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How I retired in 9 years on a corporate programmer salary (mrmoneymustache.com)
294 points by usedtolurk on Oct 16, 2011 | hide | past | web | favorite | 156 comments



I admire OP's financial project and appreciate his sharing it. I imagine quite a few people may benefit from it.

But make no mistake about it, the #1 reason for any "How I did <anything regarding money>" is really, "I am cheap."

We only get one chance at this life, and the thing that bothers me the most is, "What are you missing that you're too frugal to consider?"

Some of the greatest pleasures of my life came as a result of a discretionary purchase. Incredible people, experiences, even business opportunities came my way because I bought a product, went to an event, or took a trip that most frugal people I know wouldn't have.

Once you decide to be frugal, you'll probably be stuck that way for life because you'll rarely be in position to take advantage of those opportunities that would break the cycle.

If that works for you, fine. But not for me. I may not be extravagant, but I don't want to miss any wonderful opportunity because I was too worried about my bank balance. In the grand scheme of things, how sad that would be.

</sipsLatte>

[EDIT: Yes there is a difference between "cheap" and "frugal". Every time I mention "frugal" above, I really meant "cheap", but I was trying to be nice. I will leave it that way to make the thread below make sense. Also, I failed to mention that there's a big difference between being cheap because you have to and being cheap because you choose to.]


"the #1 reason for any "How I did <anything regarding money>" is really, "I am cheap.""

I read it as "what happens when you invest intelligently in a booming real estate and stock market" (especially the former). I don't think this path is open today.


Opportunity abounds at every point in time. Most of all, at times like this when markets are flailing after a severe and (somewhat) protracted period of chaos.

Even if we were at the peak of markets (arguably the worst time to invest), there are so many opportunities that oppose real estate and public equities. I'm not talking about selling stocks short, but potentially commodities, natural resources, agriculture, business, and so much more.

The thing is, we're not at market peaks. Not even close. If anything, I'd cite this pessimism and cynicism as a good indicator to start buying.


There absolutely are always opportunities, but those opportunities are not always available to those that won't or can't treat the investments as a full time job.

As long as there is inflation, all you need to do is buy assets to make money. When there is stagnation or deflation, making money becomes very hard work and luck plays a bigger role. That is because the number of wrong answers exceeds to number of right ones.


There absolutely are always opportunities, but those opportunities are not always available to those that won't or can't treat the investments as a full time job.

Perhaps, but more often than not I hear this excuse given by people who don't spend any time researching their investments. According to the BLS, the average American spends 2.7 hours per day watching TV. If that time were instead spent on investing people would be surprised at the difference in the financial situation.

As long as there is inflation, all you need to do is buy assets to make money.

If you're only keeping pace with inflation I hope you plan to consume a lot less in the future, otherwise you're just treading water. I don't consider that "making" money.


That's exactly what I read:

Step 1: Be born at the right time to take advantage of market conditions.

I see no reason to escape work. Rather my goal has always been to enjoy what I do. No matter the money pile, you'll never be able to repurchase your youth.


That is true of almost all success stories though ...


At this point, investing capital in real estate and stock markets is a fool's errand. They're done. Maybe they're okay as a savings vehicle (maybe!), but you should not realistically expect to make more than 2-3% returns after accounting for inflation, fees, taxes, and time spent on them. And, no, you're not going to be able to consistently outperform people who specialize full time in those kinds of investments and who have access to insider information.

The real trick is to invest in something you do have access to insider information about and that you do do full time: being yourself. Invest in human capital, aside from a financial baseline to diversify for when your human capital starts to rapidly depreciate.

In some ways this is cheap. Reject certifications besides the most basic (a degree). Focus on getting an education instead. Buying a top of the line computer, high speed internet access, and books to learn from, for developers, is an almost negligible expense that will go a long way. And the most valuable way to learn--creating useful projects--can more than pay for themselves.

In other ways this is expensive, though. Choosing to invest in a 401k* takes an hour or two of your life per year, while investing in yourself is at least one or two hours a day. This is very, very expensive if you're already spending 50 hours a week sitting at a computer pounding away at brain-deadening code. (On the other hand, if you can get paid while also increasing your human capital... you've hit gold. Stay there until you've stopped rapidly learning, and then jump to the next big thing.)

Key point, though: there are multiple areas you have to invest in. Yes, a professional skill like coding is useful. But who knows what it'll be like in 5 or 10 years? Make sure to put time into your relationships, your physical health, your non-coding hobbies (drawing, banjo, typography, whatever). This diversification exposes you to more long-term investments: they help you maximize your luck surface area and will come in handy surprisingly frequently down the line.

How do all these retire-at-30 articles fit in? They aim to maximize financial investments early on by under-investing in many categories of self-capital, hopefully catching a good bull market, and rapidly switching to building self capital at 30. The obvious flaw is the assumption of outsized returns--they're not going to be as big as hoped--but that can be dealt with by tinkering with the numbers a bit.

The more fundamental issue is that it's not diversifying. It's risky. If you've saved up 500k by 30 by working long hours and frugally cutting coupons on your time off, that's nice, and if things work out right you might be fine. But suppose the defaulting of some government thousands of miles away sets off a chain reaction of bank failures that ends up massively contracting the economy you live in. There goes most of your savings. Yes, you might have invested in bonds, but you wouldn't have been pulling in those massive returns you were banking on to retire so early. And your job, having been funded by massive amounts of loose capital, suddenly disappears. Oh, you're farked, and you'll have to start nearly from scratch again after the economy recovers. Back to giving up your weekends to the whims of an MBA. (If anyone's willing to hire an expensive 35-year-old developer when there are all these recent college grads willing to work like dogs so they can retire at 30.)

Or even simpler: you hand in your resignation on your 30th birthday, walk out the door, and are hit by a semi driven by some overworked and drugged up trucker. Wow, that sucks. At least all those hard-earned dollars will go to some charity or another.

The ideal, I think, is to semi-retire as soon as you can, and work 15 to 20 hours a week at jobs you find interesting or fun. You get the best of both worlds and have diluted the amount of risk you face at any one time.

*Controversial statement here: 401k's are the biggest scam alive today, you're not only freezing your capital but also betting on taxes being lower in the future than they are today.


At this point, investing capital in real estate and stock markets is a fool's errand. They're done.

Absolutely ridiculous. When I hear a lot of people spouting nonsense like this, I know it's time to buy. American corporations are making a killing right now; why exactly would I not want to buy a piece of that business? Especially when it's on sale? Similarly, real estate is dirt cheap right now. Have people decided they no longer need housing?

Think what you want, but I'm actually doing it, right now, as are many shrewd investors I know. And I'm doing quite well.


Exactly. Saying that most investing is done is just as bad as people saying real estate will never go down. Generally when everyone feels one way, it's time to act on the opposite.

I'm also actually doing it right now. I own stocks and close on my first house Friday.

Now for a crazy side anecdote. My cousin closed on her first house a few weeks ago. It took her 5 houses to finally get one. The reason? Her other 4 full price offers were rejected because someone else outbid her. Yep, outbid in the down market. It certainly doesn't mean that the market has turned, but it shows the interesting difference between what the news reports is happening, what people think is happening, and then what's really happening.


