even close to affordable. A massive load of student loan debt from the ever-increasing cost of university tuition. The list goes on and on.

If you need proof to go with all those negative statements, just look at the results. Americans are facing a retirement income crisis, with far too little in the average senior’s 401(k) plan to maintain their current standard of living, even when combined with expected payouts from Social Security. With budgets already stretched razor-thin, it is impossible to expect the average person to cut any further – either before, or after retirement. Did you get the memo? 73 is the new retirement age. Sorry, but that’s the way it is, nothing you can do about it.

The great experiment of the personal 401(k) plan, foisted upon us by the elites since the late 1980s  is a proven failure. The government and our employers should be providing for our retirement through guaranteed lifetime pensions, rather than forcing us to navigate the murky waters of personal finance alone. I feel I have misled you these past four years, functioning only as a pernicious savings scold and encouraging pointless individual effort, when instead we could have focused our collective efforts on reforming our system.

 

Oh, and April Fools, of course. 

 

I sure hope you didn’t believe those are really the views of Mr. Money Mustache.

Although I did my best to make the awful shit in those preceding paragraphs sound pretty mainstream, it was extremely painful to type it into my computer. My keyboard started to shoot sparks out of its orifices and it is now oozing pus and blood onto my desk. Thoughts like those are so pointless, self-defeating, and just plain wrong and it amazes me that people keep cranking them out.

The problem is not with the intentions of my detractors. These are public-spirited people who are genuinely trying to improve the world. Our difference of opinion lies only in which method we use to get the job done.

The writers who harp about “America’s Retirement Crisis” are really attempting to get the politicians to do something about it: increasing funding to the Social security system and throwing a leash on the some of the nastier elements of the financial industry, who set people up with high-fee 401k plans and then sit back and skim their profits for life. These are fine goals, as long as any rules are implemented in an open and scientific manner, without resorting to rhetoric and fear in the political battle to get them implemented. But as you have noticed, I prefer a different approach.

See, the problem occurs when you rob an individual of the belief that he is in control of his own situation. When you spread the social meme that the the system is stacked against us, and that the system needs to change in order to improve our lives. Whether or not the accusations contain a degree of truth does not matter – you train a legion of powerless people who can’t take care of themselves, you also end up with lazy voters who are easily manipulated by whichever politician will stoop the lowest to appeal to their cheapest emotions.

Just look at the excuses that go around unchallenged these days. We whine that the national savings rate is only 5% and that the average person in their 60s has only about $100,000 saved. But then nobody mentions that only one percent of trips are made on bicycle in this country, and the majority of travel and commuting is done in single-occupant vehicles bought with dealer financing.

We talk about healthcare expenses as if they are imposed upon us, despite the fact that most of the nation’s health spending is done to treat self-imposed diseases related to the biggest four factors: exercise, diet, stress and sleep. US residents spend over $20 billion dollars on soft drinks – a beverage so evil and toxic due to its sugar concentration that any figure above zero is astounding to me. The shit shouldn’t even exist, and yet we guzzle it by the tankerload! You can’t prevent the truly random and unpreventable, but you can lower your expected lifetime cost drastically.

How could anyone possibly complain about having money problems, while simultaneously paying tens or hundreds of dollars per month to have passive video entertainment and commercials streamed into their house? People are simultaneously robbing themselves of money and the necessary mental quiet time that is a prerequisite to getting ahead – building skills, meeting people, getting better jobs or starting better businesses.

The average person spends over 95% of what they earn and burns most of it on necessities that aren’t really necessary. We borrow money and drown in the interest payments. We spend most of our energy working directly against our own best interests. Somebody needs to call bullshit on this practice, because we’re not going to fix it just by raising everybody’s allowance in their retirement years.

Fig.1: America's "Retirement Crisis", Illustrated with Pen and Marker

Fig.1: America’s “Retirement Crisis”, Illustrated with Pen and Marker

No matter how much cash you pump into a sick culture like our own, you won’t solve our money problems. Because the problem is not a shortage of money – it’s a shortage of spirit. A lack of desire and fire in our bellies to embrace hardship and challenge, to get the most out of ourselves, rather than designing a lifestyle that allows us to exert ourselves the least.

So that is why I take this particular stand. I know from first-hand experience, picked up on my own unremarkable journey from minimum wage to early retirement, that taking control of your own time and effort and spending is everything. The same critic that called me a “savings scold” above admits that he hasn’t even started his first investment account. While there is a place for public policy in every great society, it seems unwise for those who have not yet mastered a field of study themselves, to make nationwide prescriptions on that very same field.

So let’s go with a hybrid approach in solving our retirement issue. Policymakers can make sure that the Social Security program survives, because not everyone is going to become a Mustachian, and we’re wealthy enough as a society that there is no need to handle people the death sentence just for poor financial skills. And sure, we should also cut down the worst thieves in the game – there is no honor in a rich person assembling a team of lawyers and marketing gurus to get poor people to sign up for a loan on a 92″ television.

But when it comes to talking and writing about personal finance to each other, let’s drop the sympathy game. We are in control of things, not our government masters or “the elites***”. We get to decide when or if to start our families, and where to settle. Our education and vocation is another choice, as is who we spend time with and how hard we work. So let us never talk about these things as if they get handed down to us from the outside world, because people are all too prone to believe it.

But most importantly of all, let’s stop talking about expenses and spending as if they’re out of our control and as if more is better. Even retiring with zero assets and Social Security alone is enough for a plentiful lifestyle (typically over $1500 per person per month) if you embrace the idea rather than fearing it. Living on a low wage (even minimum wage) and saving a good portion of our income is equally possible. Since there’s a good chance you earn more than minimum wage, plus will have retirement savings greater than zero, there is really nothing to worry about. So, with our new freedom from worrying about stuff, let’s return to work and actually get something done.

* OK, Mrs. Money Mustache is 50% derived from the country of India, so she only had half as much White Privilege. But that’s still better than nothing. Plus there’s Indian Privilege to account for as well – is that higher or lower than White? We need to factor this in to the amount of sympathy we demand.

Sure, privilege does exist, and it might make it easier or harder to inherit a company or win a senate seat. But it can’t control your choice to ride a bike, buy less shit, or read library books in your spare time and I argue that frugality is the most powerful factor in earning your independence. After all, most of my equally-privileged engineering coworkers are still stuck in the office to this day.

** Isn’t it funny how these doomer articles keep repeating those words even when it’s not true? The recession ended in 2010 and the country returned to setting all-time records within that same year. We’ve been breaking new ones ever since, and the unemployment rate at 5.2% is almost as low as you can get.

*** Actually, it is possible that some of the whinier reporters might now consider Mr. Money Mustache one of “the elites”. At what level do you lose your respectable credibility as a fellow underdog and become an out-of-touch elite. Do you need $100 million, $1 billion, or is simply having your mortgage paid off enough to put you out of touch with the common man’s plight?  

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  • Skud April 1, 2015, 11:35 am

    “Instead of helping people with simple, reasonable advice, many personal finance advisers are excellent salesmen who profit by hawking unnecessary DVD sets, tote bags, wallets, and other such crap.”

    For the record I want a MMM tote, wallet, and fanny pack

    Reply
    • Mr. Frugal Toque April 1, 2015, 12:58 pm

      I would suggest going to your local Goodwill/thrift store, buying a tote bag for $4 and embroidering it with the MMM monogram yourself.
      That’s what we do around here.

      Reply
      • Meep er April 1, 2015, 9:32 pm

        LMAO…I just spit out my beer.

        But…what you say is true!

        Reply
      • Jane F April 7, 2015, 8:35 am

        We could do it November Project style with cardboard stencil and spray paint on already owned items.

        P.S. November Project is a pretty Badass fitness community with Mustachian leanings. http://november-project.com/

        Reply
  • Jim McG April 1, 2015, 11:38 am

    Nice one! You got me with your April Fool too, but these days, as I try to become more Moustachian, I lose track of time. I stopped working in December and went into a retirement phase. I refuse to believe it is now April! The time has flown past and I used to blame work for the disappearing hours. If anything, time is flying past even faster now, the days packed with I don’t know what other than choosing to do stuff I want to do. The hardest bit I’ve found is fighting the self-induced expectation that “they” think I should be working! Another strange thing – I watch less TV than I did, so I’ve missed a lot of their April Fools today too. Another great post though, keep them coming.

    Reply
  • Ted Hu April 1, 2015, 11:43 am

    I think the biggest critique I’ve of libertarian screeds like these is that it suffers from the fallacy of composition, whereby people conflate their microeconomic lives onto macroeconomic ones.

    If everyone, and I mean everyone, indeed achieved a 70% savings rate, the economy would come to a standstill. Savings is the antithesis to economic activity, and what is prudent at the micro does not sum up to success at the macro.

    I am not suggesting that savings is not a worthy goal, and am one of those who is happy to see the savings rate finally rise from 3 to 5.8% in a short timeframe.

    I am a bit wary of extremes whereby people over-save or -spend. MMM rely on market returns that rely on economic activity fueled by 70% consumer spending.

    Any deterioration at the margin over time whereby consumers step down and ultra-rich continue to hoard result in deflation, of which Japan’s 30 year deflationary history is a clear demonstration of what happens when a society that saves too much and spends too little.

    Putting on my economist hat, I think it’s fair to say MMM is not a macroeconomist.

    Reply
    • Mr. Money Mustache April 1, 2015, 11:57 am

      Ted, these recommendations I make are scaled based on the current size of the blog’s audience. At still under 1% of the US population, I feel plenty safe with the 70% savings rate for now.

      As things grow if we end up with a surplus of frugality I’ll make adjustments – never fear.

      Reply
      • Ted Hu April 1, 2015, 12:14 pm

        touché.

        Tho I will say that once you hit 1% of the US population, you will have reached an inflection point having set a viral meme by which people are saving their way to their retirement stagnation.

