Author Topic: MMM 2016 Budget  (Read 42903 times)

EnjoyIt

  • Pencil Stache
  • ****
  • Posts: 757
Re: MMM 2016 Budget
« Reply #350 on: June 11, 2017, 01:50:11 PM »
I'm still interested to see how the community fares in an inevitable bear market. 

+1
Indeed.   Very curious how all these retirement blogs discuss our next recession. 

Classical_Liberal

  • Pencil Stache
  • ****
  • Posts: 726
  • Age: 41
Re: MMM 2016 Budget
« Reply #351 on: June 12, 2017, 05:33:07 PM »
I'm still interested to see how the community fares in an inevitable bear market. 

+1
Indeed.   Very curious how all these retirement blogs discuss our next recession.

Recessions are amazing wealth building opportunities for those with liquid capital and flexibility of time.  These boards will likely be filled with ideas and discussions about different ways to capitalize.

DavidAnnArbor

  • Handlebar Stache
  • *****
  • Posts: 1133
  • Age: 51
  • Location: Ann Arbor, Michigan
Re: MMM 2016 Budget
« Reply #352 on: June 12, 2017, 09:12:40 PM »
I ER shortly before the Great Recession and lost about half of my networth pretty rapidly. Pre- FIRE I had set myself up to be able to live on a small barebones income once FIREd and also had some laddered CDs that I could live on so could leave the stash alone. I had no other income source at that time but about $450/month from the VA for a disability. With a bit of belt tightening I was able to ride out the recession nicely and even buy some highly discounted stock as well as an inexpensive foreclosed home in a HCOL area.

 I had some other options to increase income if needed like get a couple of roommate as I lived alone in a 3 bedroom house, sell or rent the paid off house, or get a job (horrors!) but didn't have to do any of those things. I did have free health care though thru the VA which was huge in keeping expenses low but otherwise if you have some flexibily in your expenses and have low enough expenses I think most people here will do fine as long as a recession isn't too long lasting. And what's a few years or less of belt tightening when you'll be retired for decades.

Very impressive! You walked the talk.

EscapeVelocity2020

  • Handlebar Stache
  • *****
  • Posts: 1428
  • Age: 43
  • Location: Houston
    • EscapeVelocity2020
Re: MMM 2016 Budget
« Reply #353 on: June 12, 2017, 09:29:01 PM »
Maybe this is an instance of the Anna Karenina principle.  In other words, we are hearing from those who turned previous downturns into success (eventually, at least).  I'm not immune to this selective memory, but I am aware that no longer seemed difficult, since it is now almost a decade since that last bubble rapidly inflated in 2007, then even more rapidly spiraled into chaos.  But it would be interesting, right now, if it were 2009 to hear the real heroes grimly hanging tight in the face of uncertainty after what would be over a year of losses culminating in the S&P at 676.  It's easy to say that it was a money-making opportunity in hindsight, but it wasn't until several years later that all the 'unhappy families' began to recover.  In other words, it would have been more instructive to hear from these who claim to have been 'happy' at that time, back then.  Makes me wonder if I have any posts on Bogleheads from 2009... 
Transitioning to FIRE'd albeit somewhat cautiously...

EscapeVelocity2020

  • Handlebar Stache
  • *****
  • Posts: 1428
  • Age: 43
  • Location: Houston
    • EscapeVelocity2020
Re: MMM 2016 Budget
« Reply #354 on: June 12, 2017, 11:51:00 PM »
I was happy. It was perhaps one of the happiest and most informative part of my ER life. I learned an extremely valuable lesson - and what is in essence the core of MMM blog - I didn't need much money to be happy or to be fulfilled. I cut my planned expenses down to barebones and found I liked it. I didnt see it as hardship or denial but one full of fun and activity. Since my "Great Awakening" which happened as a result of the Great Recession, I haven't gone back to the level of spending I thought I would have. I've found better and more interesting and exciting things that just happen to be free or inexpensive - and that I just happen to enjoy more.

I was happy too, better off than I'd ever been in my life, but I'll admit that I was a little worried.  Not so much for myself as WTF the US government was doing (TARP (troubled asset relief plan / throwing a big plastic sheet over our problem) didn't make any sense, and still doesn't).  When the Feds blank check passed Congress, I lost a little faith in the idea that I was playing in a fair game.  CEO's from investment banks were getting 'bailed out' after Lehman collapsed, and the financial institutions were suddenly 'too big to fail'.  Basically, robbing a bank for a million could get you life in jail, but leveraging the bank for a trillion in Credit Default Swaps got you a corporate jet and some leverage with the Federal Reserve. 

