There Are No Guarantees

mydoorYou know what I have come to realize is almost always ridiculous? Contracts.

Contracts, paperwork, and bureaucracy. Guarantees, warranties, and excessive caution in an attempt to ensure a trouble-free future. Not all of it is bullshit, but the older I get, the more I realize that a surprising portion of it is.

I mean sure, if I’m Tesla and you are Panasonic, and we’re partnering to build the world’s largest structure and produce the majority of the world’s energy storage products, and we each have thousands of employees involved in the process, we can write up a contract and sign it.

But if I invite you over to my house for one of our customary Sunset Beers in the Park events tonight, how appropriate would it be for me to send along a little PDF contract with five places for you to sign?

I, Jane Mustachian, agree to arrive at the Mustache residence between 5 and 6PM, and consume between 1 and 5 servings of beer and/or wine, over a period not to exceed six (6) hours, to convey myself to and from the event using only muscle-powered transportation…

….blah blah any food served may or may not contain nuts or gluten…

…agree to not to hold Mustache family liable for any injuries..  and so on.

You’d think I was crazy, and find another place to have your beer tonight.

We understand this at the social level, and even at the small business level, if we feel a high level of trust. But as soon as we lose our trust and get overly fearful, we start breaking out the lawyers and the contracts and the stifling formality.

It is at this point, I argue, that life starts to suck.

It’s also the point at which a company starts to suck – that moment when it loses its soul and its freewheeling joy, and starts pushing for profits above ethics, and the lower level employees are not empowered to do what they know is right because their boss would have to ask the next level boss and the request would die before it reached someone with enough authority.

This is also the point at which I try to avoid doing business with a company if at all practical, and find a smaller one who could use a new customer.

And therefore I think we can make our lives better if we raise that threshold of fear a little bit, and start running our businesses and our lives as if we were big boys and girls.

Here’s another story which illustrates this point:

On the “contact” section of this website, I have a little note that says people should not email me with requests for marketing partnerships, TV shows, book publishing, etc. Through experience I learned that those activities not nearly as fun as they sound.

But one guy snuck through the gates – “Hey man, I work for Sony Entertainment which is a big company but don’t worry, I’m cool – I just have some ideas for a TV show about Mustachian lifestyles and wondered if you want to talk about them.”

So we talked on the phone, and he was indeed cool. It was a nice concept and a respectable company and they had done other successful stuff. So I said I might help out with the project occasionally, as time permitted.

Suddenly, a completely unrelated person from their legal department started emailing me contracts and agreements and such – pages and pages of them! The contracts contained obligations, promises, and bullshit galore.

And here I was just naively thinking I’d have a beer with this creative writer and laugh about some ideas for a TV show. We had already agreed on the phone, that if the project ever ceased to be completely fun – for either of us – then we’d just drop it. Retirement is is too short to engage in non-fun projects, because there is already an enormous queue of extremely fun projects that I haven’t even had time to start yet!

So I told the lawyers thanks, but I wasn’t interested in contracts. But I’d still be happy to help out just as I had originally offered.

And I never heard from anyone at the company, or the creative guy, ever again.

I felt like I had been stood up – the whole thing had been a small waste of time. But I was grateful that I hadn’t actually dug in on a big project with an organization that works this way – for that would have been a much bigger waste of time.

Let’s contrast this with a a few other business arrangements.

Figure 1 - Camp Mustache

Figure 1 – Camp Mustache

I have fixed up plenty of houses with local friends, with many thousands of dollars at stake. Sometimes even lives or limbs, as we scrambled around like monkeys to cut down tall dead trees.  No contracts, just plenty of dirt, scrapes, laughs and good times – and profits, too.

I’ve done several interviews and trips with Jesse Mecham, founder of You Need a Budget. Significant value accrued to both of our businesses from these collaborations as thousands of YNAB customers became Mustachians and vice versa, and yet somehow it never occurred to us to make up a contract.

Next month I’m traveling to Portland – first to visit Treehouse founder Ryan Carson and do some social stuff that might also have promotional value for his business. Maybe record a video and a podcast, and even host a gathering of Mustachians right in the courtyard of their central Portland building. With beer!

No contracts, of course.

Then on to Seattle to attend Camp Mustache – something that is now a popular recurring event. Although there are tens of thousands of dollars involved in putting it on, it’s an informal not-for-profit arrangement and the organizers and I have never signed a contract.

But What if the Other Person Breaks their Promise and I Get Screwed?

You may think I’m painting an unrealistically rosy picture here. Not everything always turns out for the better, right? Business partners sometimes turn evil, tenants stop paying rent, girlfriends or boyfriends dump you, products break,  stock markets crash, bones break, and fatal diseases strike your loved ones.

I agree – life has been known to serve up the odd Platter of Shit from time to time. Every one of those things above has happened to me. And yet in zero of the cases could I have protected myself with a contract or warranty and come out ahead.

I’ve been to court a few times. In some cases, I was the landlord and the tenant wasn’t paying rent even though we had a contract. The judge ordered the tenant to pay. The tenant, who had long since left town, didn’t even know there had been a court case. And yet life went on, and the inconvenience was soon forgotten.

I retired early, invested too much in a house building business, then lost a bunch of money in the ensuing great financial and housing crisis. No contract could have protected me from these market realities, and yet somehow I survived again and life continued to get even better.

I’ve had products malfunction while under warranty, and in most cases the warranty department was so clumsy and incompetent (ahem, Samsung, Nissan) that I just gave up and fixed the product myself.

The point is that in almost all life decisions, the stakes are actually very low. Here in the rich world, the majority of our catastrophes have the following consequences:

  • You might feel “inconvenienced” and experience a frowning face for a short period of time.
  • Some numbers stored in a computer, which represent your wealth, might temporarily decrease.
  • You might have to move your body around – and possibly even experience mild heat, cold, or muscular exertion.
  • You might have to speak some words into a telephone or press some buttons on a computer keyboard to resolve a problem.
  • In more extreme situations, you might even have to speak to one or more humans in person.

Are these consequences really worth worrying about – or potentially even missing out on the chance to do something great?

What does This Have to do with Early Retirement?

Every week, I get at least a few emails from people who have more than put in their time. People in their late 30s and beyond who have worked multi-decade careers, paid off the house, given their kids a good start in life, stashed seven figures into retirement accounts, and long since grown bored of the big-company life.

But they are still working one more year, to add that last bit of safety margin padding, fill up that last college fund for the last kid, max out that health savings account just in case. Some of them have more savings than my family has even now, even though we’ve been retired (and continuing to accumulate wealth) for more than ten years.

And they’re still afraid to retire.

You Become Free Only when you Acknowledge That You Cannot Control Life

You can’t control the random bits of misfortune which may strike you. You can only control your responses.

If you are following the Principles of Mustachianism, you’ve already taken all the preventative work that you need to take: optimizing your habits to maintain a healthy body, mind, and bank account.

These are not a formal insurance policy, because formal insurance is nonsense.

They are a statistical prevention policy, a way of tilting the odds in our favor. And even more important, a response policy – a recipe that ensures that even when shit does hit the fan, you can clean it up, resume your prosperous life, and learn something in the process.

The lesson? Instead of working endlessly to build a glass shield around yourself, start enjoying life right now and just keep a mop handy.

Further Reading: In his joyful short book “Anything you Want” on founding a really successful business, Derek Sivers argues the same thing about contracts – just skip them if you can possibly do so, because people will either keep their word, or they won’t. If you bring it to court, everybody loses, and all a contract does is give you something to show in court.

  • FinancePatriot April 25, 2017, 12:07 pm

    As a finance manager for a company where each customer has a contract, I agree about them being BS. Unfortunately we make them sign them, but without trust these customers won’t stick with us in the fist place.

    As a 41 year old man, I agree about being fearful to retire. I made the wise choice and asked to be laid off with severance instead. This was not in my comfort zone, but it worked. Now I will get 3 months of severance, this summer, and qualify for unemployment, should I need it. It’s an awesome way to go out, and takes some of the “fear” out of the equation.

    Notice the Amish do not sign contracts, don’t even sue when they have been wronged, yet something like 95% of Amish businesses, completely based on trust, are successful, much higher than the national average I might add.

    • Dividend Growth Investor April 25, 2017, 12:21 pm

      I think that a lot of people have a fear of running out of money in retirement, or perhaps fear of the unknown. As we all know, past performance is not indicative of future results, and the future is unknown. For some reason, people believe that a job income is more secure than investment income. I personally believe that a diversified portfolio stands a better chance of providing for the individual than job income.

      I believe that many people who have enough money to retire are probably not sure what they would do with their time. If you have no passions outside of work, you should probably keep working. If they do have passions to retire to, then perhaps those could provide them with a fulfilling use of that time.

      • --Michael Sheldon April 26, 2017, 9:16 am

        If you have no passions outside of work you should probably keep working?? I disagree! If you are FI but lost your passions along the way, then take a break and go find your passions. If leaving work permanently for the unknown is too daunting, you can try a sabbatical which would give you time to try new activities with the safety net of having a known lifestyle to go back to.

        • Dividend Growth Investor April 26, 2017, 3:42 pm

          Hi Michael,

          I understand your point, but many people think differently than you ( or have different experiences).

          If someone doesn’t know what they will do in retirement, they should figure out what they want to do first, before calling it quits. For many who spent a lot of time at work, work is their life. If you spent 30 – 40 years in one place/company, it makes sense that you will develop this type of thinking.

          An elderly relative of mine retired at age of 50 (military), then worked for another decade. He retired at the same time as his spouse did – source of income were mainly pensions. They did not do much in retirement other than watch TV, and complain about the government. They definitely missed out on their social contacts at work, but the thing that saved them in the initial years was that family was nearby so they engaged that way. After family no longer needed their services, there was a period of isolation that was not very happy for them.

        • Mr. Freaky Frugal May 18, 2017, 10:02 am

          I have to agree with Michael on this one. I hit FI and retired at 52 with a vague plan on what I would do. What I ended up doing was very different from what I thought I would do.

          But I wouldn’t change a thing. It’s really like most other parts of life – it’s about the journey. I also think the earlier that you can retire the more adaptable and open to new things that you are.

