
Mr. Money Mustache’s retirement (sort of) plan - burritofanatic
http://www.newyorker.com/magazine/2016/02/29/mr-money-mustache-the-frugal-guru
======
noelwelsh
I think many people focus too much on the money and frugality side what Mr
Money Mustache says, and not enough on the happiness part. The preconditions
for human happiness are fairly constant, but the way we achieve those
conditions can be more or less expensive.

For example, we know that people greatly enjoy being in flow. There are many
ways to achieve a state of flow. You could do a DHH and get into car racing---
a rich boys sport if ever there was one. Or you could take up bike racing, and
drop a few $K a year on a bike (with ancillary health benefits as well). Or
you could drop the racing part and ride for pleasure (maybe $2K over ten
years; my last bike lasted 18 years). All will achieve the same result, but
with vastly different impacts on your wallet. Of course racing is not the only
way to get into flow. Dance, programming, other sports, etc. are all options
and there are cheaper and more expensive choices within each category.

Similarly, it has been shown we get more long term happiness from experiences
than from things. This is a great reason to stop buying stuff and spend money
instead on activities. Of course different activities have different costs.
You could book an expensive "adventure holiday" or you could just grab your
backpack and head out the door. Anyone who has done backpacking on a
shoestring budget knows it's great fun.

In my experience all these choices are quite easily substitutable. You can
make a conscious decision to choose low cost options and have just as
fulfilling and enjoyable a life as someone who spends all their money on the
latest gaming rig / sculpted carbon fibre bike / hottest restaurants etc.

~~~
david-given
> For example, we know that people greatly enjoy being in flow.

I have no idea what this phrase means. Could you expand?

~~~
mercer
The wikipedia article [1] describes it pretty well. It's a fascinating concept
and if you find it interesting I can highly recommend the book Flow: The
Psychology of Optimal Experience, by the guy who introduced the concept.

Personally I'd say when it comes to happiness 'flow' is a bit too narrow a
concept. Or rather, it's a specific form of 'wu-wei' ("natural action, or in
other words, action that does not involve struggle or excessive effort").

A great book on wu-wei which also references the concept of flow is 'Trying
Not To Try'. I can _strongly_ recommend this book as well. Especially it's
final chapter(s) provided a lot of food for thought.

[1]:
[https://en.wikipedia.org/wiki/Flow_(psychology)](https://en.wikipedia.org/wiki/Flow_\(psychology\))

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s3nnyy
I am living frugally in Zurich, moved here for the super-high net-salaries and
I am saving 80% of my income ([https://medium.com/@iwaninzurich/eight-reasons-
why-i-moved-t...](https://medium.com/@iwaninzurich/eight-reasons-why-i-moved-
to-switzerland-to-work-in-it-c7ac18af4f90)). I could theoretically retire in 5
years. So that is doable (see advice on how to rent, how to cook etc. on
[http://www.earlyretirementextreme.com](http://www.earlyretirementextreme.com)).

If you want to do the same and / or if you are interested in working in
Switzerland in IT, just shoot me a mail (see HN profile).

~~~
hobo_mark
Where/how do you invest in CH? Vanguard is much more expensive than in the US.

~~~
s3nnyy
I don't invest anything, I just have a regular coding job.

~~~
johnloeber
If you don't invest, then you're not going to retire any time soon.

In fact, all your frugal living and saving is critically offset by the
potential revenues lost due to a failure to invest.

~~~
hkmurakami
If he claims he can retire in 5 years, then I assume he's done the math for
it.

Even a very rosy scenario of 8% compound interest pretax over said 5 years
wouldn't change the 5 years to something dramatically smaller.