        30 years ago, nobody in Japan thought much of deflation. It is one of the most insidious economic ills known, technocratically speaking. Far harder to eradicate than inflation; zero percent bound interest basement makes it so.

        If all your followers past, present, future follow your advice to the tee, compounded over time, they will find themselves reliving another Japan.
        http://www.theguardian.com/world/2015/jan/11/japan-deflation-consumers-falling-prices-gyudon

        And this is despite Japan hyper inflating their monetary and fiscal base like madmen. http://www.bbc.com/news/business-32081871

        So be careful what you wish for.

        Reply
        • LennStar April 2, 2015, 9:37 am

          And Japan is still one of the most wealthiest nation.

          Reply
        • Diogo April 2, 2015, 12:31 pm

          Don’t worry, Mr. Keynesian macroeconomist. Even if 80% of the US population did 70% saving, and the economy “crashed” because of this, the only one suffering from this “tragedy” would be the government that would see their tax revenue shrink. But no problem, because with 80% of the population living with such badass attitude, very few people would need social security anyway, so government becomes a less necessary institution, with the benefit of less warfare and destruction in the middle-east.

          The great Macroeconomic lie of the century is that “prosperity = GDP growth”. Every macroeconomist out there, austrian or keynesian, is shouting at “economic stagnation” in the developed world, but how could it be different if population is not growing at rate it used to be and if all roads, power plants, factories, water tratment facilities are already built? Growth in the “developed world” becomes a pointless target.

          Now Imagine if all the infrastructrue is built, and food and clean water are produced by backyard automatic facilities (anyone remembers the MMM post on the zero-to-hero blueprint?). GDP growth in this scenario can’t be much higher than 0%, but the population would be enjoying a great prosperity.

          The day macroeconomics drop the “grow more to consume more and print more money” motto, it may become an useful science field again.

          Reply
          • Ted Hu April 6, 2015, 11:16 pm

            Macroeconomics and development economics is about smart growth. These aren’t the finance heads on CNBC selling their sole promoting growth for its own sake.

            Smart sustainable growth is possible. One that removes externalities like pollution and reduces inputs of precious resources and increases inputs of free resources like cheap distributed solar power and storage.

            That is the next generation of growth. Green. Conservative. Where less is more. Investing in technology and infrastructure that will yield more for way less, all sourced from the sun.

            All the roads, power plants, water treatment plants have not been built. In China or the USA. Smart roads. Solar utility power plants. Water reclamation plant add ons. The next gen of infrastructure needs to get built.

            California still uses the same level of water and oil it did 3 decades ago. It will go even further because the times here and now require it so. There is so much more that needs to get upgraded.

            None of this means consumerism rules mindset is any good. It just means frugality without spending the requisite time making sure your investment dollars are working harder for you in tech sectors, in the right areas, yielding green returns, is a huge opportunity cost personally and for society at large.

            Reply
        • Elena April 3, 2015, 7:32 am

          It’s even worse than that. MMM often prides himself on following scientific advice and data. And who produces that advice, collects the data, and/or the knowledge that is then circulated in articles, books, and (via 3rd- or 4th-hand) on the internet? It’s mostly people with PhDs who took an average of 4 extra years out of the job market in their 20s in order to do the research which most of society needs, one way or another, for curing cancer or ‘simply’ producing new ideas.

          We didn’t start earning anything like average salaries (ca. 24k in my case) until we were in our early 30s — the age at which MMM retired. We did it for the sheer love of it, and the believe that it was something worth doing. But it does grate to see others taking full advantage of the knowledge produced somewhat selflessly and without thought of profit, and THEN have the same people deride those who didn’t have the balls — or badassity — to be equally selfish and self-centred in their life-choices.

          Who is going to support the writers whose books we’re supposed to read only from libraries or second-hand? Sure we could all start writing blogs — and aren’t we all? — but if you think reading a blog and reading a book amount to the same experience and depth of thought, well, I’m sorry for you.

          I love the positivity of the message on this blog, and I love the writing and wit. But the smugness and poor-bashing in its comments and forum are repelling people like me — neither consumer-sucka nor even coming close to FI. I’m writing this comment because I hope that it will motivate MMM to take on board the critique of those who share some of his concerns against consumerism, but not the wild-west individualism and the ‘fuck the rest of you’ attitude that sometimes transpires.

          There are glaring wholes in MMM’s philosophy and approach when it comes to society at large and any kind of community. I’m disappointed to see him avoiding the issues and calling complainy-pants on anyone like Ted here making arguments based on his in-depth knowledge of the economy. Unless of course MMM and Mustachians all over the world wanted to start devolving some of their indisputably hard-earned and entirely deserved stashes that owe absolutely nothing to anything that anyone else ever worked to produce or invent to investment in research and knowledge-production? Just a thought.

          Apologies for the rant. I discovered this blog about a year ago, loved its message, and everything about it; now I’m feeling increasingly alienated from it, and the smugness of its readership. Have heart, people — well done for saving lots of ‘your’ money, but that doesn’t make you better, in human terms, than those who have not.

          Reply
          • Jane F April 9, 2015, 8:42 am

            “I discovered this blog about a year ago, loved its message,” “Have heart, people — well done for saving lots of ‘your’ money, but that doesn’t make you better, in human terms, than those who have not.”

            Thank you, Elena.

            Reply
      • Ted Hu April 1, 2015, 1:11 pm

        BERNANKE: People are saving way too much and it’s holding back the economy http://www.businessinsider.com/ben-bernanke-responds-to-larry-summers-2015-4

        Reply
      • ickabug April 1, 2015, 5:43 pm

        I’m fairly sure there is as much a chance of seeing a “surplus of frugality” as there is seeing a “surplus of common sense.”

        Reply
      • win April 2, 2015, 10:24 am

        What is the Chinese savings rate? I’ve heard numbers from 20 to 50%. They are moving from a third world nation to a first world nation.

        http://en.people.cn/90778/8040481.html

        Reply
      • Happyback April 2, 2015, 8:25 pm

        Laughing sooooooo hard.
        So diplomatically stated!
        :D

        Reply
    • Yarrow Morgan April 1, 2015, 1:29 pm

      The economy would not come to a standstill. The ability of new business’s to invest in totally new ideas or
      inventions would change the world more quickly into a better place for us all. Productive savings invested wisely are what can change the world.

      Reply
      • Ted Hu April 1, 2015, 2:05 pm

        The problem today is too much savings that is unproductive because there is insufficient demand. Saving and investing does not drive long-run economic growth. It is a balance of demand with savings and investment that does.

        Nor are markets efficient. Why else do you have governments and banks not borrowing or lending more when interest rates are effectively zero? Nobody is taking free money essentially.

        Precisely because of the fallacy of composition whereby people see their narrow slice of the world and extrapolate it widely and inaccurately to the world at large do we have these huge bubble and bust cycles where demand of goods and supply of capital are constantly mismatched.

        My take is simpler and more practical. A 30-40% savings rate is more than enough. Spend using the 80/20 rule maximizing bang for buck and stop focusing on the small stuff that yield diminishing returns.

        Eg I’m not going to sell my car and buy a bike to transport my family in LA. I’ll buy an eco-friendly vehicle and minimize unnecessary trips. I’ll buy capital goods that save me time for decades like an efficient large load washer and dryer. I’ll buy a Mac vs PC. I will maximize ROI not pinch pennies as a hobby.

        Reply
      • Ted Hu April 1, 2015, 11:23 pm

        There is a global savings glut http://www.businessinsider.com/ben-bernanke-responds-to-larry-summers-2015-4. That is why interest rates are effectively zero worldwide, which is abnormal. Excess supply of investment capital chasing too few goods in demand is what’s driving down pricing. It really isn’t rocket science nor is it hard to prove deflationary causality.

        There’s nothing inherently “bad” about consumption per se, at least no more bad than savings. They are two sides of the same coin.

        The very notion of ‘return on investment’ is defined by two sides of the equation, one by demand turning over supply of invested capital on the other side, which define the ratio of money returned by consumers purchase orders in excess of aggregate and marginal capital invested.

        People too often conflate investment as an end to itself thinking that is the sum of economic activity. Supply side is just one part of the equation. The other side is the demand of that supply of capital and the goods and services it yields, without which invested capital would yield a crap ROI.

        So long as we agree then that invested capital demands a >0% ROI which require sufficient consumer demand, then it’s fair to say over savings/investing is just as bad as overconsumption. And deflation is far worse than inflation.

        We are in a capital glutted deflationary world. More savings lent or capital invested to businesses to reinvest into capital goods without sufficient demand to yield excess ROI is the last thing in the world that will reinflate and get the economy out of a deflationary cycle even America now faces with core inflation barely hovering above 1.2%

        Reply
        • Jason G April 5, 2015, 4:40 pm

          Leave it to economists to talk in extremes. There will always be a middle class, lower class, and upper class. The lower class which is at least a third of our population(and growing) will never on average save more than 25% of their income due to economic pressures.

          The middle and upper classes will continue to innovate and as a result spend money. Also a large percentage of this world is underdeveloped, and these people will continue to strive towards a middle class economy, and this will provide markets for the fortune 500 companies for many years to come.

          While the middle class has the ability to save upwards to 60% it will never happen at a macro level. People simply have different values. Not everyone has the ability or interest to plan for their future. I would be surprised if 33 % of people in this country have the strength or economic circumstances to save at MMM levels.

          Reply
        • karen April 7, 2015, 8:53 pm

          “There’s nothing inherently “bad” about consumption per se”

          Um, have you heard about climate change? May want to google that.

          Reply
    • Ben April 1, 2015, 4:59 pm

      Slightly ridiculous assertion, Ted, that the economy “couldn’t handle” higher savings rates among its citizens. Savings don’t just sit under a mattress – they’re invested in companies and bank accounts and (hopefully) productive uses that benefit society, yielding more benefit than the initial cost. Any economy heavily dependent on consumption for growth is backwards already and needs readjustment. Just because an economy is *currently* fueled by 70% consumer spending doesn’t mean that it *must* be so moving forward. This type of thinking is precisely what this post rails against: throwing hands up as a victim of the “system.”

