Author Topic: The Billfold's rebuttal to the MMM Post article: "Not All of Us Are Wasteful"  (Read 28545 times)


RoseRelish

  • Stubble
  • **
  • Posts: 179
  • Age: 32
  • Location: Chicagoland
    • RoseRelish - Slow down and Enjoy Life
Wow. This author really embodies the entitled mindset of today's Americans.

sheepstache

  • Handlebar Stache
  • *****
  • Posts: 2424
I find the tone of the comments entitled, but the article itself has some decent points.  People can make decent choices and still be in a bad situation.  The race is not to the swift and all that.  Unfortunately he takes the MMM shtick too literally.  It doesn't take a genius to recognize hyperbole.  Yes, we should talk about larger economic issues rather than blaming the middle class, but the solution to that is to talk about those issues, not get caught up arguing with someone you think is blaming the middle class. 

And I can't help but love someone who insists that not everyone's personal finance plan is going to be the same.  The blanket statements out there about personal finances are everybody's worst enemy.  But, again, to score this point against MMM is to be arguing against a strawman. 

It reminds me a lot of this comic:
http://www.smbc-comics.com/index.php?db=comics&id=2939#comic

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27774
  • Age: -999
  • Location: Traveling the World
Here in the U.S., due to how low our taxes are, how cheap our cost of living is, and how high our wages are, if you aren't being wasteful then you'll likely have a surplus.

Yes, you can get in a tough situation.  Yes, there can be things that happen beyond your control.

But the average person, if they weren't wasteful, would have tons of disposable cash.

http://www.mrmoneymustache.com/2012/07/08/early-retirement-cant-work-or-id-have-heard-of-it-before/

We're better off than ever, and we're generally letting the excess slip out of our grasp it in an exploding volcano of wastefulness rather than save it.

We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Jamesqf

  • Magnum Stache
  • ******
  • Posts: 4047
Follow the "never want to retire" link near the end:
Quote
My maternal grandmother is somewhere north of 90 (or as she rationalizes, she’s just been an 18-year-old for 70 some years), and she still works full-time...

No Name Guy

  • Bristles
  • ***
  • Posts: 450
  • Location: Western Washington
I'm sorry, but that guy at the Billfold is.....well, wrong. 

My goodness....the pieces over there are just one after another of "blame them, blame them, their fault, I'm innocent, it's healthcare, not my long list of luxury spending that I justify as "necessity", its education, its housing, etc, etc, etc".

Billfold:  Suggest to your readers that they grow a pair and take responsibility for their own actions.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4319
  • Location: CT
About the only valid point the blog post had was that everyone's situation is slightly different. But yes the current typical American middle class lifestyle is incredibly wasteful. I'm not sure how much of a defense you can raise against that. Then again I guess I'm rather biased in already believing that. I just haven't seen a good defense other than occasionally someone referring to wage increases vs. inflation but that conversation is a hot mess.

kevin78

  • 5 O'Clock Shadow
  • *
  • Posts: 75
  • Location: Columbus, Ohio
Quote
But the majority of people I know aren’t wildly irresponsible. They’re not buying luxury cars and designer clothing and $5 lattes every day (ah, the latte factor!—every personal finance guru’s favorite example). They’re dealing with shrinking salaries, skyrocketing health care and education costs, a weak economy that has resulted in job loss. Indeed, some of these people are the ones who tried to do it right—who saved up six months’ worth or a year’s worth of emergency savings only to drain it all during the financial crisis and housing crash; who cashed out their retirement accounts because they needed to pay their mortgage and didn’t want to lose their home. All the bike-riding and TV cable canceling wasn’t going to help them. Quitting your yoga class isn’t going to fix pay inequality or result in employer-supported maternity leave appearing in the office. And we can go on about the 401(k) problem.

The bolded part is what I have a problem with.  Cable costs at least 600/year generally from what I've seen and I'd also assume that most people spend at least $150/month on gas I'd think.  That is $2400 a year.  To suggest that an extra $2400 wouldn't have helped these hypothetical people is absurd.  I don't know what yoga costs but certainly that would be hundreds per year.


EMP

  • Bristles
  • ***
  • Posts: 344
Dude, they need some cheese for all that whine.

Sparafusile

  • Bristles
  • ***
  • Posts: 333
  • Age: 37
  • Location: Indiana, USA
Stopped reading at "computer engineer". Guy is obviously clueless.

cats

  • Handlebar Stache
  • *****
  • Posts: 1123
Aaagh.  I will grant that he raises some valid points about stagnating wages and income inequality.  But the idea that frugality isn't going to help people is just giving up!  Almost every person I know who's been dealt a bad financial situation has also compounded the issue through poor choices.  I have a friend right now who is freaking out b/c she is "barely making ends meet", facing a summer with no job, and racking up a bit of credit card debt. But, she likes to go out for dinner or drinks every few weeks, she chose to live in a slightly pricier (but not the priciest) part of town, she drives a truck with some regularity. None of these choices are obviously "wasteful" to the average consumer, but they are accumulating to put her in a tight situation.

Dee18

  • Handlebar Stache
  • *****
  • Posts: 1605
Hmmm.  I hate seeing someone arguing for reforms who so totally resists ways individuals can accomplish the same goals, until those reforms occur (if they do).  Mr and Mrs. MMM certainly dealt with the whole maternity leave/childcare issue in a way most young parents don't even imagine:  retirement.  And, one of my personal pet peeves, do people not realize you can still get free tv with a rabbit ears antenna?  More stations than I had as a child  :) And almost everything else shows up the next day for free on the internet.  As I said to my teen daughter, it's better for you to watch Scandal and Grey's Anatomy on Friday (for free on the internet) than Thursday (which would require cable where we live) anyhow since it's not a school night. 

