Author Topic: MMM 2016 Budget  (Read 43105 times)

MasterStache

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Re: MMM 2016 Budget
« Reply #200 on: May 25, 2017, 11:22:26 AM »


I think you nailed it. It seems to be, if you can afford it (which MMM obviously can), then it's not an expense. For someone say living on 4% of their stache (30K per year for example) and decides to drop down 30K on a shed, it suddenly is an expenditure that needs to be accounted for in the annual budget/expenses. They doubled their spending for the year. Whoops! Could spell disaster.

Nope. It's still an asset. It's just if you did that, it was likely a mistake.

I said nothing about an asset.

What do you mean if you can afford it, it's not an expense, but if you can't afford it, then it is an expense? What do you call the "not expense". Either way, it's not an expense.

Great question... for yourself

People riding the line obviously shouldn't do that. He's rich and can afford to do that. So it goes with the assets of his net worth. It's not a regular expense.

Kathryn K.

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Re: MMM 2016 Budget
« Reply #201 on: May 25, 2017, 12:06:13 PM »

What is the bright line between buying an asset (which you consider the studio to be, but others do not necessarily) and consumption? It's cash you no longer have in either case.  Your distinction seems to be that MMM can afford it, which is not a point anyone in this thread is disputing.

What is the dispute then? I'm arguing the difference between an asset and consumption which is pretty clear by definition and accounting standards. Whether he can afford it or not is not the distinction. An asset has residual value that can be turned back into cash. Consumable goods and services do not. That's a pretty clear distinction.

It is also an asset if someone without much cash reserves buys it. That's the way it works. Smart or not.

The dispute is that it's not as clear a break between being an "asset" vs. "consumption" as you think it is in terms of personal finances. Almost anything you buy, you can later sell and get some money for it.

But the main point you're ignoring is that even an "asset" costs money to purchase at the time, and that money is then unavailable to use for other purposes (see previous discussion on cash flow) until you sell the item.

ETA: You seem to be saying an asset equals a "durable good" rather than a consumable and assets/durable goods don't need to be counted as spending. But, however you classify something or its acquisition, the money to buy it still had to come from somewhere and that is what people are having a problem with in MMM's spending report.
« Last Edit: May 25, 2017, 12:11:07 PM by Kathryn K. »

nmoerbeek

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Re: MMM 2016 Budget
« Reply #202 on: May 25, 2017, 12:26:35 PM »
One of the things that strikes me is that usually MMM seems very clear-eyed about reality. But when it comes to his spending reports, he seems to fall into the same trap that many new, naive, sometimes "delusional" business owners fall into. Discounting personal spending because it's a "business expense" or "tax-deductible." This is less critical when you're profitable but still a bad habit.

He's got some very strong biases, to which he is entitled, but he holds a lot of things to different standards.  One of his biggest "tricks" is taking expenses he doesn't approve of, and projecting them out for 10 years, plus theoretical market gains, to come up with a very big number.  "Oh, you have cable?  At $100/mo times 10 years that's $12,000 plus theoretical market returns of, I dunno, 40% after compounding, you've spent $16,800 on cable TV!!!"  Yeah, got it.  But how about applying that same logic to some of MMM's spending.  What that shed cost him over 10 years including opportunity costs, even subtracting a theoretical resale? 

It's always been the tortured math that really gets to me, even when I fundamentally agree with the message.

I fundamentally agree with many of his ideas as well.  The tone of the blog at time can come across in the wrong way especially in some of its sharp (if not sometimes humorous) observations about finance.     No need to be a condescending to the majority of the population that spends almost all they earn, when your level of spending in a year matches what they would take home after taxes.  The median household income in the usa is around $51,000 and that is total income, payroll taxes take a good part of it. 

I don't think the solution is sharp criticism, but perhaps an acknowledgement that preserving in thrift for a long time is very difficult.  Arguably perhaps more difficult than even stopping regular employment for early retirement.


tyort1

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Re: MMM 2016 Budget
« Reply #203 on: May 25, 2017, 12:33:48 PM »
The real question is - with his income and assets, does his total spending come in under 4%?

The 4% rule is the real message, the $25k nonsense is just a red herring. 

I do think there should be a sharp division between pre and post FIRE.  Pre-Fire, you need to hunker down and cut as much as possible to accelerate FI.  Post Fire?  Stay under 4%.  Spend on whatever you want. 

Personally I'm saving enough for $50k/year post FIRE, plus a paid off house.  Most years I won't spend that, but some years I'll spend more, because as we see, expenses are lumpy. 
Frugalite in training.

princeradar

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Re: MMM 2016 Budget
« Reply #204 on: May 25, 2017, 01:35:07 PM »
Greetings All,

Perhaps we are making much to do about nothing:  Here's the way I see it.

1.  Did MMM use the principles he preaches to become financially independent - YES
2.  If you follow his advice, will you be able to FIRE sooner - YES
3.  Does he generally live by the principles that he teaches - YES

I think it's reasonable that he's increased his spending in certain areas based on the huge increase in income (car, studio), and I think he's been more than transparent.  I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.  Remember, one of his biggest expenditures he's made is to charity, for which I think we all should give him some kudos for.



Chris22

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Re: MMM 2016 Budget
« Reply #205 on: May 25, 2017, 01:45:31 PM »
I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.

But it's hard to argue that if you've been making the argument all along that spending does not bring joy.
"If I could get all the money back I ever spent on cars, I'd spend it on cars." - Nick Mason

Scandium

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Re: MMM 2016 Budget
« Reply #206 on: May 25, 2017, 01:52:23 PM »
I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.