We are all riding high again now, but the system isn't 'fixed'.  It is only a matter of time until all of this debt created by low yields gets a little more expensive in order to compete with how cheaply risky equities can borrow.  It would also be nice if someone would call on the Fed to reduce their balance sheet further and increase rates while the door is still wide open, but the rest of the world apparently has too many other fish to fry.
Transitioning to FIRE'd albeit somewhat cautiously...

jim555

  • Handlebar Stache
  • *****
  • Posts: 1233
Re: MMM 2016 Budget
« Reply #355 on: June 14, 2017, 02:34:29 PM »
I was happy. It was perhaps one of the happiest and most informative part of my ER life. I learned an extremely valuable lesson - and what is in essence the core of MMM blog - I didn't need much money to be happy or to be fulfilled. I cut my planned expenses down to barebones and found I liked it. I didnt see it as hardship or denial but one full of fun and activity. Since my "Great Awakening" which happened as a result of the Great Recession, I haven't gone back to the level of spending I thought I would have. I've found better and more interesting and exciting things that just happen to be free or inexpensive - and that I just happen to enjoy more.
My spending now is more barebones than when I first ERed.  But it doesn't feel any different in life quality.  So spending doesn't buy happiness.

EnjoyIt

  • Pencil Stache
  • ****
  • Posts: 757
Re: MMM 2016 Budget
« Reply #356 on: June 15, 2017, 10:59:53 PM »
I was happy. It was perhaps one of the happiest and most informative part of my ER life. I learned an extremely valuable lesson - and what is in essence the core of MMM blog - I didn't need much money to be happy or to be fulfilled. I cut my planned expenses down to barebones and found I liked it. I didnt see it as hardship or denial but one full of fun and activity. Since my "Great Awakening" which happened as a result of the Great Recession, I haven't gone back to the level of spending I thought I would have. I've found better and more interesting and exciting things that just happen to be free or inexpensive - and that I just happen to enjoy more.

This is great.  It sounds like you had excess so that you had room to spare to go bare bones.
There are plenty on this forum who talk about FIRE on a relatively low cost lifestyle already and may not have as much wiggle room. Truth be told, I think the average mustachian is more likely to do well as compared to the average person in the same situation.

  Makes me wonder if I have any posts on Bogleheads from 2009...

I'm a big fan of the US stocks in free fall thread that seams to come up from time to time.  That was started in 2011.

Some of the posts from 2009 are very informative regarding the fear people had.  Many really believed that this time it may be different.

Our next recession will be the first one for me where I have substantial assets to lose. Due to growth and contributions my investments today are 1900% of what they were in 2009.  I am pretty sure I would be thinking very differently during the next go around.
« Last Edit: June 15, 2017, 11:06:27 PM by EnjoyIt »

Spitfire

  • Stubble
  • **
  • Posts: 194
  • Location: Weston, FL
Re: MMM 2016 Budget
« Reply #357 on: June 16, 2017, 08:41:41 AM »
I guess if MMM loses his fortune because he doesn't have liability insurance, he can go back to spending $25k/year.

Agree with this, and this is probably the main reason why his budget doesn't bother me. I also feel his disclosure was adequate. Everyone may have different takes on what they consider "spending," but the information is available in the blog post.

secondcor521

  • Handlebar Stache
  • *****
  • Posts: 1068
  • Age: 48
  • Location: Boise, Idaho
  • Big cattle, no hat.
    • Age of Eon - Overwatch player videos
Re: MMM 2016 Budget
« Reply #358 on: June 16, 2017, 11:55:14 AM »
I enjoyed the more barebones life compared to the more spendy life and that its the life I'd choose even if I had a gazillion dollars.

@spartana, what do you think are the keys to this viewpoint of yours?  Do you think everyone who went through what you did would feel similarly, or not?