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27774
  • Age: -999
  • Location: Traveling the World
I hate seeing someone arguing for reforms who so totally resists ways individuals can accomplish the same goals, until those reforms occur (if they do). 

Astute observation, thanks.

The author of the article is in a variation of the group trap from Harry Browne's How I Found Freedom in an Unfree World - trying to accomplish something indirectly (thought trying to change society, other people's minds, etc.) instead of what he can change directly.

We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

destron

  • Bristles
  • ***
  • Posts: 377
  • Age: 40
  • Location: Seattle
    • Mustachian Financial Calculators

I will grant that he raises some valid points about stagnating wages and income inequality.  But the idea that frugality isn't going to help people is just giving up!

Stagnating wages and income inequality are a real problem, but the author creates a false dichotomy -- as if MMM's message (or any other finance message) is only true in an economy with quickly rising wages and a flatter income structure. The message is just as true for people who make $25,000 as for people who make $125,000 -- spending less of what you earn and investing the difference will lead to early retirement. Spending less can be achieved by not buying into contemporary consumer culture's "must haves" such as cable television and driving everywhere. Spending less means not using money inefficiently by going into debt for things you don't need but merely want (like one poster who said she can't afford to live closer to town but needs her $265/month dance classes to keep sane. If she were to move closer to town, cut out dance and cut out all the money she spends commuting, after 1-2 years she will have saved enough that the dance classes could pay for themselves out of her passive income. It is short-sighted).

olivia

  • Pencil Stache
  • ****
  • Posts: 770
  • From Consumerism to Minimalism
I read The Billfold regularly, although a large portion of the posts get on my nerves.  This was a pretty ridiculous criticism.  Obviously it's difficult to reach FI if you're unemployed or underemployed, but MMM still offers a ton of practical advice that can save anyone money, even if they don't make much money.

sheepstache

  • Handlebar Stache
  • *****
  • Posts: 2424
I hate seeing someone arguing for reforms who so totally resists ways individuals can accomplish the same goals, until those reforms occur (if they do). 

Astute observation, thanks.

The author of the article is in a variation of the group trap from Harry Browne's How I Found Freedom in an Unfree World - trying to accomplish something indirectly (thought trying to change society, other people's minds, etc.) instead of what he can change directly.

It's not always appropriate to make individual effort a condition for reform.  Should the EPA not be allowed jurisdiction over drilling companies because so many individuals don't sort their recyclables properly?
The London fog caused a number of deaths.  Individuals could have moved farther out of the city so at least they weren't sleeping in it.  They could have exercised to improve their overall cardiovascular health so they were less impacted by the pollution.  People could have closed their windows and wiped down all the surfaces in their houses.  Why puritanically judge people who don't take these precautions when the obvious problem is the poisonous frikkin' fog over everything

If this guy is saying the fact that someone can't afford yoga classes is cause for reform, that's a bad argument for reform.  But I don't think that's what he's saying.  I think he's saying that the fact that people could save $2400/year by not getting cable is not an argument _against_ reform.  I think it's a bad article because that argument isn't in MMM's blog.
« Last Edit: May 04, 2013, 08:30:30 AM by sheepstache »

matchewed

  • Magnum Stache
  • ******
  • Posts: 4319
  • Location: CT
I mostly got from what he said in the article was that things like lattes and yoga classes aren't the problem. When in fact it is a portion of the problem. He says that distinctly that our lifestyle being wasteful is a myth. Then he proceeds to get into all the outside factors such as wages, health care, and education. It's a forest from the trees situation. MMM is saying in his article here is what you can control. Focus on what you can control and you will see an immediate improvement on your life. The Billfold dude is saying forget that, here are all the (mostly) uncontrollable aspects that you can hang your problems on. That in my mind is BS. Focus on the things you can do and improve upon. And if you are politically motivated enough, get going on the (mostly) uncontrollable aspects that take large coordinated effort through government/corporate/large scale organizational efforts.
« Last Edit: May 04, 2013, 09:43:33 AM by matchewed »

BPA

  • Handlebar Stache
  • *****
  • Posts: 1191
I am glad that this blogger at least acknowledges that the MMM lifestyle will work for some.  I choose frugality over spendiness, but I don't think it's fair when people insist that others follow their lifestyle.  At least this dude didn't trash those of us who choose to live more frugally (like some of the douchebag bloggers out there).

DocCyane

  • Bristles
  • ***
  • Posts: 390
  • Location: USA
  • Keep going. You're doing just fine.
Focus on what you can control and you will see an immediate improvement on your life. The Billfold dude is saying forget that here are all the (mostly) uncontrollable aspects that you can hang your problems on. That in my mind is BS. Focus on the things you can do and improve upon. And if you are politically motivated enough, get going on the (mostly) uncontrollable aspects that take large coordinated effort through government/corporate/large scale organizational efforts.

This.

It's the classic "locus of control" dichotomy. Some people believe forces act upon you and you must tolerate them, endure and react as best you can like a ship adrift at sea. Some people believe you have total control to steer your life and those who fail to do so are somehow lacking.

The truth is probably somewhere in the middle.

The rebuttal to MMM's philosophy will always encompass some aspect of his good fortune to be born white, male, first world, healthy, have his education paid for by Canadian taxpayers, moving to the most prosperous country in the history of the planet, etc.

Rather than harp on this, however, the author could have done what Matchewed did, which was to emphasize how you play the cards you were dealt and stop fussing that you didn't get all the aces.