But it's hard to argue that if you've been making the argument all along that spending does not bring joy.

It seems the message is "money can't bring you joy" if you only have some. But when you have tons (say $500,000/year blog income) it's almost as if money can bring joy again...
(but only if spent on approve things! Leaf, real estate, power tools. And $20,000 hobbies.. Ops sorry: "side gig")

Chris22

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Re: MMM 2016 Budget
« Reply #207 on: May 25, 2017, 02:00:31 PM »
I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.

But it's hard to argue that if you've been making the argument all along that spending does not bring joy.

It seems the message is "money can't bring you joy" if you only have some. But when you have tons (say $500,000/year blog income) it's almost as if money can bring joy again...
(but only if spent on approve things! Leaf, real estate, power tools. And $20,000 hobbies.. Ops sorry: "side gig")

Again, "four legs good, two legs better."
"If I could get all the money back I ever spent on cars, I'd spend it on cars." - Nick Mason

Kathryn K.

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Re: MMM 2016 Budget
« Reply #208 on: May 25, 2017, 02:26:01 PM »
I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.

But it's hard to argue that if you've been making the argument all along that spending does not bring joy.

It seems the message is "money can't bring you joy" if you only have some. But when you have tons (say $500,000/year blog income) it's almost as if money can bring joy again...
(but only if spent on approve things! Leaf, real estate, power tools. And $20,000 hobbies.. Ops sorry: "side gig")

Ha, exactly.

Fireball

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Re: MMM 2016 Budget
« Reply #209 on: May 25, 2017, 03:10:31 PM »
It's disingenuous to say all money out is equal when it's not and then apply his behavior to someone who only has enough to get by.

But it's also disingenuous (more so IMO) to brag about your super-luxurious lifestyle on $25k a year when a bunch of the stuff that makes it super-luxurious is not included in that $25k.

THIS. +1. 

I don't care if his recent spending is business spending, consumer spending, recurring expenses, assets or whatever else. It all impacts his day to day life and increases his joy(or else why do it). Which is perfectly fine! But, at least own it. Don't tip-toe around it. 

princeradar

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Re: MMM 2016 Budget
« Reply #210 on: May 25, 2017, 03:43:18 PM »
I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.

But it's hard to argue that if you've been making the argument all along that spending does not bring joy.

It seems the message is "money can't bring you joy" if you only have some. But when you have tons (say $500,000/year blog income) it's almost as if money can bring joy again...
(but only if spent on approve things! Leaf, real estate, power tools. And $20,000 hobbies.. Ops sorry: "side gig")

Ha, exactly.

I hardly think a Nissan Leaf, and a studio where he did most of the labour himself constitute lavish speeding, considering part of the motivation for the Leaf was to advocate increased adoption of electric vehicles, which I think we all can agree it did.  MMM is also not using the fact that it's electric to start to replace his bike transport philosophy either.  Also consider that both "Lavish" purchases are sill way less than 1/2 of what he donated to charity, I think he's still living true to his principles.

MasterStache

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Re: MMM 2016 Budget
« Reply #211 on: May 25, 2017, 04:04:00 PM »
I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.

But it's hard to argue that if you've been making the argument all along that spending does not bring joy.

It seems the message is "money can't bring you joy" if you only have some. But when you have tons (say $500,000/year blog income) it's almost as if money can bring joy again...
(but only if spent on approve things! Leaf, real estate, power tools. And $20,000 hobbies.. Ops sorry: "side gig")

Ha, exactly.

I hardly think a Nissan Leaf, and a studio where he did most of the labour himself constitute lavish speeding, considering part of the motivation for the Leaf was to advocate increased adoption of electric vehicles, which I think we all can agree it did.  MMM is also not using the fact that it's electric to start to replace his bike transport philosophy either.  Also consider that both "Lavish" purchases are sill way less than 1/2 of what he donated to charity, I think he's still living true to his principles.

A 30K car and 30K "shed" are pretty lavish, IMO. I think it's great he bought a Leaf and by doing so I am sure encouraged many others to do so as well. But it's still spending. If I bought a Leaf it would be to advocate for lower emissions and less dependency on fossil fuels. Doesn't mean I can hand wave away the cost.

Scandium

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Re: MMM 2016 Budget
« Reply #212 on: May 25, 2017, 05:00:06 PM »
I think once you've reached financial independence, and you are seeing huge surpluses, then its fine to expand you spending on what brings you some joy.

But it's hard to argue that if you've been making the argument all along that spending does not bring joy.

It seems the message is "money can't bring you joy" if you only have some. But when you have tons (say $500,000/year blog income) it's almost as if money can bring joy again...
(but only if spent on approve things! Leaf, real estate, power tools. And $20,000 hobbies.. Ops sorry: "side gig")

Ha, exactly.

I hardly think a Nissan Leaf, and a studio where he did most of the labour himself constitute lavish speeding, considering part of the motivation for the Leaf was to advocate increased adoption of electric vehicles, which I think we all can agree it did.  MMM is also not using the fact that it's electric to start to replace his bike transport philosophy either.  Also consider that both "Lavish" purchases are sill way less than 1/2 of what he donated to charity, I think he's still living true to his principles.
I never used the word lavish. The rest of your post I just read: excuse excuse excuse.