      • Mighty Investor May 12, 2017, 11:12 am

        I think you make some great points here, DGI. People really underestimate how much work creates their identity, sense of self-worth, and provides a “tribe” and social outlets. I achieved financial independence a while back and quit my “job,” but I had no intention of “retiring.”

        The people in my life who retired and didn’t have a lot to fill the empty hours really struggled (including developing health problems). So I say Financial Independence, Yes, But Early Retirement No! It’s a subtle, but important distinction.

        • leslie June 28, 2017, 10:16 am

          I agree with your points on work defining our identity. Redefining your life is the challenge of a retirement from the daily grind. It reminds me of the free range chickens who can leave their pen and go outside but don’t bother to do it. Even after amassing a large bank account humans forget they are free range.

    • Ms. Frugal Asian Finance April 25, 2017, 7:53 pm

      I work with the Procurement department at my job on a frequent basis. I’ve seen lawyers go into every little detail in the agreement to make sure it works in their client’s interests in order to avoid any potential lawsuits down the road.

      When you rent your house to someone, not having a contract is sometimes equivalent to asking for trouble. I think every aspect of our life is bound by a contract whether they’re written or unwritten/official or unofficial.

      That said, I’m not always a big fan of having a contract for everything. It just means paperwork and more paperwork.

      • Matt April 26, 2017, 1:38 am

        The sad thing is that life is made up of contracts every single time we click, “I accept.”

      • Mixed Money Arts April 26, 2017, 9:55 pm

        I agree that much of our lives are arguably bound by contract. From a technical standpoint, even oral agreements are legal contracts (as long as there’s some sort of an exchange), just that they’re not always enforceable in court. So a lot of the promises that we make are actually contracts by law.

        Nonetheless, I agree with MMM that once you start thinking about this stuff as contracts, it takes the fun out of everything.

      • Jim May 5, 2017, 5:29 am

        I always view a contract as reaching an understanding, it becomes less personal when you never have a discussion but instead are just offered a “contract” to sign. It’s a socially awkward thing but seems perfectly logical in business, where of course feelings don’t matter!

        Contracts are less about enforcement and more about establishing an understanding.

        • Mr. Money Mustache May 6, 2017, 5:31 pm

          See, I disagree strongly with a small part of that: In business, feelings ABSOLUTELY matter. Business is a human activity, and the only reason to do anything as a human, is to create good feelings. In others, and in yourself. A business will only behave in a dickheaded manner if the humans that control it, allow themselves to become dickheads.

          • Sue May 9, 2017, 1:13 pm

            I feel better with a clear and easy to understand contract, not one that is heavy with lawyer speak.

            I prefer a clear contract to no contract because then I know where we both stand and that we have arrived at the same understanding. It’s easy to agree to something verbally but still have different understandings of what you agreed to and that’ s assuming you both remember exactly what’s you agreed to.

            But yea, lawyer speak isn’t fun to read and not everyone understands it so that right there violates the whole helps make sure all parties are on the same page part of why contracts are good for people.

          • Louise May 9, 2017, 5:05 pm

            I’d also disagree. I can walk into a Walmart and buy something, even using the self-scanners, without seeing or agreeing to a word of legalese. But have you seen the wall of text their website requires you to agree to before buying? Yikes!

            Why the discrepancy? I can only conclude “because people let them get away with it”. If their in-store greeters handed you a 20-page contract to sign before entering, they’d be filing for bankruptcy in a matter of months. (Not coincidentally, I almost never shop online.)

            I’ve seen it elsewhere. A bike rental kiosk once wanted me to agree to a contract, displayed 4 lines at a time on a tiny LCD screen (over 80 pages—I didn’t rent that bike). A bank manager seemed shocked when I wanted to see the declaration of trust, and took 10 minutes to find it on their computer (“but this paper you’re asking me to sign says ‘I’ve received and agree to the terms of the declaration of trust'”, I responded).

          • Jim May 11, 2017, 5:33 am

            Ha well, fwiw, that part was in jest (which is hard to convey over text, but that’s what I meant with the “of course”). Feelings matter in everything, we’re all people and in many cases, it’s all that matters.

          • AC September 19, 2023, 4:23 am

            Contracts are like insurance, they are a hassle and annoying but when things go wrong (several years down the line you and the counterparty argues whether sth was or was not agreed) you would wish you had one/paid more attention to them or gave this a little more thought.

            Contracts are a fact of life in the corporate world. You can dispense with written contracts when you are dealing with individuals but do update us if you manage to find an established media company that will make your show without any form of written agreement.

            • Mr. Money Mustache September 19, 2023, 7:38 am

              You make a good point AC – they are definitely part of the corporate world, and sometimes the social norms require you to play along. But with this article, I was just trying to encourage people to peek behind that tradition a little bit and realize that they aren’t as necessary or useful as we tend to assume.

              Because if you get to the point of litigation and having a judge or arbitrator pick apart the details of your contract, you’ve already lost. And often even if you are “right”, the system can’t enforce that rightness on the counterparty, but you can lose a lot of sleep trying to force it to happen.

              Funny story: a couple of years after writing this post, I *did* participate in a Netflix documentary where they sent me a stack of onerous contracts. Buried in there was hilarious stuff like “I agree to travel at my own expense to up to three events to promote this film, and I agree to participate in a sequel if we decide to make one.”

              I wrote back and said “I can’t sign any of this stuff, but you can take this email as my contract: I promise to put in my best effort to help with this film.” – and that turned out to be good enough. (I admit that the lawyers sent a new fancy version of that “contract” which I did sign, but it was pretty silly)

      • FrugalPrice May 9, 2017, 2:53 pm

        I like to think of contracts as more like pre-nup agreements. Both parties should already know what is expected in the relationship and try to exceed it. Words on paper don’t help much if the parties are not actively trying to make it work. But the contract is needed if/when the relationship is ending and you’re dividing up intellectual property and assets.

        MMM, I do hope you do a contract with anyone you’re doing business with. Only to make sure no one is able to screw up the great brand you’ve spent so much time developing.

  • Neil April 25, 2017, 12:18 pm

    So I have to ask… what happened with the leaf? Nissan didn’t help?

    • Mr. Money Mustache April 25, 2017, 12:43 pm

      Oh, the Leaf turned out just fine in the end – I think.

      The internal computer was diagnosing an 11% loss in battery capacity within the first month, and I saw a lower range.

      I wanted to talk to somebody in the company about the details, but nobody at Nissan knew ANYTHING about how electric cars work, or the details of the Leaf’s battery management algorithm, or how to actually measure the energy capacity of a battery, at all. It ended up as a comedy of errors, and I was passed up the chain to a corporate spokesman guy who didn’t even understand what I was asking about. Nissan Corporate doesn’t even know what a kWh is!

      So I did more tests over the fall, winter, spring, and I’m starting to think it was just bad estimation software and that the battery is actually fine. It just has a higher sensitivity to temperature than I expected (highway range is about 110+ miles in summer (80F), but only 78 miles on a cold winter morning (15F)

      Which is another gripe: you could get ALL this range back, year-round, by just providing a battery heater as other electric cars do. About 1 kWh of electricity (10 cents) would restore full range.

      Still need to collect a bit more data though, at a time when I can get the battery’s internal temperature back to 80F.

      So in summary, I wouldn’t buy a new car from Nissan again, since I believe any company who MAKES a cutting-edge product, should be willing to support it vigorously, and be INTERESTED if a customer finds a bug in it. Part of this means connecting a tech-savvy evangelist/customer with the engineers who designed the product. Tesla does this on a regular basis, and even the CEO understands the details of the products!

      • Juan April 25, 2017, 1:05 pm

        Would love to hear an update once you have more data.
        My 17 year old car may need to be replaced soon and a Nissan Leaf is (was?) an option.

        • Nicole April 25, 2017, 1:32 pm

          I’d forget the Leaf…..

          • Dawood April 25, 2017, 1:49 pm

            I would not get an electric vehicle from any company except Tesla, until the other companies attitudes change.
            What Mr MM says about Nissan corporate fits in with this:

            • bastringue April 26, 2017, 11:03 am

              Don’t buy a Tesla. You don’t even know if the company will be around in 5 years if you need help. This company is going to bankruptcy, surviving only on government grants and by diluting shares.

            • Mralistair April 26, 2017, 4:04 pm

              Did you read teh article at the top?

              so what if Tesla go pop? some guy will buy old parts and sell them to new people, maybe he’ll get a deal with former tesla suppliers for new replacements.

              if you buy a nissan, they stop supporting old cars anyway.

              So you don’t want to buy the best product from the best company because of some future worry about something that isn’t a problem, and is based on a scenario you made up

            • PW April 26, 2017, 10:09 pm

              They have been saying that same thing for years and years but Tesla is still around and growing. I can’t wait for my Model 3!

            • Johan April 26, 2017, 10:44 pm

              Tesla is not just an electric car maker company anymore. Even if their car division does happen to fail, the battery technology, battery storage solutions and solar roof panels products will keep them around for a long time.

            • Christina Shetlar April 28, 2017, 8:19 am

              I have a Tesla Model S and LOVE it. I can’t describe how much I enjoy this car. I also have no worries that Tesla is going bankrupt. You can say I’m drinking the KoolAid, but I think the future will prove me right.

            • Frugal-Investor May 7, 2017, 7:54 pm

              …in addition to their world leading expertise that Jonah mentions (like battery tech), TSLA has a core competency in development of autonomous driving software. Which seems pivotal for the next decade.

            • Jess April 28, 2017, 8:43 am

              What about the new Prius Prime? I’ll wait several years for a used one to depreciate and then buy one, provided the ratings and customer feedback is good (which I expect it to be). Given the length of my daily commute, between a car like this and my bike, I’ll never buy gas again. I’m curious about people’s thoughts on the Prime.

            • Johnny May 1, 2017, 8:13 am

              Hi Jess,
              I would pass on the Prius Prime. The tech is already outdated. It is basically a Ford C-max energi. It needs a rear wiper that is unavailable. It has bad blind spots on the quarter panels. Just go all electric!

      • Joe Brewer April 25, 2017, 1:48 pm


        You need to grab a bluetooth OBD reader and download the LeafSpy app. It will give you a true reading of your battery capacity and actual range. I bought my 2012 Leaf for $8200 and it should pay for itself in about 4-5 years. Free chargers popping up all around me! Love it but my true range is about 55 miles on a full charge which is still plenty for our short around town commutes.