Mr Mark

  • Handlebar Stache
  • *****
  • Posts: 1173
  • Location: Planet Earth
  • Achieved Financial Independence summer 2014. RE'18
Focus on what you can control and you will see an immediate improvement on your life. The Billfold dude is saying forget that here are all the (mostly) uncontrollable aspects that you can hang your problems on. That in my mind is BS. Focus on the things you can do and improve upon. And if you are politically motivated enough, get going on the (mostly) uncontrollable aspects that take large coordinated effort through government/corporate/large scale organizational efforts.

This.

It's the classic "locus of control" dichotomy. Some people believe forces act upon you and you must tolerate them, endure and react as best you can like a ship adrift at sea. Some people believe you have total control to steer your life and those who fail to do so are somehow lacking.

The truth is probably somewhere in the middle.

The rebuttal to MMM's philosophy will always encompass some aspect of his good fortune to be born white, male, first world, healthy, have his education paid for by Canadian taxpayers, moving to the most prosperous country in the history of the planet, etc.

Rather than harp on this, however, the author could have done what Matchewed did, which was to emphasize how you play the cards you were dealt and stop fussing that you didn't get all the aces.

+1

Also, looking forward to the MMM book, tv show, .... :D

foobar

  • Pencil Stache
  • ****
  • Posts: 731
Living on  something like 3500 or so(you have to factor in the cost of having 400k tied up in a house to get the true cost/month) a month is easy. It is pretty close to what the median family in the US takes home. It is being happy with it is the part that most people struggle with.  Personally I found that working 80hrs a week was a good solution. Didn't have anytime to spend money.:) Besides MMM lifestyle is still incredibly wasteful. He is spending ~200% of what the feds think a family of 3 needs to live.

The hard part is how to most people get the 800k or so in assets. A good chunk of the reason MMM was able to do it was because his family was making 160k+ (i.e.top 5% in income) which isn't realistic for a lot of families. A couple of made up (but roughly right but there are too many unknowns to be exact) to think about. A family making 160k would take home ~100k and spend 40k allows you to save 60k/year which means in 10 years you have 800k(assume 7%) and can retire. The same couple making 60k(above national average) taking home 50 and saving 10k has a mere 140k and has to save almost 30 years to get the same results. Now being able to retire at 50  instead of 75 is still a big win.




I am glad that this blogger at least acknowledges that the MMM lifestyle will work for some.  I choose frugality over spendiness, but I don't think it's fair when people insist that others follow their lifestyle.  At least this dude didn't trash those of us who choose to live more frugally (like some of the douchebag bloggers out there).

BPA

  • Handlebar Stache
  • *****
  • Posts: 1191
Living on  something like 3500 or so(you have to factor in the cost of having 400k tied up in a house to get the true cost/month) a month is easy. It is pretty close to what the median family in the US takes home. It is being happy with it is the part that most people struggle with.  Personally I found that working 80hrs a week was a good solution. Didn't have anytime to spend money.:) Besides MMM lifestyle is still incredibly wasteful. He is spending ~200% of what the feds think a family of 3 needs to live.

The hard part is how to most people get the 800k or so in assets. A good chunk of the reason MMM was able to do it was because his family was making 160k+ (i.e.top 5% in income) which isn't realistic for a lot of families. A couple of made up (but roughly right but there are too many unknowns to be exact) to think about. A family making 160k would take home ~100k and spend 40k allows you to save 60k/year which means in 10 years you have 800k(assume 7%) and can retire. The same couple making 60k(above national average) taking home 50 and saving 10k has a mere 140k and has to save almost 30 years to get the same results. Now being able to retire at 50  instead of 75 is still a big win.




I am glad that this blogger at least acknowledges that the MMM lifestyle will work for some.  I choose frugality over spendiness, but I don't think it's fair when people insist that others follow their lifestyle.  At least this dude didn't trash those of us who choose to live more frugally (like some of the douchebag bloggers out there).

So, you are letting the feds decide what is frugal instead of real people?  I am curious to know where are you getting your information from.  Is it from what welfare recipients get because I'm thinking the official "poverty line" is higher than you state, but I'm not sure.  From my Canadian so-called middle class perspective, MMM is not wasteful.  And certainly less wasteful than whiners who claim it  can't be done.  They are the people I was referring to.  Some of them are the same types of people who told me that my children would have unhappy childhoods because I don't own a car and that there was no way I could afford to work part-time and raise my children.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27774
  • Age: -999
  • Location: Traveling the World
From my Canadian so-called middle class perspective, MMM is not wasteful.

Not wasteful, no, I agree with you there.

But he certainly has many luxuries.  He does spend beyond what is necessary.  And that's fine, but his level of spending is not at a poverty level, it is enough to provide a comfortable life, if you use it correctly (I.e. much of the spending is not going to interest on credit cards, car loan, etc. etc.)
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Mr Mark

  • Handlebar Stache
  • *****
  • Posts: 1173
  • Location: Planet Earth
  • Achieved Financial Independence summer 2014. RE'18
People are just so bad at maths. MMM indeed has probably above average effective income, once you 'correct' the headline figure for the mortgage free house and taxes when compared to the average US household. A better equiv. Income would be more like 60k., well above median.

On top of that above average household income, he is sensibly superfrugal, and so doesn't just 'not suffer' but achieves a lifestyle of luxury. The average American would need loads of money to approach it, but still wouldn't be as happy!

This is the power of mustashianism. Being truly happy, and living a full life of luxury, while enjoying the one thing money cannot buy. Time.

All it takes is about $800k - $1.5 mil

And a bike.


BPA

  • Handlebar Stache
  • *****
  • Posts: 1191
From my Canadian so-called middle class perspective, MMM is not wasteful.

Not wasteful, no, I agree with you there.

