Author Topic: The Billfold's rebuttal to the MMM Post article: "Not All of Us Are Wasteful"  (Read 23238 times)

MrsPete

  • Magnum Stache
  • ******
  • Posts: 3331
The truth is somewhere in the middle . . .

Yes, unless you are Warren Buffet or Michael Jordan and have more money than you and your children could ever spend in two lifetimes, frugality WILL HELP you get ahead.  Whether your personal goals include retiring early, putting your kids through college, or whatever . . . being conscious of your spending and putting money away each and every month WILL HELP.  To say otherwise is to see yourself as a victim. 

However, the Billfold guy's not entirely wrong when he says that people can make all the right decisions and still find themselves in trouble.  I'm a teacher, and let me tell you what's happened to every teacher in my state over the last few years:

- We used to automatically get 2% more each year (that was the deal for which we signed on:  You'll never make a big paycheck, but it'll be secure and you'll have a moderate pension at retirement), but for four years our pay was frozen.  That's 8% I anticipated -- 8% I'll never get back.  This affects my paycheck every month, and it will eventually affect my pension. 
- While our pay was frozen, our health insurance increased -- every year.  So every year for the last four years, I made progressively less money.   
- The county /state removed some nice bonuses we used to get for meeting state testing scores.  No, I don't teach well when a bonus is on the line and say, "Screw it" when there's nothing extra for me, but the state never once intimated that bonuses were based upon whether they had pots of money lying about. 
- This year we were given a 1.2% increase . . . coupled with the biggest health insurance increase yet.
- Alhough it wasn't the fault of the school board, the Social Security "re-set" was another kick in the teeth.   

So, the bottom line is that I am bringing home fewer dollars than I did five years ago:  In fact, I am roughly 15% behind the salary I anticipated making at this age, AND my pension will be smaller than anticipated.  AND because they've laid off some of the younger teachers, I am making less money to teach larger classes!  

At the same time, my personal expenses have increased: 

- My oldest child is now in college, and although I'm very happy to provide this opportunity for her, it is money out of our pocket.
- We have taken in an elderly relative who could no longer live on her own.  This is the kind of decision one makes without regard to cost -- it's about family -- but our living expenses have increased. 

You see why I say I do understand Billfold's point?  As a teacher, I am middle-middle America . . . and these things genuinely are out of my control.  I'm not saying this to be whiney -- I'm pointing out how these things happen, and they are genuinely beyond my control. 

At the same time, I'm not saying, "Oh, no, what shall I do?  Shall I buy groceries, or pay the electrical bill?"  Because I have lived frugally all my adult life, and I have reserves upon which I can rely.   We won't be sitting in the dark, eating nothing but beans any time soon.  BUT I've had years of adult life and earning to prepare for this (meaning both I've had time to save, AND I've had time to learn how to live frugally -- you don't pick that up overnight).  The person for whom I really feel sorry is the teacher across the hall from me -- she's a fifth year teacher, but she's still making first-year teacher salary.  She works at the mall 3-4 evenings a week to make ends meet. 

So, yeah, wastefulness IS part of the problem . . . but it isn't the whole kit and caboodle. 


 


BPA

  • Handlebar Stache
  • *****
  • Posts: 1080
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.




MMM defines his lifestyle as "kickass" with some cool middle class stuff, not as middle class.  Those living a middle class lifestyle think that riding your bike in snowstorms (or even using it as your primary means of transportation) is weird.  I know this because I live it.  I have friends who are middle class and think it some sort of self-abuse not to hit the spa or restaurants regularly.  Of course, people could always cut back until the point that they are homeless and I have read several "cheapskate" media, including Jeff Yeager's book, so I understand what you are saying, but I think you are the one missing the point.  Mindful spending isn't wasteful.  People who whine and bitch and complain that they don't have any money and they can't possibly cut back or shouldn't cut back when there are areas where they could need a face punch. Their spending habits are often the problem.   At the very least they need to shut the fuck up and not criticize others who choose to be frugal to live the lifestyle they want.  Spending beyond your means on shit you don't need is wasteful whether you make $20K (which I have in the past), $63K (which I do now), or $100K.

I applauded the author at The Billfold for acknowledging that the MMM lifestyle works for many.  Not sure why you are clinging to "he's a hypocrite because he's wasteful."  It completely depends on a person's definition of wasteful.  And you and I clearly disagree. 

BPA

  • Handlebar Stache
  • *****
  • Posts: 1080
And Jacob, at ERE, who is one of the most resourceful, frugal people blogging about lifestyle has a great deal of respect for MMM.  In fact many of us discovered MMM because we were readers of Jacob's and he pointed MMM's blog out to us. In my opinion, the internet cheapskates ain't got nothing on Jacob's resourcefulness.  His endorsement is pretty strong support for the MMM lifestyle and I dare anyone to call Jacob wasteful.  ;)

mpbaker22

  • Handlebar Stache
  • *****
  • Posts: 1095
However, the Billfold guy's not entirely wrong when he says that people can make all the right decisions and still find themselves in trouble.  I'm a teacher, and let me tell you what's happened to every teacher in my state over the last few years:

Yes, things could go wrong.  I could be in a situation where I have to max out my deductible year after year on health insurance, and my car could get totaled year after year.  And I could have a stock go to 0 this year.  And I could ... etc.
I think the point is that most people have one or two of these things happen once or twice.  They then proceed to use it as their excuse for their problems while spending extraordinary amounts of money.

Yes, for some people disaster has struck often.  It's a fact of probability that the highly unlikely will happen to a few.  But it won't happen to most.
And to the specifics you listed, I don't know where you live so percentage increases don't mean a whole lot to me.  My sister is a teacher in Chicago and probably got a lower raise than me last year (before the strike), but she started out at 50% higher pay.  On the other hand, a friend of mine makes probably less than half what I make, but actually got a bigger raise ...

Again, my major point is that most people use small problems as their excuses, but it's actually the pointless luxuries that they choose that left them ill-prepared for the problems.

Mr Mark

  • Handlebar Stache
  • *****
  • Posts: 1030
  • Location: Detroit, MI
  • Achieved Financial Independence summer 2014. RE'18
Some people think MMM must 'suffer' to be authentic, and then decry the suffering. Others insist he' s a hypocrite because he doesn't suffer and actually enjoys above average disposable income.

All complain y pants.