        • EJ April 25, 2017, 2:40 pm

          I wonder if you would still recommend the leaf even with the problems. Personally I am looking at a Volt for the family car (we drive 1.5 hours to see family sometimes) and a electric bike to get to work (talking to a local bike shop currently). Gotta convince the wife to go down to 1 car from 2 and once she is on board I will make the leap.

          Great article. So many people don’t participate in life out of fear of the unknown. Just jump out their and enjoy it. Most of the work I have done at my home is without a contract and turns out just fine.

          • Peter G April 25, 2017, 5:10 pm

            I have a Volt (2012 model – one of the first in Canada) and it’s been great! For my “around town” missions – I live in Kingston, Canada (personal note to MMM – Kathy and I knew each other from ECE at Queen’s) I burn no gas for 9 months of the year. The Volt cycles the gas engine below -4C ambient, which is smart to condition the battery so you’re not trying to suck current out of a battery that’s been cold-soaked to -25C in February!

            For longer missions – it’s a 45+ MPG gas car.

            In Ontario, it’s also exempt from Drive Clean emissions testing, oil changes are annual events (if that), and am still on the original brake pads at almost 200,000 km of driving! Drive it in “L” all the time to maximize regenerative braking!

            Used Volts are selling super-cheap due to the effect of various government rebates…look for one that can maintain >10.0 to 10.2 kWh charge (based on 2012 battery capacity, or equivalent for a later model year).


        • Mr. Money Mustache April 25, 2017, 3:56 pm

          Of course I use LeafSpy (pro), Joe!

          I was using it for years, testing OTHER people’s LEAFs before I even decided to buy my own. And it has been essential in learning more about my own car.

          It helps work around lot of the brain-dead limitations that Nissan built into the car. For example, I don’t want to see unlabeled bars for my battery temperature, I want the fucking TEMPERATURE IN DEGREES.

          Another example -by default, the car doesn’t even show you what rate you are charging at – this is critical information for knowing how long until the car is full! LeafSpy fixes this. Plus you can disable the nonsense auto-lock doors, the 1990s computer startup noises the car makes by default, and a bunch of other benefits.

          The thing is, Tesla already does all this stuff, better, faster and with beautiful graphics, by default. They really are going to dominate the electric car market – IF people realize that gas cars are obsolete.

          @EJ – the Volt is a great choice. And so is the Leaf, because at the end it is still a fast, luxurious, cheap, gas-free-car.

          I am just rooting for these companies to get it together and not be idiots about developing their products. There is just no way a 42-year-old rusty retired engineer like me should be able to pick apart tech details of your product if you are smart enough to deserve to be in business!

          • Lucas April 25, 2017, 4:57 pm

            > IF people realize that gas cars are obsolete

            WHEN people realize that gas cars are obsolete. When, not if. It’s all over for gas cars. The rise of electric cars is inevitable. They are here to stay and take over. It’ll just take several decades because of how many gas-powered cars are already out there.

            While we’re on the subject, let’s keep shooting our optimism ray guns.

          • Kermit April 27, 2017, 2:06 pm

            MMM, I know you are a big fan of electric cars but I don’t understand why? If the world if full of a billion electric cars, don’t we still have a problem? All that rubber, plastic, energy spent to make electricity etc. The reason gas powered cars became popular was because they were “cleaner”. Horse poop was the problem back then. I really like your biking point of view and hope you continue that slant and move past the electric car.


          • Neil April 28, 2017, 4:24 pm

            My only issue with electric at this point is that there isn’t a robust used market for them. Even hybrids are essentially non-existent on the used market.

            So I’ll hold off for now. Cost of new aside, I suspect that the manufacturing footprint of a new car would substantially outweigh any savings from greening-up my weekly run of errands requiring a car. Also, given most electricity hear is still coal & gas, I’d have to buy my own solar panels to really call it “green.”

          • Scott May 1, 2017, 2:55 pm

            Great post!

            MMM: “I am just rooting for these companies to get it together and not be idiots about developing their products. There is just no way a 42-year-old rusty retired engineer like me should be able to pick apart tech details of your product if you are smart enough to deserve to be in business!”

            No offense, but you seem to know jack shit about car companies. I have a whole slew of family and friends that work for G(overnment) Motors, and the ridiculous levels of bureaucracy that exist within the manufacturing arm of that company are simply staggering. And it’s not just the unions. Car companies are entirely uninterested in what customers want unless they can convert these requests directly into revenue. Patching software or making it more useful for the “cerebral minority” doesn’t fall in that category for any said company, save perhaps Tesla who’s demographic is a stark contrast to any of the big 3 or their foreign competitors.

            The big car companies tell you what you want – it’s been this way for decades. I guess since you don’t watch tv you aren’t seeing the commercials telling you that what you really want to buy is a $50k Silverado painted up like a muscle car. Get with the program dude. ;-)

      • Kristen April 25, 2017, 3:56 pm

        I would recommend to give the Leaf more of a chance. I own a 2014 Leaf. I got a fantastic deal on it — it was used with only 12k miles on it. It came off a 2 year lease so someone else already took the depreciation hit. My only regret is that I didn’t get it sooner. I started keeping track of what we save on gas every month. Right now the average is roughly $200 a month. After selling my old, inefficient car, it will take only 3 years for it to pay for itself, then I’m actually saving money beyond that time period. What car can be bought today that saves you money as it ages? This one does. And at $1.50-$1.80 total to charge it (although I take advantage of free charging at my workplace) it’s extremely efficient.

        With that being said, the car requires some learning in regards to it’s behavior. The new 2017’s range I believe are rated at 107 miles. My 2014 is rated at 85 miles with the 24kwh batteries. Nissan said in either case, that rating is based on ECO mode with no A/C on, etc. It’s a best case scenario when all conditions are prime.

        I live in Florida, so our winter temps have been in the 40-50’s at the lowest. The batteries do go down much quicker at that temperature range. At 70 degrees, the range has performed most reliably. But that was city driving. On the highway, this is the biggest challenge for the car. Going 70mph in a headwind will eat up battery at 30-50% faster. I have not tested it in our Florida summer heat yet, so it will be an ongoing experiment.

        I’m shocked if you get 110+ miles out of the car. Wherever I go, I plan to have 20 miles of extra buffer at the end so I’m never at risk for getting stranded. This has saved me early on when first trying the highway and other conditions. The most important lesson with these cars is that you must account for common case variation and add safety into a planned trip.

        But I will never own an inefficient fossil fuel burning car again. Now all I see is immense waste on the roads around me. An electric car is freedom.

        • Ellery April 25, 2017, 6:19 pm

          Hmmm…all this is making me wonder if the Leaf is worth getting in say, New England, where it’s 40-50 now, just before May, and was colder before that.

          • Mr. Money Mustache April 25, 2017, 6:48 pm

            What it really boils down to is: how often do you NEED to drive a personal car more than the total range of the Leaf, without recharging – and will have no other car available at the time.

            This is actually starting to get a bit more on-topic here: how far are people willing to go to “guarantee” that they will have a car to take them on hypothetical long future trips with no inconvenience?

            Even the older, 84-mile Leafs cover something like 95% of typical American driving days, which is why I’m so in favor of the technology already. Then they changed them to 107 miles, and the Chevrolet Bolt is already well over 230 miles in exchange for a higher price.

            In exchange for slight range inconvenience, you get a car that is way better than any gasoline car, in almost every other way.

            • wishicouldsurf April 26, 2017, 10:52 am

              I now have 18 months of firsthand experience with a used Nissan Leaf. Mine is a first generation 2011 and I drive in a geographic area with less than ideal topography for electric car driving (read: very hilly). Despite my limited battery range, I love it for so many reasons and it really does meet my needs 90-95% of the time. Reading your blog MMM inspired me to think outside the box on this a bit and I was able to locate and negotiate the sale on a used one at a price level that made the payback period less than 3 years when I factored in the savings on gas, oil changes etc. and less than 18 months when you factor the money received in the sale of the car it replaced. I fully expect it to last another 8 years before I need to replace the battery. And I’m hoping that the cost comes down dramatically by that time!

            • Jason April 28, 2017, 11:09 am

              My wife and I were a one-car, Leaf driving family of two for over a year, in the DC metro area. It handled the daily needs perfectly and my wife was able to charge it for free in her work garage. Occasionally for long outings around town (particularly in winter) we would be cutting it close on range and so would stop into the Nissan dealer and top off with the high speed charger on the way home.

              Did we feel the like we were missing out on the ability to take longer road trips? NOPE! There were nice people in suits 5 minutes from our house that had parking lots full of fuel-efficient small highway champion cars (or really any type of car) that they would let us use for a really reasonable price for whatever number of days we needed.

            • Jubes May 2, 2017, 8:03 pm

              ^ Yes!!

              We’ve been crunching the numbers and are seriously considering becoming a one car Leaf family! The other option would be to keep our aged Prius as our second car, but we really don’t need a second car.

              We’re finding that it financially makes more sense to rent a car for long trips. Doing that for 3 weeks a year is cheaper than owning the second car for us. Plus, the rental will be more reliable than our older car, so, less stress on vacations.

              So exciting to open up the brain to new ways of thinking!

            • Kermit May 12, 2017, 2:33 pm

              Doesn’t a bike, take care of the 90% of travel needs? Seems like a electric car with a range of 80-110 miles is in the (NOT NEEDED) middle ground between a bike and gas powered family hauler. Would you take your electric car on your tips to Canada? That would extend the travel time by days, wouldn’t it? Town trips = bike. Longer out of town = gas car? I still don’t see the need for electric car. As for the overall poplulation, they don’t need an electric car? That seems a waste of resources. Just legalize golf carts if everyone is to lazy to pedal around.

            • Cory May 22, 2017, 9:51 pm

              Agree! Living in Boise, my trips are almost all 100 miles. This blog has inspired me to use a bike for the local stuff. I’d love to use a bike for the really long >100 mile trips too, but usually don’t have time :).

              BTW, One thing I figured out is that there are bike racks at the airport! Now that is cheaper than Uber or the parking lot!

