I retired at 30. The best part isn't leisure – it's freedom.(vox.com)
vox.com
I retired at 30. The best part isn't leisure – it's freedom.
http://www.vox.com/2015/7/27/9023415/mr-money-mustache-retirement
10 comments
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I retired at 55, nine years ago broadly using the well known principles and agree that "Creation of new ideas, new enterprises, or new things is the biggest joy of being alive".
For anyone familiar with the principles of personal finance and investing, my trick was unimpressive and easily reproducible: Just spend much less than you earn and pour the difference into efficient index funds.
This is the usual US centric nonsense where a certain privileged few can use their privilege to get out of the rat race, whereas the vast majority of the planet can't even get into that race in the first place, never mind hack it for these sort of benefits. I'm rather sick of the bullshit claims that there is no magic and that anybody else can do this too - this is patently untrue. You are ultra privileged; you lucked out in the ethnic and circumstances lottery. By all means share how you did it, but please stop intimating thats its at all possible for the vast majority of the rest of us to do this.
This is the usual US centric nonsense where a certain privileged few can use their privilege to get out of the rat race, whereas the vast majority of the planet can't even get into that race in the first place, never mind hack it for these sort of benefits. I'm rather sick of the bullshit claims that there is no magic and that anybody else can do this too - this is patently untrue. You are ultra privileged; you lucked out in the ethnic and circumstances lottery. By all means share how you did it, but please stop intimating thats its at all possible for the vast majority of the rest of us to do this.
It's just math.
My in-laws, who lived 2/3rds of their lives under communism, have already retired simply because they spent less than they made (of their paltry incomes) and invested it conservatively. Meanwhile, my own parents who have had solid upper middle incomes in the US, always lived above their means, have an oversized new house and financed cars, don't even have $10k in the bank.
My in-laws, who lived 2/3rds of their lives under communism, have already retired simply because they spent less than they made (of their paltry incomes) and invested it conservatively. Meanwhile, my own parents who have had solid upper middle incomes in the US, always lived above their means, have an oversized new house and financed cars, don't even have $10k in the bank.
You're right. There is magic here. It's called 1st grade math. For this to work, income minus expenses must be much greater 0.
You don't need to be rich or privileged or win the "ethic and circumstances lottery" as you called it. The key is to live well within your means and save the difference. Saving 25x your annual expenses is something anyone (even someone making minimum wage) can do but it does take time hard work and the willingness to defer gratification. Do you really need that fancy vacation or the iPhone 10x++? Or do you want financial freedom at some point in the future?
It's your choice. Choose wisely.
You don't need to be rich or privileged or win the "ethic and circumstances lottery" as you called it. The key is to live well within your means and save the difference. Saving 25x your annual expenses is something anyone (even someone making minimum wage) can do but it does take time hard work and the willingness to defer gratification. Do you really need that fancy vacation or the iPhone 10x++? Or do you want financial freedom at some point in the future?
It's your choice. Choose wisely.
Do you really think that someone making minimum wage is able to save 25x their income? Do you think those same people are buying "iPhone 10+++" and "fancy vacations"? That sounds insane.
Doing some basic math assuming $8/hr minimum wage at 40hr/wk with no vacation: $16,640/yr
Your assumption then is that someone can live off of $665 a year?
It's hard to even survive on minimum wage let alone save anything.
Doing some basic math assuming $8/hr minimum wage at 40hr/wk with no vacation: $16,640/yr
Your assumption then is that someone can live off of $665 a year?
It's hard to even survive on minimum wage let alone save anything.
Doing this on minimum wage isn't going to work as you can't live below your means at that income level. You do need to learn a trade, or profession (like Engineering) which allows you to save, then live below your means.
There's a lot of entities in this world trying to sell products and services you really don't need. All of this is a big diversion, and most people get caught up in it.
What most people don't realize is, once they get in their mid fifties, it becomes harder to hold on to a high-paying job (Engineers: I'm looking at you) If you don't have a nest-egg built up in your mid fifties, you might be in for a serious lifestyle adjustment.
I was employed as an engineer for over 30 years, and in November of 2014, I was laid off. I'm in my mid fifties. Because I did something similar to what MMM did and lived below my means, I'm not hurting due to the layoff. Would I like to go back to work? Yes. Do I have a choice of how I want to work and for whom I want to? Most definitely. This is what MMM calls a "Position of Strength". If more people lived below their means, and were in a position of strength, there would be a lot more interesting work to be had at a good rate.
There's a lot of entities in this world trying to sell products and services you really don't need. All of this is a big diversion, and most people get caught up in it.