I am on a similar trajectory in that I have everything I need and don't think that spending more or doing more luxury (of the marketed kind) would make me any happier.  I spent six dollars at Target yesterday on four spoons - my house was mysteriously running out - and that made me pretty happy.  Part of I think what has helped me is that I have had luxury on rare occasions - I've driven a Lamborghini and flown business class on Emirates.  It is usually nicer, but not worth the 10x or whatever price tag, and the economy version is just fine.  I could see general attitude and how one was raised would be helpful too.
Like Overwatch?  Check out this YouTube channel:  http://bit.ly/AgeOfEon

EscapeVelocity2020

  • Handlebar Stache
  • *****
  • Posts: 1428
  • Age: 43
  • Location: Houston
    • EscapeVelocity2020
Re: MMM 2016 Budget
« Reply #359 on: June 16, 2017, 12:42:27 PM »
I was happy. It was perhaps one of the happiest and most informative part of my ER life. I learned an extremely valuable lesson - and what is in essence the core of MMM blog - I didn't need much money to be happy or to be fulfilled. I cut my planned expenses down to barebones and found I liked it. I didnt see it as hardship or denial but one full of fun and activity. Since my "Great Awakening" which happened as a result of the Great Recession, I haven't gone back to the level of spending I thought I would have. I've found better and more interesting and exciting things that just happen to be free or inexpensive - and that I just happen to enjoy more.
My spending now is more barebones than when I first ERed.  But it doesn't feel any different in life quality.  So spending doesn't buy happiness.

Interesting how many times I hear 'spending doesn't buy hapiness' (that' s basically the tagline of Mustachianism).  I think we all agree and I'm not sure why people feel like we need to keep saying it.  What was a revealtion, should be stated more often, and doesn't get stated enough, is that financial secuirty 'buys' happiness.  Sustainability.  Knowing that you can live just fine (affording health, dental, reasonable food, shelter, etc.) through thick and thin without having to sell your time or freedom for a paycheck.  How you get there (reduced spending, side-hustle, passive income, etc.) are all just details and personal choices (which leads to all the distraction and discussions).  And I'm not sure people are evaluating their sense of financial security accurately when they are so accustomed to a steadily and consistently rising market.
Transitioning to FIRE'd albeit somewhat cautiously...

Classical_Liberal

  • Pencil Stache
  • ****
  • Posts: 726
  • Age: 41
Re: MMM 2016 Budget
« Reply #360 on: June 16, 2017, 08:49:13 PM »
Interesting how many times I hear 'spending doesn't buy hapiness' (that' s basically the tagline of Mustachianism).  I think we all agree and I'm not sure why people feel like we need to keep saying it.  What was a revealtion, should be stated more often, and doesn't get stated enough, is that financial secuirty 'buys' happiness.  Sustainability.  Knowing that you can live just fine (affording health, dental, reasonable food, shelter, etc.) through thick and thin without having to sell your time or freedom for a paycheck.  How you get there (reduced spending, side-hustle, passive income, etc.) are all just details and personal choices (which leads to all the distraction and discussions).  And I'm not sure people are evaluating their sense of financial security accurately when they are so accustomed to a steadily and consistently rising market.

What you are talking about here is the fragility of a financial security plan.  Even if 4%SWR gets hit with a sequence of return that may make it fail in the future, I would argue that a 30-40 something early retiree is still very anti-fragile, even if the capital base takes a 50% hit year one.  That theoretical person still has 12.5 years of annual expenses saved, that's a long time to figure out a way to make ends meet in the future.  Not FI forever, but having a decade or more to come up with some alternatives to maintain security is amazingly far above and beyond the average Western-world household.  When we think about the "risk" of asset failures, the above scenario it about as bad as it could get, its still pretty frigg'en OK.

EscapeVelocity2020

  • Handlebar Stache
  • *****
  • Posts: 1428
  • Age: 43
  • Location: Houston
    • EscapeVelocity2020
Re: MMM 2016 Budget
« Reply #361 on: June 16, 2017, 10:10:12 PM »
Kudos for using the term 'anti-fragile', maybe you are accustomed with Nassim Taleb?  In which case, I agree that those who are sophisticated and adaptable, who learn from each successive failure will be fine.  But those just introduced to the business cycle?

I disagree that everyone can rely on the 4% rule more and more.  If it is true that index investing guarantees the 4% rule, then folks using leveraged loans can game the system and use the 5% rule, right?
Transitioning to FIRE'd albeit somewhat cautiously...