But he certainly has many luxuries.  He does spend beyond what is necessary.  And that's fine, but his level of spending is not at a poverty level, it is enough to provide a comfortable life, if you use it correctly (I.e. much of the spending is not going to interest on credit cards, car loan, etc. etc.)

There's a thread on ERE right now which discusses the difference between ERE and being on welfare.  Welfare is certainly subsistence level.  ERE/MMM allows the follower to choose his/her luxuries, so I agree with your statement.  When I think of wasteful, I think of the dumpsters many of my neighbours have placed in their driveways every few years when they aren't actually renovating their houses.  I don't think of mindful spending on some luxuries is wasteful.  Besides, think of how much is diverted from landfills when one buys and sells on craiglist. 

Jamesqf

  • Magnum Stache
  • ******
  • Posts: 4047
I don't think of mindful spending on some luxuries is wasteful.

Right!  It's the non-mindful spending on things that are falsely believed to be necessities that catches so many in the middle class.  Like the example of commuting to your office job in an F-150*: you'd get there just as quickly & comfortably in a 20-year old Honda Civic, and save a lot of money by doing so.

*Which in itself is sorta frugal, when you think about all the people doing the same commute in F-350s :-)

StarswirlTheMustached

  • Bristles
  • ***
  • Posts: 475
I hate seeing someone arguing for reforms who so totally resists ways individuals can accomplish the same goals, until those reforms occur (if they do). 

Astute observation, thanks.

The author of the article is in a variation of the group trap from Harry Browne's How I Found Freedom in an Unfree World - trying to accomplish something indirectly (thought trying to change society, other people's minds, etc.) instead of what he can change directly.

It's not always appropriate to make individual effort a condition for reform.  Should the EPA not be allowed jurisdiction over drilling companies because so many individuals don't sort their recyclables properly?
The London fog caused a number of deaths.  Individuals could have moved farther out of the city so at least they weren't sleeping in it.  They could have exercised to improve their overall cardiovascular health so they were less impacted by the pollution.  People could have closed their windows and wiped down all the surfaces in their houses.  Why puritanically judge people who don't take these precautions when the obvious problem is the poisonous frikkin' fog over everything

If this guy is saying the fact that someone can't afford yoga classes is cause for reform, that's a bad argument for reform.  But I don't think that's what he's saying.  I think he's saying that the fact that people could save $2400/year by not getting cable is not an argument _against_ reform.  I think it's a bad article because that argument isn't in MMM's blog.

The poisonous frikin' fog was caused by everyone in London burning coal to heat, cook with, and run factories. Legislation forced people to stop burning so much coal-- wonderful!-- but while waiting for, and campaigning for said legislation, I'm sure there were plenty of ordinary Londoners who cut back on the consumption of dirty coal in their everyday lives.
That's not an argument against reform, either. There's no dichotomy, individual action vs. reform. Not only are they not in opposition, but you have to have both-- just look at how much good Al Gore has done to get down CO2 emissions by jetting around the globe. If he (and other powerful, concerned-sounding people) sold his mansion, took the train, and drove a Prius, I suspect we would have had a treaty. As they said in the 70s, "the personal is political."

As I said to my teen daughter, it's better for you to watch Scandal and Grey's Anatomy on Friday (for free on the internet) than Thursday (which would require cable where we live) anyhow since it's not a school night. 
Ah, but it's not free on the Internet. If you were using the interwebs only for hypertext, as we did once upon a time, your connection would cost a tiny fraction of what it does if you need enough bandwidth for video use. Cheaper than cable? It sure is! But not free. Heck, depending on where you live, you might actually be able to get free dialup, if all you wanted was hypertext.



Anyway, I agree with everyone who says the MMM family is wasteful-- he'd agree with you! MMM is quite unapologetic in his posts that he lives a life of (relative) luxury. Of course, anyone but a subsistence farmer can have that accusation leveled at them, so I'm not sure what the point is. He's living well below his means, anyway, and that's the point.

foobar

  • Pencil Stache
  • ****
  • Posts: 731
I am just pointing out that MMM is living the average middle class lifestyle. He isn't choosing to live close to the poverty level.  Again it is easy to look at an upper middle class family (if your over 100k your in the upper middle class) and say they should save more. Get down to the middle class (60k range) and things get a bit dicier. You will always be able to find a thing here or there that you disagree with but there is a reason why MMM is spending 40k/year on living expenses and not cutting it down to the 20k that is more than enough to live on. At a certain point you start cutting out things that make live enjoyable to you.

If you want to argue about who is frugal, there is pretty much always someone that is cheaper out there. You bought TP. I just take it from public restrooms. You buy gas? I power my car on donated vegitable fat. You buy food? I only eat road kill and free costco samples. You pay rent, I live in a card board box under the underpass.  Read the cheapskates websites sometime. They would find MMM lifestyle incredibly wasteful. They also are letting money run their lives.






So, you are letting the feds decide what is frugal instead of real people?  I am curious to know where are you getting your information from.  Is it from what welfare recipients get because I'm thinking the official "poverty line" is higher than you state, but I'm not sure.  From my Canadian so-called middle class perspective, MMM is not wasteful.  And certainly less wasteful than whiners who claim it  can't be done.  They are the people I was referring to.  Some of them are the same types of people who told me that my children would have unhappy childhoods because I don't own a car and that there was no way I could afford to work part-time and raise my children.

kudy

  • Pencil Stache
  • ****
  • Posts: 945
  • Age: 36
  • Location: RV Traveling the U.S.
Hmmm.  I hate seeing someone arguing for reforms who so totally resists ways individuals can accomplish the same goals, until those reforms occur (if they do).

