Do you dream of retiring early? We interview the expert in early retirement, Mr Money Mustache. We must learn his ways.
A Crisis
Mr Money Mustache didn’t retire because he was making so much money from his blog. He had actually been retired for six years before he started writing. The blog was born when he looked around at his friends who had good jobs but were still living pay check to paycheck.
They bought into what has long been sold as the American Dream; go to college, get a job, buy a house, fill that house with as much stuff as it can hold (and when it can’t hold anymore, rent a storage unit), have some kids, and get stuck in an unfulfilling job, dreaming of freedom that will always be out of reach.
Retire, maybe at 65 if you’re lucky, and live out your days, just kind of existing, hoping your money will outlast you. The best years of your life long past. But what if you could be retired by thirty?
Why is not spending so hard? It’s largely cultural. We believe it’s normal to borrow money for a car, to consider shopping a hobby, to order takeout every single day for lunch at work. We think it’s normal because that’s all we see.
There aren’t any frugal people represented in the media unless you count those coupon shows but those people aren’t the norm any more than a Kardashian is a norm. But just because everyone is doing it, doesn’t mean it’s the right thing to do or that you have to do it too.
MMM started the blog out of frustration, he wanted to show them, and now us, that they could do what he did. And an empire started.
So What’s The One Simple Trick?
MMM doesn’t have some magical secret. The first and most important step is to keep spending low. Really low. MMM spends 50-75% less than his peers. He was saving about half of his income. He has shown that if you can save 50% of your take home pay starting at age 20 (a time when you probably aren’t making much, so this isn’t about having a big six figure salary), you could retire before you turn 40.
It sounds impossible. Save half your income? You can. Name a category and you are spending too much on it. Your housing costs alone would probably go a long way to getting you to that 50% savings.
Here’s why; the average house size in the 1950’s was 983 square feet. The average household size was 3.37 people. In the 2000’s, the average house size was 2,300 square feet while the average household size was 2.63 people. Do you see the odd inverse? We are buying bigger homes to house fewer people!
Cars are another biggy. It certainly is a convenience to have two cars if there are two adults in the household but is it absolutely necessary? What if one of the cars were totaled and no replacement was available for a week? Would one of you just stay home from work or would you figure out a solution? Like many things in life, if you had to do it, you would find a way.
Saving this way goes against societal norms for sure. If you’re saving this much, you aren’t living in a 3000 square foot McMansion, you aren’t driving a brand new car, and you aren’t eating only the most expensive, hand harvested, organic quinoa from Whole Foods.
You are living in an affordable home, near your place of work. Because you’re so near to work, you don’t have a car at all. You bike or use public transit if you’re lucky enough to have it.
Real Happiness
But how will you be happy if you aren’t always buying stuff? Because stuff does not make us happy. It’s true. megaphone.fm/adchoices