Doesn't the fact that my POV is apparently outnumbered 7:1 undermine the idea that everyone is a bear? =)

Instead of subjective measures like what everyone feels, I prefer to focus on things like P/E and Case-Schiller ratios. Though they obviously have their limitations, they tend to suggest that the market is still overvalued relative historical norms. And I see no reason for our economy to prosper in the near- and medium-term.


We can argue whether there are opportunities out there or not (I personally believe that there are), but in this link I see many instances of annual returns far greater than 10%. The writer seems to have an above average understanding of the market (or just got lucky), and presuming that the average Joe (who is the target audience of his blog) can replicate these returns in any given economy sounds rather absurd to me.

Retirement managers typically assumed 8% annual return for portfolios, but in recent years have adjusted this number to 5-6% per annum. The writer's returns are at times more than 3x this number. Generalizing his experience to the wider population is going to be dangerous.


I agree, though I'm currently saving some money because I expect the markets to go back down to 2008 lows. I'll buy then. Companies like Coca Cola and Shell are as good as ever, but will be much cheaper then.

  Have people decided they no longer need housing?
That may not be an entirely valid comparison, because it seems simply too many houses have been built.


Saying that real estate and stock markets are "done" is ridiculous. I don't know where you got the 2-3% return expectation from, but outperforming professional investors need not be the goal. Independent (retail) investors can generate sufficient market returns to live a very comfortable retirement without having to be disappointed that they're not the next Warren Buffett.

To your point, investing in human capital (yourself) is valuable -- but it's not enough. The problem is it doesn't scale. If your biggest asset is yourself, your biggest income is going to be from each additional hour you work. If you invest in other assets (real estate, companies, whatever) you can generate passive income without having to work.

I agree with your controversial statement about 401K's, not just from the future tax prediction standpoint, but also from the perspective of limiting your investment options.


If you look at reasonable returns back in the days when we weren't busy pulling forward demand with ever rising debt / GDP ratios, 2-3% over inflation is pretty much the best you can reasonably expect if you can't afford to lose your capital.

What's "done" is the days when real (post-inflation) returns of 7-8% were achievable from passive stock market investments. Any retirement plan based on those assumptions is probably underfunded.


IMO passive income can be dangerous in that it may negatively affect your motivation to invest time in yourself. The trick is actually using that income for self-investment in the first place. Self-investment is essential, while passive income isn't (I think that's among the points of grandparent).


401k is ok even if tax rates go UP, due to compounding gains.

However, IMO, it makes sense to Roth as much as you can. Especially if your're a startup founder in early stages, making <$200k/yr, it probably makes sense to do Roth IRA (up to 105k), Roth 401k, or Roth IRA backdoor contributions (via 401k to Rollover IRA to Roth IRA, or SEP IRA to Roth IRA). Pay the taxes now, be able to compound tax free, and distribute tax free.

I'm suspicious of the public markets in general, due to the baby boomers retiring, the sense that a lot of it is fraudulent, and the rigged nature of the markets, but it's probably the only way to do passive investing.


> what happens when you invest intelligently in a booming real estate and stock market

Or, more realistically... what happens when you just get lucky swimming on the rising tide.

I wonder what OP did after year 10 when the real estate crash and the current financial crisis kicked in? No matter how clever your investments, the whole market came down.


I've found it's not that hard to balance frugality with, well, spending money. They can actually work quite well together. So while most of my wardrobe is still acquired from thrift-shops, I also bought my most recent car without taking out a loan. I liked not having car payments, but needed a new car for a road trip we're taking next year, so I tuned my budget and saved cash to buy a car outright.

Just because you're frugal doesn't mean you can't have nice things. My wife just bought me a $600 leather jacket (that I've admittedly been too frugal to pull the trigger on) -- for $450, new, via eBay. My 10 year old set of Sennheisers were showing their age, so I bought HD595s. MRSP $329, Craigslist price? $100, new in the box. My other car's radiator was shot - and if I can develop loan disbursement software and ecommerce stuff, surely I can handle changing the radiator in my car, and did, saving myself hundreds of dollars. And these are just things I buy, not even going into the stuff I do.

On that last one though, there is definitely a balance you have to find between doing stuff yourself and better spending your time. My father would always wash his own car, but I can drive two blocks and spend $20 to have 8 guys and a giant machine wash it more quickly, and I'll pay someone else to change the oil.

In short, I think that your idea that "you'll probably be stuck that way for life" is absurd, and you're mistakenly mixing up the terms frugal and cheap.


"I can develop loan disbursement software and ecommerce stuff, surely I can handle changing the radiator in my car, and did, saving myself hundreds of dollars."

Only if your time is worthless.

I say this not to be snarky, but because I found myself having to re-think these same decisions as I moved on from graduate school (where my time really was almost worthless...on a monetary basis), to having a real job that consumes most of my week. Life is too short to spend part of a weekend day (or more) changing a radiator. Much better to pay someone skilled at radiator replacement to make the problem go away (or in my case, to outsource the problem of owning a vehicle to Zipcar).

More generally, the older I get, the more stuff I try to outsource in an effort to viciously guard my spare time. Sometimes it feels a bit bourgoise (e.g. am I really so important that I'd pay someone to clean my apartment?) but it definitely helps to be able to put a dollar value on each hour of your life, and answer the question "would I pay someone $X an hour to do this?" If the answer is no, it's probably better to outsource.


You unreasonably discount the possibility of someone deriving enjoyment from working on their car.

I personally find it to be rather cathartic.


Indeed. Working on a car can be pleasant. Admittedly I do not currently- partly because bikes are more fun to work on, partly because I don't have a good space in which to work- but I hope someday to resume doing some repairs.


A fair point. If you find something enjoyable, then I agree the economic calculation is obviously different.


On the other hand, if you don't enjoy working on your car, presumably a professional mechanic would enjoy it better. And he would certainly enjoy the money.


Zen and the Art of Car Maintenance.


Ah, I thought I addressed that when I mentioned that I don't wash my own car. I don't do my own oil changes either.

The last decade of my life has been incredibly busy. It's nice to take a half hour and mow the lawn, or walk to Pep Boys, chat with the folks behind the counter, walk home with a radiator, and spend an hour figuring how to replace the old one without spilling coolant all over the driveway.

With all the coding I do, there's a satisfaction I get out of physical assembly and creation in things like home renovation or working on my car that doesn't, for me, ever feel the same coming from an LCD screen. Wiring up a three-way switch on both ends of a light bulb, throwing the breaker back on and having it work the first time, or buying a "broken" drum machine, opening it up and soldering the power connector back on, or tuck-pointing the stone foundation in my house.

I agree that spare time seems more and more fleeting as the years pass by. And though I'm sure there are interesting things for which you're saving your time, your not having mentioned them reminds me of a poem by Ogden Nash, "The Strange Case of Mr. Artesian's Conscientiousness" which Google shows me is quoted in full at http://www.paceadvantage.com/forum/showthread.php?t=69657...


The trap here that I fell into during my youth is to ask this question at the wrong time....