A lot of it IMHO is jealousy. Because they didn't do it, and despite being older, perhaps have waaaaaay lower net worth and are not just 'not FI' but '6months from bankruptcy'... they want it to be a con.

See cognitive dissonanace.
Mr. Mark

foobar

  • Pencil Stache
  • ****
  • Posts: 720
 I am saying he is hypocrite because he is saying people spending 50k or so are wastefull while his spending 50k is not. I trust people to make the choices that make them happy. Whether that is living in a mcmanision or driving a f150, I don't care. MMM writing is style designed to be shocking and that is part of what makes it fun to read.. Saying you live on 27k is shocking since mentally most of us go I couldn't live on a salary of 27k with a family of 3. Change it to I make 50k and don't have to spend any time working and it doesn't sound anywhere as difficult. As far as biking, no one I have met ever cares. They ask a couple of questions and move on. And the snow isn't the hard part. It is the 105 degree heat with 95% humidity. That is the killer(literally).

If you read the Billfold he really isn't condemning MMM lifestyle. He is just using at an intro to talk about points he wants to.  He is coming at the problem from a different viewpoint. MMM looks at the upper middle class people he worked with (all of which consider themselves middle class) and says they are wasting a ton of money and says spending is the problem. Billforld looks at the family of 4 with 60k of income from 2 working parents and says their cost of living is up 20% while they have stagnant income and says that is the problem. MMM says  move close to your job. Billfold is more like damm after 6 months of unemployment I am lucky to have a job. To bad it is 30 miles from my house and we can't move because we are 60k underwater and my wifes job is 5 miles in the opposite direction.

The reality is a bit in between. You can always say you should have saved more at a younger age and that in retrospect certain choices were poor.  But the outside world also changes and sometimes you win and sometimes you lose.

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.




MMM defines his lifestyle as "kickass" with some cool middle class stuff, not as middle class.  Those living a middle class lifestyle think that riding your bike in snowstorms (or even using it as your primary means of transportation) is weird.  I know this because I live it.  I have friends who are middle class and think it some sort of self-abuse not to hit the spa or restaurants regularly.  Of course, people could always cut back until the point that they are homeless and I have read several "cheapskate" media, including Jeff Yeager's book, so I understand what you are saying, but I think you are the one missing the point.  Mindful spending isn't wasteful.  People who whine and bitch and complain that they don't have any money and they can't possibly cut back or shouldn't cut back when there are areas where they could need a face punch. Their spending habits are often the problem.   At the very least they need to shut the fuck up and not criticize others who choose to be frugal to live the lifestyle they want.  Spending beyond your means on shit you don't need is wasteful whether you make $20K (which I have in the past), $63K (which I do now), or $100K.

I applauded the author at The Billfold for acknowledging that the MMM lifestyle works for many.  Not sure why you are clinging to "he's a hypocrite because he's wasteful."  It completely depends on a person's definition of wasteful.  And you and I clearly disagree.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4061
  • Location: CT
No the Billfold author clearly states that MMM is wrong in saying that the middle class lifestyle is an exploding volcano of wastefulness.

Here's the quote -

Quote
But it’s a myth that the typical middle class life is an “exploding volcano of wastefulness” and that “everyone always chooses the expensive ones and then complains that life is hard these days”. This is the myth that’s driving and funding the personal finance industrial complex.

The guy then proceeds to go into anecdotes. Sure he says that it is judgmental to claim that eating out once a week is wasteful and that statement. But that is not a simple value judgement. If your goal is reducing your spending there is a clear option that is less wasteful. That is not solely a judgement call but a fact. Cooking your own food is almost always cheaper than eating out.

Your attacking MMM's spending without even really knowing it. See this article http://www.mrmoneymustache.com/2013/01/21/exposed-the-mmm-familys-2012-spending/

MMM probably would say that if you have been out of a job for 6 months and need to shore up your financial foundation go ahead and take that job 30 miles away. But look at how to minimize your costs of living and you in the future would be able to weather those 6 month life problems that you can't control. So again focusing on the things you can control is the best advice I've seen. Why attack the man who gives you that advice? Instead let's praise the dude who focuses on the things you can't control and tears down the guy who is a bit more bootstrappy.

No Name Guy

  • Bristles
  • ***
  • Posts: 451
  • Location: Western Washington
I am saying he is hypocrite because he is saying people spending 50k or so are wastefull while his spending 50k is not.



Uhhhhh....by his own accounting, it's actually 30k.  Quit making a straw man on his spending.  30k spending is 30k spending, period.

http://www.mrmoneymustache.com/2013/01/21/exposed-the-mmm-familys-2012-spending/

And don't pull the bullshit "impugned" income thing due to the paid off house saying that that's "worth 20k-ish a year in income". 

The logical fallacy there is saying that someone with a 10 year old paid off car is "earning" what it would cost to rent a car 365 days a year ("oh, they have a paid off car, therefore they "earn" an extra 5k a year").  Or "earning" the cost of renting a hammer, saw and other tools when doing a household project (oh, they have paid off tools, they "earned" the $200 it cost me to rent tools at Bob's Tool Rent-All place). 

The price of that house was earned, and spent, years ago.  Trying to count it again is double booking the money previously spent.

gdborton

  • Bristles
  • ***
  • Posts: 254
  • Age: 28
  • Location: Muncie, Indiana
    • Gary Borton
Quote
And don't pull the bullshit "impugned" income thing due to the paid off house saying that that's "worth 20k-ish a year in income".

You make a decent point about the car, but I think the argument is less about actual spending.  MMM spends 27k a year outside of his mortgage something most people wouldn't be able to do if they were hoping to save a good chunk of their money.

You only have to count the money once to see the difference, MMM paid over $400k for his house and still managed to pull $25k in other investments.  No one is saying MMM doesn't teach valuable lessons, just that the typical individual or household cannot expect to do the same.
If you know me well enough to ask for money, you should know not to ask for money.

http://www.garyborton.com
Sole developer for - http://www.ploutus.com

gdborton

  • Bristles
  • ***
  • Posts: 254
  • Age: 28
  • Location: Muncie, Indiana
    • Gary Borton
Quote
the typical individual or household cannot expect to do the same.