This was my thought exactly when reading this article. Completely blow off practical ideas that could allow people flexible and comfortable financial lives in their current situation, or complain that everything else needs to change, and that changing lifestyles is asking too much.

Jamesqf

  • Magnum Stache
  • ******
  • Posts: 4047
I am just pointing out that MMM is living the average middle class lifestyle. He isn't choosing to live close to the poverty level.  Again it is easy to look at an upper middle class family (if your over 100k your in the upper middle class) and say they should save more. Get down to the middle class (60k range) and things get a bit dicier.

To be fair, he does occasionally discuss ways of increasing your income, if you're on the lower rungs of the economic ladder.  That is also something that is partially subject to an individual's control: I doubt whether any extremes of frugality would have allowed me to accumulate my current stash, if I had all those years ago pigeonholed myself as farm/construction worker.  But practicing frugality while working those low-level jobs let me accumulate enough to go to school, and eventually get a much higher paying job.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4319
  • Location: CT
I am just pointing out that MMM is living the average middle class lifestyle. He isn't choosing to live close to the poverty level.  Again it is easy to look at an upper middle class family (if your over 100k your in the upper middle class) and say they should save more. Get down to the middle class (60k range) and things get a bit dicier. You will always be able to find a thing here or there that you disagree with but there is a reason why MMM is spending 40k/year on living expenses and not cutting it down to the 20k that is more than enough to live on. At a certain point you start cutting out things that make live enjoyable to you.

If you want to argue about who is frugal, there is pretty much always someone that is cheaper out there. You bought TP. I just take it from public restrooms. You buy gas? I power my car on donated vegitable fat. You buy food? I only eat road kill and free costco samples. You pay rent, I live in a card board box under the underpass.  Read the cheapskates websites sometime. They would find MMM lifestyle incredibly wasteful. They also are letting money run their lives.

I don't disagree with the overall message of what you say. I guess this would be nitpicky of me but 60k expenses becoming dicey? I think that's the crux of some of my points, we start believing that 60k is dicey rather than closer to the (probably) wasteful living. I know the rebuttal would be that as long as it is spent on what is of value to the individual/family it is okay but how is that so different from the 100k family, isn't their spending valuable to them? I'm not saying I know where the line is but I think you can still have a valuable life and still reduce spending without any diceyness below the 60k level. And to state that those who choose or even not choose to live above 20k are sacrificing enjoyment in their lives is rather presumptuous.

mlipps

  • Handlebar Stache
  • *****
  • Posts: 1085
What I found troubling about the Billfold article is that it seemed to miss the larger point of MMM, which is not that everyone MUST retire early at 30, but that you should make spending choices with a concious attitude of how today's choice can improve or constrain your lifestyle tomorrow. I don't think there's anything wrong at all with working until you're 65 if that is honestly what you want, but I think more people should do the math and understand the power of small choices to affect their future. Mike seemed fixated on the idea that if you don't want to retire early there's nothing to be gained from those principles and I fundamentally disagree.

foobar

  • Pencil Stache
  • ****
  • Posts: 731
60k of income not expenses. After taxes (mainly SS and the various state ones) is about 50k. Subtract 27k for living and ~15k for housing (rough estimate of what a 400k house would cost) gives you 8k of savings. That will take a long time to grow into something you can retire off of. And one offs like paying 20k for a health event (imagine your wife being diagnosed with breast cancer in July and the 9 month treatment costing 45k. Or a somewhat normal pregnancy ending in a c section), being unemployed for 6 months, car accident, and it is easy to see how the average family ends up treading water. And that is assuming the family can live as cheaply as MMM (he does have 50-100 hours/wk that he doesn't have working that he and the wife can spend on doing things themselves.). The 2 parent working family ends up with stuff like child care that can easily suck up 5k/yr. As I said you can drop the standard of living a bit (1200sq ft would  be plenty for a family of 3) but at some point you hit limits most people don't want to cross.

Please don't think of what I am writing as an attack on MMM. It isn't. It is a defense of the article's point. Yes there are some people at ever income level that have no clue about money.  But there are a lot more people that make pretty sensible choices given their circumstances and are going to struggle do to stuff out of their control. I know people that went back to school to get teaching certificates in the mid 2000s. Remember when we had a teacher shortage? Turns out as soon as the recession hit, that shortage went away and these gals were stuck with debt and poor job prospects.


I am just pointing out that MMM is living the average middle class lifestyle. He isn't choosing to live close to the poverty level.  Again it is easy to look at an upper middle class family (if your over 100k your in the upper middle class) and say they should save more. Get down to the middle class (60k range) and things get a bit dicier. You will always be able to find a thing here or there that you disagree with but there is a reason why MMM is spending 40k/year on living expenses and not cutting it down to the 20k that is more than enough to live on. At a certain point you start cutting out things that make live enjoyable to you.

If you want to argue about who is frugal, there is pretty much always someone that is cheaper out there. You bought TP. I just take it from public restrooms. You buy gas? I power my car on donated vegitable fat. You buy food? I only eat road kill and free costco samples. You pay rent, I live in a card board box under the underpass.  Read the cheapskates websites sometime. They would find MMM lifestyle incredibly wasteful. They also are letting money run their lives.