      (Also: the link between Japan’s deflation and the savings rate of the citizenry is hardly causal. Many more factors and variables at work there.)

      Reply
    • Lucas April 1, 2015, 7:05 pm

      Savings != Investing (savings is not equal to investing). Investing is the Mustachian way.

      Investing means driving the economy from the backroom offices, labs, factories with more efficient processes and products and paying higher salaries to those who do such work.

      That 70% consumer-driven economy means instead we drive it from the showroom/storefront with more ridiculous, unnecessary, often low-quality products. Then there is mindless entertainment bundled with “necessities”. For example, $100 cable TV bill bundled with internet or $30 in movie tickets + ride to theater in gas-guzzling SUV or $50 dinner with family. We can do with less consumerism and even (“GASP!”) be happier.

      Reply
    • Scott P. April 3, 2015, 5:45 am

      I totally agree if EVERYONE in the world followed the advice of this website, it would be a “fallacy of composition” – if EVERYONE saved half their money overnight, companies would have half as much revenue overall so there would be layoffs, economic downturn, etc. But saying that “therefore, it makes it bad advice”, (like the savings scold article) is the real fallacy.

      There is plenty of financial advice that would have problems if EVERYONE in the world did it. But that doesn’t make it bad advice because that is never going to happen. Becoming a doctor is great advice (if you can do it) because it is noble, it can pay very well, etc. But if EVERYONE became a doctor, no one would be around to grow the food, or build the houses, or defend the country, etc. We’d have en economic downturn because the economy can only support a market for a small percentage of doctors. All the rest would be unemployed. In fact, our country would probably be taken over by Mexico, with the masses of hungry unemployed homeless wanna-be doctors easily being picked off by gun-toting banditos. Bad advice! Hey – no one become doctors, or we’re doomed!

      Same thing goes for where you live. If you want a low cost of living, consider Tennessee. But if EVERYONE went there, it would be like New York city, supply and demand would take over and it would cost a fortune just to get an apartment… Hey everyone, stay out of Tennessee! Don’t even think of moving there! It won’t work!

      You want to save money on a car? A used Toyota Corolla is an affordable car… But if everyone went out tomorrow and bought one, there wouldn’t be enough on the dealer lots to keep up, demand would skyrocket, and the price would jump up skyhigh. People would be selling theirs on Ebay to the highest bidder, and alas the lowly Corolla would no longer be affordable.

      Just because it would cause problems if the limit of X goes to infinity, doesn’t mean it is bad advice.

      Reply
      • Ted Hu April 6, 2015, 11:07 pm

        A simple way to apply economics is to build simple models and go from there. The difference is once the point is made, one can then proceed to use such first principles and flesh out the details as big data comes in.

        The fallacy of composition point stands however.

        While most lower- and middle-class people don’t save, since 0.01% control ⅔ of wealth in this country and garnered $9 out of every $10 of wealth created, it really doesn’t matter.

        You see, all in all, income inequality has ensured the rich have a shitload of money, and have bribed politicians to give them loopholes and breaks so they don’t pay taxes on it.

        So we are left with a global oversupply – a glut – of capital and goods exacerbating deflation.

        And what I am saying is if consumers decide to go that route and save like the stupid rich do, it will be the straw that breaks the camel’s back.

        The rich need to get taxed more. I should not be paying an effective 11% tax rate. Mitt Romney should be be able to pay just 9% on his; he paid 13% skipping loopholes so he would not look like a douchebag. He had hundred million dollar retirement accounts.

        So the thesis and reality is, the macroeconomy is already suffering from over savings and investing. There is simply too much supply and not enough demand.

        So that brings me back to the question of whether the 70% savings rate really is worth it. I don’t think so. It’s simply not pareto optimal at the marginal. The marginal propensity to consume should not burn 100% of ones wealth and cash flow.

        But there is a diminishing return with opportunity costs to boot when one takes frugality to extreme. The other side of the equation is to make money work harder for you by improving your investment strategy and getting a better handle and mastery of economics.

        The time spent to master that so as to avoid naively placing your retirement funds into S&P throughout the 2000s would have been worth its weight in gold. I got out in the middle of the decade and it returned me a fortune. Time I spent reading and thinking, as Warren Buffet himself recommends doing.

        Otherwise you are frugal for naught.

        Reply
        • DanR April 14, 2015, 4:58 pm

          Ted-

          I am in a situation between that of a normal consumer and one who follows MMM principles. I have found that as I have become more frugal and save more, I feel more in control of my future and am enriching the 0.01% less. As I move in the MMM direction, I also feel less at the mercy of economic shifts and bosses, more self-confident. The MMM approach and others like it are empowering for the remaining 99.99% so that they can take back their own power in the economy.

          Dan

          Reply
        • Joe M October 28, 2015, 11:51 pm

          Ted, Keep in mind we import a lot of “stuff” so a large reduction in consumption will not have as big an impact on our US economy because we are mostly a service/knowledge based economy. Our specialty is high end manufacturing while low end is mostly imported. Our main problem is mis directed education; too many college degrees and not enough skilled tradespeople. My son is in community college to be a CNC Machinist and has a tough time explaining to others he will do well without a 4 year degree,and will do better than many with a 4 year degree. We could be a much more productive economy without over consumption if human capital was more evenly distributed, and savings rate was much higher.

          Reply
  • Abbey April 1, 2015, 11:49 am

    Mr. MM – Have you ever thought about advocating for financial education early in life, for example teaching MM principles in K-12 schools, every grade? A lot of the feelings of hopelessness about never being able to be financially independent has to do with foolish choices when people are young, like choosing a high-status, expensive university, making foolish purchases, and not knowing about hedonic adaptation. Then they stumble across ideas like yours and they’re overwhelmed with despair because the hole they’ve dug is too deep. Sure, they can make a start, and maybe get a little freedom late in life, but some are doomed forever.

    Reply
    • Susan April 1, 2015, 1:05 pm

      I teach a three-part project in my college algebra classes called “Get Rich with Algebra.” We read MMM blog posts and do worksheets using compounding interest and annuities. The students participate in online discussions where they choose a monthly expense of their own and use MMM’s 173 multiplier to see what it would be worth in 10 years if they invested the money instead. Today, we learned about the annuity formula, and proved MMM’s 173 multiplier works as reliable estimate. Now my students have to find their own multiplier for a 25-year investment (it’s 810 btw). It is amazing to watch their attitudes change over the semester. It is difficult to get a 19-year old thinking about retirement, but several of them have told me that they are spending less and setting up savings accounts. If Baytown TX is overwhelmed with the financially independent within the next few years, we’ll know it worked!

      Reply
      • Bergal April 1, 2015, 6:24 pm

        Wow, Susan! That is terrific. I wish you’d been teaching when I was still in school. I’ve got my fingers crossed for your students!

        Reply
      • Paul April 11, 2015, 4:39 pm

        ^ This.

        Susan, keep up the great work. The nonsense they were teaching in my daughter’s high school personal finance class really got my MMM ire up.

        In fact I’m digging up her notes so that I can write a personal finance “text” of my own!

        Reply
    • Ed April 5, 2015, 11:32 am

      I think this is a really good point. I’m 38 and luckily a self-learner, but it took me this long to find this type of information (education) and begin correcting my bad lifestyle/financial habits. Being taught this information earlier in life would have been a boon.

      Reply
    • RandomDoctor April 5, 2015, 4:39 pm

      There is no doubt in my mind that education is the main driver of change (this blog being one form of education). I am married to one of the very best primary school maths educators in the country and firmly believe that we have to teach kids correctly when they are young if we are to set them on the right track.

      It is horrifying to hear the stories of kids my wife works with whose teachers and parents believe are doing well in maths, but have really only learned to repeat a series of steps when given a specific problem. They don’t really understand the underlying principles and therefore quickly forget how solve the problem and also cannot adapt to any new problems.

      My wife shows teachers how to efficiently identify and correct the kids’ misconceptions, rapidly catching them up to where they need to be. When I see figures showing that she typically improves student performance by two standard deviations (yes, that’s huge), and that she has that effect on multiple thousands of children every year who will now have enough mathematical literacy to understand real-world maths (especially financial decisions) it justifies our decision for me to work very part-time in medicine show that she can do her work. She has a bigger positive influence on the world than I do. To me, that’s the element of Mustachianism that I find most appealing – seeing your contribution to the world as something unrelated to your earning rate.

      We have published a number of resource and guide books over the years. It may be time to look at producing one specifically for financial literacy.

      Reply
  • ALSKA April 1, 2015, 11:54 am

    I love the optimism and sense of self advocacy that is promoted here. I hate the oversimplification and disregard of historical and structural inequalities, backed only by the fact that your wife happens to be biracial, and if she can, why can’t everybody.

    Considering how astute many of these articles are, this one was a huge disappointment and demonstrated a shallow grasp of historical inequality. I like the idea of getting away from the circular/useless conversations in this country that people have about white privilege and general guilt, but this is way too dismissive.

    Reply
    • Mark April 3, 2015, 9:55 pm

      I think you’re contradicting yourself. You say you want to get away from historical and structural inequalities on one hand and criticize people like MMM on the other. If you believe what happened in the past will be your destiny in the future, you’ll be right every time.

      Reply
    • Jason G April 5, 2015, 5:21 pm

      Not everyone wants to read a few paragraphs about the social inequalities in this country on every MMM posting. MMM has implied in the past that his blogs intended target audience was the middle class. You can’t save everyone :(

      Reply
  • Em-dash April 1, 2015, 12:16 pm

    That article about “scolds” has some decent points, but it does the enormous disservice of lumping MMM in with the world of financial-industry crazies who are mainly trying to sell their advice and gear (or earn commissions on dubious investments). Retirement/finance-industry types do have a racket going, and they earn money from the accounts of people who don’t know any better—whereas, crucially, MMM’s intention is to empower and educate those people.