Classical_Liberal

  • Pencil Stache
  • ****
  • Posts: 726
  • Age: 41
Re: MMM 2016 Budget
« Reply #362 on: June 16, 2017, 11:54:26 PM »
I heart Nassim. 

If I could get large scale, 50 year term non-callable leverage fixed at 4% with interest only monthly payments I'd take it in a heartbeat! Wouldn't you?  :)  Other than that, I'll stay leverage free.

4%WR is more than good enough to play the game, I'll probably pull the plug at 5%.  However, I doubt I will rely on the capital alone and I bet most early retirees will have other diversified skillsets as well.  Side-hustles, part-time work, new interests that turn to income generation or reduced expenses, ect.  But it doesn't hurt to have a some of the assets invested at extremes (barbell) like Taleb would suggest.  My comment was more to point out that even in a worst case, someone who starts with 25X spending will be a couple of standard deviations above the average in any economic climate, black swan or otherwise.  We talk about assets like this so much, it's too oft forgotten how much security capital at these levels actually provide. 

Classical_Liberal

  • Pencil Stache
  • ****
  • Posts: 726
  • Age: 41
Re: MMM 2016 Budget
« Reply #363 on: June 17, 2017, 06:51:07 PM »
I personally believe that more people out their ARE like me but just don't know it yet. So brainwashed by society and media telling us wanting more, bigger, better, costlier things and lifestyles are the only things that will bring us joy. And maybe that's true for some people but I don't think most.

^This in concert with other psychological factors.  I happen to know quite a few middle class/upper middle class spendypants who are running away from poverty in youth though accumulating stuff. 

The way in which each individual views their finances is very different, a MMM, YMOYL and ERE folks look at finances more like a business would.  Getting "x" value from money spent and invested, greatly dissociated from what makes life worth living.  Consumers look at spending as, "somethings not right in life and buying this [insert totally unnecessary consumer good/service here] might fix me".  A logical vs feeling paradigm maybe? 

Captain and Mrs Slow

  • Bristles
  • ***
  • Posts: 420
  • Age: 57
  • Location: Munich Germany
Re: MMM 2016 Budget
« Reply #364 on: September 12, 2017, 01:00:09 AM »
Only posting here because Mustache posted this thread on twitter (link below) but there are a gazillion other blogs out there if you feel that he doesn't speak to you anymore!

To me money is purely a means to an end. Been retired for a few years now and am back to work at my own business and absolutely loving it! You can only watch so much TV a day before your brain starts to melt.

if the business is as successful as I think it will be the extra money will allow my wife to take a buyout in 2020 (age 57) rather than working to her planned retirement date of 63.

Secondly and much more importantly it will allow us to pursue our dream of first class travel. You can couch surf with friends I want fly first class and stay in 500 dollar a night hotels. That's my idea of FI.

good by and so long

https://twitter.com/mrmoneymustache/status/907423680061304832
I Embrace Frugality so I can have my Cake and Eat I Too

Forum Search sucks: forum = MMM + Search term in Google

gargagnam

  • 5 O'Clock Shadow
  • *
  • Posts: 4
Re: MMM 2016 Budget
« Reply #365 on: September 12, 2017, 08:16:38 AM »
I think that there are two main lessons in MMM blog, and some people in this topic are missing the second.

First lesson is that by working hard, saving a lot and having a life that's frugal but still extremely enjoyable (maybe even more enjoyable than the average high expense life) you can retire early and live an even more enjoyable life.

I have no doubt that this is the exact path that brought MMM to early retirement and to start his blog.

The second lessons is that retiring early doesn't mean lying on the couch for the rest of one's life, but that you'll find yourself involved on more activities you love and that some of them may even bring in money. You can use the money to stash even more, give to charities or live a less frugal life.

Does the second lesson invalidate the first? No
Does the fact that MMM may have lately decided to be a little less frugal on something invalidate the first lesson? Of course not, quite the opposite: it demonstrates that through a highly enjoyable frugal life you can reach financial independence and even allow some occasional (unnecessary) luxury.

The frugal life is not the end, it is a mean to the end. It frees up time and money for the people and the things you really love.

rscore

  • 5 O'Clock Shadow
  • *
  • Posts: 1
Re: MMM 2016 Budget
« Reply #366 on: September 12, 2017, 08:36:44 AM »
"Seems like a fair bit of jealously, and nitpicking whining in this thread. Oh, no, new people might get the wrong idea... Yeah sure you are worried about new people, you just want a reason to cry your eyes out."


