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That's at least partly, if not mostly, because the average corporate worker bee doesn't want it bad enough. You essentially have to earn an upper middle class income but live a lower middle class lifestyle for a decade and save/invest the difference. Engineers seem to be most likely to be wiling to live this way. They don't care about social status and get a kick out of designing an efficient lifestyle....so living close to work in a small apartment (or buying a house and renting out the bedrooms) and riding your bike to work (or driving a used economy car) is less likely to be seen as deprivation/sacrifice to such people. They want independence from the corporate world more than they want the 'trappings' of the upper middle class lifestyle.
You really have to have a pretty decent income for this to work.
I make ~$60,000 annually. In my local area, that's top 10% or so of single income earners. Even if I put back half of that, the leftovers of that $30,000 that remains is going to be tough to live on. It's a minimal apartment, little to no recreation budget, minimal driving in an old car, etc.
It really doesn't work for incomes much below mine. It's much more sensible if you have two people making what I do (top 5%). At that point, you could live a decent lifestyle and bank the other salary. Even if you got started late (~40 or older), you can still be a millionaire by a traditional retirement age.
Realistically, you’re right. I exaggerated. If it is truly someone’s goal to be financially independent with a decent job you could do it early by just planning. When I graduated college, I made 45k but I choose to rent in one of the nicer suburbs. Today, my wife and I make over 3 times that amount and the lifestyle creep is obvious. Now, I have a house, new cars, travel, eat out all the time, live in nice areas, etc. If I lived as simple as before I met her, we could easily throw 60k to 80k into investments a year and I would be a millionaire by 35.
The truth is, I don’t want to. I grew up struggling in a poor area. I moved heaven and earth to escape it. I want to be able to go on 3 or 4 trips per year because I never left my home state until after college. I save 7 percent of my salary to get the 7 percent 401k match and my wife saves 6 percent to get her 6 percent. The rest is to have experiences and to live well. I could be dead by 60 or I might not have the health to enjoy the things I do now. My job is stressful. I work to do other things. Not to grow an investment balance as my highest priority. It’s still a priority, but I don’t value financial independence higher than using my 20s and 30s to live well.
Thank you for admitting the truth. Most people won't.
Financial independence types feel that the lifestyle you live is just a more comfortable prison from the life you grew up with. I'm not necessarily saying that's true, but that's how they feel. And they are willing to do whatever it takes because they value their time/control of their time more than anything else. They don't see the new cars, 3-4 trips per year, and the house in the suburbs, as sufficient rewards for working a stressful job or adequate substitutes for the lack of the ability to control their time and do the things they really want to do, which may not involve earning an income at all. More commonly, what they really want to do involves earning a small income from a side job they enjoy doing, which supplements their investment portfolio. They don't worry about being in bad health or dying by 60 because they're planning on being financially independent by 40, or possibly earlier. They have less stress in their lives and more time to take care of themselves; so they're less likely to die or be in bad health by age 60 than if they were working a full time, high stress job all those years.
Last edited by mysticaltyger; 09-11-2018 at 12:52 PM..
Anyway, not really talking about you specifically, but your post is an example of the stereotypical middle income family that could very easily have a million in the bank in their 30s. But choose not to.
Thatsright19 is the target audience for Mr. Money Mustache. Above average income and tired of the stressful job / rat race.
You’re taking quotes out of context. The person who retired in their 30s (he didn’t...he was 42...and his wife was still working) made more than 100k per year on just his income. It didn’t mention what his wife made from what I saw.
I don't know how much the wife made. But I've read the blog. While he was working, she stayed home to raise their 2 daughters. It's only recently that she went back to work. And I think the key for them, once again, is she did it because she wanted to because it was a job she liked. They pretty much already had $1M saved by the time she went back to work.
Last edited by mysticaltyger; 09-11-2018 at 01:14 PM..
But usually most of these young millionaires or those that retire old with millions are quite monk like.
No passports or they never left North America, outdated clothes, non existent dating life, small circle of friends, no hobbies that require or barely any money, rarely eat out, are thankful the internet was invented to fill up the majority of their time.
Simply not true. Or--it certainly doesn't have to be true.
There are plenty of bloggers who aren't living the way you describe. Maybe they're an anomaly, but they do show what's possible.
I think people say this "you live like a monk" stuff because they somehow need to believe any alternative outside the norm is a miserable existence.