    Reply
  • Kevin April 1, 2015, 12:20 pm

    Even in jest, it is good to see you acknowledge how rare your situation is. Two people, both making above the median household income individually immediately after graduating college and then getting together is a pretty rare scenario Booming housing and stock markets (of course there was the subsequent crashes, but it seems like you were pretty set by then). And yes, being white in the Western world does help. I say that as a white guy myself.

    But people should realize that your scenario is an extreme outlier. The stuff you preach is all good. Saving vs spending and all. Still though, you’re an outlier. I understand that your numbers of saving rate vs. years of work technically “work” at any level of income, but they ignore a couple of important things. One is marginal utility of money. It is a lot harder to save higher percentages of your income when your income is low. Another is market volatility. not all 9 year working careers are created equal. If you started work in 2000 and wanted to retire in 2009, tough luck. Gotta tack on several more years while the market recovered.

    Reply
    • Mark April 3, 2015, 9:57 pm

      But even if you compare MMM with other households who had similar earnings, very few of those other households save anywhere near what the MMM household saved, and the vast majority of those households could have.

      Reply
  • Dan A. April 1, 2015, 12:41 pm

    MMM, how much money did you make for those 9 saving years? Were both of your parents college educated and what was their income.. Any inheritance?
    I’m not criticizing. I just want to see the breakdown of how it comapres to my own situation (or the situation of someone making less, etc. If you had a post about this already let me know?)
    Thanks!

    Reply
  • Alvar C. April 1, 2015, 1:19 pm

    I generally agree with you, but I think you’re oversimplifying things. The government, the system, the elites, do definitely influence people’s destinies and white privilege is a real thing, even though it’s invisible to most people who enjoy its benefits. If you were the descendant of slaves you would have started at a different point in life, would have had fewer opportunities for education and would have faced other societal biases that could have kept you from getting ahead in life to some extent. That doesn’t mean that saving and investing aren’t good ideas for people with that background, but they may be starting at a disadvantage, assuming they even get a chance to have the education that would allow them access to understanding the market. Let’s not kid ourselves with some Libertarian fantasy.

    Reply
    • Greg December 1, 2016, 10:11 pm

      “When you arise in the morning, think of what a precious privilege it is to be alive, to breathe, to think, to enjoy, to love” — Marcus Aurelius

      By labelling privilege as the exclusive birth-right of white people you’re missing a mind-blowingly massive opportunity to realise just how unbelievably privileged we all are.

      Reply
  • Scott April 1, 2015, 1:27 pm

    Thank you for the April Fools joke! I got a good chuckle out of it! I also have to say I appreciate your graph. So many think that saving money is for before you retire, and that retirement is for taking money out of savings. But your graph shows that Mustachians still save money, even in retirement! Now, I will be the first to admit that I suck when it comes to toeing the Mustachian line, but even in retirement, our savings rate is around 30%. We have a high level of what I consider ridiculous spending, but we still save 30% of our retirement income! So thank you for that graph!

    Also, in answer to the last question in this week’s post, just having your mortgage paid off may very well put you out of touch with normal people! So many normal people will never even know the concept of being out of debt, much less ever get there.

    Reply
  • Ellie April 1, 2015, 1:46 pm

    Nice April Fool, Mr. MM. Too bad about your pus-covered computer though. ;)

    Our accountant just told us how much we owe on our 2014 tax returns. Owing to a huge capital gains hit on investments, it is a hefty sum, sadly NOT an April Fool’s Day joke, and makes me wonder why I still work (seems like it’s mostly to pay taxes right now!). Thanks to a mindset that has always been similar to your own, we have lived below our means, paid off our little house 14 years into a 15 year mortgage, and have a boatload of money saved and invested. Next week, I will celebrate my 61st birthday. Can’t yet bring myself to cut the work cord…that security blanket of the regular paycheck still has a strong grip.
    #firstworldproblems

    Reply
  • Ted Hu April 1, 2015, 1:59 pm

    Not true. Consumer demand must absorb those investments otherwise it’s idle capital equipment nobody uses.

    You see this in Japan where there’s too much supply of goods and not enough demand, thus deflation. Inflation is when too much paper (money) is chasing too few goods. Deflation is the opposite.

    Invent and produce a widget and they may or may not come to buy. That is the magic sauce that drives economic activity.

    Or in the USA between 2007-9 when interest rates were zero, cars were overflowing dealer lots, and supply of goods sat idle when banks stopped lending and consumers stopped spending and borrowing.

    Too much supply of anything just like too much demand is bad.

    Reply
  • allen April 1, 2015, 2:23 pm

    “lets drop the sympathy game” is going to limit your ability to communicate effectively. “If you want to be heard, you must first listen.” There ARE real reasons behind why individuals differ in performance that actually ARE out of their control. Children born into an abusive environment may take decades to “catch up” emotionally to areas that you are gifted – not necessarily by “white privilege” but by being born to a family that provided nurture instead of injury. This is but one of many issues that plague a multitude of people in our population. Failure to be compassionate about people’s limitations only limits your reach, as you’ll only be able to touch those who are fortunate enough to have the capacity to listen to a non-compassionate perspective.

    Reply
    • Laura April 6, 2015, 11:28 am

      I would have to agree with what many people are voicing here. MMM, while I almost always agree with you, I do not agree with your “just boot strap it” mentality. While your message to the middle class needs to be heard loud and clear, it is not a message that makes sense for the working poor and when applied to that population the message goes from being one that is radical, empowering and necessary to being the same mainstream bullshit message you can hear on Fox News or anywhere else– that if you work hard you can pull yourself up by your bootstraps. Working hard and saving up to pull yourself out of poverty is the exception, not the rule. It is hardly possible for most.

      I am a social worker and would know better than most that what these people are up against. I get to know their stories intimately and a huge part of my job is to guide them financially. The marginal utility of money is a huge thing to consider. The cheapest phones that people are able to afford up front are actually the worst, most expensive plans. Shopping at Costco is OUT of the question because even if you have $50 for the membership you don’t have the capital to pay for 2 months of bulk groceries up front. Most people I see don’t have bank accounts for various reasons and they end up spending a few dollars or every paycheck just to cash the check. This is unwise and we always try to help people get bank accounts and set up overdraft protection, etc. but it just goes to show that the mentality of the poor is completely different. There is a lot of misinformation and there is not a lot of guidance or modeling for these folks, which is why they often fall prey to payday loans and for profit colleges. The fact that you even know someone who understands the pitfalls of these decisions and can steer you away from them is in itself a type of privilege.

      Being in poverty is emotionally and mentally draining. A ton of the jobs I see my clients working are so physically demanding and low paying that they are violent. I love the optimism and can-do attitude of this blog but the poor are working from such a disadvantaged place that it is utterly flippant to act as though it is easy to save on minimum wage.

      Reply
      • Tim April 7, 2015, 1:52 pm

        Laura, that was a very thoughtful and well-written comment. I think what a lot of the Bootstrap people on this site are trying to get across is how much they don’t understand the thinking that goes into making unwise economic decisions like the ones you mentioned. I think the best solution is more education. Education for minimum wage earners on what they should be doing with their hard-earned money, and education for the rest of society as to the struggle lower class people face.

        Reply
      • ChapterEight April 8, 2015, 10:28 am

        Yes, this reminds me of a book I read a while back, about how many poor people get caught in a vicious cycle of borrowing and repaying. The authors’ thesis was that they lacked a cushion and that they were using too much of their energy just surviving to have enough for moving forward. I wish I could remember the name of the book. It was about decision making, I think, written by 2 economists. It made me think.

        Reply
  • CzarNicholasMustachian April 1, 2015, 2:32 pm

    MMM, I look forward to your “posts with the most.” One valuable lesson I learned early on from my parents: keep track of income and expenses in a ledger. I did this all throughout college – and well into my career. There was no pressure to stay within a certain budget; it was simply to understand the concept, inflows and outflows. Soon, as a naturally competitive person, I challenged myself to see where I could cut expenses. I saw myself as a business – and worked hard to increase my profit. This reined in my spending because I could see, month to month, how it affected my bottom line. Slowly, too, it helped me sort out necessities from wants. This was a revelation because I was – in my youth – extremely materialistic. I was what I owned – or so I thought. As it turned out, my possessions owned me and made me a slave to their costly appeal. Little did I know, too, that a kind heart and good manners took one further than fancy wheels and expensive duds ever could.

    My dad also introduced me to the stock market at a young age. The number of shares were small, but the lessons they taught were enormously valuable. And what fun it was to receive those dividend checks in the mail – addressed just to me! In fact, I still own two of the stocks he bought for me: Disney (DIS) and Southern Company (SO). As time went on, I added to these holdings and have followed their ups and downs through the years. It would make my dad proud to know that I was able – financially – to hold onto them.

    Incidentally, MMM, the photo of the gentleman in a Japanese rickshaw above the headline “Top Questions from Internet Strangers” is of Russian origin. It is the young Nicholas II of Russia. He visited the Far East in 1890-1891, as Tsarevich. While in Otsu, a member of his police escort attacked him with a saber. Only the quick action of his cousin, Prince George of Greece and Denmark, saved his life. Prince George held off the assassin with his cane (talk about your Badass!). Even so, Czar Nicholas carried a small scar on his forehead the rest of his life. Quite a Mustachian, especially as his tragic life played out.

    Reply
  • Phil Pogson April 1, 2015, 2:54 pm

    You well and truly got me – April fools day was yesterday in Australia, so it has passed my point of consciousness :-) Reading the first paragraph I was all set to send you a stinger of an email and give you a piece of my mind…. baa haa.

    Phew – we’re all good!