Is going out on a date with my wife worth $X/hr ?

Is helping someone by giving them a lift worth $X/hr?

Is sitting down to read a book / watch a movie worth $X/hr?

Drove my wife crazy.


Is helping someone by giving them a lift worth $X/hr?

I've done that calculation from time to time, but I've always ended up concluding "yes, because I'll enjoy talking to this person for half an hour more than I would enjoy having an extra $50".

... which, depending on your perspective, either means that I understand that money really isn't worth a lot, or just that I'm desperately lonely.


And if you get 2 u-turn tickets and hit someones car by mistake before zip car, you can't use it or many of the other zipcar like services out there.


When you're working for yourself or in a situation where you can work more hours and make more money (freelance, sales, whatever) then you can lose money by being cheap. Anything that can be hired out at a lower hourly rate than your own should be hired out. The catch is that you actually have to spend that time you saved working and earning income!

If you have a fixed salary, though, you might as well do those things for yourself if you have the skill.


Well, if you have a fixed salary you probably work 40+ hours per week. This means your free time becomes scarce, and its value increases.


I understand that perspective, however I feel that there are experiences more valuable than money. Even when I was scraping by month to month during college, I blew time and money on experiences that no amount of work for hire would ever get me.


> "MRSP $329, Craigslist price? $100, new in the box."

Have you considered that those goods are probably hot? Perfectly good, brand new, item on CL for 70% off?!


I considered that they're now $200 NIB on Amazon, and that the dude I bought them from attends UPenn, so the chances are pretty good that unless he's financing his ivy league degree by selling stolen goods, it's more likely that he bought them, tried them on, decided he didn't like them, and listed them on CL to cut his losses.

We have really nice furniture in our house that we bought from a family on the main line. They still had the tags on them - if I were to guess, the family moved here from India, landed a job making more money than they needed, and overspent. Bought this couch and loveseat, decided they didn't like it, and moved them into the basement, buying another. Not sure how long they sat down there before we picked them up, but they sure look nice in our living room.

Even when back in college, I went to yard sales in (central PA) affluent neighborhoods. Sometimes people just want to get rid of otherwise good stuff. Now that I do alright, when I need get rid of a DVD player or a stereo I don't use anymore, I list it for free.


  > the #1 reason for any "How I did <...>" is really, "I am cheap."
I couldn't disagree with this more. In fact, I find the opposite true. Living lightly and investing well on average creates much greater opportunity and enjoyment than indiscriminate spending.

Sure, some wealth comes with being cheap/frugal. But real wealth comes from investing your time & money well and spending intelligently. Notice I said "time & money". Discretionary items are just as much a time sink as they are a money sink.

Forget the self-help articles that harp on about minimalism and the latest lifestyle design fads. Try to live lightly and gauge the results for yourself. You won't miss anything, you'll have more time, you'll think clearer, and of course you'll have more money.

Then you'll decide to launch a startup and lose your mind :)


To piggyback on your comment. Being frugal allows people to have capital when opportunities come along. Being cheap is generally undercutting someone else in order to save a nickel or a dime. Being frugal is delaying gratification in order to save up for some specific purpose or to have capital when an opportunity presents itself.

Regards, TDL


I am sorry, but I think I disagree with your viewpoint. My idol in being frugal (but not cheap) is Mr. Warren Buffett. I don't think he lost an opportunity by being frugal or has any regrets. Obviously it is a very personal choice. Some people do get pleasure by discretionary purchases, and some (like me) by knowing that there is money in the bank.


I live, by most comparisons to people within the same bracket, very cheaply. The thing is, I'm not watching every penny, I'm not buying the cheapest thing there is. I just refuse to pay more than what I value something at (and dollars, not intrinsic value of the time). There's some things that are significantly under what I would value them at dollar wise and have no trouble paying for, but there's a large number of things that are priced over what I would value them at and just don't buy them. Additionally, the immediate price isn't the only thing to consider in the cost, there's the lifetime value of the item as well. So, I would disagree that the sole response is being cheap, I'm completely confident the same things are capable of being accomplished by having an understanding of the total cost and total value of things you're spending money on and being smart about purchases and use of money rather than buying expensive things because they're "nice".


Story of my life, Ed. I am your poster boy who lives "cheap" and not "frugal" by choice. I clip coupons and browse slickdeals before committing to a purchase. I never buy anything at MSRP. I monitor airfare prices for weeks before booking a ticket.

This is a difficult problem to escape because it's one that I behaved myself into, and that it's self-reinforcing for a variety of reasons:

- When you're already on a fixed salary, the opportunity cost of spending time on being cheap is not obvious. You're not taking time away from that $500/hr side consulting gig that you don't have. Instead, you're at a situation where the marginal rate of return on clipping coupons (say, $10/hr) is significantly better than spending the next hour working on that iPhone app that is months from release and has no interested buyers (how long is it going to take to recoup the Apple developer fee?).

- Some people get a rush out of saving money, a feeling of "Ha! I beat the system." To them, saving money is a form of entertainment [1], and there's certainly far worse hobbies to have from a well-being perspective. Unfortunately, there are people who take this too far and end up as total misers or compulsive hoarders. I'm not a pathological case, but I've done things that would make some people cringe.

- Seeing people successfully live frugally can be a motivator to follow in their path. My parents are immigrants who worked hard and saved for 20 years before they were finally able to afford a house in an expensive neighborhood (and nearly paid for it all in cash). They drive Toyotas, shop at Costco, and cook at home. They are basically the epitome of the "millionaire next door" [2].

- There's also a moral justification for this. "Why do I have to keep up with my spendthrift neighbors? So what if I don't drive a Maserati or carry a Herm├Ęs bag? No thanks, I shall be comfortable in my own skin, since envy and greed are evil." This is now an identity statement [3], and while it's a good position to take from a financial perspective, it can be crippling in the way it makes some people closed-minded. Of course, this doesn't necessarily stop them from pontificating about retirement at 30.

I do still think that my years of being cheap are starting to pay off, mostly because I'm finally getting comfortable with the sort of "discretionary" expenses you mentioned in your post. The difference is that it probably took a much larger bank balance for me to consider them "affordable." I just flew across the continent purely on a whim to visit some friends that I hadn't seen in years, I no longer cringe at expensive bar tabs if they were time well spent with buddies, I can afford to make an impulse electronics purchase just to see what it's like, and I'm preparing for that self-funded sabbatical [4] to reboot my life.

Was it worth it? Well, it was really, really hard to re-orient myself this way, and it took much more sacrifice than necessary, but the good news is that aside from lost time, most of the rest hopefully can be recovered.

[1] http://www.budgetsaresexy.com/2009/08/saving-money-trumps-se...

[2] http://www.amazon.com/Millionaire-Next-Door-Thomas-Stanley/d...

[3] http://www.paulgraham.com/identity.html

[4] http://www.joelonsoftware.com/articles/fog0000000076.html


Well I would say that savings driven life is far better than the spendthrift side of things. Now this is purely personal choice. No denying.

