Insights From Mr Money Mustache

Coming across Mr Money Mustache about 4 years ago opened my eyes to the possibility and practicality of an early retirement. Hungrily gobbling up his archives, I would group all those episodes of reading into one important moment of epiphany in my life.

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His impact on my life has been truly huge and yes, the only reason why I am writing this blog was largely down to this article. Admittedly, both the quality and quantity of his articles in the past year has dipped (unsurprising since there’s only so much you can talk about before you start more or less repeating) but there’s no doubt that this New Yorker piece about MMM is one of the best articles on personal finance I have read this year. 

It took me about 20 minutes to digest the article and I really urge you to read it since it was written rather beautifully and gives one a very close-up and intimate look on how the MMM household functions. However, if you’re suffering from the dread TLDR syndrome, here’s a short snippet of some of the most important insights I have gleaned from this very personal profile of Mr Money Mustache (same link, 3rd time! Just to emphasize the point).


“The blog, which he started five years ago, is really an attack on consumerism and waste—a theology of conservation—disguised as a personal-finance advice column. The prospect of retirement is in some respects just a lure—the carrot, as opposed to the stick of his relentless polemical thrashing of anyone who thinks it’s O.K. to buy lattes at Starbucks or drive “a gigantic piece of shit that can barely navigate a parking lot.” He told me, “I’m really just trying to get rich people to stop destroying the planet.”

 

“He has now accumulated enough in additional savings to spend much more than twenty-four thousand dollars a year. But the point, for him, is to live lean and free.”

I have been on this journey for a few years and (rather naively) even tried to convince some of my closest friends about the merits of leading a highly optimised and frugal life. Minimalism, environmental consciousness, contentment and early retirement are concepts that complement each other almost perfectly which are rooted firmly in frugality.

Most people only yearn for the carrot of an early retirement, thinking that such a situation would allow them to travel all around the world. Frugality? Nah. Too much sacrifice.

I have come to learn that frugality would never be sustainable if it is seen as a sacrifice. Be frugal because you think that is the right way to lead your life. Otherwise, it’s a matter of time before one capitulates and oscillate back into the consumerist way of life.

He told me that his blog is now earning around four hundred thousand dollars a year. He was reluctant for this to become public, without his being able to provide a detailed explanation. He makes money from the products and services he recommends—Betterment, Lending Club, Geico, and numerous others. They pay him for every customer who comes to them via his site. He insists that he makes these recommendations based only on his own research and experience. He’s saving all this income and plans to give it away someday. Making money off the idea of not needing money is perhaps mildly perverse but little different from a cleric who preaches poverty yet lives in a parish manse.

Isn’t it absolutely amazing that even though the blog brings in $400K of annual income, he is still more or less keeping to $24k of expenses every year?

Actually, I think making money off the idea of not needing it is SUPER perverse. Doing something like that would, in my mind, make someone a hypocrite. However, I understand that it’s a difficult urge for us humans to fight. I would be the first to admit that if my blog earns $20k a year or my tuition income reaches $100k a year, there would be every temptation to buy a car or stay in a condo.

Therefore, it’s really his principles and resolve to be a good role model that I most admire and look up to.

“Paying for parking is a sign from God that you’re in an area not designed for a car,” he said. “You are fighting the design of your city.”

Very relevant for us Singaporeans. The egoistic consumerist within me does long for one but I have to agree with the Mrs that it’s a luxury that we could easily do without. The opportunity cost is easily $200K over 10 years.

“People say I can’t be as hard-core as Mr. Money Mustache,” she said. “The other day, he was scrubbing the floor with a giant sponge. I said, ‘Why don’t we get a mop?’ ” He felt it would be a waste of space. She went on, “I’ve gotten used to it all, but he’s a weird dude.”

 

“He is aware that he is a handful. He imagines that his wife’s inner voice whispers, “Your relentless optimizations are a drain on my life energy.”

Such a lifestyle does exert a toll on your loved ones. Occasionally, the Mrs does gripe about “how often I complain about the amount of stuff we have in our house”, which pisses her to no end. But I really have an aversion towards “free but useless gifts which you have to queue half an hour for at a shopping mall’s customer service”.

“Each Ten is a critical brick in the Early Retirement castle you are building. If you save $796 per week for ten years, and get a 7% compounded investment return after inflation, you’ll have $600,000 sitting around ready to party for you. . . . Let’s say you’ve got two income earners working together. Now each one has to save only $398 a week. There are 112 waking hours in each week. Each person has to make 40 successful $10 decisions each week—or one $10 decision every 2.8 waking hours.”

Sometimes, I really wonder how both of us managed to sock away a few hundred thousand dollars before 30 when some of our peers struggle with even $20,000.