              MMM, you are probably flying to Portland and Seattle, but if you happen to be driving we have some pretty nice parks and mountain biking in Boise if you need to break the trip up!


        • KS April 26, 2017, 2:21 pm

          Wait till autonomous vehicles dominate our roads – 100+ years of waste and efficiencies will be revealed soon. Hope I live to see how much contempt future generations have for all our 20th century oil & gas/combustion engine sinning.

      • Stockbeard April 25, 2017, 4:02 pm

        Pete, you left the corporate world too long ago, you forgot that customer service *never* puts you in touch with the person who could actually fix the problem or discuss the root cause with you :)

        • Lynne April 26, 2017, 10:15 am

          Hah. Yup. If only this worked in real life: https://xkcd.com/806/

          …I feel it’s extra sad in a business-to-business context when *I* know more about the idiosyncrasies of a software package than its vendor’s tech support rep does, and can do a better job of troubleshooting it. We are paying for, and get, a lot more in-depth tech support than people in the consumer market usually do, but we *still* don’t always get people who know what they’re doing. But there are better odds of that, at least. I do adore the really competent reps like that Linux chick. :)

          The other nice thing about our context is that if I solve or diagnose something and tell the vendor about it, they actually do listen (even if they don’t necessarily do anything about it right away). I’m not an ignored voice in the wilderness. But that kind of listening is much more…directly incentivized…for the vendor when they have a relatively small set of customers to keep happy. I represent a non-trivial revenue stream.

          If you’re a smart company that wants to thrive in the long term, you find a way to do that sort of listening even when your customer base is big, of course…

      • Chris May 1, 2017, 8:04 am

        I recently bought a used nissan leaf and I think it’s odd that you would criticize them so much. They were the first major manufacturer to put some skin in the game and create a mass market electric car. It’s flawed, but it still provides a more than adequate amount of utility for people who own them. If you want a perfect battery you can buy a Tesla Model S for $60K more.

        Nissan deserves more credit AND loyalty for being first to market on a car like this.

      • Dan D May 8, 2017, 7:40 pm

        I differ with you on requiring the corporate culture to align with the product. I just bought a brand new Chevy Bolt. Not very Mustachian, I know, but at least I did it with cash after decades of being described by my financial adviser as in the 95th percentile of savers. (What? If i’m at the head of the class it is an extremely dumb class). Anyway, I did it specifically to empower the beautiful nerds in the engineering department at Chevy. I traded in a Volt to get the Bolt. I had purchased the Volt in 2012 for the same reason. I know all about GM and I am not impressed, but I don’t require the corporate culture or the CEO to be enlightened. In fact, in today’s climate I find it hugely encouraging that Chevy could have ever produced the Volt or the Bolt while upper management contained the likes of Bob Lutz, a rabid climate change denier who used his corporate booty to purchase his twisted vision of luxury , a fleet of clown cars and his own private fighter jet. And yet the Bolt exists. I have even gone so far as to field customer questions over the phone for the salesman who sold me my Bolt because he knows so little about it. I was glad to help, not him necessarily, nor his CEO. No, i was supporting the engineers who swam upstream against such resistance to create a game changing vehicle. I was happy to help them. I trust I can get a hold of one of them in a pinch.

        Not to put to fine a point on it, but this is exactly why Trump does not bother me as much as he otherwise might. He is not an obstacle to progress when the place is crawling with kick ass engineers. Take a nerd to lunch (rice and beans). The meek shall inherit the earth.


      • James May 15, 2017, 3:30 am

        “Nissan Corporate doesn’t even know what a kWh is”

        The fact that an adult person with a job doesn’t know what a kWh is gives me feelings I don’t like.

  • Chris Durheim April 25, 2017, 12:23 pm

    What a loss for that company that wouldn’t do business without the contract. Sounds like they missed out on something cool. I would have watched it.

    Your comment on one more year syndrome applies in a ton more scenarios too:
    – one more year before we are ready to have a kid. We’ve really got to “maximize our earnings first”
    – one more year before we are ready to start a business. The concept just isn’t refined enough yet.
    – one more year before we take our big trip across the ocean. We need to make sure we have every last detail planned.

    It all comes down to minimizing risk, but risk is where a lot of the fun in life is.

    I took a small risk when I went out of state for school. But led to meeting my wife and having an amazing person to spend the rest of my life with. Now we’ve got an awesome family of 5.

    It takes a little faith to try uncertain things, but the upside far outweighs the downside – a life of drudgery.

    I’m a risk adverse person by nature so this is a regular battle but I’m getting better at this and have some big risks planned in the next few months :)

    Thanks for the reminder and inspiration.

    • The Roamer April 25, 2017, 2:45 pm

      That is a great observations and very true , waiting for things to be perfect to act is silly because we all know things will never be perfect.

      I am currently acting on this advice. I have been wanting to visit Ecuador and El Salvador for years and years as I have family there. It has always been someday. When I graduate high school, when I graduate college…. but it didn’t happen. Finally we set a date ( to attend a chautauqua with MMM no less which ironically we wont be able to do as this years was scheduled in OCT not in NOV like previous 2 years, bummer for us) and now we are taking concrete steps to make it happen. There is a risk in just quitting our jobs for 4 months without having anything else lined up but our mustachianism has allowed us to build a big enough safety net.

      If I was able to respond to these people who are working just one more year I would say just pick a date and stick to it. Talk about it. tell everyone! it will make it more real and you will mentally start preparing for the change.

      After our trip maybe I’ll come back here and give an update. To show whether our mitigated risk was worth it or a very bad idea. I’m fairly confident we’ll find jobs before burning through our safety stash. So here’s to being optimistic.

  • Mr Crazy Kicks April 25, 2017, 12:36 pm

    Studies have shown that social contracts hold more value with us than legal ones anyway. When we agree to work together as friends people are a lot more likely to contribute more and be more honest. Studies have shown that when we move away from social contracts and into business contracts people stop working as a team and start trying to the the most for themselves. We would all be better off trusting each other and building communities rather than trying to get whats ours on paper.

    That said, your contract looks fairly reasonable. I’d have no problem signing up for some tasty brews and chilling for an evening, even if it was legally binding :)

    • Mr Crazy Kicks April 25, 2017, 12:40 pm

      BTW, I left my job soon after we became FI. Even if I miss the paychecks sometimes, I have no regrets at all. You can’t buy time and I’ve been making the most of mine. Thanks for the extra inspiration :)

  • jason April 25, 2017, 12:41 pm

    Here’s a thought – while I totally agree with the trust thing – makes things just so much enjoyable – it only happens if priorities are aligned. In other words, for example, your motivation for a project is not about the money (while that’s of course a good side effect) but instead to be productive, to be helpful. contracts and all the formality bs stems from the general cultural accepted normal BS that is greed, which in turn, boils down to people not having strong frugality muscles to use your term. always trying to ‘stay with the jones’ by buying more stuff, which means need more money, which means greed, which means will screw you over whenever possible to get more money, which raises the ‘need’ for contracts, which ironically, gives greedy lawyers (I’m a lawyer too btw) to see the opportunity to pad their wallets (because again, greed).

  • Stewart April 25, 2017, 12:45 pm

    This post is spot on and further makes me question my entire profession. I work as a lawyer and I often worry that with my small business clients, all I am doing is creating unnecessary obstacles to them carrying on their business by insisting that they document every business relationship with some sort of contract. Far too often during the day I find myself asking….am I really creating value for anyone beyond myself with this legal work?

    • Paul April 25, 2017, 1:04 pm

      I’ve been practicing law for 25 years and also often question how much value I
      am providing my clients. Early in my career I felt I was adding significant value. However, the practice of law, in too many instances, has changed from being a “profession” and has simply become a “business” and is driven almost solely by billable hours and the bottom line. This is especially true in larger law firms.

      I likely have enough to retire, or try something different, but as MMM points out above, it is difficult and scary to walk away from that steady pay check and benefits. Slowly, I’m getting over my fear and will soon have a new beginning…perhaps a small law practice that actually puts the clients first….

      • PhilosoBiz April 25, 2017, 9:16 pm

        I have used commercial lawyers and patent attorneys a number times over the years. In my view, good ones add a lot of value. The words on paper are one thing, but I find the clear thinking about what a potential business relationship is trying to achieve that’s needed to get to those words is invaluable, and certainly saved me from going off half-cocked on more than one occasion.

        But yes, I avoid law firms where it’s all about billable hours and mostly go boutique. And then only for setting up non-trivial relationships.

      • Biglaw Investor April 26, 2017, 12:28 pm

        Do it Paul! Can you send me an email? Would love to chat with you.

        @Stewart – I agree, although the one value of contracts that Pete overlooked is that it forces you to agree on terms. Many people think they are in agreement until you force it to get written down and then they discover that they were thinking different things. Does that mean everything needs to be documented with a contract? Nah, but they can be helpful.

        • Roger Browne April 27, 2017, 4:04 am

          @Biglaw_Investor — For a written document that will “force the parties to agree on terms”, a Memorandum Of Understanding can work better than a contract.

          The Memorandum Of Understanding lays down the agreed terms, to avoid misunderstandings, yet both parties know it cannot be enforced as a contract, so the project proceeds in a manner that is co-operative rather than adversarial.

    • Amber April 26, 2017, 8:53 am

      It’s a valid question. The billable hour model is the source of much bullshit because it places the interests of the client directly against the interests of the lawyer. For example, the cheapest and most effective way to solve disputes is by contacting the other party and working it out or, more formally, early mediation. But that’s not as profitable for the lawyer is litigation. It’s also more profitable for the lawyer to draft a long ass, cover-every-contingency agreement when I shorter one will do.

      This reality is part of the reason I moved in-house. First, I now focus on litigation avoidance, which involves such novel principles as “make the right decision the first time”, “treat people with respect”, and “don’t be an asshole.” Second, I know my clients and their business objectives much better because I don’t bill them for every six minutes of our conversation. I actually know them as people!

      I will say in defense of contracts–they can be useful for managing expectations. They force the parties to sit down, hammer out the details of what they plan to do and what the limits are. However, I’ve seen plenty of deals negotiated to death over tiny details that could be resolved with a little trust.

      • Stewart May 2, 2017, 8:45 am

        I agree 100% with the problems associated with the billable hour model. Moving in-house and freeing myself from that model would be a dream and it is definitely one of the options I am considering for my career going forward.