Before I get flamed on this, I meant retire SO early with SO much luxury, I do believe that almost anyone can retire early.
If you know me well enough to ask for money, you should know not to ask for money.

http://www.garyborton.com
Sole developer for - http://www.ploutus.com

matchewed

  • Magnum Stache
  • ******
  • Posts: 4061
  • Location: CT
Quote
the typical individual or household cannot expect to do the same.

Before I get flamed on this, I meant retire SO early with SO much luxury, I do believe that almost anyone can retire early.

That is fair. No one is expecting everyone in the world to retire at 30. MMM isn't saying that either. But the article's point isn't about MMM's spending, it is saying his advice doesn't work because people don't spend wastefully.

The crux of the argument (foobars points) from what I'm hearing is that you cannot define others spending as wasteful because it is a pure value judgement. The MMM approach is to have individuals look at their own spending and evaluate whether they're being wasteful and that is imposing a judgement on others somehow. No one is forcing an individual to do this. But it is good advice for those who seek to have a buffer from when life dishes out serious shit. It won't eliminate the serious shit but it will mitigate it.

Living below your means or reducing your spending will help protect you from the points brought up in the Billfold article. Don't take umbrage at the normal Middle Class American lifestyle being called wasteful when it is. In fact most lifestyles are wasteful when taken from an efficiency viewpoint, which is (at the temerity of putting words into MMM's mouth) the viewpoint he generally takes (alongside many other viewpoints as no one is just a single faceted character).

foobar

  • Pencil Stache
  • ****
  • Posts: 720
So if I buy a 400k whole foods gift card and use it to buy food for the next 10 years, you only count it is an expense in 2013 and not 2014 on?   The point was it takes 50k of cash to live MMM life. If that cash comes from spending or from previously bought asset doesn't matter. And anyone with a brain would take the 400k asset over a 16k of income even it if it inflation indexed.

I don't want to define things as wasteful because before long everything is wasteful. My dad would go why spend 200/yr on a cellphone. I have gone 70 years and never had one. Is he right? For him yes, for me no.  What about having a pet? Pet people would say their life would be worse other people just look at them as burdens.  If you get the same satisfaction drinking 1000 of lattes as MMM gets going on a 1000 dollar vacation, that is your choice.  I might lean more towards MMM world view (after all I don't drink) but I understand that it is my personal choice.  I also understand that when money is an issue, both go away.

Billfords point as I read it is that between the "fixed" (yes they are not really fixed) expense and income, the discretionary spending is a bit of a noise thing.  Yeah having 50k would be good but it isn't going to help when your laid off and your house drops 100k in value.



Uhhhhh....by his own accounting, it's actually 30k.  Quit making a straw man on his spending.  30k spending is 30k spending, period.

http://www.mrmoneymustache.com/2013/01/21/exposed-the-mmm-familys-2012-spending/

And don't pull the bullshit "impugned" income thing due to the paid off house saying that that's "worth 20k-ish a year in income". 

The logical fallacy there is saying that someone with a 10 year old paid off car is "earning" what it would cost to rent a car 365 days a year ("oh, they have a paid off car, therefore they "earn" an extra 5k a year").  Or "earning" the cost of renting a hammer, saw and other tools when doing a household project (oh, they have paid off tools, they "earned" the $200 it cost me to rent tools at Bob's Tool Rent-All place). 

The price of that house was earned, and spent, years ago.  Trying to count it again is double booking the money previously spent.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4061
  • Location: CT
I don't want to define things as wasteful because before long everything is wasteful. My dad would go why spend 200/yr on a cellphone. I have gone 70 years and never had one. Is he right? For him yes, for me no.  What about having a pet? Pet people would say their life would be worse other people just look at them as burdens.  If you get the same satisfaction drinking 1000 of lattes as MMM gets going on a 1000 dollar vacation, that is your choice.  I might lean more towards MMM world view (after all I don't drink) but I understand that it is my personal choice.  I also understand that when money is an issue, both go away.

Billfords point as I read it is that between the "fixed" (yes they are not really fixed) expense and income, the discretionary spending is a bit of a noise thing.  Yeah having 50k would be good but it isn't going to help when your laid off and your house drops 100k in value.

So you're going to use the slippery slope? Spending is all relative there is no way to view your spending and evaluate it for improvements because someone else might view it differently?

And yes 50k will help if you lose your job and your house value drops. How would it not?

Mr Mark

  • Handlebar Stache
  • *****
  • Posts: 1030
  • Location: Detroit, MI
  • Achieved Financial Independence summer 2014. RE'18
I am saying he is hypocrite because he is saying people spending 50k or so are wastefull while his spending 50k is not.



Uhhhhh....by his own accounting, it's actually 30k.  Quit making a straw man on his spending.  30k spending is 30k spending, period.

http://www.mrmoneymustache.com/2013/01/21/exposed-the-mmm-familys-2012-spending/

And don't pull the bullshit "impugned" income thing due to the paid off house saying that that's "worth 20k-ish a year in income". 

The logical fallacy there is saying that someone with a 10 year old paid off car is "earning" what it would cost to rent a car 365 days a year ("oh, they have a paid off car, therefore they "earn" an extra 5k a year").  Or "earning" the cost of renting a hammer, saw and other tools when doing a household project (oh, they have paid off tools, they "earned" the $200 it cost me to rent tools at Bob's Tool Rent-All place). 

The price of that house was earned, and spent, years ago.  Trying to count it again is double booking the money previously spent.

I disagree withboth of you.

Yes, he spends about 50k, but not as wastefully as average people. It's not the amount, it's the 'bang for the buck' he achieves.

equiv. Income is important. Owning a house outright is still an investment and a use of ones stash that could be deployed elsewhere. That it provides low cost living as well is fine, but it is replacing rental expense, and could be sold and the proceeds used to fund say, 4% swr.
Mr. Mark

No Name Guy

  • Bristles
  • ***
  • Posts: 451
  • Location: Western Washington

I disagree withboth of you.

Yes, he spends about 50k, but not as wastefully as average people. It's not the amount, it's the 'bang for the buck' he achieves.


Actuall Mr. Mark, please read his post.  He spent exactly $25,046, not "about 50k" - that was my biggest objection to Mr / Ms. Foobar's post.  It's a strawman to say MMM is spending (e.g. dollars going out) ~25k more than he actually is.