I don't disagree with the overall message of what you say. I guess this would be nitpicky of me but 60k expenses becoming dicey? I think that's the crux of some of my points, we start believing that 60k is dicey rather than closer to the (probably) wasteful living. I know the rebuttal would be that as long as it is spent on what is of value to the individual/family it is okay but how is that so different from the 100k family, isn't their spending valuable to them? I'm not saying I know where the line is but I think you can still have a valuable life and still reduce spending without any diceyness below the 60k level. And to state that those who choose or even not choose to live above 20k are sacrificing enjoyment in their lives is rather presumptuous.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4319
  • Location: CT
60k of income not expenses. After taxes (mainly SS and the various state ones) is about 50k. Subtract 27k for living and ~15k for housing (rough estimate of what a 400k house would cost) gives you 8k of savings. That will take a long time to grow into something you can retire off of. And one offs like paying 20k for a health event (imagine your wife being diagnosed with breast cancer in July and the 9 month treatment costing 45k. Or a somewhat normal pregnancy ending in a c section), being unemployed for 6 months, car accident, and it is easy to see how the average family ends up treading water. And that is assuming the family can live as cheaply as MMM (he does have 50-100 hours/wk that he doesn't have working that he and the wife can spend on doing things themselves.). The 2 parent working family ends up with stuff like child care that can easily suck up 5k/yr. As I said you can drop the standard of living a bit (1200sq ft would  be plenty for a family of 3) but at some point you hit limits most people don't want to cross.

Please don't think of what I am writing as an attack on MMM. It isn't. It is a defense of the article's point. Yes there are some people at ever income level that have no clue about money.  But there are a lot more people that make pretty sensible choices given their circumstances and are going to struggle do to stuff out of their control. I know people that went back to school to get teaching certificates in the mid 2000s. Remember when we had a teacher shortage? Turns out as soon as the recession hit, that shortage went away and these gals were stuck with debt and poor job prospects.

Nearly 17% of the forum posters who have responded to a demographic survey are individuals/families who make between 40-60k Nearly 28% of the forum posters who have responded to a demographic survey are individuals/families who make less than 60k, being one of those I find your post absurd for you to suggest that I'm living a limited life. How do you get to define what these limits are? How do you know what limits people are or are not willing to cross? Why is a 400k house required for a family of three?

Yes sometimes life happens. I'm not disagreeing with you there. But terrible things can happen and if you  have a good enough savings rate and a drive to do better and/or get better you can pull through. You are (mostly) in control of your decisions and your life. Stick with that "mostly" and don't hang your problems on the things you can't control.

*Edit* I messed up on my numbers from the demographic survey - corrected number and statement is above.
« Last Edit: May 06, 2013, 07:08:40 AM by matchewed »

foobar

  • Pencil Stache
  • ****
  • Posts: 731
You are reading in things that I didn't write. All I am saying is that the MMM is living a normal middle class life so calling other people living the same lifestyle (different choices. Most have cheaper houses and more driving) wasteful is somewhat questionable. I am sure MMM life seemed frugal because he was interacting a lot with the people at work who were also all 5%ers. The reality is that it is just an average lifestyle. I don't want to debate what is wasteful. There is too much value judgement in that and those choices will change depending on your circumstances. You can definitely live comfortablely on half of what MMM is spending if you have 100 hours a week to spend on doing things that save money at the cost of time.


60k of income not expenses. After taxes (mainly SS and the various state ones) is about 50k. Subtract 27k for living and ~15k for housing (rough estimate of what a 400k house would cost) gives you 8k of savings. That will take a long time to grow into something you can retire off of. And one offs like paying 20k for a health event (imagine your wife being diagnosed with breast cancer in July and the 9 month treatment costing 45k. Or a somewhat normal pregnancy ending in a c section), being unemployed for 6 months, car accident, and it is easy to see how the average family ends up treading water. And that is assuming the family can live as cheaply as MMM (he does have 50-100 hours/wk that he doesn't have working that he and the wife can spend on doing things themselves.). The 2 parent working family ends up with stuff like child care that can easily suck up 5k/yr. As I said you can drop the standard of living a bit (1200sq ft would  be plenty for a family of 3) but at some point you hit limits most people don't want to cross.

Please don't think of what I am writing as an attack on MMM. It isn't. It is a defense of the article's point. Yes there are some people at ever income level that have no clue about money.  But there are a lot more people that make pretty sensible choices given their circumstances and are going to struggle do to stuff out of their control. I know people that went back to school to get teaching certificates in the mid 2000s. Remember when we had a teacher shortage? Turns out as soon as the recession hit, that shortage went away and these gals were stuck with debt and poor job prospects.

Nearly 17% of the forum posters who have responded to a demographic survey are individuals/families who make between 40-60k, being one of those I find your post absurd for you to suggest that I'm living a limited life. How do you get to define what these limits are? How do you know what limits people are or are not willing to cross? Why is a 400k house required for a family of three?

Yes sometimes life happens. I'm not disagreeing with you there. But terrible things can happen and if you  have a good enough savings rate and a drive to do better and/or get better you can pull through. You are (mostly) in control of your decisions and your life. Stick with that "mostly" and don't hang your problems on the things you can't control.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4319
  • Location: CT
Where did I place words in your mouth? I believe I'm going directly from your statements.

You're making some pretty big assumptions about others spending habits without actually doing any reading. You seem to only have a typical take on lifestyle and are hiding behind "value judgement" rather than looking at our culture of spending with a critical eye. Please, stick around, read some posts on the blog, keep interacting with the forum beyond this post. You'll probably find a diverse group who does not have to work an additional 100 hours on frugality tactics in order to attain FI.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27774
  • Age: -999
  • Location: Traveling the World
All I am saying is that the MMM is living a normal middle class life so calling other people living the same lifestyle (different choices. Most have cheaper houses and more driving) wasteful is somewhat questionable. I am sure MMM life seemed frugal because he was interacting a lot with the people at work who were also all 5%ers. The reality is that it is just an average lifestyle.

Interesting observation.  I find it hard to disagree, based on the amount they're spending.