      • Stewart May 2, 2017, 8:45 am

        I agree 100% with the problems associated with the billable hour model. Moving in-house and freeing myself from that model would be a dream and it is definitely one of the options I am considering for my career going forward.

  • Nathan L April 25, 2017, 12:50 pm

    You could add a link to your Insurance is for people who are bad at math” atricle at the bottom

  • Andrew Alexander April 25, 2017, 12:51 pm

    YES! This is such a good point, which I’ve been trying to impress on people for years. There was a wonderful Planet Money a few years back, in which they described the story of a young 27-year-old associate at a white-collar NYC law firm, who was drafting a $400 million contract between two large boring Midwestern industrial concerns. The young lawyer agonized for weeks over the contract, and after many late nights, finally finished it, and the two companies signed it. Then, lying awake in bed that night, he realized: //he had put a comma in the wrong place//. Due to some legal detail, the misplaced comma in the contract would cost his client $25 million.

    And so he started panicking. At a minimum, he’d be fired. More likely, he’d be disbarred, and his legal career would be over, and he’d never be able to pay back his law school student loans, and maybe he should just jump off a bridge right now.

    So the next day, he goes into work, and tells his boss, and they get the client on the phone, and explain what happened. There’s a pause. Then the client laughs: “Hah! That’s hilarious! Well, I guess I better call up Bob [the president of the counterparty] and we’ll get it fixed.” Of course the two companies had done business together for years, and the presidents were both friends, and they both realized that it was a mistake and corrected it. The moral of the story was: //the contract wasn’t the deal//. The deal existed in the long-term TRUST and the long-term RELATIONSHIP between the two companies.


    • Mr. Money Mustache April 25, 2017, 4:02 pm

      Great story Andrew! And so true – even the biggest deals (like inter-country relationships) come down to integrity, which leads to feelings and trust. Get that part right and everything else is easy.

      • Mralistair April 26, 2017, 4:15 pm

        If there has to be a cotnract, it should be there to set out how parties work together and what happens when unexpected stuff happens.

        it’ll never create trust,

    • SwordGuy April 30, 2017, 2:13 pm

      My wife and I buy and restore homes and rent them out as our side business.

      Over the last several years, we’ve identified a quality electrician, plumber, roofer and arborist. We don’t work off fancy contracts, we work off of earned trust.

      They don’t do work that doesn’t need to be done, the work they do is done right (or fixed promptly if a mistake was made). I pay promptly and send them more business.

      Some times things don’t go as planned, so we work them out in good faith. The electricians were working long hours on a Saturday and Sunday so the house would be ready for us to move in. They mis-wired the clothes dryer that came with the house and fried it, which we discovered a couple of days later. They were just tired and made a mistake.

      Once we realized what had happened we contacted the owner of the electrical company. He came out and verified it. Here’s what I told him, “Look, the guys were working above and beyond to help us out, so if this is going to come out of their pocket, I would prefer to just eat the cost.”

      He said, no, he would be paying for a new dryer, not them.

      “Ok, but it’s a used dryer, not a new one, so how about you only kick in half?”

      He paid for a new dryer, half for the used dryer and the other half for the inconvenience. Wouldn’t take no for an answer.

      How many of his other customers would have that conversation with him? Do you think we get a fast response time when we have a problem? You bet we do.

      Here’s a different case:

      We’re doing a slow flip on a mid-century modern house to restore it and get it on the national registry. A large portion of the roof is flat. Water had pooled up on it and, with the inevitable leaks over time – particularly after it was abandoned – had caused a lot of water damage.

      The roofer supervisor and I came up with a plan to put a small degree of slope on the roof so water wouldn’t pool on it again, but the house would still look the same. Once the actual roofing crew got to the site to do the work, the foreman refused to do what we had agreed to. Then he explained the problems it would cause and exactly where the problems would manifest. And – he was right.

      So we changed what we wanted done to take into account his advice. And saved several thousand dollars, too.

      It’s always good when the actual experts get a say in how the work gets done instead of just the sales people.

  • KMB April 25, 2017, 12:51 pm

    Checking in here as someone in this very situation. About a million net worth. I want to take some risks very similar to what you did when you got caught unable to sell your spec house. My solution has been to keep my job, but this sucks big time! With all your hindsight, if you were determined to build houses again, how would you approach it?

  • Juan April 25, 2017, 1:02 pm

    Very true! In my line of work I see way more contracts than I would like. It’s amazing how trusting each other can make our lives much better.

    I’m still 5+ years away from FI. The “one more year” problem is something that I can see myself falling into. I’ll ask for some face punching when/if that happens :)

  • Jone April 25, 2017, 1:09 pm

    This is spot on in my current life. I recently sold the big house and downsized to an older, but more reasonably sized home closer to work. Unfortunately, a few major expenses have come up with the new house that were unforeseen (…primarily hidden chimney and plumbing issues). While I still like the house very much overall, my net worth will take a temporary dive making the repairs. Further, when these repair costs are added to what I paid for the place, my total inputs will exceed the house’s current market value. I’ve been beating myself up because I didn’t see the defects at the outset.

    But, as MMM states, there are no guarantees. Even if YNAB shows a decrease in my net worth over the next few years, I’m still going to be warm, safe, well fed, and dry. Eventually, (about 3 years by my reckoning) inflation and sweat equity will catch up and the net worth chart will achieve new heights.

  • LongmontScott April 25, 2017, 1:10 pm

    Makes total sense. Throw out that example makerspace contract I sent you. 😁

  • The Tepid Tamale April 25, 2017, 1:12 pm

    I love the lesson: “Instead of working endlessly to build a glass shield around yourself, start enjoying life right now and just keep a mop handy.” I have always felt that a contract simply gives you the right to take someone to court, where as you put it, nobody wins. (Well, the lawyers collecting the fees do win, but let’s not talk about that and get anyone’s undies in a bunch!) Enjoying life right now, something that is my new focus. I’ve let this journey get me too focused on the future.

  • Patrick April 25, 2017, 1:23 pm

    I’ve had more positive outcomes with warranties than negative outcomes. Several companies just outright sent an entirely brand new product and asked for the return of the faulty product.

    I’ve had to use contractual obligations to force my landlord to fix issues with the property we are renting (I provided notices that the lease would be broken in x amount of days, based on the limitations of the law, if they failed to complete the required maintenance). Without the force of contract law, we’d still be sitting here with a swampy green pool (first asked for repairs in December and continued to ask once in January, February and March; no action until I provided a fix it or break lease notice in April which resulted in immediate action). Also, they seemed to get on it when our hot water went out, but after they got estimates, they sat on their hands leaving us without hot water for 7 days before I delivered a fix-it or break lease notice in that case as well. I bet we’d still be without hot water, 25 days after the incident, if not for the force of contract law.

    Now if we had a world with no contracts and just a firm handshake? I guess we could always have just packed up all our belongings, taken a week of vacation, paid hundreds of dollars to rent a moving truck and uprooted our entire life because we would have had no other recourse – seems expensive and disruptive especially since we have no way of doing a review of a landlord for a single family home to find out if they meet their obligations on time and as expected.

  • MrWoW April 25, 2017, 1:25 pm

    That’s the rub right? Being comfortable with the unknown. Trusting the process. No one can predict the outcome, but if you trust and follow the process, the outcome is most likely to be what you have been preparing for. Might not be, but then you can adjust, granted you’ve allowed yourself the flexibility.

    Most times, it’s just better to behave like a sane rational human being. If you do, most people will do the same in return. At least that’s what I’ve seen, you might get burned a couple times, but that just comes with the territory.

    • Divnomics April 25, 2017, 2:49 pm

      The unknown is often the time/place where you learn the most and grow as a person. In my opinion, something that anyone should go through, but not always succeed in.

      Even in the small things in life, this can really help putting you forward. Like calling that girl you know and really like, asking to do a kick-ass project on your job, or even choosing a different lifestyle and pursue FIRE. And even if the outcome isn’t what you expected, it can open new doors or you can find new ways.

  • DLcygnet April 25, 2017, 1:50 pm

    I work for a large Aerospace company – your rant about lawyers and layers of management approval struck home with all of us in the office. It’s gotten pretty bad – that’s really saying something from somebody who used to be in the Army.

    Anyway, this is a great post & I’m one of the many people who told myself “pay off the house first” or “1-2 more years and THEN…” One reason I’m glad I didn’t jump ship earlier: cancer. Being on a really good company health insurance plan that covered the full treatment saved me. It also helped to have something else to keep my brain active, rather than doing housework while staring at a big pile of medications for the better part of a year.

    Having said that, being close to (or beyond) financial independence makes the daily bureaucracy so much easier to shrug off and even crack a few jokes.

  • Adam A April 25, 2017, 1:59 pm

    Where is the Like or +1 button? I couldn’t agree more with this. I run a small side business and like to try to do things honestly and with integrity. There have been instances where I’ve been presented with a contract after we’ve had some very friendly conversations and things seemed to be progressing well. As soon as I get one, that same good and happy feeling about the project starts to die and I feel like the seeds of distrust have been sewn. Do they not trust me and that’s why they sent me this? Should I not trust them and send them one back? Why can’t we just do what we agreed to do and if neither one of us is happy, we show it using our feet and walk away. If you’ve got so much to lose by being involved in a project that you feel you needs contract, perhaps the deal is too one-sided to begin with. Both parties should hopefully have something equally to gain or lose should one of you not do what you said you would.

  • Mrs. Picky Pincher April 25, 2017, 2:00 pm

    Good point, MMM. Sounds like the One More Year syndrome really gets people. Luckily I’ve hated 100% of the jobs I’ve ever had, so getting the hell out of Dodge is always priority numero uno.

    This is slightly unrelated, but I thought you would enjoy an absolutely bullshit contract I had to sign a few months ago. I’m a contractor and I work in my client’s office with their employees. My desk was moved to an area where employees sit, instead of sequestering contractors to our dungeon (no really, it was a literal dungeon, underground). I had to sign an extra contract saying I wasn’t allowed to attend pot lucks.

    A contract. Just for pot locks. What.

    • Biglaw Investor April 26, 2017, 12:31 pm

      That is hilarious Mrs. Picky Pincher. And what are the damages if you break the contract I wonder. Must you bring two desserts?