I don’t want to scrimp and save the majority of my income in the prime of my life (while working damn hard for it...and having my reward be an electronic number going up. That’s a real motivator day in And day out...smh. ) so I can spend 45 years scrimping and saving in retirement too hoping to god a stock market crash doesn’t blow up my glide path I’m drawing down on.
They translate that "electronic number" into something more meaningful (to them). It's not just a number. It represents units of time that they don't have to work the stressful job.
You really have to have a pretty decent income for this to work.
I make ~$60,000 annually. In my local area, that's top 10% or so of single income earners. Even if I put back half of that, the leftovers of that $30,000 that remains is going to be tough to live on. It's a minimal apartment, little to no recreation budget, minimal driving in an old car, etc.
It really doesn't work for incomes much below mine. It's much more sensible if you have two people making what I do (top 5%). At that point, you could live a decent lifestyle and bank the other salary. Even if you got started late (~40 or older), you can still be a millionaire by a traditional retirement age.
The difference between me and you is I don't see the small apartment, etc. as a punishment. I do plenty of eating out, travel, etc. But I'm selective about it. No, I'm not doing high end places. But I'm not eating fast food, either. I didn't care that I drove my last car until it was 20 years old. I live walking distance from my job, so I wasn't driving that much anyway. I did buy 2 year old used care a few years ago (cash).
And as That'sright19 pointed, out...when you get the 2 people making 60k each for a total of 120k, they typically only add a couple of percentage points to their savings rate. They don't ramp up their savings in a big way. They say "I work hard at a stressful job. I want the travel, new cars. I'm enjoying my 20s and 30s now, etc.".
Actually, the financial independence types would say that they value their time more than you do.
As I progress higher in my career, it’s easier to buy time back. In other words, paying for things like house cleaning and lawn mowing. My cars are new so I don’t need to bother taking them in for repairs all the time. I turn the key and it works. I don’t want to learn how to fix them to “save money”. It’s the same with my house and appliances. I believe in specialization of labor. I do what I am good at and get paid a lot to do it. Then I don’t need to sacrifice my time doing a bunch of other stuff to save money. 1 hour of my time pushing higher in my career is more valuable than one hour of my time to learn how to fix my broken down washing machine because of opportunity cost.
And the reality is that I’m banking more in gross numbers into retirement by saving 13 percent of a high income and getting a 13 percent dollar for dollar match than the person making way less but working super hard to save and give up fun stuff in their 20s and 30s to live some grand future life where their time is freed up partially with financial independence. They probably still need to do a lot of “do it yourself” and penny pinching to make the money last though. In this example, the prior poster pointed to someone making 60k. They would have to take a hard bite on their lifestyle to save 30k a year. I hardly notice it’s ever been gone because I’ve always just saved it up front. It’s basically the marginal utility of money in action.
Last edited by Thatsright19; 09-11-2018 at 02:06 PM..
As I progress higher in my career, it’s easier to buy time back. In other words, paying for things like house cleaning and lawn mowing. My cars are new so I don’t need to bother taking them in for repairs all the time. I turn the key and it works. I don’t want to learn how to fix them to “save money”. It’s the same with my house and appliances. I believe in specialization of labor. I do what I am good at and get paid a lot to do it. Then I don’t need to sacrifice my time doing a bunch of other stuff to save money. 1 hour of my time pushing higher in my career is more valuable than one hour of my time to learn how to fix my broken down washing machine because of opportunity cost.
And the reality is that I’m banking more in gross numbers into retirement by saving 13 percent of a high income and getting a 13 percent dollar for dollar match than the person making way less but working super hard to save and give up fun stuff in their 20s and 30s to live some grand future life where their time is freed up partially with financial independence. They probably still need to do a lot of “do it yourself” and penny pinching to make the money last though. In this example, the prior poster pointed to someone making 60k. They would have to take a hard bite on their lifestyle to save 30k a year. I hardly notice it’s ever been gone because I’ve always just saved it up front. It’s basically the marginal utility of money in action.
This.
I grew up with a guy that became a tech entrepreneur. He's had gophers get groceries for him for years. Landscapers. Cleaning crews. It's far more valuable for him to have someone else do it than do it himself.
My girlfriend and I were driving through a rural area Sunday that had large homes on many acres. These were probably million dollar homes here in rural Tennessee. She was asking how they mowed. At the level of wealth/income it would take to own one of those homes, the cost of a staff to maintain it is fairly minimal.
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