Then again, I know they aren't wasting money on expensive cell phone plans, cable TV packages, new cars, they don't pay any interest or constantly buy new clothes, lattes, etc. etc.  (Plus then they don't have child care to pay, typically not a "waste," but still not an expense for them).

So I wonder where all their money is going.  I suppose I could dig up one of those yearly spending reports, but I don't care that much, because the point is that their specific example isn't what's important: the concept and how you can apply it to your life is.

Your point is interesting though, they do spend an average family's worth of expenses, so to call the others at that level an exploding volcano of wastefulness is interesting. Hmm.  (Of course how low could that family's expenses be if they cut out all those things I listed above?)

Thanks for the thoughts.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

simonsez

  • Pencil Stache
  • ****
  • Posts: 778
  • Age: 33
As what others have said, it often times IS about the cable and the yoga that really add up.  The author seemed to want to look at the forest rather than the trees.   It is hard to take a few steps back from a sequoia named "yoga" and look at the forest because some of those "insignificant" trees are still blocking the view.  Prune the troublesome trees for Pete's sake.

In the comments, those who seemed put off by the idea of cutting yoga seemed to admit they could do it on their own if push came to shove.  That seems the definition of a luxury to me.

"The $140/month I spend on my yoga.....I could do all this by doing yoga on my own, for free........"

"Yes, this! Yoga helped me get off several pricey medications and greatly improved my quality of life and while yes, I could do it alone......."

I think these people are missing the point (one of them at least).  You can love yoga all you want and feel it is of utmost importance in your life for various reasons, but at the end of the day, you have to realize it is still a luxury.  If the comments read something like, "Yeah, I am a sucker for yoga.  It provides benefits to me in so many ways, it is worth the $140/month to me.  I realize I could be investing that $140 instead of spending it but it is my choice and currently the yoga provides a better usage of my money by my terms." that would be great.  At least admit the problem rather than make excuses and use that reasoning to help shoot down an article with generally great advice. 

JR

  • Stubble
  • **
  • Posts: 129
You are reading in things that I didn't write. All I am saying is that the MMM is living a normal middle class life so calling other people living the same lifestyle (different choices. Most have cheaper houses and more driving) wasteful is somewhat questionable. I am sure MMM life seemed frugal because he was interacting a lot with the people at work who were also all 5%ers. The reality is that it is just an average lifestyle. I don't want to debate what is wasteful. There is too much value judgement in that and those choices will change depending on your circumstances. You can definitely live comfortablely on half of what MMM is spending if you have 100 hours a week to spend on doing things that save money at the cost of time.


60k of income not expenses. After taxes (mainly SS and the various state ones) is about 50k. Subtract 27k for living and ~15k for housing (rough estimate of what a 400k house would cost) gives you 8k of savings. That will take a long time to grow into something you can retire off of. And one offs like paying 20k for a health event (imagine your wife being diagnosed with breast cancer in July and the 9 month treatment costing 45k. Or a somewhat normal pregnancy ending in a c section), being unemployed for 6 months, car accident, and it is easy to see how the average family ends up treading water. And that is assuming the family can live as cheaply as MMM (he does have 50-100 hours/wk that he doesn't have working that he and the wife can spend on doing things themselves.). The 2 parent working family ends up with stuff like child care that can easily suck up 5k/yr. As I said you can drop the standard of living a bit (1200sq ft would  be plenty for a family of 3) but at some point you hit limits most people don't want to cross.

Please don't think of what I am writing as an attack on MMM. It isn't. It is a defense of the article's point. Yes there are some people at ever income level that have no clue about money.  But there are a lot more people that make pretty sensible choices given their circumstances and are going to struggle do to stuff out of their control. I know people that went back to school to get teaching certificates in the mid 2000s. Remember when we had a teacher shortage? Turns out as soon as the recession hit, that shortage went away and these gals were stuck with debt and poor job prospects.

Nearly 17% of the forum posters who have responded to a demographic survey are individuals/families who make between 40-60k, being one of those I find your post absurd for you to suggest that I'm living a limited life. How do you get to define what these limits are? How do you know what limits people are or are not willing to cross? Why is a 400k house required for a family of three?

Yes sometimes life happens. I'm not disagreeing with you there. But terrible things can happen and if you  have a good enough savings rate and a drive to do better and/or get better you can pull through. You are (mostly) in control of your decisions and your life. Stick with that "mostly" and don't hang your problems on the things you can't control.

Remember that the average middle class family lives beyond their means through the use of credit so the MMM family likely lives on less than the "typical family". And your example of the $60k couple is ridiculous because my wife and I made about that last year and still managed to save $28k and live a comfortable life. I remember in an older article that MMM said their average household income would have been $60k/yr from 22-30 even with their large incomes later in their careers. So even if it takes a couple to 30 to start making $60k (and they saved nothing to this point) then they have to wait until 38-40 to be FI. Still better than 65-70.
« Last Edit: May 06, 2013, 09:43:43 AM by JR »

gdborton

  • Bristles
  • ***
  • Posts: 254
  • Age: 30
  • Location: Muncie, Indiana
    • Gary Borton
Quote
MMM said their average household income would have been $60k/yr from 22-30

You're wrong in a couple places, but this one stands out the most.  MMM by himself was making $57k his second year working, their combined income climbed pretty much every year after that.

JR

  • Stubble
  • **
  • Posts: 129
Quote
MMM said their average household income would have been $60k/yr from 22-30

You're wrong in a couple places, but this one stands out the most.  MMM by himself was making $57k his second year working, their combined income climbed pretty much every year after that.

Could you please elaborate on the points I am wrong on?