  • JL April 25, 2017, 2:16 pm

    I am exactly that guy you describe! – “late 30s and beyond who have worked multi-decade careers, [almost] paid off the house, given their kids a good start in life, stashed seven figures into retirement accounts, and long since grown bored of the big-company life.But they are still working one more year, to add that last bit of safety margin padding, fill up that last college fund for the last kid, max out that health savings account just in case.”

    Just wanted to say thanks for again putting things in the appropriate mustachian perspective. Truly nothing but my own (and wife’s) fear standing in the way.

  • Mike April 25, 2017, 2:34 pm

    My small business lives on contracts, but that’s because we’re signing multi-decade land leases to develop multi-million to (in one case) billion dollar wind and solar power plants. I occasionally deal with contracts between myself and my partner, but we both are laid back and easygoing about them and recognize that they’re mostly just a formality. I highly encourage the getting laid off path to semi-
    freedom. While not fully independent just yet, when I got laid off it came with a big enough severance to give me the confidence to go self-employed. All I had to do was decline to leave Colorado.

  • Kat April 25, 2017, 2:44 pm

    I am curious what are your thoughts on prenuptial agreements. Do you think that legal contracts/prenups suck the joy and fun out of marriage?

    • Sandy April 26, 2017, 2:02 pm

      Why would you marry someone you wouldn’t trust to treat you fairly if you divorce?

      • kruidigmeisje May 8, 2017, 9:35 am

        Because you fall pregnant during the pink phase of the relation (and trust me: no contraceptive is 100%).
        And I valued the prenup later (in the court proceedings), because mopping is easier if you have have a scoop (and can prove what was agreed upon)

      • Brian November 27, 2018, 2:27 pm

        For the same reason, you would marry someone that ends up divorcing you

        Because you can’t always trust any person to stay the same (nor should they).

        A lot happens to people in 30-50 years and people change. Often for the better, sometimes for the worse.

        Also, it’s not just about trust, it’s about simplicity. If I was getting divorced, I would much rather have a starting place to have a conversation that a battle from ground zero. We’re going through enough already clearly.

  • Adam Bloome April 25, 2017, 2:54 pm

    I agree with the sentiment of the post, however there are situations where it is definitely not applicable. As a doctor, you need to get a patients signature for all kinds of ( even minor) exams, tests and procedures. 99.99% of the time it probably wouldn’t be necessary, but in case one patient develops an unforeseen complication and decides to sue, my career could be over. So while this might work on a personal level or with small businesses, being screwed out of money or time is far different than being screwed out of your livelihood (or in the case of a patient actually being the victim of a medical error) contracts or consent forms do make a big difference in some cases. Also, aren’t oral contracts legally binding as well?

    • jubilant jill April 26, 2017, 1:09 pm

      I’m an RN and I’ve read studies that show repeatedly that “nice” medical staff are way less likely to be sued. I’ve seen a sweetheart surgeon fess up to the family about mistakenly nicking a patient’s bladder. I was blown away by her humble attitude and the family’s understanding. Compare that to the botched job I saw last week with a nicked bowel that wasn’t caught for 6 hours (lady had a crazy high pain tolerance and atypical presentation). This surgeon hardly apologized, and she tried to avoid the family entirely. Her attitude sucked and a lawsuit wouldn’t surprise me.
      And let’s be honest- informed consents are a joke. By including every little thing that could go wrong the patient is overwhelmed with information and has no idea what their actual risks are. They just trust that their surgeon “knows best.” I had a lady last week who didn’t know getting her tubes tied would render her sterile forever! This was after she’d spoken with the doc. Crazy, right?

    • coco April 26, 2017, 6:46 pm

      I don’t believe informed consent forms protect you from being sued. I believe they can help the patient think about what they are agreeing to but that they do erode trust in the relationship. Furthermore, the suit itself can make you plenty miserable even if you win. I think informed consent forms are exactly the kind of contrac MMM is talking about.

    • Amelia May 3, 2017, 8:50 pm

      Umm. I don’t know here. I know the medical field is complicated but one size contract doesn’t fit all situations. I am always aggravated by the “contracts” I am asked to sign just to talk to medical staff. In one case, very recently, I took my kids to the dentist (they’re 3 & 5) and they asked me to sign a contract that said something like, “we have the right to do whatever we deem necessary in whatever event we deem is urgent without parental consent.” Now I’m paraphrasing a bit but that was the gist and I declined to sign it. I emphasized, this is dentistry and these are my kids. I can’t foresee what kind of dental emergency you are going to have that you can’t check with me about first. I am pretty much only going to be about 20 feet away at any given time. I know the contract was just to protect them and give them some freedom to practice but it was overreaching. The aggravating thing was that because I declined to sign it the entire staff started explaining things to me as if my IQ was that of a snail and treating me like I was a mental patient . As if , because I don’t just accept these commonplace obligations, I was off my rocker. (I’m a decently educated , decently well read, previous chemical engineer and hang with a reasonably clever circle of friends. I can understand basic dentistry, business concepts and contracts.)

  • Nick April 25, 2017, 3:21 pm

    Thanks for the great reminder. The fear driven contract dynamic seems to be much like the illusion of safety and all the extra sales that drives. I’d much rather do business with companies and people who follow through without a contact whenever possible.

    I really appreciate your self testing and diagnosing the Leaf. It’s so much more fun to read a curious engineer’s honest thoughts on a product than a marketing pitch. Your findings on cold weather driving down battery life is a little disappointing for someone living in Alaska though.

    As one who “retired” the first time well before truly reaching FI I endorse your war against “one more year”. I’ll admit there have been some times of financial stress in the 5 years since I left my first “real job”. I was 31 and only had about 8 years of expenses stashed at the time, but the fear was unfounded. I traveled the world for a year, took jobs based on what I could learn and “retired” twice more, started my own business, married and walked across Spain for our first anniversary. Even with all of that our stash now has at least 15 years of expenses… Occasionally I wonder where I’d be today if I had found MMM in 2011 and been inspired to push through to full FI. Probably I’d have more money stashed and need a facepunch for missing the whole point.

  • Arthur Guerrero April 25, 2017, 3:39 pm

    Great reminder Pete.

    Life is too short to stress over the bullshit that may or may not ensue.


  • PoF April 25, 2017, 3:55 pm

    There are times when contracts are required, but even then, they’re written by lawyers and for lawyers. A lay person is not going to make any sense of the “legalese.” Not that it necessarily matters. The words on paper don’t necessarily mean anything.

    For example, before a surgical procedure, the patient signs a consent form (probably the 2nd or 3rd double-sided paper full of text they’ve signed that day). Even though the form tells them about all the terrible things that could happen, if those things aren’t verbally discussed, the signature means nothing.

    Trust is something I’ve noticed comes into play with the sharing economy. When I rent an Airbnb or even ride in the back of someone’s car, both the provider and user are putting a lot of trust in the person on the other end of the transaction. I’m being trusted not to destroy, damage, or steal someone’s stuff, while trusting someone else to drive me to the place safely. Sure, there are contracts we all agreed to when we signed up, but without mutual trust, these sharing economies would fall apart fast.


    • EJ April 25, 2017, 5:49 pm

      The medical contracts are huge, but I am talking about the social ones. When I meet someone the first time as a Cardiologist. I am building rapport and a relationship. Nothing is more important in that first encounter than the bond we build. Once that is set, we can cover the other anxiety provoking things like procedures and medicines.

      Once the person goes home I am trusting that they will follow their end of the bargain. I have given them information and prescribed them medications but the onus is on them to follow through and reach out to me if they have problems. On my end, I must always be available to them to answer questions and alleviate concerns.

      Sure we sign paper work to get care, but if that social bond is not there between a physician and a patient, then forget it. Outcomes are going to be worse and the patient is not going to reach out when there is a problem.

  • Mike April 25, 2017, 4:55 pm

    Wow, there is a lot of hate around here for contracts. People are even implying a contract are only used when you cannot trust someone!

    I have worked with small contracts (leasing apartments) and large contracts (hundreds of millions of dollars) and they are never a substitute for trust. You first establish a relationship of trust with the counter parties then create a contract. A contract is not an instrument designed only to beat someone over the head in court it is, in simple terms, an agreement of what the parties duties and responsibilities. Obviously they are tailored to the size of the project. A multi-million dollar deal will require a very long contract while an apartment lease only needs a short contract.

    Don’t think a contract is necessary? What happens when you want to move out of an apartment? Do you need to give your landlord notice? How much notice? Who pays for the electricity? How pays for a landscape service to maintain the courtyard? How are packages handled; will the office hold them for residents?

    Even in simple economic relationships like renting and apartment there are a lot of things that have to be decided. I don’t know about everyone here but I am sure I will not remember all the things I agreed to in 3 years when management changes. A contract, in its most basic form is simply an agreement between two parties.

    In Mr. MM’s example of having friends over for beer he likely did not write a 100 page contract but that would have been the wrong tool for the job. I bet he did send a text or email and reach an agreement of who was coming, when they would arrive, who was providing beer, and if there would be food. For a simple arrangement such as this a sentence or two written or verbal can accomplish the mission.

    I think Mr. MM’s problem is not contracts but boiler plate contracts from large bureaucratic companies. It is not uncommon to enter into a relationship with a large company only to be asked to sign a contract which is overly complex for the arrangement and has contradictions from what the sales person says. Well, the beauty of capitalism is we don’t have to give our dollars to those large bureaucratic messes.

    • Adam Bloome April 25, 2017, 5:08 pm

      Well said.

    • Mike Reiche April 25, 2017, 6:23 pm

      I too was struggling with the “all contracts are evil”. You described the situation very well, thanks for your post! If the contract is worth the benefit of entering, then by all means sign it. If you don’t like the terms or the time commitment of filling it out, it doesn’t mean the contract is stupid, just that it wasn’t for you!

    • Anne April 26, 2017, 11:52 am

      That is so true! Hard to remember exactly what one has agreed to 2-3 years earlier. Also, in the case of death, there is something to go on with. For example, if my son were to inherit my rental property, it would be very good for all concerned to have the contract which outlines everything from who is responsible for changing furnace filters to who pays the sewer bill.