And opportunity cost isn't the same as actual dollars out the door spending.  As a thought experiment, take it to the extreme - should a person sell everything, plow the money into income producing assets and only rent things they need?  Should I NOT buy clothes and rent them instead?  Car?  Coin Op laundry versus washer and dryer at home?  Household tools?  How is a house (shelter) any different than any other object that fulfills a need? Or should one look at their unique position and decide on a case by case basis that buying this, renting that, is the most efficient way to obtain the goods and services "needed" to have the desired life.

That said Mr. Mark, I do agree entirely that MMM gets a lot for his money.  That is the very definition of frugal in my mind.  That's another spot I take exception to Mr. Billfold - instead of telling his readers to make the most of what they DO have, its whine, whine, whine at external factors and then also whine that being efficient doesn't get you anywhere.  Flat out wrong on that latter point.  Efficiency (in both fixed and so called discretionary expenses) is what leaves one with a surplus and that surplus is what provides the cushion to personal financial shocks (illness, job loss, etc) and the means to get to FI, be in at 30, 40 or 50.

Foobar:  400k on a gift card...yeah, riiiiiiiight.....ok, well, food is a consumable.  Try selling it after you've used it.  :-)  A cared for house on the other hand will still retain utility value after being used by a person for 50 years of providing shelter.  50 year old used food on the other hand, not so much utility value there.   And no, it does not take 50k.  It takes $25,046 cash out the door to live the life he lived in 2012, with the accumulated skills and objects he has.  Read the link.
« Last Edit: May 07, 2013, 12:29:49 PM by No Name Guy »

Jamesqf

  • Magnum Stache
  • ******
  • Posts: 4050
I don't want to define things as wasteful because before long everything is wasteful. My dad would go why spend 200/yr on a cellphone. I have gone 70 years and never had one. Is he right? For him yes, for me no.

Depends.  Why spend $200/yr on a cellphone, when you can pay $85/yr?  And use it to replace the landline that was costing over $300/yr?  Likewise with pets: why pay upwards of $1000 for a purebred puppy, when you can get an adult dog for nearly free?

Furthermore, I think you, and to a certain extent even MMM, are missing the larger point about waste.  Financial independence shouldn't just be about retiring early.  Say you want consumer good X because you think it's going to make you happier.  If you're FI, you can just go out and buy it.  If you're a typical middle-class consumer, you put it on a credit card, and pay 18% interest in addition to the purchase price.  Now is there any reasoning under which that extra 18% isn't waste?

A big part of the reason I can live so cheaply is that (except for a mortgage) I haven't paid a cent in consumer interest since I paid off my last student loan.  So even if I chose to start living exactly the same consumer lifestyle as the average American, it would cost me a good bit less because FI means I don't have to do it on credit.

That is something that almost anyone can do: restrict their wants/needs until they can pay cash.

AJ

  • Pencil Stache
  • ****
  • Posts: 909
  • Age: 34
  • Location: Oregon
As a thought experiment, take it to the extreme - should a person sell everything, plow the money into income producing assets and only rent things they need?  Should I NOT buy clothes and rent them instead?  Car?  Coin Op laundry versus washer and dryer at home?  Household tools? 

No one rents those things because the cost of renting massively exceeds the cost of ownership over the lifetime of the item. And even if it were a wash in terms of cost, there is a convenience factor it items you use regularly. People DO rent tools that are 1) very expensive to purchase and 2) used infrequently. Actually, the same is true for clothes. People rent tuxes for weddings because they are 1) very expensive and 2) used infrequently. If that were true of ALL items, then yes I would say someone should rent them rather than buying and put all their money into income producing assets - or account for the investment when talking about their spending.

So, yes, if I spent $200k right now on enough MREs to feed my family for 30 years, it wouldn't be fair to say that my food budget was zero dollars.

AJ

  • Pencil Stache
  • ****
  • Posts: 909
  • Age: 34
  • Location: Oregon
As a follow-up: the reason we account for the investment in a home purchase and not any other purchase (besides the fact that the home will presumably appreciate) is that all other purchases are trivial in comparison. If MMM drives a $10k car, for example, at 4% withdrawal rate that only equals $25 a month. Not super relevant to the discussion. The $1600 a month in lost investment gains for the $400k house, however, is very relevant. Clothing and household goods would be an even more trivial amount.

Mr Mark

  • Handlebar Stache
  • *****
  • Posts: 1030
  • Location: Detroit, MI
  • Achieved Financial Independence summer 2014. RE'18
As a follow-up: the reason we account for the investment in a home purchase and not any other purchase (besides the fact that the home will presumably appreciate) is that all other purchases are trivial in comparison. If MMM drives a $10k car, for example, at 4% withdrawal rate that only equals $25 a month. Not super relevant to the discussion. The $1600 a month in lost investment gains for the $400k house, however, is very relevant. Clothing and household goods would be an even more trivial amount.

+1

And a house is special, because you can live in it, and you've gotta live somewhere.

So, if I spend say, 25k/ yr after tax, in a free house I own thats worth around 16k per year to rent, I'm saying that to compare my situation with Joe-paycheck will give them the wrong idea. I just want a closer apples to apples comparison for 'headline' purposes. So I want to include the implied rent as income and then gross it up to account for differences in tax treatment of that income.

Effective gross income of MMM is I think above the U.S. median household, but that's a guess, I confess. Any CPAs out there?
Mr. Mark

unitsinc

  • Stubble
  • **
  • Posts: 188
  • Age: 32
  • Location: Houston/Denver
So if I buy a 400k whole foods gift card and use it to buy food for the next 10 years, you only count it is an expense in 2013 and not 2014 on?   The point was it takes 50k of cash to live MMM life. If that cash comes from spending or from previously bought asset doesn't matter. And anyone with a brain would take the 400k asset over a 16k of income even it if it inflation indexed.

I don't want to define things as wasteful because before long everything is wasteful. My dad would go why spend 200/yr on a cellphone. I have gone 70 years and never had one. Is he right? For him yes, for me no.  What about having a pet? Pet people would say their life would be worse other people just look at them as burdens.  If you get the same satisfaction drinking 1000 of lattes as MMM gets going on a 1000 dollar vacation, that is your choice.  I might lean more towards MMM world view (after all I don't drink) but I understand that it is my personal choice.  I also understand that when money is an issue, both go away.