In my case I like to sit on piles of cash, without any debts and EMI's to pay. And loan interests to worry about. I like to live a tension free life at the same time get a realization that I'm getting rich. And if you do so, you actually see that a lot of luxuries come a little late, but they come at zero stress, worries and hassles to worry about. The lateness in affording things is often very differential and in my case at least has made very little difference. Over the years you are far better off having money, peace and tranquility in your life even if you drive the Mercedes two years late. Than having a Mercedes right now and all the while paying off debts endlessly in cycles(Home, Credit card etc).

Now the point is simple, I don't really understand the spend thrift part of the world. Just because I don't dine at a seven star hotel eating a sever course meal, I doesn't mean I'm not eating well. I eat whatever I like, drink whatever I like and wear whatever I like. I just don't fall for the brands and buy 1 get two free kinda stuff.

I can go with the same phone for some years provided that server the job for the moment. Which most of the times it does. I don't see any reason to have credit card(Yes I don't have a credit card at all). Its just if you don't succumb to peer pressure and blindly imitating others spending patterns. You sort of can end up saving really lots of money. With savings and investments you can really end up making a lot after a while.

And then you can buy everything your want, retire early. Buy your dream home and live well.

In fact this is more pleasurable than the other approach.


It's funny that a black 0 in your bank account can make you better off than so many others, these days.


Debt is a dangerous thing. I don't think the same about governments. But I consider debt to be disastrous for individuals.

The reason is simple a lot of your work, time and energy drains into paying the most scary thing invented by finance industry so far - 'Compound Interest'. This is especially dangerous in the case of credit card. The debt keeps mounting because of two reason, you being unable to pay and yet still continuing to borrow money. This sort of a spending patters brings a lot of pain to people every where.

And all of this for what? Upgrading from iPhone 4 to iPhone 4s. Is this really worth?

In this sort of set up people living with a savings driven life get a automatic lead ahead of spendings driven people.

Because while you are working to pay off the interest money. He works for the same time and saves that interest money.

I think it will be safe to say to say that if your paying X% money as interest to bank by working for hours Y(Remember you are loosing X% money, thereby in effect rendering your Y hours of work useless, as though it never happenned). The same X% is the money earned by the savings driven guy in the same Y hours(Additional to the money he is already earning. So this his extra income).

You work to loose money and he works to get rich. Although both work for the same time. One gets richer other gets poorer. This is how bad debt can inflict suffering on you.

These days you can be relatively rich by just saving money! And avoiding debt.


I think the lack of understand about borrowing to fund an asset, versus borrowing to fund lifestyle. If it is going to return higher than the interest rate you are borrowing at, then cool. If, in the case of a house, it is cheaper than renting (without a high risk of capital value falling putting you into liquidity diffulties), then also cool.

Borrowing for consumption is where people make the mistake.


Don't forget however that you still have to have a roof over your head. Assuming you have close to $0 net worth when you graduate, you still have to lose money, be it over a mortgage or over renting.

So, the question is, which is cheaper? Your mortgage, or your landlord?


Money let's you trade things you don't mind doing and stuff you don't need for things you want other people to do and stuff you want to have. Clipping coupons can pay 1000$ an hour or 1.5$ an hour but the important thing is not just ROI but how much you like or dislike doing things. But with stuff there is a third option. I don't listen to music so the cost of a CD or concert ticket is irrelevant to me. I don't like to travel so the cost of a plane ticket is irrelevant, I don't like posters, nick nacks, or buying clothes so most stores simply don't have anything I want to buy.

So, when you see someone that saves most of their money don't assume they are hording it, some people just don't find all that many things they want to trade it for at a price they are willing to pay. Now I like playing video games, but I have several of them unopened new in box so I don't feel the need to buy yet another one that may or may not get played etc. I have cable TV, but I spend far more time playing free flash games not because they are cheap but because I simply enjoy them more. http://www.kongregate.com/games/light_bringer777/learn-to-fl...


I think it was a post on HN awhile back that got me thinking like this. If I don't want to do it, and the opportunity cost for me is greater than the cost to hire someone else to do it, then I should just pay them. The key here is the opportunity cost is for me, not for anyone else. For example, I hate mowing the lawn and I estimate I'd have to be paid well over $100 to get me to "enjoy" doing it. Thus, I pay the $60 for lawn service. To me, I just earned $40 of my time back. Now, I'll admit, it isn't as cost effective as being cheap or "frugal", but I do think I enjoy life a bit more.


How much can you save per month by being frugal? Top several thousands dollars per month.

I prefer to focus my efforts on maximizing my income, which is theoretically unlimited, instead of minimizing my personal expenses, which are limited to $2K/month.


On the other hand, as todsul pointed out, cutting your expenses can give you more money to invest. Cutting costs that also eat up your time also gives you more time to increase your earnings potential. Owning many things brings to mind the definition of a boat as "a hole in the water into which you pour money" and your time.


There is only X amount of time and Y amount of energy you can use to 'maximize your income'.

Now come to think of this. If you choose to go this way More expense imply more work. How long can you can you continue doing this. Unless you have a business which you can milk like a cash cow, a salaried employee can only go so far with 'Work more earn more' attitude to match his increasing expenses.

The only approach is to know to how to save and invest appropriately.


It's worth noting that you are better off tax-wise saving one dollar than earning the same dollar. I didn't expect it to impact your argument that much, but given that the 2010 income tax rate in Israel is 44% for anyone making over ~90K/yr, 2K in savings is roughly equivalent to 3.5K in marginal income. From what I gathered last time I was in Israel, that was a pretty significant amount of income.


We only get one chance at this life, and the thing that bothers me the most is, "What are you missing that you're too frugal to consider?"

And I ask instead, "What are you missing because you have to spend so much time working?"


What you're saying is that you spend money and it increases your luck surface area; but there are plenty of free ways to do this. You don't need to go on vacation, make extravagant purchases or even go to the coffee shop to meet new people, make contacts, etc.

It sounds like you need money to get outside of your social comfort zone. If that works for you, fine. But it's not necessary.

Also, don't confuse using money to increase your luck surface area with blatant consumerism. Flying to a conference in Finland is much different than buying a new TV.


The thing that "cheap" and "frugal" characterizations miss is one that I think is significant (and is noted in other comments in this thread, e.g., ebay) is "resourceful".


This is not about being cheap. This guy won't cheap out on food and drinks on a night out, because he doesn't do it very often. He will buy better shoes and clothes than you, because they have to last longer. He will have a nicer house than you, because he has put time into it, and the end, can afford better stuff than you do. Spending wisely and being cheap are very, very different things.


How is being self employed retired? Is this a new meaning of the word retired that I have not heard of?

He notes on his 'start' page that a mere 1 in 9 Americans are self employed like him. Only a few 10s of millions of people then?

I think your office of national statistics would disagree with you buddy, you're a handyman, your wife's a realtor. You're not retired.

What a plonker.


"How is being self employed retired? Is this a new meaning of the word retired that I have not heard of?"

Raises an interesting question about whether working in a hobby business is "retirement".

If the author works solely in the hobby business for his own pleasure and could live indefinitely if he shut up shop tomorrow then he is arguably retired. Plenty of retired people still do some measure of work for the sole reason of having something enjoyable to do with their time.