    Reply
  • Dmitri April 1, 2015, 3:57 pm

    >> and the unemployment rate at 5.2% is almost as low as you can get.

    That’s why the Waahmeisters in the press invented a new word “Underemployment”, which is loosely defined as “I’m too lazy to go look for a real job, but the economy is now so good that a lower-paying job was basically handed to me”.

    Great stuff as always!

    Reply
  • Name April 1, 2015, 4:10 pm

    Relating to what you wrote about people’s inability to reconcile their diet and exercise habits with their health, we are absolutely going through this right now with my fiance’s mother. She has just hit 60 and has multiple health issues and is on cholesterol and blood pressure meds (just low dose though- her words). She mentioned to my fiance recently that she has been having to buy multiple bottles of Pepto, and he suggested that maybe if she ate lighter she wouldn’t have to. Her mind was blown. By her own concession, she “had never considered that”. This drives me CRAZY! She refuses to correlate her everyday decisions to her poor health, whereas we walk our dogs constantly, eat 90% veggies, and live right on Denver’s most beautiful park, Cheesman Park.

    She constantly laments that she wishes she could workout in a gym class or go on hikes like we do, but she’s “not in shape enough to do those things”. When we were there for the Christmas holidays, she hardly left her huge, bulky recliner for more than five minutes and always bee-lined back to it ASAP. My main concern is the pain this will cause my fiance when she inevitably gets very sick, or the guilt he will feel for being so far away during her health troubles. I wish she could see that when you have a family, your health isn’t just imperative for yourself, there are other people to consider.

    Reply
  • Jone April 1, 2015, 4:13 pm

    I absolutely love the pen & marker graphic MMM!

    BTW – I traded in my 11 year old VW Passat station wagon last week. It was a great car and averaged about 26 MPG over it’s long life. Unfortunately, it started overheating again the other day and there was a good deal for a hybrid on Craigslist. It sure is nice having cash available as a negotiation tool. The hybrid should just about double the wagon’s average mpg and can I still fit my bicycle in the hatchback!

    Thanks!

    Reply
  • Andy April 1, 2015, 4:31 pm

    I clicked through to the article labeling MMM a “pernicious savings scold”, and while I found the article to be worse than worthless, I’ll admit my interest was piqued by the “paradox of thrift” idea. In other words, while high rates of personal savings are good for the individual, the collective effect of widely adopted thrift would be detrimental to the economy as a whole.

    To the more advanced Mustachians out there, or perhaps even MMM himself, what is the Mustachian response to this critique that our approach is too individualistic and potentially damaging if scaled up?

    Reply
    • DMM April 1, 2015, 6:55 pm

      Well, that is a difficult problem & gets into complicated macroeconomic ideas. It depends somewhat on the persons definition of a healthy economy. For example, if low unemployment is your only goal then we should all waste our money by paying people to sit in a room (sounds a lot like my job at a defense contractor), or as Warren Buffet has said, paint his picture, but that actually hurts the economy because it is wasteful, specifically it wastes the productive power of people who could be adding value to something.

      I think if it this way: An economy is based on adding value. I buy things because the value I get adequately compensates me for the lost value of the dollars I spent. Their argument is implying that I should buy things I don’t want, in other words give away my dollars for nothing (of value) in return. This is actually destructive to the economy because my purchase is tying up the labor of someone who could be doing something that adds value.

      It’s counter-intuitive, but correct if you think about it. Check out the broken window fallacy. Buying something I don’t want is economically the same thing as breaking windows to help the glass business.

      Reply
    • Meep er April 1, 2015, 9:22 pm

      I think the “paradox of thrift” is a bunch of crap. Sure, if fewer people borrowed insane amounts of money to live a ridiculous lifestyle by buying McMansions, foreign luxury SUVs, and loads of unnecessary trinkets, the current economy would sag. However, the mustachian answer to this: it would mark a SHIFT in the economy from mindless consumerism and over-consumption to INVESTMENT in things that really matter — like better relationships, life-long education, clean air, ample water supply, preservation of open space, energy efficiency, preventative health care and fitness, and live music.

      Here is a micro-example: instead of making a trip to the insanely priced amusement park in a lux SUV to “get away from it all,” take the family on a bike ride to a local music fest. Go ahead and buy some popcorn, get the kids’ faces painted, toss a ball, and enjoy the concert. Lie on a blanket and enjoy the sunshine. Have a local brew. Or two. Meet some neighbors. Maybe make a deal with the local carpenter to re-finish your cabinets. By doing these things, you are making a huge impact on the economy and spreading health, building relationships, contributing to the community, and creating jobs. Talented, interesting, local people are employed. And the kids will be happy…

      Reply
    • Ted Hu April 1, 2015, 11:48 pm

      The economist side of me compels me to save. Our net worth is over a million. I am retired at 40. Worked in tech for a long while. Now focused on taking care of our special needs son. I’ve two dozen white Costco t-shirts and wear shorts and loafers everyday. My main focus in life is ensuring a high quality of life for me and mine. We cook at home and buy bulk. We live on 45,000 a year.

      Those are my FI bona fides.

      As I’ve commented before, my motivation is maximizing ROI. I saved 30% of our income when I worked in tech for a couple of decades. I also wasted almost a decade staying (over)invested in my former employer Microsoft with its flat stock of which I divested around the start of the financial crisis. I am a long macro investor who uses 3X leveraged funds to boost returns of which this is required reading http://ddnum.com/articles/leveragedETFs.php.

      I believe MMM’s philosophy is too one sided. I don’t have to save 70% when I hedge my risk and rather than spend my time scrimping pennies spend quality time investing my money to ensure outsized returns all the while applying the 80/20 rule. I’ve never saved 70% nor do I optimize for money- over time-saved.

      I think it’s great to DIY saving money wherever possible if truly money spent is a waste. But I do think saving 20% will get you 80% of the way there to early retirement and FI, and saving 30% will get you 99% of the way there, if one just doesn’t dump it into an S&P index fund, and didn’t even notice that the 2000s was absolutely a flat decade of zero returns, all the while expending his/her free time then riding a bike for grocery shopping or hand washing clothes sans washer/dryer because that felt better.

      I am all about ROI and the 80/20 rule.

      That said, the fallacy of composition and paradox of thrift are long proven economic axioms, with few exceptions. They do not mean you should waste spending money on shit you don’t need. They do mean that you should spend money that yields ROI all the while minimizing diminishing returns in an pareto optimized (80/20) way.

      Life’s too short to be frugal for its own sake. 20% will get you 80% of the way to where 70% savings would. Anything beyond 30% yields you diminishing returns; you could be spending that time biking instead figuring out how to make your money work say 3X harder for you, which compounded over time will trump any naive 70% savings plan anytime.

      Reply
      • Mr. Frugal Toque April 2, 2015, 11:33 am

        “Life’s too short to be frugal for its own sake.”
        There’s no need to address the rest of your assertions about Mustachianism, as this speaks for the whole.
        We aren’t being frugal for the sake of frugality. We’re optimizing our spending for happiness. We’ve made the realization that buying stuff doesn’t make us happier – not in general.
        Life is too short to work in exchange for stuff I don’t need.
        We’re being frugal for the sake of happiness.

        Reply
        • Dee April 8, 2015, 12:17 am

          Well said Mr. Frugal Toque,

          I’ve noticed the less I buy the more pleasure I get when I do purchase something because it becomes a “treat” instead of a regular occurrence.
          Why are people considered “frugal” when they realize that they have all their needs met and they have no need to go out shopping so they don’t ? Shouldn’t these people be called practical instead or realistic? So because life is too short you should buy things you don’t need?
          Life is too short not to experience life.

          Reply
          • Jonathan April 9, 2015, 1:43 pm

            Agreed! Two years ago I realized that I no longer was getting any sort of pleasure out of my purchases or even gifts that were given to me because I had so much stuff and I could afford to buy anything small that I wanted whenever I wanted it.

            I kind of missed the feeling of being a kid, when getting something was actually really exciting. It’s not like I didn’t have everything I needed back then, I just didn’t have so much excess where getting something was more of a burden than an improvement.

            We bumped our savings rate up a bit, and then found MMM the next year. Our entire outlook on life changed when we realized we could be saving extra money to buy freedom sooner rather than spending it now and not actually increasing our true happiness at all.

            Reply
      • Matt April 6, 2015, 10:51 am

        Wow, you lost all credibility when you mentioned 3x leveraged ETFs.

        I know I’m probably not going to change your mind, but anyone else reading the above comment and considering these as a good idea for long-term Buy-and-Hold, here’s some real required reading on them: http://www.bogleheads.org/wiki/Inverse_and_leveraged_ETFs

        Reply
        • DanR April 14, 2015, 5:15 pm

          I agree that 3x leveraged ETFs are not appropriate for most, especially due to the very high volatility which can be distracting and cause punishing drawdowns (as in 2008 financial crisis or 2011 correction).

          In fact, I am taking the opposite approach and reorienting my more stock-heavy IRA to more of a “Permanent Portfolio” allocation (25% cash, 25% gold, 25% S&P500 and 25% 30 year Treasury bonds) with no leverage. I am not ready to go full-tilt with the Permanent Portfolio but my testing and research on it indicates that leverage does not help it much and that its day-to-day and month-to-month returns are half as volatile as that of the S&P 500 itself.

          Reply
    • a1smith April 7, 2015, 8:21 pm

      Look at Japan for an example of a country with a high savings rate. Their economy was not just created by a high savings rate; there are other issues such as aging population; low (to no) immigration; and so on. But it is food for thought.

      Reply
  • Candice Brasington April 1, 2015, 4:44 pm

    Love it! While I’m no where near investing money in stocks…don’t know much about it yet…I just am not there yet…I AM knocking out my debts with a sledgehammer and making wiser investments as needed, smart car purchase, Republic Wireless, etc. My goal for next year is to learn and understand the world of investing…but for now…it is knocking out credit card and student loan debts!