I'm buying an escalade. To help Detroit. See, I'm helping the poor! It'd be wrong not to! You can defend almost anything that way.

And had to lol at "offsetting" spending by charity. Almost like those carbon offset greenwashing scams

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« Last Edit: May 25, 2017, 05:02:49 PM by Scandium »

Optimiser

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Re: MMM 2016 Budget
« Reply #213 on: May 25, 2017, 05:54:46 PM »
Let me start off buying saying that Pete was not obligated to start to start the blog, and is not obligated to post annual spending reports, or justify any of his spending. I appreciate that fact that he did, because it has no doubt changed the trajectory of my life, and will shave years off my working career.

However, I do find issue with his spending report, and am mostly in agreement with Chris22.

To claim that he lives a live of overwhelming luxury on 25k a year is simply not true. It is also not possible for someone else to replicate his lifestyle without A) spending more than 25k a year, and B) having a substantial amount of assets.

As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.

There is nothing wrong with how MMM chooses to spend his money, and to be honest I wish I could afford to spend my time and money the way he does. But the tone of the blog often comes off as, I only spend 25k a year on this amazing lifestyle and if you spend more than that you are a spendypants consumer sucker. I can see why this would turn away new readers who don't immediately grasp the bigger picture.

FireLane

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Re: MMM 2016 Budget
« Reply #214 on: May 25, 2017, 07:26:10 PM »
While I don't want to say a word against our gracious host, it always bothered me that stuff like his trips to Ecuador weren't listed on his annual spending reports. I thought it was shady to exclude them by classifying them as "business" expenses. Business expense or not, they scratched an itch for travel and fun that he would've had to pay for one way or another. I'm glad that he's being more transparent about this.

That said, I don't begrudge MMM a single bit of his success. He could have gone into a peaceful stealth retirement and never written a word. Instead, he chose to spread a philosophy that's changed countless people' lives, including all of us here. As far as I'm concerned, he deserves every dollar he's earned through his blog.

Besides, isn't this the point of FIRE? He's comfortably retired, he has way more money than he'll ever need, so why not have a little fun with it and launch some moonshot passion projects? There's no rule saying you have to spend only 4% of your savings. Anyway, his life is way more modest than most people with his income. I mean, a shed in his backyard and a midrange electric car? In the grand scheme of things, that's barely any lifestyle inflation at all. We're not talking caviar or private planes here.

Regardless, even though it's not in any way his fault, his newfound fortune does make his situation less relatable.

When I found out about MMM, his articles on frugality, simple living and Stoicism struck a nerve with me. It was just what I needed to hear. It all seemed so simple and straightforward, it convinced me that I could live a lifestyle like his. If I'd discovered his site today, with articles about donating $100,000, or starting an S-corp to funnel his taxes through, or buying a storefront in town to launch his own business, I might not have stuck around.

If I was directing someone new to MMM's site, I'd tell them to start with the oldest articles first, and consider skipping most of the posts from 2016 onward, about the time his blog output started to drop off.

EscapeVelocity2020

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Re: MMM 2016 Budget
« Reply #215 on: May 25, 2017, 09:36:22 PM »
While I don't want to say a word against our gracious host, it always bothered me that stuff like his trips to Ecuador weren't listed on his annual spending reports. I thought it was shady to exclude them by classifying them as "business" expenses. Business expense or not, they scratched an itch for travel and fun that he would've had to pay for one way or another. I'm glad that he's being more transparent about this.

That said, I don't begrudge MMM a single bit of his success. He could have gone into a peaceful stealth retirement and never written a word. Instead, he chose to spread a philosophy that's changed countless people' lives, including all of us here. As far as I'm concerned, he deserves every dollar he's earned through his blog.

Besides, isn't this the point of FIRE? He's comfortably retired, he has way more money than he'll ever need, so why not have a little fun with it and launch some moonshot passion projects? There's no rule saying you have to spend only 4% of your savings. Anyway, his life is way more modest than most people with his income. I mean, a shed in his backyard and a midrange electric car? In the grand scheme of things, that's barely any lifestyle inflation at all. We're not talking caviar or private planes here.

Regardless, even though it's not in any way his fault, his newfound fortune does make his situation less relatable.

When I found out about MMM, his articles on frugality, simple living and Stoicism struck a nerve with me. It was just what I needed to hear. It all seemed so simple and straightforward, it convinced me that I could live a lifestyle like his. If I'd discovered his site today, with articles about donating $100,000, or starting an S-corp to funnel his taxes through, or buying a storefront in town to launch his own business, I might not have stuck around.

If I was directing someone new to MMM's site, I'd tell them to start with the oldest articles first, and consider skipping most of the posts from 2016 onward, about the time his blog output started to drop off.

Very well written, huge +1. 

I had noticed discontinuities in past '25k spending revealed' vs. what he'd obviously spent in his blog posts in 2015 and 16 and never heard a response like yours demonstrating people really got it.  He likely used to live on 25k early in the blog when he was bringing us on-board with biking, how clownish upper-middle class lives are, and the timeless value of stoicism, somewhat updated and rebranded as mindfullness...  Sometimes he would throw out gems like zero to hero and challenge (but educate) with the idea that biking may be safer overall than driving.

Nowadays, he could still live on 25k if he had to, but his business and related deductions give him opportunities that he otherwise would not be able to have on a typical 25k lifestyle.  He certainly wouldn't need an accountant to do his taxes if he were ER spending 25k from a rollover IRA, and maybe he would have more relevant info on how an ER should optimize with converting within the remaining non-taxable space to a Roth.  Basically, his posts now about how he doesn't have a care in the world about money will probably he hard for people pre-FI and people early in ER to relate to. 

