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People love to say that as if he does the blog to make a living. But he was retired for quite a few years before he even started the blog. It's like he can't win. You start a blog to try to help people and it makes money because it's successful....and then people tear you down for it. I suspect Mr. Money Mustache would say that the dynamic changes when you work on something that's a labor of love. Sometimes when you're not trying so hard to make money is when you make more than you dreamed. I think that's because you feel more free to experiment and try new things when you're not under the stress of having to earn X amount to keep a roof over your head.
I'm not implying that. What I am saying is he will be fine on a 4% withdrawal rate because he keeps adding significant capital to his portfolio every year. Most people won't retire and still be earning 6 figures before they touch their nest egg.
Then those great 17 years hit a wall in 2000 and turned in to one of the worst 15 years returning less than 2% cagr up to today.
In the end the time frame was nothing special for most folks and if they retired in 2000 that was the most hurtful short of the 1966 retiree.
Someone who had money in the S&P 500 back then is not having such a good time today. My point is that there were better alternatives. Many have paid a high price for being too dogmatic in their beliefs.
I'm not implying that. What I am saying is he will be fine on a 4% withdrawal rate because he keeps adding significant capital to his portfolio every year. Most people won't retire and still be earning 6 figures before they touch their nest egg.
True enough, but if you spend only 25K - 32K per year like MMM or the slightly more spendy ER bloggers do, you really don't need to bring in anywhere near that much money to supplement your portfolio if necessary. 10K from a part time job for a year would probably cover it. You also have time flexibility. You have time to put those frugal muscles in overdrive if you're unwilling or unable to work.
I don't know about MMM expecting to inherit. But it's really beside the point. The main point is, he doesn't have to work if he doesn't want to. And you'll find that most people who become financially independent in their 30s or 40s WILL do some kind of work on a part time basis. But the bottom line is they don't have a financial NEED to do so.
If I were single I could probably live just fine on something like $2000/mo. The things I like to do "for fun" don't really cost much. I'm not sure about the healthcare part, so maybe that would add a bit.
As you add more people it gets harder. With two people, not only do both need to be on board with the plan, but the expense will go up as well.
Kids introduce a complete unknown. When they are little of course they will just go with the flow. But when they start growing up they may not be on board with the whole Mustache thing. Raising teenagers is hard enough when money is no object. Money constraints could push this into an untenable situation.
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The spirit of the whole thing is really great. Most Americans just spend whatever they earn plus a little, which of course gets them in trouble. But this Mr Mustache takes it beyond what is reasonable, IMO. He shows a middle class existence in a very nice, modern, middle-class home full of consumer items, a car, a child, hosting parties with "expensive food", etc. All supported by poverty-level income. He reportedly retired on $800K, spent $350K of that on a home, spent an undisclosed amount renovating that home, and now he claims he can support himself, his wife, and his child indefinitely on what remains for potentially 50-60 years. That's not what is happening, of course. He has other income, including his construction business. And his wife was working part time too. And he admits that his family has given him certain things...
Again, I think this is all really great. We're planning to morph to a similar existence soon, albeit at a bit older age than him, and with more assets. As always, the devil is in the details, and there is no magic formula that applies to everyone. Vast amounts of money can certainly be saved by eschewing things that most consider essential. But never ever, ever working again after 35 is extremely difficult.
Trying to buy a house in the Bay Area is what kills people here. (I know. I live here, too). It keeps people in the rat race for many more decades than they otherwise would have to be.
A lot of times it's worth it to take a lower paying job somewhere else. Your money actually goes a lot further despite the lower pay.
There is a flip side to this. If you live in a high cost area and own a home, you always have the option of selling it and moving to a low cost area. A $1 million home in the Bay area isn't much of a house. If you're in you 60's and it's paid off, you can buy an equivalent house in a low cost area for $200K an live off the rest. If you spend your career in that low cost area, you retire and are locked in to your $200K house.
Folks in long island are doing that in droves. They can't afford the cost of living in long island because of the high taxes so they are forced to relocate.
The good thing is that high taxes and high property values tend to be joined at the hip .
So selling and relocating generally provides a good chunk of money to live on.