And I don't remember if it was the article featured on MSN or the hypothetical two teacher article but MMM did say their average pay while working would have been $60k.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27774
  • Age: -999
  • Location: Traveling the World
I think he meant you were wrong when you said "average household income" of 60k.  They had double that, as it was 60k each.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

JR

  • Stubble
  • **
  • Posts: 129
I think he meant you were wrong when you said "average household income" of 60k.  They had double that, as it was 60k each.

Yeah now that I reread it I realize that I was wrong. Their higher than average salaries still should not be used an excuse for why it is impossible for most people to reach FI early.

gdborton

  • Bristles
  • ***
  • Posts: 254
  • Age: 30
  • Location: Muncie, Indiana
    • Gary Borton
Quote
Could you please elaborate on the points I am wrong on?

That $60k average is each, putting them at $120k average minus their bonuses and stock options (no data to back this up, but I'm guessing neither are "typical").  Each of them earned more than the typical gross income of a household for the bulk of their careers.

Also, when you factor in their mortgage (which they don't have anymore) their yearly spending is roughly $50k, which is more than the median income of the US.   MMM isn't kidding when he says that he lives a life of luxury.

http://www.census.gov/compendia/statab/2012/tables/12s0690.pdf

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27774
  • Age: -999
  • Location: Traveling the World
Their higher than average salaries still should not be used an excuse for why it is impossible for most people to reach FI early.

Correct.  It's all about your savings rate percentage.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

docah

  • 5 O'Clock Shadow
  • *
  • Posts: 5
I see a lot of thoughtful analysis here.  It seems like a lot of straining to justify the articles existence if you ask me.  The article title and tone were picked exclusively to create page views and revenue.  Referring to the advice given as being part of the "Personal finance industrial complex" sealed the deal for me. 

I've wasted more time writing this than that author and his opinions are worth.

Starstuff

  • 5 O'Clock Shadow
  • *
  • Posts: 92
  • Age: 30
  • Location: Ohio
Did anyone else laugh out loud at the "overly smug dickball" comment?

Quote
The Mole
There’s nothing quite like an appropriate call-out of an overly smug dickball that can’t understand there are different strokes for different folks.

foobar

  • Pencil Stache
  • ****
  • Posts: 731
Sure but lets look at some take home pay numbers and see how they go. Lets assume a 50% savings rate (you can retire in about 12 years depending on the return)

150k -> lives of 75k. No problem.
100k -> lives of 50k. Again no problem.
50k -> lives of 25k. Now this getting a bit tight but definitely doable
25k -> lives of 12.5k. Good luck. It can be done. But it isn't MMM life of luxury.

The saving percentage tells how long it will take to get enough assets to replace your income. But your saving percentage to a large part is dictated by income. Now the guys making 150k like MMM who are willing to live on 50k can drop the number of years down to like 7. On the other hand the family making 60k, might find that they can only save 20% and they are looking at 25 years of saving.

If you want to start saying that MMM lifestyle is wasteful and he should spend half as much (perfectly doable) thats fine. But claiming the average family spending the same amount of money is wasteful because you don't like their choices is imposing your values on them.  You can go through pretty much any budget (the homeless guy on the corner is spending too much on hooch) and cut money. Read any of the cheapstake sites and you can see how the approximate amount of money need to live is 0.



I think he meant you were wrong when you said "average household income" of 60k.  They had double that, as it was 60k each.

Yeah now that I reread it I realize that I was wrong. Their higher than average salaries still should not be used an excuse for why it is impossible for most people to reach FI early.

mpbaker22

  • Handlebar Stache
  • *****
  • Posts: 1095
To the 2 or 3 people who keep posting back at eachother arguing over MMMs spending.  Remember he's hinted towards getting a smaller house, so that would actually reduce his house to less than 400K.  In fact, he could easily maintain the same lifestyle in other towns with a house of 200K or even less.  I think the point of 400K providing 16K/year, so his expenditures are only 41K is kind of pointless as he has complained about his house's size before.

But for the doubters, if you need an example, I gross right around 50K, and I live a life of extreme luxury, and I have a 50%+ savings rate (it's actually been nearly 80% every month this year so far.  I expect it to decrease this month, and be closer to 55 the rest of the year).  It's certainly possible to live a life of luxury, at least in St. Louis, at 10-15K expenses per year.   To be fair, I'm single and sharing an apartment.  On the other hand,  I don't grow my own food and I drive quite a bit ...

Jamesqf

  • Magnum Stache
  • ******
  • Posts: 4047
If you want to start saying that MMM lifestyle is wasteful and he should spend half as much (perfectly doable) thats fine. But claiming the average family spending the same amount of money is wasteful because you don't like their choices is imposing your values on them.

I think you need to reflect on the meaning of the term "waste" here.  The point is that a lot of these middle class families are spending a lot of money to achieve exactly what could be achieved for a lot less, with a little thought.  As for example the guy commuting to an office job in his new F-[123]50, at a cost of (guessing a bit here, but figuring payments, gas,&c) $10K/year, when the same commute might be done in a 20 year old Honda Civic for $1K/year.

I go along with mpbaker: if you define luxury as having stuff I want, rather than what consumer society tells me I ought to want, I live a life of almost ridiculous luxury.  I kept my own airplane up until last year, keep a horse for riding, have a large garden (mostly ornamental), can take off to hike, bike, ski or whatever any time I want...  And I doubt if I've ever spent much over $25K/year on living expenses (excluding the large downpayment on the house).

Oh, and I still do my yoga most days, as I have since my teens.  Think I spent about 20 bucks on a nice foam mat about 10 years ago, when I put in hardwood floors...
« Last Edit: May 06, 2013, 04:47:56 PM by Jamesqf »