So we now have this sort of hybrid blog from a guy with tons of business income that pretends he doesn't spend much to enjoy a luxurious lifestyle.  It's just not as authentic as it used to be (like when he bought a bread-maker or bragged about making espresso drinks at home).  I'm honestly not sure if he purposefully walls off his personal spending from all the 'other business stuff' in his mind of if he truly believes that anything spent in the name of the MMM business is basically free / investment (since it is more than paid for by ongoing business income).  I'm sure his accountant has him buying personal non-deductible stuff in cash and one card, but using business credit for the other deductible home office stuff.  In other words, I would guess that his real financial life is nothing at all like that 25k ER family.

He means well, it's not his fault that he can buy a 30k home office and 14k (after subsidies) car without blinking.  And, maybe the MMM HQ storefront is intended to help others more than himself, but I just want to know the details then decide if they are relevant to me.  All of this '25k spending reveal' stuff that doesn't line up with what he's been posting about in the blog already does more harm than good.
« Last Edit: May 25, 2017, 10:38:53 PM by EscapeVelocity2020 »
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EnjoyIt

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Re: MMM 2016 Budget
« Reply #216 on: May 25, 2017, 11:53:12 PM »
I have wondered for a few years why MMM only spends $25k/yr considering his wealth and ability to spend more.  I have sent him an email asking him why he doesn't spend some cash on a little extra freedom and possible happy experiences. I was hoping to understand his views a little better. In my email I explained how spending more money on certain items can make his life better without taking away from his DIY ideals and badassity attitude. I gave examples such as getting a baby sitter for the evening so that he and his wife can have a night out alone, maybe getting a nice buzz and returning home for private mustache time without worrying about junior.  Maybe going to the Caribbean with the family and scuba diving followed by lessons with junior about what they saw is not only fun but also educational and money well spent. I was hoping he can express his reasoning and maybe make me think about my own lifestyle choices. Unfortunately I have never received a response.  To be honest, I don't want to live on $25k/yr.  The life that offers is not something I want because I can choose to work more and therefor spend more. Apparently MMM is willing to spend more on happiness as well. I learned so much from his blog posts regarding happiness and made me look at my own life and choices. I try my best to not waste money on useless trinkets but value each expenditure to purchase the maximum amount of joy for my life.  I am glad that MMM does the same though I still wish he would respond to me :)

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Re: MMM 2016 Budget
« Reply #217 on: May 26, 2017, 05:19:49 AM »
It's disingenuous to say all money out is equal when it's not and then apply his behavior to someone who only has enough to get by.

But it's also disingenuous (more so IMO) to brag about your super-luxurious lifestyle on $25k a year when a bunch of the stuff that makes it super-luxurious is not included in that $25k.
But his point, and a big part of mustachiaism, is that the life he lives on $25k/year is super-luxurious. And all the extras on top just make it super-duper-extra luxurious. But in his opinion, the basic stuff that they do, the stuff for $25k/year is already super-luxurious. Several people here seem to think that that life would be miserable. Yes, the numbers and the maths are important. But that is not the entire point. The other side of things is learning to be content with less consumer goods, learning how to do things yourself (not because you're a cheap-ass but because it's interesting and fun to learn how to do stuff, not to mention being able to enjoy the smug feeling of being able to do whatever-it-is), figuring out that it is not things (above a certain minimum level) that make you happy.

obstinate

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Re: MMM 2016 Budget
« Reply #218 on: May 26, 2017, 06:35:49 AM »
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.

Chris22

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Re: MMM 2016 Budget
« Reply #219 on: May 26, 2017, 07:24:54 AM »
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.

I don't have or want a Leaf or a fancy shed.  But I do have a hobby car, and I like to travel, and those are analogous to the Leaf and Ecuador trip for MMM.  He would say they are unnecessary for me because they don't add value to my life, but he does the same thing and excludes them from his spending.  Wonder why that might make me roll my eyes?
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MasterStache

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Re: MMM 2016 Budget
« Reply #220 on: May 26, 2017, 07:45:17 AM »
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.

MMM preaches spending on what adds value. Clearly the shed, car, travel etc. add value to his life. Otherwise why do it? It just needs to be accounted for in his spending and not a footnote.

BeanCounter

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Re: MMM 2016 Budget
« Reply #221 on: May 26, 2017, 07:52:22 AM »
I think MMM should spend more on things that add value to him. He's worked hard to earn the additional income through the blog and other projects and should enjoy it. BUT, he should disclose it.
What I would like to see as someone aspiring to FIRE fairly young, is how the original investment of RE stache has gone. So if he retired on $700k what has that earned to be drawn down year by year. And then the spending that allowed. So if the stache earned $25k then what kind of lifestyle did that $25k drawdown bring. And then he could report the rest as "but RE allowed me to build other revenue streams that have generated X and here is how I chose to spend that".
Or he could not disclose anything. But I do agree that the current method seems somewhat disingenuous and I question it's integrity.

prognastat

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Re: MMM 2016 Budget
« Reply #222 on: May 26, 2017, 08:09:19 AM »
I would say in my opinion the only real valid criticism is imputed rent, but he doesn't really hide that this is part of what allows him to live off as little as he does.