When we had the house in the pocono's i felt sorry for the locals. The lower housing values and lower pay went hand in hand so they really had no where else they could relocate to and keep a lot of cash from the home sale.
If I were single I could probably live just fine on something like $2000/mo. The things I like to do "for fun" don't really cost much. I'm not sure about the healthcare part, so maybe that would add a bit.
For most people, the healthcare part isn't insurmountable.
Quote:
Originally Posted by hikernut
As you add more people it gets harder. With two people, not only do both need to be on board with the plan, but the expense will go up as well.
This is the problem super frugal people have....it's hard to meet other people like ourselves because we're so outnumbered (and I think we tend to be introverts, too--so a double whammy). But obviously, it's possible, since a most of the ER bloggers I read are married or in relationships.
Quote:
Originally Posted by hikernut
Kids introduce a complete unknown. When they are little of course they will just go with the flow. But when they start growing up they may not be on board with the whole Mustache thing. Raising teenagers is hard enough when money is no object. Money constraints could push this into an untenable situation.
Eh, I think you're overstating it. If you're the parent, it's your job to set boundaries. Kids definitely more expensive, though. I notice that early retiree bloggers tend to have 0 kids or only 1. However, Justin at Root of Good | Retired 2 years ago at 33. Life is Good. has 3 and their budget is about 32K per year. They're well under budget this year, despite taking a trip to Mexico over the summer.
The spirit of the whole thing is really great. Most Americans just spend whatever they earn plus a little, which of course gets them in trouble. But this Mr Mustache takes it beyond what is reasonable, IMO. He shows a middle class existence in a very nice, modern, middle-class home full of consumer items, a car, a child, hosting parties with "expensive food", etc. All supported by poverty-level income. He reportedly retired on $800K, spent $350K of that on a home, spent an undisclosed amount renovating that home, and now he claims he can support himself, his wife, and his child indefinitely on what remains for potentially 50-60 years. That's not what is happening, of course. He has other income, including his construction business. And his wife was working part time too. And he admits that his family has given him certain things...
Again, I think this is all really great. We're planning to morph to a similar existence soon, albeit at a bit older age than him, and with more assets. As always, the devil is in the details, and there is no magic formula that applies to everyone. Vast amounts of money can certainly be saved by eschewing things that most consider essential. But never ever, ever working again after 35 is extremely difficult.
Meh, I can see where MMM understates things, but I think you're overstating them.
Folks in long island are doing that in droves. They can't afford the cost of living in long island because of the high taxes so they are forced to relocate.
The good thing is that high taxes and high property values tend to be joined at the hip .
So selling and relocating generally provides a good chunk of money to live on.
When we had the house in the pocono's i felt sorry for the locals. The lower housing values and lower pay went hand in hand so they really had no where else they could relocate to and keep a lot of cash from the home sale.
Yep. It's NYC tri-state math, Boston math, DC math.... If you moved to, say, Atlanta at age 25, you'd be stuck there for life with only the equity in your far less expensive home. You can buy an OK house there in an OK town with an OK school system for $125K. When you are contemplating retirement, you have $125K of equity in your paid-for house, not $750K+ in your Nassau County house.
For most people, the healthcare part isn't insurmountable.
Sure, until you have a health event where you actually need good health insurance. It doesn't take a whole lot of insight to predict that Medicaid benefits are going to be dramatically slashed over the next decade. The poor don't vote. The budget doesn't balance. Health care for the poor is going to be very tightly rationed. I wouldn't want to game the system, look poor on paper, and have to rely on the 2025 version of Medicaid to deal with a significant health problem. ACA is one Presidential election away from being vaporized. Right now, healthy 20-somethings are being forced to subsidize unhealthy 50-somethings and 60-somethings. That won't last.
Ya i read all of John C Bogles "Little book of common sense investing" and learn a ton about how index funds have such a great return in the long run. I'm leaning more towards just a long run index. Seems like a solid plan.
Funds are either seek to replicate an index, or in the alternative, they seek to implement someone's investment thesis -- that is, picking the stocks/bonds/alternatives based on some analysis where the fund manager is, well, actively placing bets.
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