Right?  I love the assumption that he needs to answer to others.  Has his blog helped you?  It has done wonders for my life.  Why fault him for what he does, ask if he helps, or hurts, or is neutral.  If he helps, keep reading.  Hurts, stop.  Neutral?  Well then, I guess it depends on if you can read without becoming a complainypants. 

tyort1

  • Handlebar Stache
  • *****
  • Posts: 1550
  • Age: 45
  • Location: Denver, Colorado
Re: MMM 2016 Budget
« Reply #367 on: September 12, 2017, 10:52:54 AM »
I think that there are two main lessons in MMM blog, and some people in this topic are missing the second.

First lesson is that by working hard, saving a lot and having a life that's frugal but still extremely enjoyable (maybe even more enjoyable than the average high expense life) you can retire early and live an even more enjoyable life.

I have no doubt that this is the exact path that brought MMM to early retirement and to start his blog.

The second lessons is that retiring early doesn't mean lying on the couch for the rest of one's life, but that you'll find yourself involved on more activities you love and that some of them may even bring in money. You can use the money to stash even more, give to charities or live a less frugal life.

Does the second lesson invalidate the first? No
Does the fact that MMM may have lately decided to be a little less frugal on something invalidate the first lesson? Of course not, quite the opposite: it demonstrates that through a highly enjoyable frugal life you can reach financial independence and even allow some occasional (unnecessary) luxury.

The frugal life is not the end, it is a mean to the end. It frees up time and money for the people and the things you really love.

YES!!!!!  This is precisely how I understand MMM and that message strongly resonates with me. 
Frugalite in training.

DavidAnnArbor

  • Handlebar Stache
  • *****
  • Posts: 1133
  • Age: 51
  • Location: Ann Arbor, Michigan
Re: MMM 2016 Budget
« Reply #368 on: September 12, 2017, 11:12:52 AM »
I think that there are two main lessons in MMM blog, and some people in this topic are missing the second.

First lesson is that by working hard, saving a lot and having a life that's frugal but still extremely enjoyable (maybe even more enjoyable than the average high expense life) you can retire early and live an even more enjoyable life.

I have no doubt that this is the exact path that brought MMM to early retirement and to start his blog.

The second lessons is that retiring early doesn't mean lying on the couch for the rest of one's life, but that you'll find yourself involved on more activities you love and that some of them may even bring in money. You can use the money to stash even more, give to charities or live a less frugal life.

Does the second lesson invalidate the first? No
Does the fact that MMM may have lately decided to be a little less frugal on something invalidate the first lesson? Of course not, quite the opposite: it demonstrates that through a highly enjoyable frugal life you can reach financial independence and even allow some occasional (unnecessary) luxury.

The frugal life is not the end, it is a mean to the end. It frees up time and money for the people and the things you really love.

YES!!!!!  This is precisely how I understand MMM and that message strongly resonates with me.

+1

nereo

  • Walrus Stache
  • *******
  • Posts: 6304
  • Location: la belle province
    • Here's how you can support science today:
Re: MMM 2016 Budget
« Reply #369 on: September 12, 2017, 11:23:11 AM »
Someone brought this thread back from the archives.   



yay?
"Do not confuse complexity with superiority"

dragoncar

  • Walrus Stache
  • *******
  • Posts: 7249
  • Registered member
Re: MMM 2016 Budget
« Reply #370 on: September 12, 2017, 05:25:50 PM »

nereo

  • Walrus Stache
  • *******
  • Posts: 6304
  • Location: la belle province
    • Here's how you can support science today:
Re: MMM 2016 Budget
« Reply #371 on: September 12, 2017, 05:31:09 PM »
Quote from: MMM

Few good points but I definitely wouldn't want to invite some of these people for dinner!


Well shoot
I know... i was a bit bummed to read that.  Guess I'm uninvited to the next MMM cookout, eh?
"Do not confuse complexity with superiority"

aperture

  • Bristles
  • ***
  • Posts: 347
  • Location: Denver
Re: MMM 2016 Budget
« Reply #372 on: September 13, 2017, 08:09:39 AM »
Quote from: MMM

Few good points but I definitely wouldn't want to invite some of these people for dinner!