If he weren't MMM and just Pete without the blog he could easily be living FIRE off the amount he is spending now with the paid for house. If he had a mortgage a realistic amount he would spend yearly adding the mortgage to his regular expenses would be about 45k a year which is very doable.

I wouldn't count the car, because a large part of his intent with the blog is environmental and I'm sure that influenced his choices with that. Without the blog I suspect he would have kept his old car and I'm sure it is the same for the work shed. The multiple a year vacations are something that would be horrible to me and I definitely wouldn't be spending on even if I had the money he has.

So in my opinion yes he doesn't live off 25k a year without considering the paid off house, however I don't feel this is something he necessarily hides and has made multiple posts around. Living off 25k a year with a paid off house definitely isn't deprivation in any sense. He effectively lives off just below the median household income, nothing crazy. He has just structured his life in a way where he could achieve that without having to continue working.

tooqk4u22

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Re: MMM 2016 Budget
« Reply #223 on: May 26, 2017, 08:57:26 AM »
So in my opinion yes he doesn't live off 25k a year without considering the paid off house, however I don't feel this is something he necessarily hides and has made multiple posts around. Living off 25k a year with a paid off house definitely isn't deprivation in any sense. He effectively lives off just below the median household income, nothing crazy. He has just structured his life in a way where he could achieve that without having to continue working.

I agree....if I assume that the out of pocket health care costs this year were only one time, and my property taxes were equal to his (which they are so not), exclude all the costs related to kids bc they are one time only this year too (its not like they will do this stuff in the future even though they have been doing it many years already), and the vacation related expenses didn't really happen, and the HVAC system was one time and nothing else will go wrong with the house, and the brakes I did for the car weren't needed.....yeah I can get to $25k and living fine.

Not sure why everybody is bitching about this so much.

mm1970

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Re: MMM 2016 Budget
« Reply #224 on: May 26, 2017, 09:14:55 AM »
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.
Right.  Same here.  It's hard for me to understand "but he gets to travel and I LOVE travel", when I can't relate.

Has he ever said that spending $ on travel is not justified?  I mean, I kind of remember his mentioning travel hacking, house swaps, etc., as ways to travel for less.

The next question is: "why is your $25k much less luxurious?" (to obstinate).  Why does it feel that way?  There are many possible reasons
- you have housing costs (in which case you aren't comparing apples to oranges)
- you have childcare costs (ditto)
- you live in a HCOL area
- you spend money on things that don't add value to your life

Goodness, I have no idea how much $ we spend a year, if we were to make a comparable budget.  Maybe it would be worth it to do that analysis for me.  I do know that our biggest expenses are mortgage ($3500/month) and childcare ($1300/month).  Compared to that, the rest of my life is pretty cheap.

tyort1

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Re: MMM 2016 Budget
« Reply #225 on: May 26, 2017, 09:15:08 AM »
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.

I don't have or want a Leaf or a fancy shed.  But I do have a hobby car, and I like to travel, and those are analogous to the Leaf and Ecuador trip for MMM.  He would say they are unnecessary for me because they don't add value to my life, but he does the same thing and excludes them from his spending.  Wonder why that might make me roll my eyes?

I suspected something like this might be the underlying cause of your anger in this thread.
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Chris22

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Re: MMM 2016 Budget
« Reply #226 on: May 26, 2017, 09:20:29 AM »
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.

I don't have or want a Leaf or a fancy shed.  But I do have a hobby car, and I like to travel, and those are analogous to the Leaf and Ecuador trip for MMM.  He would say they are unnecessary for me because they don't add value to my life, but he does the same thing and excludes them from his spending.  Wonder why that might make me roll my eyes?

I suspected something like this might be the underlying cause of your anger in this thread.

Anger is the wrong word.  Annoyance?  Like I said, I'm an accountant, when people torture numbers to badly make a point it makes my brain itch.
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Dabnasty

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Re: MMM 2016 Budget
« Reply #227 on: May 26, 2017, 09:23:42 AM »
I would say in my opinion the only real valid criticism is imputed rent, but he doesn't really hide that this is part of what allows him to live off as little as he does.
I agree with this. Opportunity cost on a home is very relevant and the quality of home you live in can influence other spending. For example, If I live in a 700sq/ft house I purchased for $60,000 but I spend more on maintenance, gym membership for lack of a home gym, activities outside of the home for lack of space; I may still be coming out ahead but I'd be counting the other expenses.

On the other hand I'm ok with the shed because I think it's reasonable to lump that into the home cost (which again I think should be accounted for but since it's in it's own bubble...)

I'm sorta ok with the leaf, I mean it should count but not for $14,000. Has anyone acknowledged that he sold the scion for $5,000? That means the leaf is now $9000 and if he amortized that over 10 years or so it's only $900 +opportunity cost. That he didn't include it at all, well I believe it when he says he wouldn't have bought it if not for the blog but he almost certainly enjoys it. There's not much point in arguing what the alternative reality would have been and how he would have otherwise entertained himself because that void could be filled with anything from $0 up.

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Re: MMM 2016 Budget
« Reply #228 on: May 26, 2017, 09:30:24 AM »
I wouldn't count the car, because a large part of his intent with the blog is environmental and I'm sure that influenced his choices with that.

Perhaps he should have bought a Tesla then since it doesn't count as "spending."  Why settle for a Leaf?

tyort1

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Re: MMM 2016 Budget
« Reply #229 on: May 26, 2017, 09:37:52 AM »
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.