Also, LOL at the advice essentially being "Participate in the hottest job and stock market in history and get out at the right time". Living cheap and making investments is sound advice, but anyone who made their fortune in the late 90s was more lucky timing than prescience.


No one would have read the story if its title was "How I became self employed in 9 years on a corporate programmer salary"

HN needs some sort of false title penalty.


My reaction exactly.

I'd also add: Landlords earn every penny that they collect.


"How is being self employed retired? Is this a new meaning of the word retired that I have not heard of?"

It is the meaning that describes a person who'd saved enough so he doesn't have to work for the rest of their life. What he does for fun is irrelevant. Even if it happens to be "work".


This is a nice article, but two observations:

- He made a great home investment, apparently bought cheap and later was able to rent it for a lot of money. This is good for him, but somewhat lucky (or, alternative, a spark of insight into real-estate)

- He made nice returns on stocks

Both are fine, but not a part of "corporate programmer salary"


My thoughts exactly. He used the rent from 1 house to cover the mortgages on both his rental and his own house.

A typical mortgage around here is about 1/3rd of your income. So being able to basically have other people pay 2 mortgages for you is _huge_.

He also mentions he bough a bunch of Cisco stock for 7$ which he later got to sell for 30$. That's more than a 300% return, so depending on how much he invested, that can easily amount to a hefty chunk of cash as well.


Not to mention his wife's salary.

But the HN posting title seems to have been adjusted from the original title (which doesn't mention corporate programmer salary).


I'm surprised how little attention that part of the story receives, but maybe I'm in the minority as a late-20s bachelor?

Earnings received by a partner and shared expenses makes a dramatic difference to wealth accumulation. Where I live, if I earn double what two people in a relationship each individually earn, the couple make an extra 12% after-tax vs. what I do because they are taxed at a lower rate on their lower individual incomes. Furthermore, while two people eat and poop twice as much as one person, the greatest expenses (living) can often be shared.


and in retirement he has a part-time job that earns 50k/year.


Exactly...a bit misleading. It's more about making smart investments and having a lot of luck with the timing. Like my parents, who had successful careers (dad was a dentist, mom was in real estate), but in the end selling the house they bought in 1975 for $87,500 (and paid off) for $950,000 in 2004 was what put them in the best shape for retirement.


True, but his investment capital came from his IT salary (at least initially).

I thought this article counter-balances some of the many startup success stories we read about here. All great success seems to involve exceptional circumstances, hard work and good luck.

I guess the point is that startups aren't the ONLY way for programmers to get lucky.


Let me get this straight, he thinks 900k is going to be enough to retire on, send a kid to college, and lay for his future medical bills!? That home building business started during the home building boom better be earning more than 50k.


The safe withdrawal rate -- that is, the rate at which you can withdraw from retirement accounts without too much risk of running out of money eventually -- is generally considered to be around 4%. With $900,000 saved up, that means the OP can spend about $36,000 / year from his nest egg without too much risk. The article states that they live as if they made $35,000 - $40,000 / year. So the income from their retirement combined with their side business should be enough to at least sustain their current lifestyle. I have no idea if their $35,000 - $40,000 estimate covers health insurance, so it's hard to say whether they are at risk of being wiped out by medical expenses.


It sounds like he moved from Canada initially, which implies he is a Canadian citizen who can always move back and get universal health care if his health becomes a concern


He's letting that 900K appreciate, so it should be enough soon for a lifestyle as frugal as theirs.

And I expect that his income will remain good. There's something about being able to say 'no' that puts you in a position to snap up the really juicy work.


yeah, what a moron thinking 900k still appreciating in his 30's plus free rent is enough to support a comfortable lifestyle.

I'm going to refrain from writing something offensive. Suffice to say I find your attitude distasteful.


The median household in the US earns about $1.8M over their working lives; and I suspect that the median household wouldn't describe themselves as having a "comfortable lifestyle".

Now, the fact that they aren't working lowers their costs; but still, the amount of money they have now is significantly less than what a typical couple would earn between now and when they retire.

I don't see anything distasteful in questioning the arithmetic here at all.


$1.8m distributed over ~40 years equates to $3750 a month. I doubt a family could save much with that income.

If you get to this kind of logic, you will lose around $50k from slacking out during lunch through your lifetime (15m a day, $20/h).


Back in 1950 a loaf of bread cost 5 cents. Now? People often forget about this little thing called inflation. You have to plan for 4% inflation and faster medical inflation. You also can't count entitlement p


That's why you put your money in a savings account... anyway, I think we're on the same side.

To put these $1.8m in perspective, that's just a tad less than the amount of savings one in the top 0.5% might have after retirement: http://sociology.ucsc.edu/whorulesamerica/power/investment_m...


So you don't think he's going to burn through 900k in 70 years? You don't think that his living expenses will increase when he has kids?


45k a year (5%) + supplemental income from side projects is A LOT of money when you aren't paying a rent or mortgage in most parts of the country. I suspect many HN people have a warped view of living costs living in areas with lots of high tech jobs.


And in ~20 years those mortgages will be paid off, and he'll be making rental income off of the house.


Wikipedia defines retirement as follows:

  Retirement is the point where a person stops employment completely
Obviously not what the author of this article did. It seems that the author's goal was to get out of the IT industry. Why? Was he unhappy? Whatever the case, he seems much happier building houses. That's great!

Personally I love software development, and don't really want to do anything else. Sometimes, when the stress gets to me, I find myself imagining doing something else, but it's usually just a phase.

If you want to change your line of work, then by all means do it, but it's not retirement.


Working on your hobbies for just as long as you wish, with plenty of money in the bank, suffices for "retirement" to me. Retirement doesn't mean not working, is your goal in life to become a vegetable? There are easy shortcuts to that.


Not working is actually what people usually do when they retire at old age. "To retire" can mean several things[1], but quitting one line of work to go into another is not one of them.

That he quit his job and got into something else is great, I'm not trying to belittle that, but I'm just annoyed that he seems to consider retirement to be working with something he really wanted to be working with all along. It gives the impression that the goal in life is to retire. Which I don't think it should be. If you want to work on your hobbies, why not find a way to make a living out of it now, rather then when you retire?

[1]: http://dictionary.reference.com/browse/retire


Early retirement has a totally different meaning than retiring at an old age. At old age, you think of covering your medical expenses, sufficient enough money to take of your needs for food,clothing and shelter till your very soon to happen biological death. Besides you don't really have the energy and enthusiasm to enjoy the same things somebody young does.

At an younger age retirement has a different meaning. It means traveling, riding your motor cycle in rallies to far off places. Roaming around the country trying out different sort of food, Playing video games and your favorite instrument during Sunday afternoons.

In order to do all this you need a supply of money that isn't mediocre by measure. In this case, even if you have $900K (I don't know if this is sufficient in the US, I'm from India) that may not be sufficient to live a life of even mediocre decent luxury.

If the idea is to live hand to mouth the rest of ones life, then retiring with $900K at 35 isn't bad idea. Other wise,... One has no option but to get back to work.