    Reply
    • Meep er April 1, 2015, 8:52 pm

      That’s the spirit! Knock out the credit cards first, Kiddo. BOOOM. Those things are a cancer on your financial future, especially at 27% (though I imagine you have already found ones with lower rates) . Follow MMM’s road map and you will be in a very strong position within 5 years. Good luck!

      Reply
  • KiwiKaz April 1, 2015, 5:35 pm

    I usually share your posts on Facebook, but the headline and first paragraph that will appear in everyone’s news feed will either scare them or simply reinforce their own beliefs :-(

    After April 1st, could you amend the beginning of the post as it is a good one and well worth sharing.

    Reply
  • D$ April 1, 2015, 6:56 pm

    Though I do understand the OVERALL point of the article which I agree with and enjoyed reading, there is more to the unemployment percentage as you probably know(Just a fun topic to discuss). The lowest you can get is about 2 to 5% due to those in the job market that are moving from one job to another(I believe friction unemployment). So the 5% unemployment would seem mighty fine, but those that gave up looking(not counted in unemployment) are now looking for jobs and are becoming employed/underemployed at a similar or quicker rate then they are beginning to look for work. Also, there are the underemployed that are considered employed but can get and desire more hours, higher pay and better jobs. Example, the engineer working at Home Depot that would rather do engineering stuff. Let us assume these people do diverse to work the higher level job(Dude aint no punk engineer). Once the under employed and those that gave up are gobbled into the labor market, employers are going to have a shortage of employees, thus shifting the demand for employees out causing wage increases. I feel that once wages begin to increase we can then assume that the calculated unemployment rate better represents true unemployment. Under the current conditions, I feel the estimate of unemployment is a looser estimate than usual. Basically, 5% seems good, but many more still want and are capable of full employment.

    No matter what though, KICK ASS because it is on YOU TO DICTATE YOUR FUTURE, NOT UNEMPLOYMENT RATES. NO EXCUSES!

    Any Poops, Fun semantical tangent that digresses from the point of the article.(Was that last sentence redundant and repetitive???)

    Reply
  • Nathanael April 1, 2015, 6:57 pm

    “the problem is not a shortage of money – it’s a shortage of spirit. A lack of desire and fire in our bellies to embrace hardship and challenge, to get the most out of ourselves, rather than designing a lifestyle that allows us to exert ourselves the least.”

    As someone who practices a martial art called kendo, this quote *really* resonated with me. We *need* to cultivate a more vigorous spirit, both individually and as a society. I encourage my fellow Mustachians to look into kendo as a way to pursue the former. It has the added bonus of being ridiculously cheap (once you acquire your gear, which you will not do until you have earned it).

    Great pep talk, MMM!

    Reply
  • Cats Eye April 1, 2015, 7:15 pm

    I like the graphical version of the fake retirement crisis chart. It reminds me of Thermodynamics 101: the big rectangle that’s “useless” spending is like “exergy” – the energy/potential that is available to be used. The little rectangle that’s “useful” spending is like your limit on the second law of thermodynamics – you can’t get 100% efficiency/savings rate, but you can get close to a “theoretical maximum”.

    Sorry about the unwarranted nerdiness, but I get amazed by the relevance of thermo in everything.

    Reply
    • a1smith April 13, 2015, 9:53 pm

      You’re right, thermodynamics is everywhere! :-)

      The difference between exergy (available energy) and energy is the energy lost to irreversible processes (due to increase of entropy). The available energy is exergy, the lost energy is anergy, the sum of exergy and anergy is the total energy. See http://en.wikipedia.org/wiki/Exergy

      A better analogy would be to say that the “regular people” are like very inefficient heat engines and so you have a lot of waste heat (anergy) which is analogous to the “useless” spending.

      Now, the mustachian comes along and redesigns the heat engine so that it has better 2nd law efficiency. Now, the available energy or exergy is higher (useful work which is analogous to useful spending and savings) and the anergy (“useless” spending) is lower.

      We could get even nerdier and make analogies between the 1st law (Ein – Eout = Estored) and income, spending, and savings but that’s enough for one day! :-D

      Reply
  • Dan April 1, 2015, 8:18 pm

    Glory, glory hallelujah this needed to be said. We get way too caught up in all the negative statistics out there. And there are plenty. But no statistic can account for doing a few simple Mustachian things to make life more money efficient.

    Too many people have become defeatists about their individual potential just because the bonehead majority can’t cut it. Time to get fired up and win.

    Reply
  • Aja McClanahan April 1, 2015, 10:27 pm

    I live in the HOOD of HOODS (look up Engelwood, Chicago.) We have a home with no debt, cars & educations paid for. Our kids are home schooled and we “got money in tha bank ,shorty watcha thank.” I run a business and hubby is gainfully employed. No debt here, not now, not ever….We are thriving in a place where no one is supposed to make it… it can be done. Preach MMM, Preach!

    Reply
    • Jonathan April 9, 2015, 1:46 pm

      Aja, you seem like you’d be awesome to know. Great comment. I laughed :-)

      Reply
      • Aja McClanahan April 22, 2015, 10:08 pm

        You are so kind Jonathan! I don’t know if this is against MMM policy, but I do write about our ‘Hood Rich approach to finances on my blog. If you google Aja McClanahan, you will find it! Cheers!

        Reply
  • LeisureFreak Tommy April 1, 2015, 10:44 pm

    Great post, you nailed it. I hear excuses from people who can’t get their financial sh!t together and also throwing accusations of privilege one way or another at me for pulling early retirement off. Grew up low income, married young, raised 3 kids, worked 2 jobs for over a decade, went to night school and took pre-internet correspondence courses, took me 15 years to make it to engineer, and all anyone sees is I am just lucky to have retired at age 51. Well I am lucky because my situation made me hungry to advance and dedicated to what I wanted. There are many I know who made a lot more money than I did and they have a lifetime of stupid spending ensuring their continued servitude. Poor unlucky ba5tard5.
    That said there are many bummer stories that are all too real where health or long-term loss of income derailed even the most financially savvy. The true disadvantage goes to those in generational poverty without having any guidance to break the cycle. Yep, I am lucky.

    Reply
  • Steen April 2, 2015, 8:13 am

    Right on MMM. I have been practicing many of your philosophies long before I knew of your existence. It always astounds me how simple it is/was to achieving financial freedom. I must admit that I get infuriated from time to time when I read all the whiney articles about how people can’t afford to retire or save any money. Of course many people I know laugh at me because I don’t have a smart phone and drive around in an 18 year old car. I usually want to respond with something like ” I could purchase that new car you just leased in cash” but I restrain myself. Of course this is getting harder and harder to do when I read articles like the one written by Ryan Cooper who suggest that I AM irresponsible because I save my money instead of spending it all? Give me a #%*!#% break!!!

    Reply
  • Markola April 2, 2015, 8:51 am

    Hello MMM, Mark from the August Ecuador trip here. I share your disbelief in the poor state of Americans’ household finances. My own view is that the bleak picture is not totally due to work ethic or government or being an engineer or entrepreneur, luck or most other factors. What I observe among citizens of the wealthiest country ever on planet earth is… Obliviousness, brain-deadness, ignorance, NON CARING about the whole savings/investing topic. In my teens, I came across a copy of a table showing the miracle of compound returns. That was all I needed to get serious about savings learning to invest, with the result that my work is optional at 49 (I’m less interested in work but hooked on making my stash grow!). Yet, I can barely talk with the people closest to me about saving and investing. I am a freak to them. An outlier. Someone who cares about dirty money too much. Whenever the topic comes up, I instantly sound to myself like a savings scold judging a friend or relative about their consumer debts and nonexistent savings rate, or someone who is pissing, figuratively, on the hood of their new, leased BMW. I don’t like potentially sounding like a self-satisfied jerk, so I congratulate them on the BMW or other clearly stupid want and I don’t talk about this most important of topics unless someone asks me for advice, which I then give abundantly after establishing a “no judgment zone” regarding their non-optimal choices. So, what can one say about the vast majority of citizens of a massively wealthy society who can’t even be bothered to read a book by John Bogle, or your blog, or to even understand their monthly spending? The rich ARE getting richer, and I believe it’s less to do with policy and more to do with the fact that we are a nation of BLOCK HEADS who can’t think beyond next week.

    Reply
  • martin hurst April 2, 2015, 8:54 am

    I sit at the midway point on this for a number of reasons.

    1. Heathcare costs: its possible to keep those costs low for your retireees and we are all invincible in our 30’s and 40’s but what then? I certainly want the best medical care through my 60’s and 70’s and am prepared to pay for it.
    2. I might have two left thumbs but for whatever reason I am not good and and do not enjoy DiY! Not being able to pay someone to do those jobs for me would lead to a material reduction in the quality of my life.
    3. There a lot of focus on the expense side of the equation here which has a limit. Most people would be much better off working on improving the income side of the equation. Remember that there’s a certain minimum level of expenditure below which its very difficult to go…but there’s no limit on how much money you can make. The trick is to keep lifestyle inflation in check as the mulah rolls in!

    Reply
    • Eldred April 2, 2015, 2:09 pm

      The trick is ALSO to figure out HOW to increase your income. Lower expenses – check. Paid off consumer debt – check. Working on savings – check. Increase income? Not a clue. Except for a couple of years at $70k+, followed by 13 months of unemployment, I’ve pretty much been at about $50k for the past 10-12 years. :-(
      Still need to improve THAT side of the equation.

      Reply
    • dave April 14, 2015, 12:03 am

      a penny saved is a penny earned

      Reply
    • Adrian Meraz April 14, 2015, 3:08 pm

      1 and 2.) The best investment you can make is continuing to be active, which using “Muscle Over Motor” does for you. It simultaneously allows you to be active and exercise, while also enabling you to insource operations at a small fraction of the cost of buying something more expensive with a motor. You may not be the best DIY’er, but you can surely cook your own meals and cut your own grass :)

      3.) Many people don’t pay enough attention to the expense side of the equation, and neglect it far more than the income side. Reducing expenses permanently has a double effect. You are able to save and invest more, while reducing your lifetime expenses, resulting in you having to save and earn less to be FI!