I don't have or want a Leaf or a fancy shed.  But I do have a hobby car, and I like to travel, and those are analogous to the Leaf and Ecuador trip for MMM.  He would say they are unnecessary for me because they don't add value to my life, but he does the same thing and excludes them from his spending.  Wonder why that might make me roll my eyes?

I suspected something like this might be the underlying cause of your anger in this thread.

Anger is the wrong word.  Annoyance?  Like I said, I'm an accountant, when people torture numbers to badly make a point it makes my brain itch.

Plus you don't want to be made to feel guilty about your hobby car when MMM is out there building sheds and buying Leafs, right?  I get it, I also have/had expensive hobbies.  But I'm also not FI, so I've decided to put a pin in mine for a bit until I get a bigger ball of money.  Especially since the market is on such a tear right now.  But that's my choice.  Your choice is no less valid, because after all, we do have to live and enjoy life between now and full FI status.  So it's a balancing act. 
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Chris22

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Re: MMM 2016 Budget
« Reply #230 on: May 26, 2017, 09:41:25 AM »
Plus you don't want to be made to feel guilty about your hobby car when MMM is out there building sheds and buying Leafs, right?

I never feel guilty about what some mystery dude on the internet is doing, but I do find his "automotive pursuits are wasteful and terrible, but ignore this new Leaf I bought" the equivalent of a man shoveling donuts in his maw and yelling about cookies are bad for you.  It's just eye rolling, ESPECIALLY when he brings his goofy-ass MustacheMath(TM) along for the ride as justification.
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Re: MMM 2016 Budget
« Reply #231 on: May 26, 2017, 09:50:18 AM »
I wouldn't count the car, because a large part of his intent with the blog is environmental and I'm sure that influenced his choices with that.

Perhaps he should have bought a Tesla then since it doesn't count as "spending."  Why settle for a Leaf?

I actually put this one in MMM's favor. If he was trying to get pure enjoyment from something and pass it off as "eco-friendly" he would have gotten a Tesla. Nobody is getting any enjoyment from driving a Leaf.

tyort1

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Re: MMM 2016 Budget
« Reply #232 on: May 26, 2017, 09:54:36 AM »
Plus you don't want to be made to feel guilty about your hobby car when MMM is out there building sheds and buying Leafs, right?

I never feel guilty about what some mystery dude on the internet is doing, but I do find his "automotive pursuits are wasteful and terrible, but ignore this new Leaf I bought" the equivalent of a man shoveling donuts in his maw and yelling about cookies are bad for you.  It's just eye rolling, ESPECIALLY when he brings his goofy-ass MustacheMath(TM) along for the ride as justification.

I guess I took it more as a "hey I never have to buy gas again and I can get a bunch of other people to do the same".  Because it's not just a frugality blog, it's also an environmentalist blog.  I think the Leaf purchase was more about getting people to be more comfortable with going electric.  But I can see you get more upset with every response here, so I'll desist.
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Chris22

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Re: MMM 2016 Budget
« Reply #233 on: May 26, 2017, 09:59:26 AM »
Plus you don't want to be made to feel guilty about your hobby car when MMM is out there building sheds and buying Leafs, right?

I never feel guilty about what some mystery dude on the internet is doing, but I do find his "automotive pursuits are wasteful and terrible, but ignore this new Leaf I bought" the equivalent of a man shoveling donuts in his maw and yelling about cookies are bad for you.  It's just eye rolling, ESPECIALLY when he brings his goofy-ass MustacheMath(TM) along for the ride as justification.

I guess I took it more as a "hey I never have to buy gas again and I can get a bunch of other people to do the same".  Because it's not just a frugality blog, it's also an environmentalist blog.  I think the Leaf purchase was more about getting people to be more comfortable with going electric.  But I can see you get more upset with every response here, so I'll desist.

Upset?  We're just discussing here, what makes you think I'm upset?  But I will say I get a special itch when frugality and environmentalism conflict, and MMM tries to make the environmental option also the frugal one using goofy math.  Why not just admit that being green is sometimes more expensive but that's okay?  Or why not admit that not being green is not necessarily particularly expensive, but that doesn't mean you shouldn't do it?  You can be all for things like "not running a gas dryer" because it's green, but you can't really convince anyone it's meaningfully expensive.  So he should stop trying.
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Re: MMM 2016 Budget
« Reply #234 on: May 26, 2017, 10:01:29 AM »
One thing I think was missing from the 2016 budget was the kid's allowance (I remember reading him paying his kid per mile of bicycle travel). It's probably small, but maybe indicative of other holes in the budget that were not reported. Maybe I'm picking the fly shit from the pepper.
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tyort1

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Re: MMM 2016 Budget
« Reply #235 on: May 26, 2017, 10:06:08 AM »

I guess I took it more as a "hey I never have to buy gas again and I can get a bunch of other people to do the same".  Because it's not just a frugality blog, it's also an environmentalist blog.  I think the Leaf purchase was more about getting people to be more comfortable with going electric.  But I can see you get more upset with every response here, so I'll desist.

Upset?  We're just discussing here, what makes you think I'm upset?  But I will say I get a special itch when frugality and environmentalism conflict, and MMM tries to make the environmental option also the frugal one using goofy math.  Why not just admit that being green is sometimes more expensive but that's okay?  Or why not admit that not being green is not necessarily particularly expensive, but that doesn't mean you shouldn't do it?  You can be all for things like "not running a gas dryer" because it's green, but you can't really convince anyone it's meaningfully expensive.  So he should stop trying.