Sorry, but his stock trading seems bit hard to believe.

He's saying that he made money on stocks during the dot com boom and during the bust as well? I don't think that's possible, unless he was psychic enough to short at the top.

Anyone who made money on stocks during the bust got their heads handed to them during the bust. No one believed that the bust was going to happen. One of my coworkers turned 50k in 1999 into 250k by 2000, and then 6 months after the bust started, he was down to 20k. EVERYONE during that time thought they were stock picking geniuses, so when stocks went down, they thought it was a buying opportunity. I can't imagine there were any stocks you could have bought during the bust where he could have made money, let alone increase in value by 50%!!! During those years he went for 67k to 150k to 250k!

Unless he was shorting stocks, there really wasn't any stocks that survived the bust very well, especially if he was investing in the likes of Cisco, etc.

The same goes for 2008/2009. Unless this guy is some sort of stock trading guru, he would have lost 50% of his stock portfolio yet he made $35k. It just doesn't sound right.


It seems pretty silly to me to assume "anyone who made money on stocks during the bust got their heads handed to them during the bust". Im sure that there's plenty of people that that quote does not apply to. Most people lost money in the 2007-2008 crash, but I got in an a triple inverse ETF in late 2007, so I didn't. Was I psychic? No, I was just paying attention, which most "investors" are not doing. Mr Money Mustache seems to be one who pays attention.


Just because you don't know how to invest doesn't mean other people don't. In 1999/2000 I was telling everyone the market couldn't sustain itself and to get out, and I was just out of high school! I also called the dip in 2006. When the market tanked in 2009 I bought in & have made 50%+ on those investments.

The message is that there are plenty of people who can invest wisely.


Everyone was calling for a crash, but it took years before the markets actually started crashing. Anyone can make a prediction when there's no money behind it. Obviously everyone thought the market was toppy in 1999/2000, but if you followed your advice and shorted it, you would have lost plenty of money from 1999 to 2000. It probably would have bankrupted you.

For the record, I also made money after the dotcom crash and after 2008, having avoided buying anything during the boom and buying blue chip in 2001. As well, I sold all my investments in Sept 2008 and picked up more blue chip in March 2009. Selling all my investments in Sept 2008 was more luck than anything else, I sold because I thought October was going to be the 80th anniversary of the Big Crash in the 1920s, but I was off by one year, it was 1929 not 1928. Better lucky than good.

My point is, anyone who made money on the way up, which it sounds like the author did, didn't believe that the markets would crash. The author didn't even show flat returns, it was always net positive before, during and after 2 crashes. It just doesn't sound right to me.


Why do you have to short it and lose money for 2 years? You can exit somewhere on the way up, sit on the sidelines, wait for the crash, buy low, do it again. Not that hard to believe.


Investing is easy. I follow two simple rules. They are all you need to follow:

1. Buy when people are desperately selling (Get in when people are getting out).

2. Sell when people are desperately buying (Get out when everyone is rushing to get in).

That has always made money for me.


What stock should I buy now?


I'm not sure if you're serious, I really hope you're not. Don't ever directly take advice from a random discussion. Many people have no clue and many people have an agenda. Don't take advice from "gurus" like Jim Cramer the pumper.

Learn and understand how investing works so you can take advice with a grain of salt and research the recommendations yourself. You also have to have a strategy that works for you and fits your needs, risk tolerance, and bankroll.


Wouldn't a strategy of investing in good long term stable stocks (for the good times) and shorting ETFs during the busts be solid? It takes timing, a bit of luck, and knowing the markets well enough, but there's probably a ton of people doing it successfully.

(this is more a comment on a possible strategy rather than on what the OP did, I realize)


During the dotcom bust and during the 2008 crash, EVERYTHING went down. In stock trading, 80% of it is getting your timing correct. So sure, if you can get the timing down, then you'll make great money, but that's also the hardest part that not even 80+% of money managers get.

I'm not sure there's a ton of people who made money during the bust, especially those that owned mutual funds like what the author claimed. There certainly were people that made money but they are few and far between. One of my coworkers at my current company made $500k shorting 3COM and YHOO.

The point is that the author didn't even show a year of flat stock earnings... every year they went up! During 2 crashes! And he never got burnt enough to start thinking that stock investing was dangerous or foolhardy when he had no steady job. It just seems fishy.


Remember that this is one guy doing it. It's possible to make great money just by basing your buy/sell decisions on coin tosses. Is it likely that it will work out well every time, hell no. But if a load of people did it, there would be some with great runs. By extension, the fact that many people did terribly doesn't mean that others didn't do great.

And with your "80+% of..." - the 20% left weren't necessarily more skillful, many will have just been luckier.


No idea why this was downvoted. Maybe because it is right? One data point may not reflect the broad market. If he sold before the crash and then dumped his money back in the market when the dow hit 6500 he would have made a killing.


Not everything went down in either crash. Also, 80% of trading any financial instrument is risk management, position sizing, & dealing w/ losses & gains. Stock selection & timing are a small percentage of trading, they are just easier to sell to the public.

Regards, TDL


The difficulty is in identifying "good" long term stable stocks.


I agree completely. Either (A) this guy is a stock-picking genius (in which case this blog post is a missed opportunity because he doesn't say anything about his strategy, but just casually mentions eye-popping gains) or (B) there's something fishy in the state of Denmark.


Money coming out of falling stocks usually goes somewhere else.


I think this is completely feasible starting with a $0 net worth and having a college education. I am not remotely surprised he got to a $100k salary working full time plus nights and weekends. You'd be surprised how many people you can pass up in the work force just by showing up on time and working more than them.

Frugality is also huge. If you can save 15-25% on products you knew you were going to buy anyway by clipping coupons or buying in bulk or searching for deals, that's far better than making 15-25% in the stock market because there's no risk.

The real estate thing, too, isn't as hard as you think. Multi-unit dwellings can often be purchased at the price of a normal house and rented for 2-3x what a normal house would go for. If you can find a three or four unit building for $100-$150k and live in one of the units while you pay down the equity and fix up the other two to increase they're rental value, then getting $500-$600 per unit becomes very possible. That's $1500-$2400 a month to go towards mortgages, which would easily support two $100-$150k houses.


With regards to the idea of having a cap on savings returns, this is very true. But savings are also different from investments in that whatever you were going to do with your discretionary investments, you now have more capital to work with because of your savings.

Example: You make $3000 a month and your monthly expenses are $2000. That leaves you with $1000 a month to invest. If you haggle on rent, clip coupons, and use second-hand stores and flee markets to get your monthly expenses down to $1500 a month with no reduction in lifestyle, then you have $1500 a month to invest.

The 50% increase in your investments means a very large gain on returns. With compounding interest at 8%, you can accrue $180k+ over ten years on $1000 into savings every month. When you change the savings to $1500, then you only need 1% return to save the same amount of money OR you'll have $276k at the original 8% rate. You're either massively reducing your risk or massively increasing your return.

In any event, saving money on expenses should be the number one priority of any investment strategy.

Note: I used this financial calculator for this comment - http://www.thecalculatorsite.com/finance/calculators/compoun...