      Reply
  • Frugal Bazooka April 2, 2015, 9:40 am

    This blog post is right up my philosophical alley! For some reason I am surrounded by friends who parrot nearly every fool’s day premise you presented. Even worse a portion of them are hard core conspiracy theorists who truly believe that the Rothchild’s are controlling our every move since the mid 20th century. Move over MATRIX the banker nerds are now more powerful than superman, batman or Neo. I don’t bother disputing them too much because them I am labelled a sheeple or worse a Republican (I am neither…baaaahh).

    In reference to your rather astute dismantling of the “victim” mentality of our current American society I place the blame for this squarely on the media and the public schools. The idea that we take control of our lives and make them better than the government could ever do is scoffed at as an invention of the Rothchild elite to keep us rubes gazing at our navels and 6 packs (of beer).

    Reply
  • LennStar April 2, 2015, 10:00 am

    MMM, your poor poor keyboard :(

    I must admit I havent read every comment. I like the positive aproach by MMM but I always feel he is too one-sided in these things.
    “When you spread the social meme that the the system is stacked against us,”
    The problem is, that it is. In many ways. Of course you can do right, but nobody is able to do everything right (and everyone has a maximum of good-decision-energy aka willpower and time), and its a lot harder when you are on the stacked-against end.
    Just one example:
    Person A is a young black male in a poor area with a very bad and underfunded public school. He also is extremely shy or even leaning to the autistic side.
    Person B is an outgoing young male with rich parent and gets presents from business leaders from his first birthday on.
    Which one is more likely to be a CEO later in life?
    Of course its possible for both, buts its an incredibly HUGE disadvantage for Person A. And not everyone can be CEO…
    Hell, even your name influences what grade you get in school. Talk about personal responsibility here ;)

    And then a lot of this society is “rigged” towards certain decision. Example from germany:
    If you are unemployed (for a longer time), you get social security – if you dont have money. If you have saved something, you have to use this.
    I recognize the meaning of this, but if you are one of the (lets guess) 1/4 of people where losing your job (or your partner losing it and you have children) means you have to apply to this SS or live on the street, then why should you save? You have a very high probability to lose it all (before getting SS). So its better to use the money, buy things and have them when you lose your job instead of the money. If you sort of invest it like into a new refrigerator that uses less energy, then you are even better off when you fall onto SS.
    Its a huge DISincentive to save and you (and the children) learn to use all money to buy stuff.
    Same principle applies to retirement: On current numbers for people no in their 20s, if you are in the bottom half of income, you land in SS instead of “normal” pension. Then saving privately just means your private retirement income is substracted from your SS retirement income. You basically saved for nothing.

    Reply
    • Meep er April 2, 2015, 2:11 pm

      I had a dad who was a felon and a mother who was a marginally educated immigrant. What I learned early — by age 12 — is that a person can either use these disadvantages by playing the “woe-is-me” game of victimization, and blame the world for dealing a bad set of cards, or a person could bite the lip, take advantage of living in a very prosperous nation, and try to get ahead by being honest, learning in school, and working hard. I started work at age 12. Yes, 12. Like MMM, I started saving at a young age. Like MMM, I put myself through college. Like MMM I chose to walk and ride a bike everywhere for quite a long time (I still prefer muscle over motor to this day). Like MMM, I do have sympathy for people who are disabled, fighting depression, the elderly, and disadvantaged. Like MMM, I have absolutely zero tolerance for racism, bigotry, or sexism.

      However, many people — and mean many — act like they are helpless when they are not. MMM’s message of stoicism really might be a completely new perspective for those who are little lost, but not helpless. That’s why his message resonates with me. “Strength through Badassity” IS a known way to overcome all kinds of hardships and bad spots — from financial woes, to health issues, to problems with relationships. Personally, I think it’s one of the secret ingredients that helped build much of the United States, so I have no problem telling my three kids to stop complaining and suck it up. I teach them how to garden, cook, fix things, do laundry, clean, sell things for profit, shop for bargains, save, and have fun. I firmly believe that, come what may, integrity and these skills will lead them to a position of strength one day, come what may.

      Someday they WILL lose a job or become ill or lose a loved one. My hope is that I have equipped them to face these hardships with toughness, creativity, tenacity, and love so that they can move on without blaming anybody or…relying on government. They can rely on themselves, their savings, their talents, their spouses, and their family. These things make a much better safety net anyway.

      Reply
      • Markola April 2, 2015, 5:10 pm

        That’s one very inspiring comment!

        Reply
  • James April 2, 2015, 11:37 am

    “Let’s drop the sympathy game.” Fair enough, but tough isn’t always the best medicine. Sometimes this attitude makes MMM seem like the Bobby Knight of the personal finance world.

    In my opinion, acknowledging limitations, disadvantages, and other causes for sympathy for what they are is important to overcoming them. Pretending they don’t exist / ignoring them is likely more harmful. Granted, there is a fine line to walk between lulling people into a victimized attitude and helping them move past said reasons for sympathy to take as much control and responsibility for their own lives as possible.

    I’m specifically thinking about therapy as a metaphor (and I don’t claim to know more than what I see/read/hear in the popular media), where, for example, people are encouraged to confront various traumas (abuse, combat, low self-esteem, etc.), acknowledge them, and then work on strategies to overcome them. Denial of trauma or some underlying issue is generally portrayed as a hindrance to progress.

    The ultimate goal is a realistic understanding of the situation, which allows people to devise appropriate goals and strategies to move on. A person can simultaneously acknowledge a disadvantage and also be committed to taking complete responsibility and initiative for their own life (working within their circle of control). These aren’t mutually exclusive, and in the event of successful growth, I’d argue that the person who acknowledged their disadvantages and still made it is better off (has made more lasting and complete progress) than the person that denied disadvantages exist in the first place.

    This is your blog and you’re most definitely welcome to keep throwing chairs, but some nuance would be refreshing from time to time.

    Reply
    • Brett Michaels, musician April 2, 2015, 7:22 pm

      I’m torn on this, dude. On the one hand, I’ve long believed that admitting weaknesses adds credibility to an argument, making it more persuasive, like a waiter suggesting I stay away from an overpriced dish on the menu and suggesting something less expensive: I trust that guy. But on the other hand, MMM’s slightly cartoonish WWF -style battle rap has been effective in bringing in thousands upon thousands of readers, so if you, or I, or anybody else can’t smell what the Rock is cooking’, maybe that’s just on us? I’ve always been a big fan of nuance, but there are also times when I find it exhausting… maybe that’s why I love the simplicity and hyper-accountability of today’s post.

      Reply
  • Danny C. April 2, 2015, 2:21 pm

    I knew I was a member of the 1%. Just didn’t realize it was as a bike commuter.

    Reply
  • Jason April 2, 2015, 4:54 pm

    All I have to say is here, here! The problem I have is that I try to spread this message of savings to my students, but the message doesn’t get through to most, heck I don’t even know if it gets to my own spouse (although she seems to be coming around). They don’t have any interest in escaping their consumerist existence and believe all of this “deserving” because they are graduating or working. What they are doing is not remarkable or even special, but they believe to be that they deserve it. I think a Mustachian book of Chicken Soup for the Financial Soul needs to be started.

    Reply
  • Derek R April 2, 2015, 8:38 pm

    But I love believing that the system is stacked against us! That makes it even sweeter when my savings keep rising because I know that I’m fighting against the odds. And winning!

    Reply
  • Honey April 2, 2015, 10:04 pm

    Hey, mmm. I’ve got a teenage question for ya. Should I be working on accruing credit or growing my ‘stache? I am newly eighteen, and live with my parents. (Mutual agreement) I make about $1000 per month, and give my parents about $800 as we work to get out of debt. I am starting to keep the $200 per month, as I drive my car less and make less ridiculous purchases. I currently have minimal savings, and am getting offers for teen credit cards, with limits of $100. I want to be able to get my own small house with some roommates in two years. So at this point, which would you do: credit or ‘stache?

    Reply
    • stan April 3, 2015, 8:43 am

      I would advise to start a Roth IRA and put as much as you can in it into an aggressive stock fund because compound interest will make you rich by the time you retire. If you buy a house, get one you can afford to make the mortgage payments by yourself in case roommates become squatters that don’t pay and you can’t legally get rid of.

      Reply
    • Jason G April 5, 2015, 5:45 pm

      A lot of people think that you need to take out a loan to build your credit, but in reality all it takes is getting a credit card, putting a couple small purchases on it, and paying the balance each month. I would do a Roth IRA for savings and get a starter credit card and limit yourself to having a balance no greater than $100 on the credit card,

      Reply
  • GU April 3, 2015, 8:16 am

    “No matter how much cash you pump into a sick culture like our own, you won’t solve our money problems. Because the problem is not a shortage of money – it’s a shortage of spirit. A lack of desire and fire in our bellies to embrace hardship and challenge, to get the most out of ourselves, rather than designing a lifestyle that allows us to exert ourselves the least.”

    A-fucking-men.

    I happen to know, personally, some of the people who write op-eds for the NY Times, testify in Congress, appear on cable news shows, etc. These people constantly rail on inequality, that it’s so hard to make a living these days, etc. I have a psychological theory of why, which I’ll explain below.

    These academic/pundit/intellectuals tend to make quite a bit of money–$200k – $1M a year. Though these are astronomical sums, these folks also get to rub shoulders with those who make $5M, $10M, even $20M a year. So even though $500k is a SHITLOAD of money, it looks miniscule compared to $5M. So our academic/pundit/intellectual feels like he’s barely treading water. And then he thinks “I’m barely floating by on $500k, how the fuck can these proles making $50k a year even survive”? Hence the economic “crisis” for the middle-class we hear about daily.