What most people don't realize is, once they get in their mid fifties, it becomes harder to hold on to a high-paying job (Engineers: I'm looking at you) If you don't have a nest-egg built up in your mid fifties, you might be in for a serious lifestyle adjustment.
I was employed as an engineer for over 30 years, and in November of 2014, I was laid off. I'm in my mid fifties. Because I did something similar to what MMM did and lived below my means, I'm not hurting due to the layoff. Would I like to go back to work? Yes. Do I have a choice of how I want to work and for whom I want to? Most definitely. This is what MMM calls a "Position of Strength". If more people lived below their means, and were in a position of strength, there would be a lot more interesting work to be had at a good rate.
>>Do you really think that someone making minimum wage is able to save 25x their income?
To be clear, I said: "Saving 25x your _annual expenses_ is something anyone (even someone making minimum wage) can do". And yes, they can. But they need to keep their annual expenses less than their income.
>>Do you think those same people are buying "iPhone 10+++" and "fancy vacations"?
Some minimum wage earners are, yes. Rather than saving for the future, they are buying the latest iPhone, a new car or $200 shoes with an athlete's name on them.
>>Doing some basic math assuming $8/hr minimum wage at 40hr/wk with no vacation: $16,640/yr
>>Your assumption then is that someone can live off of $665 a year?
Your math is incorrect. Using your wage numbers and ignoring inflation, if that person saved $800/yr invested at 4% annual return, they would have $411,000 in 25 years. That's 25.9x of their annual living expenses of $15,840. ($16,640 - 800 = $15,840. $411,000/$15,840 = 25.9)
If they started saving at age 20, they would have 25x their expenses at age 45.
Yes, I'm over-simplifying because I'm not counting inflation which would decrease the value of their savings over time. But that would be offset to some extent by rising wages. The federal minimum wage has more than doubled in the last 25 years (from $3.80 to $7.25).
Also, my assumed rate of a 4% annual return is low. A small investor should have no trouble averaging 8-10% return over long periods with reasonable risk.
>>It's hard to even survive on minimum wage let alone save anything.
Yes, it is hard. We are a society of consumers that wants immediate gratification. Saving means delaying that gratification in favor of a bigger benefit at some point in the future.
To be clear, I said: "Saving 25x your _annual expenses_ is something anyone (even someone making minimum wage) can do". And yes, they can. But they need to keep their annual expenses less than their income.
>>Do you think those same people are buying "iPhone 10+++" and "fancy vacations"?
Some minimum wage earners are, yes. Rather than saving for the future, they are buying the latest iPhone, a new car or $200 shoes with an athlete's name on them.
>>Doing some basic math assuming $8/hr minimum wage at 40hr/wk with no vacation: $16,640/yr
>>Your assumption then is that someone can live off of $665 a year?
Your math is incorrect. Using your wage numbers and ignoring inflation, if that person saved $800/yr invested at 4% annual return, they would have $411,000 in 25 years. That's 25.9x of their annual living expenses of $15,840. ($16,640 - 800 = $15,840. $411,000/$15,840 = 25.9)
If they started saving at age 20, they would have 25x their expenses at age 45.
Yes, I'm over-simplifying because I'm not counting inflation which would decrease the value of their savings over time. But that would be offset to some extent by rising wages. The federal minimum wage has more than doubled in the last 25 years (from $3.80 to $7.25).
Also, my assumed rate of a 4% annual return is low. A small investor should have no trouble averaging 8-10% return over long periods with reasonable risk.
>>It's hard to even survive on minimum wage let alone save anything.
Yes, it is hard. We are a society of consumers that wants immediate gratification. Saving means delaying that gratification in favor of a bigger benefit at some point in the future.
This particular gentleman also lucked out in the early wealth lottery as well. Mr. Money Mustache is a frequent example brought up in most every "this is how to retire" threads, without mentioning that he was able to somehow accumulate over 3/4 of a million in the bank prior to "retiring".
It's also worth considering everything he (and his family) has given up to live on his "retired" salary - like health care, a permanent home in the city or suburbs, modern cars, etc.
In short, it's not just the rest of the world where this is not feasible.
It's also worth considering everything he (and his family) has given up to live on his "retired" salary - like health care, a permanent home in the city or suburbs, modern cars, etc.
In short, it's not just the rest of the world where this is not feasible.
I think he lives in Boulder in quite a nice house and drives a minivan. It's true that some people would rather have "modern cars" than retire earlier, but that's the whole point of the article