    • Moshen April 26, 2017, 1:26 pm

      I agree with Mike. Putting things down in writing (you don’t need to call it a “contract”) forces both parties to think through the terms of the agreement and some “what ifs.” It also helps afterwards when memories get fuzzy about what was agreed to. I lost one friendship partly over a friendly, informal transaction where we disagreed afterwards about what had been agreed to. Had we put it down in writing in a simple email we would not have gotten so angry at one another. In my business, contracts or letters of agreement function in that way also.

    • Eric May 4, 2017, 7:50 pm

      Exactly. In unusual deals (like an M&A deal for example), the biggest thing that a contract does is precisely spell out what each party is agreeing to. Human memory is incredibly bad compared to how good most people think it is, and even well intentioned and trusting counterparties can have significant disagreements about what was agreed to unless it’s well specified in writing. A good contract also specifies how to work things out in the case of disagreement.

      I completely agree with MMM that contracts shouldn’t be necessary for the normal, low risk day to day interactions, but with anything that’s not boilerplate, they’re very useful.

  • RJ Bruer April 25, 2017, 5:09 pm

    Timely post. We reached that seven figure net worth this past year. We have no debt and a small paid off townhouse. Yet, I’m feeling like it’s not enough. We plan to try to hit at least 1.5 mil before we decide we are FI. Should be there in the next three years or so if all goes well. In the meantime, we are traveling a bit, looking for a place to settle and call home. We were in MMM neck of the woods last year and loved Fort Collins. The whole culture there really spoke to us.

    Chances are housing will be a bit more expensive where we end up, so we would like to stash a bit more to remain debt free. I will most likely keep working in some capacity, under my own terms of course. That’s partly because I just don’t see myself without some type of work, and partly out of the fear mentioned in the post. Hopefully I’ll have a nice short bicycle commute at that point.

    I think I’m just gonna have to work my way into the concept of FI a bit slowly. Regardless, we are amazed and proud of what we have accomplished in a relatively short amount of time. Things only get better from here.

  • HenryDavid April 25, 2017, 6:17 pm

    Nothing AT ALL worth bothering with is the least bit safe or guaranteed.
    First kiss. First love-making. First apartment. First solo foreign trip. First public speaking. First published words. First music performance.
    All . . . fucking . . . terrifying! Absolutely no guarantees! Coulda gone horribly wrong!
    And every single time, the beginning of the best parts of life.
    (And hey, I’m not even a parent, the biggest no-guarantee leap ever. Without which: no humans.)
    Take at least one big scary leap–with or without a safety net–every year.
    Because “if you’re not busy being born, you’re busy dying.”

    Life’s too short to wait around for (the illusion of) safety . . .

  • Matthew April 25, 2017, 6:18 pm

    What do people think about sublease arrangements to friends? Last fall, I lived in an apartment near my college campus that has been kind of a rotating door of friends/lessees, and I’ve subleased my share of the apartment for the spring semester to a friend without any kind of formal arrangement. I’m planning to sublease it out for the summer to another friend, but I feel vaguely uncomfortable doing it without any kind of written arrangement. The landlord is kind of a nonfactor, as he has been disinterested in helping with different issues that weren’t a direct danger to the structure itself.

    • Mike Reiche April 25, 2017, 6:27 pm

      I moved to Colorado just 1 month ago and entered into a temporary sublet in Boulder. It has worked out great so far. I knew that I was good for what I committed to, but the guy who sublet to me didn’t know that about me. There was no contract signed, just text exchanges while I was on vacation in Sweden with my family! There is, Im sure, a risk of taking a hit if you come across someone who is no good, but I also believe that most people are honest and worth taking a small risk on!
      If you are in an area where the sublease would be easy to fill if the tenant fell through then take the risk with no contract. If its a tough area to fill a sublease then perhaps a paper contract would urge the person to feel more responsible for following through on the lease.

    • Nick April 25, 2017, 7:11 pm

      I’ve had nothing but good experiences with subletting to friends and family. I do always made sure to have the permission of the owner when I am not the owner. In the 12 years since college I’ve only spent one year living in an arrangement entirely under written contract. It was the least enjoyable living situation I’ve had.

    • Tara April 26, 2017, 8:14 am

      Be careful with these–it really depends on state law.

      Did you know in California and NY, once you live XX amount of days in a place (I think it’s like 28 days, honestly), you are a tenant and have tenants rights (even if you’re just visiting a friend)? That is why contracts are VERY important. Without one, and depending on state laws, courts always rule in the tenants favor.

      • Mike April 27, 2017, 12:59 pm

        I agree with Tara. You should have a contract, even if it is only one page. It really just needs to list the terms you and the tenant agree to. How long will the tenant be there, does he have to give you notice if he decides to leave early, how much is rent, how are utilities handled.

        You should also get written permission from your landlord assuming your contract with the landlord requires this, it may not.

  • Tanstaafllite April 25, 2017, 7:08 pm

    Having practiced law (mostly contracts and commercial law) for many years, I have heard numerous criticisms of and apologies for both lawyers and contracts. MMM’s belief that trust should matter more than a piece of paper is a common theme (and not wrong as far as it goes). It was very eloquently stated by Mannie in Robert Heinlein’s “The Moon is a Harsh Mistress” (one of the greatest, no, the greatest, SF novel ever published).

    However, there are times when you do not know enough about the other party to have a rational basis to trust the other party but you still need to work with the other party. In that case, especially when the stakes are high enough, you are likely acting in an irrational manner to throw caution to the wind and blindly decide to “trust” the other party without any reasonable basis for doing so. It may rise to the same irrational level as trusting expensive Wall Street advisors to consistently provide financial advice to you which is strictly in your best interest. One option, as mentioned by MMM, is to avoid doing business with such people whenever possible. That is sound general (and legal) advice but it is not an answer when circumstances force you do business with such people. You need a sound, fair contract it the stakes are high enough.

    A more important point is that a good contract lawyer (not always an oxymoron) will help the two parties fully understand the business deal to be evidenced by the contract. Many intelligent people who are competent in their areas of expertise sometimes do not fully understand the risks and other ramifications of a proposed business relationship (for example, which party bears the risk if X happens; who owns any intellectual property which is created by the parties during the business relationship; if a party defaults, what are the rights and remedies of the damaged party, and are the rights and remedies different based on whether the other truly cannot perform or merely chooses to not perform; if the parties cannot resolve a disagreement should they be required to mediate or arbitrate or is a lawsuit the only recourse?). To paraphrase Oliver Wendell Holmes, a good contract greases the wheels of commerce. Of course, a bad contract prepared by an incompetent or careless lawyer is sometimes (but not very often) worse that no contract at all.

    I agree with MMM that we should dial back our litigious impulses (easy for me to say since I am not a litigator and I routinely caution my clients that litigation should be viewed as a last resort and that sometimes justice simply cannot be achieved in a business dispute — such as MMM’s dispute with his former partner in the construction business). However, a good contract sometimes can help the parties restrain their baser instincts. I will note that people who want to post on the MMM Forum must sign a reasonably comprehensive contract (the Registration Agreement) which does a good job of informing posters about their rights and obligations — exactly what a good contract should do.

    • GU April 26, 2017, 11:18 am

      I like Heinlein, and TNSTAAFL is one of the most important lessons in life, but I have to admit that I was disappointed with “The Moon is a Harsh Mistress.” I think it was just hyped up too much for me. And it feels very dated (very Cold War-ish).

      • Tanstaafllite April 27, 2017, 10:51 am

        I had the good fortune to read “Mistress” the first time without knowing much about the book, so I had no expectations other than the fact that I had enjoyed several other Heinlein novels. As to the dated, Cold War critique, that it how I would describe “Farnham’s Freehold” but I never thought that criticism applied to “Mistress.” If you think of “Stranger in a Strange Land” as describing a new, libertarian ideal that is neither liberal nor conservative in the traditional sense (Hayek’s third way), then “Mistress” tells the story of a proto-libertarian society which, paradoxically, has evolved from a penal colony. The sentient computer, Mike, is the literary device essential to the plot and which (or who) also raises the question of what it means to be a free sentient being.

        • GU April 27, 2017, 12:05 pm

          I was certainly cheering for the loonies!

    • Lawprof November 19, 2017, 3:31 pm

      I don’t see the bit where MMM said that people should irrationally throw caution to the wind and blindly trust everyone who crosses their path with no reasonable basis for doing so. That would just be stupid, right?

      As for the contract lawyer helping the parties to understand the business deal, I think most business people if they have their heads screwed on right are far better able to understand their own deal and its risks – the day lawyers made people believe that they don’t understand their own deal and its risks until the lawyer explains it to them, is the day lawyers pulled a fast one on everyone. I don’t think savvy businessmen buy that at all, anyway, they know very well that the lawyers are just parasitic on the deal.

      Lawyers are very vested in making people believe that life is too risky to be chanced without the so-called force of law.

  • Eliza April 25, 2017, 8:42 pm

    Uncanny timing Mr Money Mustache. A good friend was just complaining about how her building designer isn’t sticking to “his own contract” in terms of response times and when the drawings were supposed to be ready. I suggested she take the whole thing with a grain of salt, but she believes a contract is a contract and everyone should stick to it.

    Mostly I reckon it’s as you say, a veil of security. Most clients would read through the contract and feel like the decision to use this building designer was justified because look at all the promises he’s making and then probably not think twice about it unless the shit hits the fan.

  • MAD Wealth April 25, 2017, 9:01 pm

    Wow this article comes at an interesting time in life for me where I’m seeing there are no guarantees in life after making it through a house fire that was really close to being an utter catastrophe. Still a very fortunate person, and makes you grateful for everything you have in life. Only downside is my current lack of bike access.

    The whole contract thing reminds me of when we were hiring a chef/caterer for our wedding. After getting a bunch of contracts from other prospects we went with the person who said “I work on handshakes, not contracts”. My wife wasn’t assured considering it was for our wedding, but after the conversation/meeting my gut told me otherwise. Best decision I made as they went above and beyond all our expectations. Plus Rich and his crew did more work than they said they would. On top of that everyone said it was the best meal at a wedding they ever had. Some of that had to do with our own homemade ingredients we supplied, but I don’t think any other crew could have pulled it off. I’ll put up the website for anyone interested in the Chicago area. http://chefmostwanted.com/biography/.