"that's far better than making 15-25% in the stock market because there's no risk"

Not really, because clipping coupons won't ever make you enough to retire.


I guess this comment I'm replying to was downvoted for being too vague and blunt, but it's a perfectly valid point.

Let's say my monthly expenses (in areas that might theoretically have coupons - e.g. house rent isn't going to come with a groupon offer) are $2k, then saving 25% of that is only ever going to net me $500/month, and there's a hard cap based on how much I'm already spending.

Whereas with investments, there's no cap on it, except the amount I have to invest, which could be much, much more than $2k.

Obviously this skips over the question of success in those investments, but that isn't the question being discussed.


I'd love to hear his wife's take on this frugality. "I didn't miss the 2nd car a bit" - I imagine the Mrs. has a different idea about that.

So pretty much, have a high-earning wife and buy a firecracker realestate deal that pays 2 mortgages. Doesn't sound so much brilliant as lucky?


There's always an outlier who attributes his success to skill (and he's usually writing a book about it so we can all follow his three step process to riches).


  I'd love to hear his wife's take on this frugality. 
http://www.mrmoneymustache.com/2011/04/25/having-the-talk-wi...


Before the crash, virtually all real estate deals were firecrackers, so no luck was involved there. The luck involved was in mostly cashing out before the crash. He doesn't say whether 2011 is year 11 or year 15...


So, let me get this straight. You:

1. You and your girlfriend were making more money individually than the 2009 median household income [1], and you had been doing so since 1999.

2. You ended up on the good side of a stock market that robs as many people as it enriches.

3. You cut expenses whenever possible.

And your end result is a nest egg that might be enough if you stay frugal and work part-time? How is this useful financial advice?

[1] http://quickfacts.census.gov/qfd/states/00000.html


Seems to me that stories like this are much more useful to the masses than stories about the Steve Jobs and Bill Gates of this world and everyone seems to eat those success stories up. I guess it is about perspective and what your ideal lifestyle goal is.


i don't understand this sudden focus on retirement. You could've had a nice programming job and done it for years with enjoyment


I find these articles interesting - insightful in the "lifehack" kind of way.

I want to be able to retire some time early, but almost certainly won't actually retire - I love this occupation too much and would do it for free (well, I actually do that too). But being able to retire is a nice situation to be in, in terms of self-confidence, work-life balance and general psychological well-being.


These memes are cyclic. It's the retire early one right now (gambled and won), last 6 months was minimalistic lifestyle (startup failures who gambled and lost and late startups going ramen), 6 months before that was startup goldrush VC/angel money.

Which is next? Probably share/investment goldrush. Then gold and other hard commodities when that goes belly up, then we're back to real-estate. and on and on...


You forgot about the great bitcoin takeover.


Well, universally I'd label that the OMGspeculativemarketisabouttocollapse meme.

Also missed out the travel for a year and see the world while running a blog meme. My personal favorite seeing reality hit and post schedule start to slip Scheudenfreud is awesome :)


There's more to life than writing code 9-to-5 for someone else. Some people want the freedom to code when they want on projects they choose. They may also want the freedom to do other things like travel the world and spend time with people in places that would otherwise not be possible.

Nothing wrong with wanting something different.


It doesn't sound like his jobs weren't nice. You know, you can actually enjoy corporate work if you are not stuck with it for the rest of your life, and got a nice team.


And that goes for any profession. I was far more inspired to hear a recent NPR story about a welder at a local factory who's 90 and just celebrated his 65th year with the company. He likes going to work every day and keeps doing so.

Far more desirable to me than finding some golden goose is to find a path that keeps me enjoying work for years and years.


Who is downvoting this? The point is that people can find a lot of fulfillment in work.

When I read about a programmer who stopped programming at 30 to go into construction, I think that shows programming wasn't really the right career choice for him. If it's not the right career choice for you, then by all means follow the recent spate of HN "retirement" posts and change careers.

But if you love programming, you can actually find jobs you like in programming! You don't need to retire! Talking to 30-somethings planning their retirement is...depressing.


For me, the path to enjoyment involves my own freedom. Freedom to work on what I want and to have, build and implement my own vision. I think this community has a higher than average amount of people like this and that is why these articles show up.


Not factoring in age discrimination, you won't.


I don't believe much in this. I think a large percentage age discrimination in engineering is well-deserved. There's so many people at any large engineering firm who at some point just start doing the same thing over and over again for 20+ years, protecting their little knowledge island, resisting new ideas and approaches. If these people lose their job and enter the job market, yes they are discriminated against. I call this "lack of skills and interest discrimination". I believe that in most working economies, this is allowed.

Of course, as with anything, there's exceptions, but I'm convinced that if you keep investing in your own knowledge, keep exploring and learning, and keep figuring out what it is that you'd like to do most, you can avoid age discrimination pretty well. The few 60+ year old co-workers I have confirm this. The large amount of aged Software Superheros out there confirms this.


> i don't understand this sudden focus on retirement.

You sound like someone that's never taken a serious amount of time off work. Two years ago I quit my perfectly good programming job to spend 2 years driving from Alaska to Argentina. Someone asked me what I did the whole time - my answer "Exactly what I wanted to do. Every single day." I encourage you to take a seriously long amount of time off work to discover what you actually want to do with your life if you don't have to go to work.


My landlord used to vacation in a nice coastal area. For a number of years, he went to the same town, same rental. At one point, the cottage came up for sale. $200k. He dismissed it as too much of a risk for his financial situation at the time. Less than five years later, the boom and bubble in coastal properties had exploded the market value to $600k. For a humble cottage. That regret (he could have bought the cottage and rented to cover) - missing that opportunity is why he purchased multiple properties in an up and coming area before it became the young professional magnet that it is today. He had done quite well for himself, a liberal arts major who has minored quite successfully in real estate.


The timing of the housing market and stock market couldn't have been better for this guy.

I'm not saying he didn't have anything to do with this for being frugal (I'm doing the same thing), but stock and housing gains seem to account for a large portion of his wealth.


He could have summed up the entire thing with

"I was lucky"


Here in Australia, the commonwealth bank provided a guideline on how much super you needed to retire on to main various life styles, and what struck me as scary was how much you needed at retirement age 65, to survive for 20 years, if you wanted such first world pleasures as running a dishwasher, going out to dinner once a week, and so on. 800k was not anywhere near the amount needed.

I'm not calling this guy out, but you would be living a minimalist lifestyle in order to make 800k last you 40 years..

If you had it all in a 6% long-term savings account, you're barely making 50k pa before tax, for two people to live on. Sure, you have no mortgage, but you still have all the other costs of life involved. They'd be able to do it, but they certainly wouldn't be living the high life.


Oh and yeah, you could go for high risk/return investments, but your investments could get wiped out, and the taxes you paid go to paying bonuses to banking execs requiring bailouts.


Step 0: no debt. You could attribute that to luck or smart early decision making, but that's definitely a large step ahead of everyone else.

Personally, I have measured it will take me approximately three years of post-college work experience to get out of debt (with my current income, budget, amount of debt, etc.). I haven't heard of any startup founders that go into a startup with debt already in their wallet so I feel that the amount of student loan debt universally shrinks the space of potential new entrepreneurs.