Well shoot
I know... i was a bit bummed to read that.  Guess I'm uninvited to the next MMM cookout, eh?

For anyone that is not aware, Pete tweeted a quote from this thread and made the comment quoted above. 

I have not read this entire thread and do not intend to, but I have no doubt that there are comments made here that no one would make to Pete's face.  Thus has always been the internet.  Obvious netiquette rules like 'play nice' rarely are observed by everyone.  Happily, my experience has been that this community is mostly positive, and supportive.  I have been thrilled to meet so many people willing to share their experience and expertise. 

I applaud Pete for reading this thread.  As he says, there is a "good point" made here. I suspect Pete struggles to (1) remain transparent about finances and (2) live the life and opportunities that present themselves and (3) tell a story that continues to be relevant to the lean FIRE community.  I think the "good point" made here is that when he became a media star and disclosed the tornado of money coming off of this blog, MMM became someone that was no longer relatable as a peer to people pursuing lean FIRE.  Pete continues to live a stoic frugal life, but MMM can buy a Prius and a storefront as experimental tools and then not even bother to update his blog on how that is going.  (Most other bloggers in this space are so hungry for success they are falling all over themselves to post regularly and get their comments in early on everyone else's posts). 

I am excited that Pete/MMM are doing interesting things with the $s that come off of the MMM blog.  The Prius and the storefront and the backyard office are starts of some really interesting stories.  I hope those stories get told, and I do not really care about being able to relate to Pete, the man that lives a rich amazing life on $25k per year - I mean I do, but the successes make that difficult.

Example: I drive through Longmont at least once per month - right down main street past the MMM temple.  I search for Pete on his bike, I look through the windows of the storefront, but I do not stop and bug anyone.  If Pete had just put up his blog and it was 2013 again, I would find him and have a beer/coffee with him.  It is 2017 now and Pete is still the same person, but he has 10,000s of people that would love to sit and have a beer with him.  That changes things.  I cannot relate to the fame or the wealth and that is OK. 

best to all - especially Mr. and Mrs. MM as well as the young Master MM.  - aperture

nereo

  • Walrus Stache
  • *******
  • Posts: 6304
  • Location: la belle province
    • Here's how you can support science today:
Re: MMM 2016 Budget
« Reply #373 on: September 13, 2017, 08:47:38 AM »
Prius?
"Do not confuse complexity with superiority"

Lazy_Spartan

  • Stubble
  • **
  • Posts: 152
Re: MMM 2016 Budget
« Reply #374 on: September 13, 2017, 09:40:32 AM »
Only posting here because Mustache posted this thread on twitter (link below) but there are a gazillion other blogs out there if you feel that he doesn't speak to you anymore!

To me money is purely a means to an end. Been retired for a few years now and am back to work at my own business and absolutely loving it! You can only watch so much TV a day before your brain starts to melt.

if the business is as successful as I think it will be the extra money will allow my wife to take a buyout in 2020 (age 57) rather than working to her planned retirement date of 63.

Secondly and much more importantly it will allow us to pursue our dream of first class travel. You can couch surf with friends I want fly first class and stay in 500 dollar a night hotels. That's my idea of FI.

good by and so long

https://twitter.com/mrmoneymustache/status/907423680061304832
if this is your experience with early retirement you are seriously doing it all wrong.

(Formerly spartana and I think MMM would invite me to dinner ;-).
Retired at 42

iowajes

  • Magnum Stache
  • ******
  • Posts: 4911
  • Location: United States
Re: MMM 2016 Budget
« Reply #375 on: September 13, 2017, 10:31:26 AM »
It's always funny to me that people rush to his defense in these threads.  Yes, we all know that Pete's spending is not outstripping his income, commenters aren't advocating a 'save Ferris' collection, but his posts that show he actually doesn't know how much he spends aren't very Mustachian, IMHO.

By definition, isn't everything he does Mustachian? 
The platform has just changed a bit.


(I however am on the side that he is spending more than $25k a year and rationalizing a lot of it in ways that doesn't make sense to me.  But he can do whatever he wants. He doesn't owe me anything.)
« Last Edit: September 13, 2017, 10:44:14 AM by iowajes »

mizzourah2006

  • Bristles
  • ***
  • Posts: 295
  • Age: 34
  • Location: NWA
Re: MMM 2016 Budget
« Reply #376 on: September 13, 2017, 10:38:09 AM »
I honestly have no problem with Pete's success and if he wants to spend it all good for him, he earned it and deserves it. I just get a little frustrated by the slippery slope of not counting something as an expense because it could become a good long term investment down the road.