I think the point that I have taken from MMM and attempt to talk to my friends about when it comes up is that while spending on enjoyable things is relative to a degree, most people, when they really analyze their habits and spending patterns agree that lattes and new cars and fancy things are not very worthwhile. That is almost a very simple realization. The hard part is actually getting people to WANT to think about their spending in a conscious manner.
I'm your huckleberry.

mpbaker22

  • Handlebar Stache
  • *****
  • Posts: 1095
I think some of the people bitching about the cost of the house are missing the point.  I think MMMs sentiment is that if he didn't own it he wouldn't be spending $1600/month on rent.  He might spend half that or less.  To just blindly add $25k to his budget because of the house is irresponsible.  Just as irresponsible as not accounting for it at all. 

Sure, he had to pay off the house, but most people can do just fine paying off a $200k house, which is much easier, or even less than 100k in my area.

AJ

  • Pencil Stache
  • ****
  • Posts: 909
  • Age: 34
  • Location: Oregon
I think some of the people bitching about the cost of the house are missing the point.  I think MMMs sentiment is that if he didn't own it he wouldn't be spending $1600/month on rent.  He might spend half that or less.  To just blindly add $25k to his budget because of the house is irresponsible.  Just as irresponsible as not accounting for it at all. 

Sure, he had to pay off the house, but most people can do just fine paying off a $200k house, which is much easier, or even less than 100k in my area.

Er...it actually sounds like you're missing the point here. It isn't about $400k vs $200k vs. $100k. It is that a large portion of his net worth is tied up in a paid-for home - and the forgone gains from that large chunk are (arguably) effectively an expense when comparing MMM's budget to that of other people. $400k at a 4% withdrawal rate is $16k a year. Adding that to his other $27k in expenses is $43k in effective expenses (to make an apples-to-apples comparison) and that is a very average budget - not at all kick ass, and certainly not difficult to achieve for most people.

Do I love MMM? Yes! Does he kick me in the teeth with awesomeness every week? Yes! Do I think he gets more bang for his buck in terms of happiness and life satisfaction from his average middle class budget? Hell yes! Do I think he lives an "average" life? Fuck no! But in terms of spending, $27k is completely and totally average if we remove housing expense from the picture.

foobar

  • Pencil Stache
  • ****
  • Posts: 720
Why buy an 80 phone when you can by a 0 dollar one? After all you can make an emergency call without service and are already paying for a internet(another lux item given how many places you can get it for free) at home. Your free dog still needs shots and food and sucks up time. Having a pet is wasteful. A frugal person would run a pet sitting service and get paid to satiate their need for a pet.  Heck MMM is still eating meat. Haven't you ever talked to a vegan about how wasteful that is? It turns out most peoples definition of wasteful is anything more than what I spend:)

If you can live the life you have been living for the past 10 years without having to work, I am fine calling that FI. If you define FI as being able to buy anything you want, then I am screwed. I need 20 million+ for a ride on the soyuz. That is going to take me 25 years or so (assuming 10% ROI and no taxes). I am guessing I am going to pass on that desire.

And is thee F150 a regional thing? I never see anyone other than contractors in them. We are all about driving crossovers instead of cars in my neck of the woods.


Again I don't really read the Billfold article as a rebuttal. It is more of a commentary on how not everyone made 120k/yr in their 20s and that the middle class (again not the upper middle class guys making 100k) are not the crazy spenders you read about. Yes some 20's people go nuts (i.e. MMM buying a bike)but most recover. You can always talk about living cheaper but that fact is that you can make money mistakes (i.e. spending 10k on bike) when your upper middle class and recover. Make the same mistake in the middle class and you are set back for a couple of years

I don't want to define things as wasteful because before long everything is wasteful. My dad would go why spend 200/yr on a cellphone. I have gone 70 years and never had one. Is he right? For him yes, for me no.

Depends.  Why spend $200/yr on a cellphone, when you can pay $85/yr?  And use it to replace the landline that was costing over $300/yr?  Likewise with pets: why pay upwards of $1000 for a purebred puppy, when you can get an adult dog for nearly free?

Furthermore, I think you, and to a certain extent even MMM, are missing the larger point about waste.  Financial independence shouldn't just be about retiring early.  Say you want consumer good X because you think it's going to make you happier.  If you're FI, you can just go out and buy it.  If you're a typical middle-class consumer, you put it on a credit card, and pay 18% interest in addition to the purchase price.  Now is there any reasoning under which that extra 18% isn't waste?

A big part of the reason I can live so cheaply is that (except for a mortgage) I haven't paid a cent in consumer interest since I paid off my last student loan.  So even if I chose to start living exactly the same consumer lifestyle as the average American, it would cost me a good bit less because FI means I don't have to do it on credit.

That is something that almost anyone can do: restrict their wants/needs until they can pay cash.

mpbaker22

  • Handlebar Stache
  • *****
  • Posts: 1095
I think some of the people bitching about the cost of the house are missing the point.  I think MMMs sentiment is that if he didn't own it he wouldn't be spending $1600/month on rent.  He might spend half that or less.  To just blindly add $25k to his budget because of the house is irresponsible.  Just as irresponsible as not accounting for it at all. 

Sure, he had to pay off the house, but most people can do just fine paying off a $200k house, which is much easier, or even less than 100k in my area.

Er...it actually sounds like you're missing the point here. It isn't about $400k vs $200k vs. $100k. It is that a large portion of his net worth is tied up in a paid-for home - and the forgone gains from that large chunk are (arguably) effectively an expense when comparing MMM's budget to that of other people. $400k at a 4% withdrawal rate is $16k a year. Adding that to his other $27k in expenses is $43k in effective expenses (to make an apples-to-apples comparison) and that is a very average budget - not at all kick ass, and certainly not difficult to achieve for most people.

Do I love MMM? Yes! Does he kick me in the teeth with awesomeness every week? Yes! Do I think he gets more bang for his buck in terms of happiness and life satisfaction from his average middle class budget? Hell yes! Do I think he lives an "average" life? Fuck no! But in terms of spending, $27k is completely and totally average if we remove housing expense from the picture.

Hard to argue with someone who seemingly purposely skews numbers away from reality!

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 26110
  • Age: -999
  • Location: Traveling the World
I think some of the people bitching about the cost of the house are missing the point.  I think MMMs sentiment is that if he didn't own it he wouldn't be spending $1600/month on rent.  He might spend half that or less.  To just blindly add $25k to his budget because of the house is irresponsible.  Just as irresponsible as not accounting for it at all. 