My hunch is that when their savings reach $20,000, they cannot resist the temptation to use that money for a trip to Europe or/AND enjoy some ostentatious stuff. And if the savings is given a chance to reach $50,000, the urge to splash it all on the downpayment of a new car is absolutely compelling.

As for us, maybe we have been subconsciously looking at each humble $10 bill and thinking about how to make 40 successful $10 decisions every week. Doing something like that for the past 5 years has helped us to accumulate a stash that has allowed us to achieve quarter retirement.

This form of psychological framing, coupled with the ideals of minimalism/contentment/anti-consumerism, empowers one to save. 


 

 

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    14 thoughts on “Insights From Mr Money Mustache

    1. The Finance Smith

      You read Mr Money Mustache as well! The US and Canada personal finance bloggers are amazing and I read their articles regularly. Then again, our Singapore personal finance bloggers are fantastic as well and a vibrant community here would be good for everyone.

      Great job on building up your portfolio to such a significant size before 30. Since your wife and you are about the same ages as my wife and I, I keep using your blog as an example to my wife of what I am trying to achieve with my blog. FYI, I have the same problem with the amount of stuff we have in our apartment!

      1. My 15 HWW Post author

        Hi TFS,

        Besides Raptitude & LivingAFI (who writes very occasionally), I have more or less stopped reading many of the international blogs. The good ones have either stopped writing (BraveNewLife), sold out (DividendMantra) or reduced their frequency and quality (MMM).

        If you’re looking to declutter, I would recommend the book by Marie Kondo. Just google it and you will know what I am talking about.

    2. B

      Hi 15hww

      Amazing to see that mr mm blog generates that much income and yet he is bent of habit of spending the minimal in his lifestyle.

      I guess he has reached the zen and zen he is on his own.

      1. My 15 HWW Post author

        Hi B,

        Ya, $400k is really crazy. $30k USD every month.

        But like I mentioned, what I find admirable is that he has not capitulated and lead a consumerist lifestyle. He could easily be driving a fast car and travel around the world in style.

        A role model for me indeed.

    3. Frugal Daddy

      Don’t know why, i felt we are writing the same thing over and over again by different bloggers and in different sentence structures. Frugal, minimalist, etf, stocks, property, debts, saving, insurance, income. Haha…I am too generalizing topics i guess.

      Good that you live-better earlier than me. I am still struggling in the workforce.

      1. My 15 HWW Post author

        Hi FD,

        Only a while more for you!

        I am sure even if you quit now, you will find a way out. Right now, it’s more of building margin of safety or buffer for you and your family.

    4. Marcus

      Interesting thought. But should majority of the population begain to thjnk like this. No consumerism = to no dividend for income investor like myself.

      How are we going to go into semi retirement.

      1. My 15 HWW Post author

        Hi Marcus,

        I guess some businesses will still thrive. If more people cook, farms and supermarkets would do better.

        I think if everybody thinks like MMM, everybody can be semi-retired. Just work 15 hours a week, be productive and optimise our consumption. Maybe there’s no need for dividend income at all too!

    5. singvestor

      I must admit I am one of these people who would love to travel the world once retired. This carrot is quite appealing! However by that time I would probably be around 40-45 years old, so I am not sure if I would still enjoy it then.

      Right now it seems very attractive to reduce all my possessions to two suitcases and spend my time slowtraveling around the world, staying for a weeks in each place. Short term rentals instead of fancy hotels and a frugal lifestyle would make it not very expensive. I feel that would be a minimalist and frugal way to live.

      1. My 15 HWW Post author

        Hi singvestor,

        If you’re keen, why not see if it’s possible to take a few months off work and try that out?

    6. Lazy Singaporean

      Hi, I read MMM as well. But, I have to point out something.

      He uses a 7% real rate of return for his investments, and he says that the historical rate for the US market is that. However, it is not possible that this 7% real rate continues. We might have to settle for lower rates in future. I’m assuming he continues to invest by buying into a broad base index fund.

      On a side note, he spends $24,000 a year. At an exchange rate of 1.40, it is actually SGD $2,800 a month for Singaporeans. I’m not sure if I got it wrong, but does this refer to his own expenses, or the combined expenses of the household?

      1. My 15 HWW Post author

        Hi Lazy Singaporean,

        At least for the past few years during his blog’s existence, the US market has achieved >7% returns. He probably has plenty of room for returns to come back down. Anyway, he probably doesn’t need anything more than 3%.

        Regarding exchange rate, I would feel that US and Singaporean standard of living is quite close. 100 bucks could probably buy two similar basket of goods in both the US and Singapore.

        I believe $24,000 is for his entire household (exclude housing since there’s no mortgage).