  • jessica April 25, 2017, 9:01 pm

    This is such a great piece of writing.

  • Kevin April 25, 2017, 9:30 pm

    MMM, you touched on the one topic I haven’t seen you address lately but am greatly curious how you handle – health care/insurance. It certainly must be the biggest line item in your budget. How do you handle it nowaday?

  • Travis April 25, 2017, 10:29 pm

    Did you use a contract to buy & sell your homes…?

    The contracts exist for a reason… you just need to apply a healthy dose of Pareto Principle. The example used is a perfect use case: No production company will air material for which they don’t have contractual rights to do so; doing otherwise is an existential threat to their business… and they’ve probably been burned in the past.

  • Paul April 25, 2017, 10:33 pm

    Fair points all, but I view contracts for doing business akin to the famous quote on democracy (“the worst form of government, except for all of the others”). They can and often do suck, but I think that’s more from laziness / CYA / a lack of creativity than anything else.

    There are a host of transactions where there is no ability (or need) to build up trust, and a contract serves a very important role there. I’ve been saved on small and large matters by contracts, and I’ve also seen companies unfairly damaged or destroyed from poorly written or missing contracts. They’re a necessary evil methinks.

  • Mike April 25, 2017, 10:50 pm

    Funny story about contracts. As a non-lawyer, I’ve actually made a decent amount of money correcting mistakes in contracts made by lawyers due to lack of attention to detail. Of course, I only made 30 cents fixing their mistakes for every $1 they made making them, but then again I didn’t shell out $100k for law school. Nothing against lawyers; I work with them all the time and i am glad they are around to amuse the fuck out of the rest of us with their antics.

  • Mr. Grumby April 25, 2017, 10:53 pm

    I am in health care and, while we have along way to go to improve safety and outcomes in the US, the massive number of “safety” initiatives (really initiatives to assure reimbursement) is astounding. There are safety nets for the safety nets, and the result is a bloated system that impairs the ability of bedside staff to provide effective care. But we all feel better about ourselves, I guess.

    I look forward to meeting you in Portland next month!

    • KS April 26, 2017, 2:31 pm

      Yeah, now medical professionals are typing on keyboards and making more eye contact with device screens than their patients. All the upsell efforts during an appointment are also making healthcare such an unpleasant experience. Maybe if healthcare started to use the phrase’ customers who drive our business’ instead of ‘patients’, they might actually are about delivering solid care & wellness.

  • Mike Reiche April 26, 2017, 12:04 am

    First post I really got into and made multiple comments and… first time some got censored? Oh well, not worth reposting.

  • jestjack April 26, 2017, 3:05 am

    My problem is with warranties….which are so many times worthless…so why offer them? A good example is roof shingles. I am in the process of putting a roof on my home. To that end I decided to get three estimates and then decide whether to hire someone OR make it a DIY Project. During this process there are 50 year warranty and even “lifetime warranties”…..but in the same breath that it is mentioned the company rep discloses that it REALLY isn’t a lifetime/50 year warranty but rather a “marketing tool”….So why call it a warranty? I’m with ya … paperwork that means nothing!

  • chasesfish April 26, 2017, 5:23 am

    You’re speaking to me MMM! Yes, I am that person in my 30s you described, given 15+ years to a megacorp and still in fear of being “poor” again, even though my stash is something like 30x annual expenses.

    I also hold the same personal hatred of contracts, I work in an industry that has 30-50 pages of contracts that don’t matter 99.5% of the time and then when they matter, we just spend a lot on attorneys fees enforcing them.

    It will be nice to cut loose of both of those in the near future..

  • The Vigilante April 26, 2017, 5:43 am

    Love the message of this post about trying to control everything. 100% on board.

    But I wouldn’t ever want to do business with some kind of TV production that didn’t want to sign a contract. I want to know what each party intends to get out of the deal, and I want to memorialize that so that if something goes wrong, (or if someone just FEELS wronged), it can be fixed. MMM, I respect that you didn’t want or need anything from the deal, and that’s great. But THEY did, and I wouldn’t want to see them get screwed by you, even if by accident!

    As an example of how “no contract” deals can go wrong, I just represented a guy who accepted a verbal contract for an addition to his home (in spite of state law requiring a written contract). He hired some fly-by-night contractor by a friend’s recommendation, but that guy didn’t do a good job and ended up not answering calls after he finished half the job. Weeks after the date the work should have been done, my client hired another contractor (this time with a written contract!) to undo the first guy’s shoddy work and finish the job – and it went off without a hitch. Now, my client is seeking reimbursement for the additional costs he incurred because the first contractor disappeared. Now, it might be that the first guy had good intentions, but maybe he was an early retiree who got bored with the idea of building this addition. It shouldn’t become the problem of my client that the other guy changed his mind halfway through the job! A contract would have made my client’s life far easier (and the legal fees a lot lower). The only people who really win in the scenario where a contract was left out are the new contractor, who got new business, the lying scumbag contractor, who was paid for a job he didn’t do, and me, the lawyer who cleans up the mess left by the contract vacuum.

  • Jim Grey April 26, 2017, 5:50 am

    I wonder if a corollary to this post is “don’t sue.” Or, at least, “sue only if it’s wicked, wicked important.” The link is that if I can absorb minor losses and move on, who needs the stress of court?

  • Dude! April 26, 2017, 8:16 am

    My kids gave me a gift certificate for 90 day membership at a local Snap fitness. No contract was signed, in fact, the gym heavily advertised “No contracts” as a selling point. After 90 days, I decided to let the membership lapse and I planned to re-join at a later time. The gym, who happened to have my wife’s checking account number on file from her membership years before, billed me for another 90 days! I confronted the gym owner asking, “Why did you bill me without my consent? Don’t you advertise no contracts?” He responded, “Oh, you have to give us 30 days notice that you’re leaving.” I pointed out to him that I hadn’t signed any contract agreeing to that stipulation. I also pointed out that the stipulation is, in effect, a contract! After several weeks of haggling and major attitude from the owner, he finally refunded my money. Moral of the story: They will try to scam you with or without a contract!

    • Mr. Money Mustache April 29, 2017, 11:28 am

      Yikes – I’m responding to this one just so more people will notice and see that this Snap’s Fitness place sucks.

      The key is to never let them connect to your checking account! At least a credit card has quick dispute resolution where you talk to the CC company rather than the owner.

  • Tara April 26, 2017, 8:24 am

    While someone in your shoes would have nothing to lose in terms of the social contracts you enter, someone like a contractor going into business with a large corporate owner who likes to not pay bills in full–it’s the contracts that save their ass. You would never go into such a deal as you don’t need the money, but for those who do, a contract is a necessity.

    At our house, we had to replace the knob and tube wiring so we had an electrician who did not initially have a contract. I had heard plenty of companies who screwed over people (especially in Katrina affected areas) by not completing a job and running off with the cash. All I asked in the contract was what would be done, when it would be done, and the expected payment schedule. The electrician actually beat the deadline by a week and all went well. But by having the contract, I would have been able to take them to small claims court ($12k limit in PA), had they not come through. You DIY your own home, but for things that we have to outsource due to a lack of time or technical ability, losing a couple grand on a shady contractor is not something we can afford. And yes, to your argument–while the contractor could disappear and we’d be SOL, I’d still take the chance with having a contract over not having one.

    And you’d be surprised in the entertainment industry about how many people come out of the woodwork and say “YOU STOLE MY IDEA”. While you’re not the type to do that, it happens ALL THE TIME. Anytime a TV show, movie, song, etc. becomes popular, you always get a lawsuit. No one with brains in the entertainment industry would ever “shoot the shit” over some beers with someone for ideas without a contract. Yes, you are trustworthy, but most have been or know someone who’s been hit with a theft-of-IP lawsuit and they would never take a chance with anyone again.

  • GU April 26, 2017, 8:42 am

    I distinctly remember it dawning on me in law school that all a contract does is give you a ticket to court. You still have to hire a lawyer and fight about, usually for several annoying years. And even if the court decides in your favor, enforcing a judgment is not always easy.

    Contract law has been a valuable thing for the world, but it is not the Holy Grail, especially for small businesses. Great article.

  • J Boogie April 26, 2017, 8:54 am

    That sweet door should have signed a contract with you to ensure it would be paired with trim/casing of the same species, unpainted, with a stain/finish that does not differ from that of the door, at least or exceeding 3.5 inches in width, with at least three clean profile lines. But then again maybe that would make carpentry less fun ;)

  • The Magic Bean Counter April 26, 2017, 9:31 am

    Nice post MMM. Most contracts do indeed suck! I gotta admit though, a TV show about mustachian lifestyles sounds pretty cool. Just make sure we can stream it on Netflix if you ever do it please!

  • Matthew M April 26, 2017, 10:54 am

    My “one more year” syndrome materializes as “one more recession” in the economy. I worry that my portfolio will look a lot different once the inevitable stock market decline occurs. Basically, right now after stocks have increased so much recently, I think I need a bigger buffer to handle more risk in stock values. After a decline or recession, I would be comfortable with a smaller buffer. Seems like Mr. MM is advocating for no financial buffer rather an attitude that slack will be made up with ingenuity, flexibility, and a burst of hard work.

    • Sherry May 14, 2017, 4:20 pm

      Mathew M, I don’t agree that MMM is advocating for “no financial buffer” – not at all. It sounds more to me that at some point we need to say, “here’s my 3 (6, 12, however-many-months) security fund and past that, I have to trust myself to be able to roll with the punches. At age 66 I just recently (end of April, matter of fact) found myself in a solid job, albeit with a bit less of a buffer than I was shooting for, but recognizing that the stress levels of my job were affecting my health (and I mean, scary serious stuff) and I looked at my x-number of months saved and said to myself, “Self, time for a break – maybe even see if after a month or two off, we can turn the 40 hr week out to pasture” and I trust myself to figure out a way to do that. At the end of my life, I will not regret having hung in another four years, unable to sleep, having bad dreams when I did, and waking with chest pains, believe me.

  • GR April 26, 2017, 11:20 am

    Thank you MMM! My wife and I have been stuck in the “one more year” cycle for too long. Your writing is inspiring us to take the plunge.


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

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

Love, Mr. Money Mustache

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