Sure, he had to pay off the house, but most people can do just fine paying off a $200k house, which is much easier, or even less than 100k in my area.

Er...it actually sounds like you're missing the point here. It isn't about $400k vs $200k vs. $100k. It is that a large portion of his net worth is tied up in a paid-for home - and the forgone gains from that large chunk are (arguably) effectively an expense when comparing MMM's budget to that of other people. $400k at a 4% withdrawal rate is $16k a year. Adding that to his other $27k in expenses is $43k in effective expenses (to make an apples-to-apples comparison) and that is a very average budget - not at all kick ass, and certainly not difficult to achieve for most people.

Do I love MMM? Yes! Does he kick me in the teeth with awesomeness every week? Yes! Do I think he gets more bang for his buck in terms of happiness and life satisfaction from his average middle class budget? Hell yes! Do I think he lives an "average" life? Fuck no! But in terms of spending, $27k is completely and totally average if we remove housing expense from the picture.

Hard to argue with someone who seemingly purposely skews numbers away from reality!

I completely agree with the math there, 400k in a house at 4% SWR = 16k.  If MMM sold and rented, he'd be using that 16k to rent (at a rate of about 1300/mo, fairly reasonable for a family of 3), so it makes some sense to me to count that into his expenses to compare his total spending to a person with a mortgage or renting as apples to apples.  In essence, he's living a life of 25k spending without housing, that's the same as someone spending 41k (25k without housing, same as him, 16k on the housing).
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with a kid.
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 (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."

Jamesqf

  • Magnum Stache
  • ******
  • Posts: 4050
I completely agree with the math there, 400k in a house at 4% SWR = 16k.

OK, but then there are people like me, who don't have a paid-off house (though it was bought a dozen years ago, with a big downpayment), yet manage to live comfortably with spending levels similar to MMM's.  Even with the mortgage, I seldom spend over $2K in a month, usually less.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 26110
  • Age: -999
  • Location: Traveling the World
I completely agree with the math there, 400k in a house at 4% SWR = 16k.

OK, but then there are people like me, who don't have a paid-off house (though it was bought a dozen years ago, with a big downpayment), yet manage to live comfortably with spending levels similar to MMM's.  Even with the mortgage, I seldom spend over $2K in a month, usually less.

That's fine, and I myself have the same level of spending (though no kids).  Certainly it can be done.

However, if we're talking about comparing MMM's spending to yours, MMM spends 25K with none on housing.  You spend 25K including housing.  Clearly that's not apples to apples, so typically one would account for that spending as the opportunity cost of what he has invested in his house as what he's spending (i.e. that 400k house, if sold and he started renting, could produce 16k at 4% SWR.  Therefore, since he keeps that 400k locked up in the house, it's like he's spending that 16k on housing).

You certainly spend less than MMM, as do I.  But we're talking about comparing MMM to a typical household, and to do so, you have to account for his housing allowance.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with a kid.
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 (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."

Jamesqf

  • Magnum Stache
  • ******
  • Posts: 4050
However, if we're talking about comparing MMM's spending to yours, MMM spends 25K with none on housing.  You spend 25K including housing.  Clearly that's not apples to apples...

In other ways, too, as his spending includes MrsMM and MMMjr.  The point is, first, that whether you're a single guy, or a couple with kid, you can still live more than comfortably on a lot less than what the mainstream considers necessary for a middle-class life.  And second, once you have done this for a while, it becomes increasingly easier to keep doing it.  Not just because of practice (or reverse hedonic adaptation), but because your accumulating stash means you seldom if ever have that consumer interest taken off the top of your spending.  That is, even if Joe Average and I buy exactly the same things, he'll pay considerably more for them.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 26110
  • Age: -999
  • Location: Traveling the World
I agree with all of that.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with a kid.
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 (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."

Mr Mark

  • Handlebar Stache
  • *****
  • Posts: 1030
  • Location: Detroit, MI
  • Achieved Financial Independence summer 2014. RE'18
Me too.

One of the revelations for me from MMM  was how well one can actually live on 50k/ yr. This dramatically changed my FIRE calc.

MMM reminds me of the character Morpheus in the matrix sometimes, in the way his POV is very game changing. He is an enabler.
Mr. Mark

simonsez

  • Bristles
  • ***
  • Posts: 411
  • Age: 31
I think a point of contention regarding the wastefulness/spending of say, MMM, to average/median what have you is that the units aren't really equivalent ($'s vs. {utility units} per $).  This could just be me, but I view most of MMM principles more or less as a way to maximize "utils"/$ in a given situation rather than just pure dollars.  That is how how some rationalize a cheap dog compared to a more expensive one (and technically, the people buying the more expensive dog THINK they are getting more absolute utils compared to the less expensive option so their internal utils/$ calculator is not buzzing telling them they are being silly since the ratios are similar to them) or different phone plans or what have you.  MMM is a wake up call to hone your utility function to make sure it is as robust as possible so you can make the best decisions and have the best life possible.  It just so happens optimizing your financial situation in myriad ways is positively correlated with having the most enjoyable life.

That's basically how everyone is different since we all have our own utility functions.  A dollar may be a dollar (even that is debatable) but utility is definitely not a constant across consumption of goods.  Thus, different decisions and different consumption levels even if everyone had the exact same income level.  Using MMM advice, do your thing and maximize your value in all situations and the awesome by-products are that you tend to be easier on the environment, healthier, and you enjoy life more all the while typically retiring earlier and being financially independent.

If you are just talking $'s and $'s, then sure, pick apart and argue about what is average or what is wasteful or what should even count as spending, etc.  It is argued that 50k for one person is equal to 50k for another person.  That may or may not be true but who cares?  What really counts, IMO, is the value, or utils/$, one person or household is getting for what they consume.  If MMM's spending is indeed 50k and that is indeed the national average, I would place a bet that MMM's 50k and the way in which it is spent does more to enhance value, at least in his household's eyes than would the way the average 50k would be consumed by his household.  It's purely coincidental that what MMM spends, if you include the housing consumption, is near the median household level spending.