Yes your tone is upset/annoyed/aggressive.  Might not be your intention, but that's how it reads. 
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Re: MMM 2016 Budget
« Reply #236 on: May 26, 2017, 10:06:29 AM »
One thing I think was missing from the 2016 budget was the kid's allowance (I remember reading him paying his kid per mile of bicycle travel). It's probably small, but maybe indicative of other holes in the budget that were not reported. Maybe I'm picking the fly shit from the pepper.

taxes are missing too.  even if he shouldnt count his full tax burden on income.  he should still estimate what his taxes would be assuming no income at all.
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Dabnasty

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Re: MMM 2016 Budget
« Reply #237 on: May 26, 2017, 10:11:06 AM »
I think he should give up on the accounting and just point out that this is part of the beauty of ER. All this free time means he can find alternative ways to fill his needs/desires. Help a friend and get free beer. Spend time to barter certain items. Fly on a specific day because it costs less and use travel hacking. Do your own home repair.

In his case additional income has opened different paths for creativity and helping others but I have no doubt that without that additional income he would have chosen another path. Debating whether that other path would be better or worse is 100% pointless. His readers have tried to equate his lifestyle to a standard blueprint and in response he did his best to come up with a transparent analysis that fits that mold but in the end he just fed the beast.

AlanStache

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Re: MMM 2016 Budget
« Reply #238 on: May 26, 2017, 10:14:02 AM »
I read this entire thread then went back and reread MMM's budget blog. 

http://www.mrmoneymustache.com/2017/05/19/2016-spending/

Quote
Well, I might as well come clean on our spending for last year.  It either went up, or way up, depending on how you want to account for things.
...
If you are early on in your journey to financial freedom, you should not do what we are doing. Until you have your finances on auto-pilot so that you are saving 50-75% of your income, you should absolutely be reviewing every piece of spending and adding up all the categories.

Please everyone go reread the blog.  Pete is 100% upfront about all his spending.  He even make some of the same pro/con arguments made here. 

At the end of the day he (and probably all in this thread) have a dozen different columns in our annual spending report.  The answer to "what did I spend last year" is very much dependent on what specific question you are interested in answering.  The idea that a complicated thing like annual spending can be universally summed up in one number with perfect clarity to all people is dumb.  Go reread the blog-everything is broken out.
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Kathryn K.

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Re: MMM 2016 Budget
« Reply #239 on: May 26, 2017, 10:27:19 AM »
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.
Right.  Same here.  It's hard for me to understand "but he gets to travel and I LOVE travel", when I can't relate.


Rather than "travel" insert whatever you'd like to potentially do that costs several thousand dollars.

tyort1

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Re: MMM 2016 Budget
« Reply #240 on: May 26, 2017, 10:29:35 AM »
The more interesting question to me is this - what's more important, the $25k life, or living off the 4% rule?

Because if we're living off the 4% rule, then Pete could spend a LOT more and still be under the 4% rule, with all his new income and bigger stache. 

I do think there's some tension between the frugality message, because he uses it for 2 purposes - to get people to save and FIRE, but also to positively impact the environment by reducing consumerism.  Often those 2 things are aligned, but not always.  With the Leaf, we see an example of where it's not aligned. 
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Kathryn K.

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Re: MMM 2016 Budget
« Reply #241 on: May 26, 2017, 10:32:51 AM »

I guess I took it more as a "hey I never have to buy gas again and I can get a bunch of other people to do the same".  Because it's not just a frugality blog, it's also an environmentalist blog.  I think the Leaf purchase was more about getting people to be more comfortable with going electric.  But I can see you get more upset with every response here, so I'll desist.

Upset?  We're just discussing here, what makes you think I'm upset?  But I will say I get a special itch when frugality and environmentalism conflict, and MMM tries to make the environmental option also the frugal one using goofy math.  Why not just admit that being green is sometimes more expensive but that's okay?  Or why not admit that not being green is not necessarily particularly expensive, but that doesn't mean you shouldn't do it?  You can be all for things like "not running a gas dryer" because it's green, but you can't really convince anyone it's meaningfully expensive.  So he should stop trying.

Yes your tone is upset/annoyed/aggressive.  Might not be your intention, but that's how it reads.

I'm getting annoyed but not upset or aggressive by any means (unless aggressive means that Chris22 doesn't automatically agree with you?).  Are you projecting here?

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Re: MMM 2016 Budget
« Reply #242 on: May 26, 2017, 10:37:28 AM »
I do think there's some tension between the frugality message, because he uses it for 2 purposes - to get people to save and FIRE, but also to positively impact the environment by reducing consumerism.  Often those 2 things are aligned, but not always.  With the Leaf, we see an example of where it's not aligned. 

I'd even go one step further to say that buying the Leaf instead of a Tesla or Prius is a perfect example of why an environmentalist living on 25k/yr could be seen as having made a non-Mustachian choice as compared to MMM who doesn't have to live on 25k/yr.  Pete seems to have a huge (and justifiable) crush on Elon Musk, so why not ramp up spending AND support a good company that you want to see succeed.  Plus a Tesla is a better product (arguable a better value, and seemingly more in line with his values) and it's something more people would be interested in hearing his take on (extra blog revenue).  Why give his money to the Nissan corporation and buy a crappy Leaf that no-one really cares to read about?  Was it just to save money although he's already got an income stream that is (depending on the math) 4 - 8x his annual spending?  I'm pretty sure readers get it that he's FI and still living below his means and forgive him for spending excess blog income on an experiment...