    Reply
  • Kayla April 3, 2015, 9:21 am

    Due to the mistakes of my past, I honestly think early retirement isn’t in the cards for me. But I do think I can achieve my goal of self-employment and still have a very comfortable retirement when I’m older. Self-employment will allow me to do the things I want to do rather than being a slave to my employer and my desk. I know self-employment is still work (obviously), but I would consider that a win for me.

    Reply
  • win April 3, 2015, 10:50 am

    Saving money in Singapore.

    http://www.forbes.com/sites/johngoodman/2015/03/31/singapore-a-fascinating-alternative-to-the-welfare-state/

    “At times the forced saving rate has been as high as 50% of income. Today, employees under 50 years of age must set aside 20% of their wages and employers must contribute another 16%. These funds go into accounts where they grow through time until specific needs arise. For example, one of the uses for these savings is housing. About 90% of Singapore households are home owners – the highest rate of home ownership in the world.

    In health care, Singapore started an extensive system of “Medisave Accounts” in 1984 – the very year that Richard Rahn and I proposed “Medical IRAs” for America in the Wall Street Journal. Today, 7 percentage points of Singapore’s 36% required savings rate is for health care and is deposited in a separate Medisave account for each employee. “

    Reply
  • MiningFrugal April 3, 2015, 3:25 pm

    You’ve written tons of great posts–this one is by far my new favorite.

    The victim mentality needs to stop.

    Reply
  • Marz April 3, 2015, 4:01 pm

    Regarding the luck/white privilege vs skill debate – I’ve seen both sides of it. I grew up in Apartheid South Africa, and was a teenager when it was abolished and a new government brought in. Since then, affirmative action was put in place, along with Black Empowerment policies to encourage businesses to bring in black partners, ie. get minorities into better positions of power.

    http://en.wikipedia.org/wiki/Black_Economic_Empowerment

    I have two half brothers who had a real dip-shit Dad, who did more damage to them than good. We are an all white family, so were greatly advantaged up until the 90s.

    Since then, my brothers have gone in and out of work, didn’t really advance their careers, and always spend months searching for a job every time they quit – because it’s so hard to find work as a white male person in South Africa. They don’t have a cent saved to their name.

    I got a good degree (my brothers dropped out of college), I was probably privileged to immediately get a job (as a woman I would be considered a minority so had an “advantage” in affirmative action days).

    So I consider the start of my life pure luck – I got great parents who taught me a combination of finance and personal skills, and had plenty of cash to get me a good education into a great, well paid career.

    Everything from there is hard work and mostly choices I made to better my life. Who I married, where we emigrated to, deciding not to have kids, changing jobs strategically to get a better position, not buying an expensive, overpriced house… these have all led to us being well off, and saving 50%.

    In that same time, my brothers have bought and pawned off their goods, drinked and smoked, quit their jobs several times… etc

    So yeah, on one hand, my start was extremely lucky. On the other hand, what I did with it mattered a great deal…

    Reply
  • Genevieve Hawkins April 3, 2015, 4:06 pm

    It’s not just finance articles that groom people for helplessness…I recently read an article about obesity that asked why, with 70% of American adults overweight or obese, 80% of parents don’t believe their child will become overweight. The article followed with scary statistics on how by the year 2032 everybody in America will be overweight (okay I’m exaggerating but only slightly) and why more parents can’t just accept the reality of their kids turning into fatasses. I could almost imagine some obese person munching on fast food and slurping down soda as they read the article, and probably handing their kid some fries, now that they’ve been reminded that their weight and their child’s weight is out of their control. I couldn’t help thinking that people don’t gain 50 or 100 extra pounds overnight–weight gain, like FI, is the sum total of hundreds of thousands of little choices made every day and taught to offspring. It doesn’t just drop down on you from the heavens…and thinking that it does is the most dangerous thought of all, because you can’t change something you don’t control….

    Reply
  • Marz April 3, 2015, 4:07 pm

    I find it incredibly sad that Ryan Cooper has read and written a great deal about finance, but hasn’t even opened a savings account. He talks about feeling like Satan is clawing at his throat, while looking at 401k options. The only time I feel that, is while trying to do my taxes….

    He says “investing in boring index funds would probably be easy”…. Yeah, it’s easy as pie. As easy as signing up for cable.

    Wow…

    Reply
    • Steen April 3, 2015, 7:00 pm

      Amen! I am completely dumbfounded that someone who clearly has some level of intelligence (probably more than me) can be so incredibly uninformed and downright stupid when it comes to personal finance. I wonder if Mr Cooper would be more supportive of me if instead of living responsibly for myself and my family, I decided to spend all that I make, save no money, run up credit card card debt, file bankruptcy and then complain that the system is against me? It’s just too confusing to buy a boring index fund!

      Reply
  • Vawt April 4, 2015, 8:38 am

    I agree that accountability is what is missing from people’s financial lives. As long as they can blame it on something else, then they don’t have to look at their choices and what they can control.

    Reply
  • starttheconvo April 4, 2015, 9:40 am

    I just would like to point to a few comics that do point out white privilege.

    http://everydayfeminism.com/2014/10/history-of-black-white-relations/

    http://everydayfeminism.com/2014/09/white-privilege-explained/

    http://everydayfeminism.com/2015/01/how-you-benefit-from-racism/

    But do understand it does NOT mean your individual hard work means nothing or the indivdiual negative experience you have had with people of color invalidated, but the majority of the crap faced by people of color in america is a crap ton. Like the everyday overbuild slight nuances that non-white or accepted non-whites experience, hell it does get tiring.

    Reply
  • Christian April 4, 2015, 1:54 pm

    Spot on MMM, as usual. I am able to save 80% of my take home pay. I’ve been doing this since I started working 10 years ago. (military officer). It’s rather easy…just continue to make a conscience effort to save and don’t worry about keeping up with your neighbors. In fact, whatever it is they are doing, do the opposite and you will be good-to-go.

    Reply
  • GZC April 4, 2015, 2:31 pm

    Hi MMM,
    I’ve been reading your blog for a few months now and really enjoying it. I’ve been learning so many things that I always wanted to learn. I’m 27 years old and pretty much starting my real working life now. It sounds late but that’s how it is in Israel. Until we finish the army and get our bachelors degree we are well in to our 20’s. I found your blog through an Israeli newspaper and I’ve been inspired by it. My whole live I’ve been pretty good with saving money but I always wanted to learn what to do with it. Combining the infermation from your blog and jlcollinsnh I’m starting to figure things out.
    I live with my boyfriend/ pretty much husband and we try to save about 50% of our income. In American terms it’s not a lot but here it’s pretty decent. We save about 2,000$ a month. We don’t have any loans (university tuition here is only about 2,000$ a year and most of it is paid off with the money we get from the army). We don’t own an apartment (prices are rediculesly high now but we do want to buy one day). We own a Us bank account.

    So my question is this – do you still stand behind your opinion about VTSAX. I want to start investing our money (workers) but I’m not completely sure if the best way to start is still Index funds like you and jlcollinsnh prefusely recommend. On vanguards’ site it seems like its Been a avereging about 5% a year since 2000. Is that good?
    I would love if you can refer me to some more reading material that is written as clearly as you and jlcollinsnh write about the basics and the beginning of investing.

    Thanks in advance.
    And if I haven’t stressed it enough – your blog is just what everyone needs to read, maybe then people would understand the real power of money – freedom.

    Reply
  • Acroy April 4, 2015, 4:25 pm

    Wise man said MMM should “offer an e-book of (his) own stuff on this blog, and sell thousands of copies at $99.99 each. It would target the most desperate of readers, promising them the tools to get out of debt and a lifetime of financial independence.”

    ah yes, that was MMM :)

    Reply
  • Frugal Bazooka April 5, 2015, 11:52 am

    Before getting too riled up about the nonsense the financial media – and media in general – writes about the state of the nation or the state of the individual (financially speaking), I remember that the media has several agenda’s and none of them are designed to benefit me.
    Media’s Agenda:

    1. To make money – yes ironically (for many media outlets) they must make money to stay in business. As much as they hate that, it causes them to write a lot of interesting lies and half truths. A lot of internet media in particular use headlines that are outright lies to simply get you to click on their site which helps to pay their bills. Ever notice how many times Huffington Post runs random stories on HITLER, NUDITY and CELEBRITIES? Apparently these topics are good for millions of clicks.

    2. Partisan politics – the idea of objective reporting is all but completely purged from the media as we know it today. No doubt there has always been the nuanced slant to ALL reporting ever since the day the Gutenberg press first began pressing, but having said that – today few reporters bother to remove words and phrases from their copy that gives away their sympathies.

    3. Manipulate the National Dialogue – There was a time when the media was the only institution in the USA that people seemed to trust. With so many social problems going unchecked by the political system civil rights, war and other problems were entrusted to the media to uncover and fix – or at least put pressure on politicians to fix. How many times in movies does the protagonist send his information to the media just in case something goes wrong and the truth must get out? Well, today the national dialogue is whatever the media wants it to be whether it’s worthy of being the national dialogue or not. No offense national media, but 24 weeks of Occupy Wall Street was 20 too many.

    So what does it all mean? To me it means the media has zero credibility when it comes to telling me if I can or cannot succeed financially because of all the problems with the economy and all the problems with wages and all the problems…blah blah blah. How hilarious is it when a financial “expert” gets on TV or the internet and tells me that there is no way I will ever save or earn enough to retire comfortably when I already have? I just feel bad for the next poor sucker who is looking for an excuse for his/her failures and is inundated with all the bullshitters in the media who tell them it’s not their fault it’s the fault of the system.
    So why should they even try to be frugal and save when there’s no hope of success? What those media bullshitters neglect to mention is that most of them are millionaires who have succeeded in that very same system. So in conclusion the media is a large group of lying millionaire bullshitters.

    Reply

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