VexedCoffee

  • 5 O'Clock Shadow
  • *
  • Posts: 17
I think a point of contention regarding the wastefulness/spending of say, MMM, to average/median what have you is that the units aren't really equivalent ($'s vs. {utility units} per $).  This could just be me, but I view most of MMM principles more or less as a way to maximize "utils"/$ in a given situation rather than just pure dollars.  That is how how some rationalize a cheap dog compared to a more expensive one (and technically, the people buying the more expensive dog THINK they are getting more absolute utils compared to the less expensive option so their internal utils/$ calculator is not buzzing telling them they are being silly since the ratios are similar to them) or different phone plans or what have you.  MMM is a wake up call to hone your utility function to make sure it is as robust as possible so you can make the best decisions and have the best life possible.  It just so happens optimizing your financial situation in myriad ways is positively correlated with having the most enjoyable life.

That's basically how everyone is different since we all have our own utility functions.  A dollar may be a dollar (even that is debatable) but utility is definitely not a constant across consumption of goods.  Thus, different decisions and different consumption levels even if everyone had the exact same income level.  Using MMM advice, do your thing and maximize your value in all situations and the awesome by-products are that you tend to be easier on the environment, healthier, and you enjoy life more all the while typically retiring earlier and being financially independent.

If you are just talking $'s and $'s, then sure, pick apart and argue about what is average or what is wasteful or what should even count as spending, etc.  It is argued that 50k for one person is equal to 50k for another person.  That may or may not be true but who cares?  What really counts, IMO, is the value, or utils/$, one person or household is getting for what they consume.  If MMM's spending is indeed 50k and that is indeed the national average, I would place a bet that MMM's 50k and the way in which it is spent does more to enhance value, at least in his household's eyes than would the way the average 50k would be consumed by his household.  It's purely coincidental that what MMM spends, if you include the housing consumption, is near the median household level spending.

I completely agree. MMM is essentially living a upper middle class lifestyle while spending at regular middle class levels. I imagine if MMM wanted to live at a middle class level he could easily spend less than a normal middle class income (which I believe many people on this forum are already doing).

foobar

  • Pencil Stache
  • ****
  • Posts: 720
Or he could have invested more money before starting and be able to live cheaper. Imagine what a 30k geothermal system, 200k solar cell system with some huge storage batteries, picked up a model S. and prepaying the college tuition (I know MMM jr is paying for college by working over the summer and commuting 30+ mins each way. For the rest of us that expect college cost to out gain inflation (like they have for the past 30 years) and states to cut back on funding (i.e. No new taxes) it might make sense).  Heck get some roomba and the robot mower (Ok this is mainly for the coolness factor). After all buying assets before hand doesn't count. I am not sure if it counts if you give setup  a trust with 800k to give you gifts of items if they are allowed to buy you stuff. After all technically it is the trust spending money not you. You got to learn to think outside of the box if your going to maximize your frugal lifestyle.





I completely agree. MMM is essentially living a upper middle class lifestyle while spending at regular middle class levels. I imagine if MMM wanted to live at a middle class level he could easily spend less than a normal middle class income (which I believe many people on this forum are already doing).

StetsTerhune

  • Bristles
  • ***
  • Posts: 402
Wow. This turned out to be quite a thread.

What I get out of MMM's message ("You're being wasteful") is inspirational, everything is within my control.  A lot of people just shut down when they perceive criticism, though. I don't know if Billfold is one of these people, but he's certainly recognizing those people's existence. By saying that everything isn't their fault, a lot of people will be more receptive to messages that may help their lives.

I just hear Billfold's message as coddling excuse making, but that's the only way to get through to some people.

MMM doesn't bother with getting through to those people, which works great for me.

stevesteve

  • Guest
What I get out of MMM's message ("You're being wasteful") is inspirational, everything is within my control.  A lot of people just shut down when they perceive criticism, though. I don't know if Billfold is one of these people, but he's certainly recognizing those people's existence. By saying that everything isn't their fault, a lot of people will be more receptive to messages that may help their lives.

I just hear Billfold's message as coddling excuse making, but that's the only way to get through to some people.

So, I think you're right that it comes through as coddling and excuses because they don't make a good distinction between who is struggling legitimately and who is creating their own struggles for themselves.  I think a family of four living on $23,550 (poverty line) is struggling.  I do think much of what MMM says applies to them (especially about cars) but I have a hard time saying they're making excuses when they complain about being poor and having hard life.*   What I really like about MMM and hate about The Billfold article is how they deal with families above median income for their situation.  To hear someone more privileged (or at least earning more) than half the country and most of the world complain about money troubles is tedious.  The audience for most of this stuff falls into the latter half.  The half  that could get themselves out of money troubles but makes life choices that put them at the edge each month.  Now, I don't think anyone has to be a Mustachian, but I do think they need to own up to creating their own problems.  The article is a bit duplicitous as well.  It talks about all of the options people have to show that not everyone has to choose the MMM lifestyle (duh).  You can't have it both ways.  You can't spend on the luxury items now and then somehow feel victimized when you don't have a nest egg. 

* There are a million caveats to this.  Suffice it to say that I think and feel for the millions of legitimately disadvantaged in the U.S.

menorman

  • Stubble
  • **
  • Posts: 178
  • Location: SoCal
    • Marven's Money Musings
Hi guys! I'm late to the party, so please excuse my interjection. My issues follow:
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).

Sure they're not buying a luxury car, but their car is probably still sapping their funds at a dreadful rate. To start, did they buy it brand new or used? Are they driving it half a block to the store? Do they carpool whenever possible? Also, the concept of a 'luxury' based on manufacturer is faulty, especially once you hit the used market. A brand new Civic can easily cost double a used BMW or Benz. Yet people don't see a problem with buying new Civics, but will make a big deal if they see someone in a BMW. (Something I have firsthand experience with. People assume my car was extremely expensive because of those black, white, and blue decals. I bought it for $7500. They're driving a $16,000 Corolla.)

Quote
They’re dealing with shrinking salaries,

All the more reason to invest as much and soon as possible. Salaries are shrinking, but payouts to stockholders aren't. Clearly, one should become a stockholder if they want to share in the profits of the company.

Quote
skyrocketing health care and education costs,

Public schools are still free through high school. At the college level, Harvard isn't necessary for everyone and couldn't possibly take everyone anyway. State schools are fine. Community colleges are dirt cheap. Simplifying life will also lower healthcare costs. Many illnesses are stress-induced anyway. Lower the stress, bike more, and you'll suddenly not be at the doctor so often.

Quote
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.