I had a very large negative net worth when I finished grad school and started working on startups 12 months ago. It was risky, but you have to have a taste for risk to be an entrepreneur.


That's inspiring to hear. Student loan debt is not the worse debt to have; however, it doesn't go away even if you declare personal bankruptcy (although, there are bills going through the legislative process currently to amend this currently).

Perhaps I am not as risk-taking as you are, but having to worry about paying student loan debt versus startup concerns seems like a mental battle I am not prepared to fight. I'd rather do the debt repayment independent of the startup so I can focus on each individually with undivided financial attention. On the other hand, the argument can be made that having debt repayment while you're running a startup makes you hungrier. Although, I predict that would make me rather short-sighted to live hand to mouth.


Don't forget that if you have a sufficiently low income, you can suspend payment on your student loans for a year at a time up to three years with no penalty. I think it is called "forebearance".

Unfortunately, now I am making a salary and next year I will have to start paying my loans again :\



Retiring on 900K? Here's a breakdown for 3-4 mil range and, no, it's not enough under conservative assumptions - http://www.tonywright.com/2010/no-you-cant-retire-rich-at-30... - though this is not to say that this analysis is accurate.


Well that's talking about retiring rich -- i.e. on a $200K lifestyle. And then he goes to excessive lengths to show that you can't life on a "$200K" lifestyle for the rest of your life given only $4 million.

That's fine, but you can retire on a $120K lifestyle given $4 million -- my rule of thumb is that you can live on 3% of your principal and leave the rest to appreciate fast enough to keep up with inflation. Dividend-yielding stocks are an easy way to do this (not sure if it's the most tax-effective way).

So, $4 million gives you an inflation-adjusted $120K lifestyle for the rest of your life without ever eating into the principal. That still counts as retiring rich. Half that will give you $60K for the rest of your life, which is a comfortable not not extravagant retirement lifestyle.

Halve that again and you've got $30K a year to live on, which is roughly what the guy in this article is doing. That doesn't sound like much fun to me -- if I'm going to be retired, I want to spend a fair slab of my time travelling and doing other fun and expensive things. But hey, if he has inexpensive tastes then good luck to him.

I generally think of $3-4 million as being the amount I'll need to retire. I don't plan on retiring early though -- I'd be doing this as a hobby even if they weren't paying me.


It's clearly been enough for his family, he's been retires for several years now.


You can, if you want to live like this guy. I don't. I would rather work and spend the way I want to on my off time than spend every waking hour managing my budget without a job. If always going to the library rather than grabbing a book on Amazon or always bringing stuff from home rather than eating out or getting a coffee is key to living like this, then count me out. If $5 is unacceptable discretionary spending, then a coffee or meal out once in a while is the least of what you're giving up.

Frankly, I also think the guy is a little delusional about the future. You've got everyone on board now, something tells me that might change once you have a kid. Or multiple kids. Perhaps you already "agreed" to only have one kid, but then you are truly being naive in assuming that will stay the case. It may, but I wouldn't bet on it like this.


It's worth pointing out that this man is exceptionally frugal. It's a great strategy if you can be happy with a modest spend throughout your life.

This is why the guy who owns the laundromat down the street is a millionaire -- great stable income, but he and Mr. Money Mustache are far from having a lavish lifestyle.


The key thing for me was that he was able to clinch such big pay-rises. Not complaining or anything, but I wonder how universifiable the abilities/opportunities are which made that possible. He just mentions them almost in passing.


I started as a Powerbuilder programmer at 30K/yr and since then I have gotten Java and Sybase and Six Sigma certification, Toastmasters for public speaking, and almost finished my CFA exams. It's been 15 years and I'm still not at his Year 3 salary. FML.(in Canada BTW)


I'm convinced money grew on trees in the 90's... Too bad I missed out. Maybe it's just beacuse OP highlights what went right, I'd be much more interested in hearing what went wrong w/ his plans.


Wait till the family arrives... That's when the fun begins - more rewarding than anything - and the fastest way out of retirement u will ever find. Not into kids(?) - time will tell.


Can someone explain how a combined income of $150K (before tax) allowed the OP to save $100K/year ?

And why is the idea of stopping being a productive member of society at 30+ is a good thing ?


That "stash" number does not count only cash in the bank. He is also including the value of his house, and other assets.


> And why is the idea of stopping being a productive member of society at 30+ is a good thing ?

I'm just about to turn 30, and my parents bring this up all the time. I honestly believe this is old school thinking that simply doesn't apply in the year 2011. I go to work to earn money so I can have and do the things I want in life. Once I have enough money, I will stop going to work and contribute to society in other ways (volunteering, community projects, raising kids, etc.) It blows my mind that people still think you have to go to work.


With respect to your first question, I was wondering the same thing. At $150K, federal/state/local tax - not even including property tax - is going to be over 30% unless there's some seriously dodgy accounting involved. Oh, but a lot of that was going untaxed into a 401k? Yeah, about that, the contribution levels mentioned are well above those allowed by law. Either there are some major inaccuracies and omissions in the OP, or the way to retire early is to break the law . . . or both.


It's called "Fuck you money", and it means he can choose to be productive or not as he sees fit. He's not trapped to working somewhere he doesn't enjoy being.

Why is this idea of being a member of society a good thing? I'm here to live my life.


I am assuming the author and his wife are both Canadian citizens. If he moved to the U.S. in year 3, and his wife a year later, I wonder how the guy has retired (without moving back to Canada)? He got his green card in 4 years or less? Not likely. Did he already have it? Also, if he was on H1 visa, it's very unlikely (if possible at all) to become less-than-full-time worker (as he did in year 8) in this status. Lots of questions..


I'm not terribly knowledgeable in this area, but this was pre 9/11, where I imagine it was much much easier to obtain a green card/citizenship, especially from a friendly country like Canada.


With only one piece of income property, I am a little surprised that the author of the blog post thinks that his family has enough for the rest of their lives.

That said, if they maintain their job skills, they should be fine because of part time work income when the will need it.


So marry someone who makes a lot of money, and get lucky with investments? Ok.


The article should be renamed- 18 (wo)man-years.


Deciding to live near work. House on 1st yr/job. Several other jobs.

Or boulder have one single building with all companies, or this guy can sell houses for homeless people


I don't want to retire. I could not live without creating stuff. Maybe I missed the pointof the article, but it all felt very sad - capitalistic.


The whole point is retiring so you can raise your children and work on things you enjoy. What's "capitalistic" about that?


The "work on things you enjoy" part I buy - not the raise children part, but the article was written in a way it sounds like retirement = success. "This is how you become a me" kind of blog posts flood this forum. Very often I get the feeling too many in HN community are driven by money, which is sad.


Not everyone live with that goal. You are assuming too much.


I find it interesting that people strive to retire from their work by living frugal (or cheap!). I have always enjoyed what I do and don't mind working till I am in my seventies if so allowed. I still save a large portion of my income and have a high net worth, accumulate little material possessions but still do not feel like a slave to the machine.




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