Transitioning to FIRE'd albeit somewhat cautiously...

MasterStache

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Re: MMM 2016 Budget
« Reply #243 on: May 26, 2017, 10:38:13 AM »
The more interesting question to me is this - what's more important, the $25k life, or living off the 4% rule?

Because if we're living off the 4% rule, then Pete could spend a LOT more and still be under the 4% rule, with all his new income and bigger stache. 

I do think there's some tension between the frugality message, because he uses it for 2 purposes - to get people to save and FIRE, but also to positively impact the environment by reducing consumerism.  Often those 2 things are aligned, but not always.  With the Leaf, we see an example of where it's not aligned.

I think there possible could be some discrepancy there as well. From what I can remember MMM claimed he would giving away his blog income some day. I realize he donated some. If he is indeed keeping blog income separate, I wonder if 90K truly is 4% of his savings. That's over 2.3mil. I have no idea so can't make a claim either way.
« Last Edit: May 26, 2017, 10:40:12 AM by BeginnerStache »

SustainableStache

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Re: MMM 2016 Budget
« Reply #244 on: May 26, 2017, 10:51:17 AM »
I read this entire thread then went back and reread MMM's budget blog. 

http://www.mrmoneymustache.com/2017/05/19/2016-spending/

Quote
Well, I might as well come clean on our spending for last year.  It either went up, or way up, depending on how you want to account for things.
...
If you are early on in your journey to financial freedom, you should not do what we are doing. Until you have your finances on auto-pilot so that you are saving 50-75% of your income, you should absolutely be reviewing every piece of spending and adding up all the categories.

Please everyone go reread the blog.  Pete is 100% upfront about all his spending.  He even make some of the same pro/con arguments made here. 

At the end of the day he (and probably all in this thread) have a dozen different columns in our annual spending report.  The answer to "what did I spend last year" is very much dependent on what specific question you are interested in answering.  The idea that a complicated thing like annual spending can be universally summed up in one number with perfect clarity to all people is dumb.  Go reread the blog-everything is broken out.


I agree with this post. Stop trying to keep up with the Joneses (or Pete in this case). Don't compare yourself to what others are spending. "Pete has a hobby car so I can have a hobby car." Not true.. If you're FI and can afford it... sure. If you're not FI but saving 50-75% of your salary... sure. Otherwise, you can't afford it. Don't buy shit you can't afford.

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Re: MMM 2016 Budget
« Reply #245 on: May 26, 2017, 10:58:19 AM »
Anger is the wrong word.  Annoyance?  Like I said, I'm an accountant, when people torture numbers to badly make a point it makes my brain itch.

Not angry, just... disappointed?   :)


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Re: MMM 2016 Budget
« Reply #246 on: May 26, 2017, 11:17:21 AM »
As someone who earns more than 25k a year, but substantially less than MMM, it feels off-putting and depressing to read posts that claim his spending is so low. I spend more than 25k for a lifestyle much less luxurious.
Maybe it's just me, but the extras that people are complaining about in this thread are not the part of MMM's lifestyle that seems nice to me. I do not care about a Leaf or a shed in the back. I would pay money to avoid going to Ecuador (not a big traveler and I have a two-year-old so vacations are a good deal more stressful than day to day life). To me, the parts of MMM's lifestyle that are appealing are exactly those which fit within the $30k budget. And I think this is what MMM is trying to communicate.
Right.  Same here.  It's hard for me to understand "but he gets to travel and I LOVE travel", when I can't relate.


Rather than "travel" insert whatever you'd like to potentially do that costs several thousand dollars.

That's just it.  I can't think of anything.  I mean, I'm not FIRE.  But our net worth is high.  I'd love to buy a new car.  I'm jonesing for a minivan.  I can buy a new car.  I just deposited a reimbursement check into savings (I don't generally do the banking) and our stupid savings acct has almost six figures in it.  It just builds up until we realize it and move it into the market. 

I'd also love to add on to my house (what I wouldn't do for a second toilet!)  I can afford to do that too.  But what  PITA to deal with all of that.  So, I haven't done anything.

dougules

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Re: MMM 2016 Budget
« Reply #247 on: May 26, 2017, 11:23:44 AM »
I do think the accounting is a bit questionable, but the real question is does the basic idea still stand?  If he had to move into a modest house and cut back to that $22k for the rest of his life (plus homeowners insurance of course) would he still feel like he was living a luxurious lifestyle?  That probably still holds. 

tyort1

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Re: MMM 2016 Budget
« Reply #248 on: May 26, 2017, 11:27:41 AM »
I do think the accounting is a bit questionable, but the real question is does the basic idea still stand?  If he had to move into a modest house and cut back to that $22k for the rest of his life (plus homeowners insurance of course) would he still feel like he was living a luxurious lifestyle?  That probably still holds.

Speaking for myself, I've lived a high consumption lifestyle and a much lower consumption lifestyle.  I've also had periods of very little to no income.  Overall levels of happiness were about the same for me once I adjusted to that particular level.  That's part of why MMM's message resonated with me so strongly - I'd lived a consumerist lifestyle and found myself no happier at the end of it. 
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Spitfire

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Re: MMM 2016 Budget
« Reply #249 on: May 26, 2017, 11:42:13 AM »
I don't think his $24k was ever meant to include a housing payment. He FIRED on 600k and a paid off house, so I've always looked at his budgets with that understanding.