A nice mishmash of faulty assumptions. All those are problems—for people who want to make excuses. But financial independence (even when just budding) would in every single one of those instances. MMM already showed what happens to a Mustachian who loses their job. He's also already shown how many people literally lose money working. Many of MMM's recommendations will help. People had to drain their savings—because they were already living at the 102% level of their income. People had to cash out their retirement accounts—because they didn't have enough savings to begin with. And the list goes on.

As employer-supported maternity leave, it keeps being brought up everywhere as some gigantic panacea to fix all of society's problems. It ain't. FI would be a much better focus for everyone to beat the drum over.
(:

NumberJohnny5

  • Pencil Stache
  • ****
  • Posts: 625
So, I think you're right that it comes through as coddling and excuses because they don't make a good distinction between who is struggling legitimately and who is creating their own struggles for themselves.  I think a family of four living on $23,550 (poverty line) is struggling.

Quick note...I've figured the costs for our family of four, and at $24,000/yr we'd be living a pretty good, and somewhat wasteful, life. This is back in Tennessee, USA. Not including housing costs, which ours cost...hrm...under $20,000 (ok, more like $25,000 after we fixed it up). We'd be able to go out multiple times a week, spend $50/wk on going out to eat (we now spend $20/wk, but the last time I really crunched numbers I was figuring on $50), at least two weeks of vacation a year (Disney plus a cruise), etc. It's hard for me to feel sorry for SOME of the people struggling...when they whip out their shiny iphones and drive off in their new car (a note...in rural Tennessee, there is NO public transportation except for school buses, so a car is a virtual necessity...though a huge 4WD to go muddin' in and carry your 4-wheelers may not be).

I could go on a full-blown rant, but I'd sound too cynical. I do feel bad for people who have a rough life. I just don't think very many of them live in the US.

stevesteve

  • Guest
So, I think you're right that it comes through as coddling and excuses because they don't make a good distinction between who is struggling legitimately and who is creating their own struggles for themselves.  I think a family of four living on $23,550 (poverty line) is struggling.

Quick note...I've figured the costs for our family of four, and at $24,000/yr we'd be living a pretty good, and somewhat wasteful, life. This is back in Tennessee, USA. Not including housing costs, which ours cost...hrm...under $20,000 (ok, more like $25,000 after we fixed it up). We'd be able to go out multiple times a week, spend $50/wk on going out to eat (we now spend $20/wk, but the last time I really crunched numbers I was figuring on $50), at least two weeks of vacation a year (Disney plus a cruise), etc. It's hard for me to feel sorry for SOME of the people struggling...when they whip out their shiny iphones and drive off in their new car (a note...in rural Tennessee, there is NO public transportation except for school buses, so a car is a virtual necessity...though a huge 4WD to go muddin' in and carry your 4-wheelers may not be).

I could go on a full-blown rant, but I'd sound too cynical. I do feel bad for people who have a rough life. I just don't think very many of them live in the US.

I think many of us living on more underestimate startup costs.  I can easily live (and probably with kids too) on $24,000 given what I've set up for myself.  But I had the money to make a house down payment, I had the family to furnish the house, etc.

Also, are you saying your whole house cost $20,000? or you spent $20,000 a year to pay it off?  It was unclear to me.

NumberJohnny5

  • Pencil Stache
  • ****
  • Posts: 625
I think many of us living on more underestimate startup costs.  I can easily live (and probably with kids too) on $24,000 given what I've set up for myself.  But I had the money to make a house down payment, I had the family to furnish the house, etc.

Also, are you saying your whole house cost $20,000? or you spent $20,000 a year to pay it off?  It was unclear to me.

Before closing fees and what-not, it cost $17,750. 3/4 acre with a creek out back. Add in costs to fix up (replace busted windows, new mini-split ac/heat pump, hardwood flooring, etc), we have about $25k total in the place. Yeah, it's a fairly rural area (nearest walmart 30 minutes away, so not too bad), low wages, etc. But in my scenario, where $24k is a spendy lifestyle, $12k is just getting by (with no government help btw...i.e. no food stamps needed). So if you have a "mere" $24k/yr, just save half for a house. Two years, you have something livable. Four years, you have a pretty nice place. Then you go back to living a wasteful life...or a moderate lifestyle at $18k (includes dining out multiple times a month, plus one week vacation a year) with a 25% savings rate. Or keep the barebones lifestyle and have a 50% savings rate.

Even in Australia, if you take out our retirement savings and our holiday spending, we're living on a similar amount. No way we'd ever get a home for $25k, or even one in 5 digits; but still....

ep114

  • Guest
I am sympathetic to his points about shrinking salaries, rising healthcare and education costs, etc.   but isn't this a reason to be smarter with the money that we do have.   I know that I was pretty wasteful with my money for about 10 years, and it was pretty regular middle class stuff, nothing extravagant.   Now that my salary is stagnant- and might shrink this year- and my health care costs are much higher than I'd like because of some lingering issues, I really really wish I'd been smarter for those 10 years. 

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 26110
  • Age: -999
  • Location: Traveling the World
I am sympathetic to his points about shrinking salaries, rising healthcare and education costs, etc.   but isn't this a reason to be smarter with the money that we do have.

Hear hear.

In a tough situation we can make the best of it and try and improve on it, or we can complain.

I'll take the former, thanks.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with a kid.
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 (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."

DocCyane

  • Bristles
  • ***
  • Posts: 389
  • Location: USA
  • Keep going. You're doing just fine.
When I lost my job a year ago, I took another that paid less.

Then I got mean. Grrr.

I decided that rather than save less, I would save the same and spend less. Sh*t got real.

So you have a choice. Even when your pay is cut. Even when you don't get a promised raise. Even as healthcare costs rise.

Either you are committed to your goal, or you find an excuse.
Everything will be okay in the end. If it's not okay, it's not the end.

Jamesqf

  • Magnum Stache
  • ******
  • Posts: 4050
In a tough situation we can make the best of it and try and improve on it, or we can complain.

Or of course we can do both :-)

BPA

  • Handlebar Stache
  • *****
  • Posts: 1080
In a tough situation we can make the best of it and try and improve on it, or we can complain.

Or of course we can do both :-)

ha ha I do both.

I spend a lot of my free time advocating for better working/living conditions.  When I FIRE, I will do even more.  People who complain but do nothing to help themselves make me crazy.