Besides, not everyone is psychologically equipped to handle market swings --
particularly what we've seen in 2016 so far.

~~~
johnloeber
Regarding your first point:

According to the graphic in the article, he has a net income of 6200 CHF/mo.
He says he saves 80%, that's 5000 CHF/mo, or 60k CHF annually. The graphic
says he's 27. I assume he started work at 22. At a constant salary, he will
have saved 300k thus far, and will save another 300k in the next five years.

So in five years, he will have accumulated 600k savings in cash. That's not
sufficient for early retirement -- not even for MMM, who retired on 600k cash
+ 200k house. I suppose he could make it happen if he bought an extremely
cheap apartment and lived more frugally than MMM, but that does not strike me
as having a satisfactory quality of life.

Regarding your second point:

While it is true that investing over the span of 5 years does not
significantly change his cash stack, investing matters looking forward: he
_definitely_ needs to invest if he plans to retire early on mid six-figure
sum.

~~~
hkmurakami
Whether he can retire on 600k would depend on where he chooses to live.
Certainly it would be financial suicide to try to do so in the SF Bay Area.
You'd likely be able to live quite well in many parts of SE Asia. He may very
well be able to afford a decent life in various parts of the world.

Regarding looking forward, one could theoretically just buy an annuity (I
don't actually recommend this), or live in a country with a deflationary
economy. "Investing" in the most commonly cited way, isn't the only way to
provide cash flow from a nest egg and protect against inflation.

I myself run a very conventional asset allocation for my own portfolio.
Generally speaking, what you say is prudent advice and is good wisdom. But
that doesn't mean that there are other, particular, ways to go about designing
one's financial life (sort of like edge cases), and his choices shouldn't
automatically be considered nonstarters.

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burritofanatic
I thought about MMM earlier today at the grocery store (wondering if we were
spending too much), so I was surprised to see him profiled on this week's
issue.

In a way, his methods make me feel relieved that a particular income benchmark
or the wild growth of a business is not needed to lead a happy/sufficient
life, yet I feel anxious because 1) I didn't have the best start (law school
debt), 2) I haven't cut down my spending/saved as much as I should.

Just curious, are there any anti-mustachians who 1) bust ass to maximize
earnings, 2) have unabated spending habits, 3) believe they are happier to
live such a lifestyle?

~~~
johnloeber
Regarding the last point: one of the most common deathbed regrets is to have
worked too hard. An extension can be made for being overly frugal: leading
your life hamstering cash is not much fun, and ultimately, pointless.

A common pitfall of frugality is to save money at the expense of your personal
happiness. Example: In many companies, people head out to lunch together, grab
a sandwich or whatever, eat together, and try to have a social time. That
costs about $3300 a year, assuming 220 working days with the price of lunch at
$15. That's a pretty large expense, and if you frame it solely in terms of
food, probably not worth it for most. MMM would say that you should bring a
packed lunch to work. However, I would argue that it is absolutely worth it
for most office workers: chances are their jobs are in some way unpleasant,
and if they bring a lunch from home, it's only a small step to eating that
embarrassing, soggy PB&J in front of the screen, working and missing out on
that small break. That can be very demotivating.

Beyond that, I think that some contrarian cases can be built for high-income,
high-expense lifestyles. For one, an expensive lifestyle can be a great way to
meet other successful people, which may open doors to opportunities. (There's
a caveat on this: some kinds of expensive goodies, like vacations to Zermatt
or living in a great area, are probably much better investments than buying a
$15k handbag.)

Spending money on great experiences while young is also probably worth it.
Having had "boring" 20s and 30s is another common regret, and it's quite
feasible to prevent that, if you're confident in your earnings potential later
on.

~~~
s3nnyy
I disagree. It all boils down to social skills.

I am living frugally in Zurich and I am saving 80% of my income (see post
above).

What I do when I want to participate in social meals is this: I just eat my
own food before so I am not hungry, and then I just order a drink at the
restaurant. My colleagues at work know my lifestyle and accept me the way I
am.

If I am eating out with people who don't know me, I just say I am not hungry.

~~~
xiphias
How does your girlfriend/wife like this situation of just saving money?

~~~
s3nnyy
She likes that I don't waste money on useless shit like everyone else but
rather save such that I can finance studies at Stanford or some other good
school for our future kids, if they desire to do so.

Having kids will mean I can't retire in 5 years but maybe in 15 years. In any
case I have a heads up compared to everyone else. Having tons of cash on hand
and little expenses gives you sort of super-freedoms other people don't have.

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josh_fyi
MMM tells you not to drop big bucks on fancy restaurants, SUVs, liquor.

Like I need to be told _that_?

I don't spend on any such thing, track all my expenses, make a good high-tech
income, and still spend most of my earnings.

There is something fishy behind this story.

~~~
mattlutze
I take slight issue with the fact that he made the lion's share of his savings
riding the tech bubble of the late 90's.

 _> He got a computer-engineering degree in 1997, and skipped the graduation
ceremony to begin working at a company near Ottawa called Newbridge Networks.
This was the early upslope of the dot-com boom. He started at forty-one
thousand dollars a year, with no savings or possessions except “a bike, a
backpack, and a diploma.” He made the rookie mistake (“what a clueless young
man!!!”) of buying a sports car with a loan from his sister. He got his first
raise soon afterward, to fifty-seven thousand and six hundred dollars. By the
end of year one, he’d saved five thousand dollars. A year later, he had
twenty-three thousand. By year five, a quarter of a million._

It's quite apparent that yes, Adeney has done a ton of work to be rigorous
enough to have built and to maintain the endowment.

However... it feels like he built this retirement nest egg on a rare period in
the markets' history. I'd question how repeatable it is.

~~~
miseg
Is it repeatable, who knows?

But it's a mindset thing too. Do you "give up" and take out the biggest
mortgage and car loan you can, or do you act against it and take your destiny
into your own hands a bit more.

~~~
mattlutze
This guy makes most of his money from a dot-com nest egg and the community of
people he's built around him that subscribe to his brand of asceticism.

If it brings a person a person emotional comfort to live as the willful anti-
consumer, then that's the value in it. But I think it's unkind or deceptive to
suggest most people can ride a bike instead of drive a car and suddenly save
most of a semi-retirement nest egg in 6-7 years.

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tempodox
I refuse to be directed by money to such a degree as Mr. Money Moustache seems
to be. By putting so much effort into not spending any money you make yourself
highly dependent on money, albeit in a negative sense. “ _Distinction is
perfect continence._ ”

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josh_fyi
How does he rely on regular returns on investment of 7% or 4%?

You don't get that on bank accounts; and the stock market too has not given
such returns over long-term timespans in the last 15 years.

~~~
HappyTypist
A very simple allocation of 70% stocks and 30% long term treasury bonds has a
6.23% CAGR over the past 15 years.

[https://www.portfoliovisualizer.com/backtest-asset-class-
all...](https://www.portfoliovisualizer.com/backtest-asset-class-
allocation?s=y&portfolio3=Custom&portfolio2=Custom&portfolio1=Custom&annualOperation=0&TotalStockMarket1=70&initialAmount=10000&endYear=2015&mode=2&inflationAdjusted=true&annualAdjustment=0&startYear=2000&rebalanceType=1&annualPercentage=0.0&LongTermBond1=30)

~~~
josh_fyi
Thank you. 6.23% before taxes and inflation, less after these.

Is this reliable enough over the long run to retire on?

~~~
hudibras
Keep in mind that the period 2000-2015 includes two major recessions. Almost
any other fifteen year period will work even better (you can test it on that
website). Move the timeframe to 30 years (which is the bare minimum that the
early retirement crowd looks at) and it's difficult to find a period with less
than 7% returns. Even adjusting for inflation, it's rare to have a 30-year
period with less than 4% returns, which is the basis for the 4% Rule mentioned
in the article.

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pearjuice
Great coverage and love what the guy does but I understand people are annoyed
with him. The guy makes around half a million from his online work each year.
That excludes ROI of earlier escapades. Yet he is living on some 30K a year.
So what is he doing with all that money? Accumulating wealth for the sake of
accumulating? Proving you can be rich whilst spending little? As long it makes
him happy, but it has always stroke me as odd.

~~~
bonniemuffin
The article vaguely mentions a plan of giving it away to charity, which seems
reasonable enough to me. If he's just as happy with his current life, why
should he feel obligated to spend it?