- I put in new kitchen countertops this past year. Is that an expense or an investment? I know that when the contractor asked for the money it needed to come out of my pocket.
- Many here paid for advanced degrees. Is that an expense or an investment? I know that when the school wanted their money every semester I had a bill come due. Did it help me get an education that provided me the opportunity to get a high paying career, I enjoy? Sure, but it was still an expense IMO.
- What about a riding lawn mower? You could rationalize that as an investment in time as I could cut my lawn in 15 minutes with one whereas it takes me 60 minutes with a push mower.
- If you bought a Prius for work why isn't that an investment in 'your business' as your business is providing a service to a company in exchange for pay.

Essentially everyone here could rationalize almost all of their expenses as an investment in themselves or their children, but at the end of the day money still leaves your hands to pay for it. So, IMO it is an expense.

That being said, I still see Pete as someone that can be emulated by a large majority of society and still see him as very relatable to people starting the FIRE journey. So I suppose you could say I'm nitpicking, but if so, my expenses are drastically lower than I have been counting these past 2 years as many of them are actually 'investments'. When I look at my FIRE # it has to be able to support those 'investments' on the front end or the # won't last because they appear on paper the exact same as an expense until I realize the return.

dougules

  • Pencil Stache
  • ****
  • Posts: 841
  • Location: AL
Re: MMM 2016 Budget
« Reply #377 on: September 13, 2017, 11:11:37 AM »
I don't understand why everybody seems to think the MMM blog is all about extreme frugality.  Pretty much every post is about how luxurious his life is, and how even his supposedly low spending is still an explosion of luxury.  What I hear is about cutting out ridiculously wasteful spending, but still keeping the luxuries that actually affect happiness.  It's sort of like the concept of the Middle Way in Buddhism.  If he were a super-frugal ascetic he would move to a little shack in Mexico and farm his own food, but he lives in a fancy house in Colorado, owns several nice bicycles, and buys fancy food that he didn't have to grow. 

iowajes

  • Magnum Stache
  • ******
  • Posts: 4911
  • Location: United States
Re: MMM 2016 Budget
« Reply #378 on: September 13, 2017, 11:28:26 AM »
I don't understand why everybody seems to think the MMM blog is all about extreme frugality.  Pretty much every post is about how luxurious his life is, and how even his supposedly low spending is still an explosion of luxury.  What I hear is about cutting out ridiculously wasteful spending, but still keeping the luxuries that actually affect happiness.  It's sort of like the concept of the Middle Way in Buddhism.  If he were a super-frugal ascetic he would move to a little shack in Mexico and farm his own food, but he lives in a fancy house in Colorado, owns several nice bicycles, and buys fancy food that he didn't have to grow.

I don't think he is about extreme frugality. But he is showing a line item budget that shows extremely low spending, while talking about a luxury lifestyle. But much of what makes his lifestyle luxury he puts into his business budget, or subtracts from his personal budget to show that low spending number.

The guy is a multi-millionaire and lives a very basic lifestyle for one. It is a lifestyle to aspire to. But he subtracts out all his luxuries to hit a $22k "no frills" number. But ANYONE could show a super no frills budget if they subtract out all those things they don't need. The problem is spending money on things you don't need.

Of course, as a very very rich guy- he can spend tons of money on extras all he wants.

Spending only $30k a year is admirable. Representing it as "we could have just spent $22k" is weird.

DavidAnnArbor

  • Handlebar Stache
  • *****
  • Posts: 1133
  • Age: 51
  • Location: Ann Arbor, Michigan
Re: MMM 2016 Budget
« Reply #379 on: September 13, 2017, 01:27:43 PM »


Spending only $30k a year is admirable. Representing it as "we could have just spent $22k" is weird.

If I had the ability to use my own labor to build additions, solar energy to my rooftop, and a highly efficient radiant heating system then I would be willing to spend money on the materials to make that happen. Essentially, he is using his own sweat equity to vastly increase the value of his home. You can't get more mustachian than that. If it meant that the spending was above $22k as a result then what difference does it make?  That extra spend is now an increase in value of the asset of his home, business building, etc. That's what I call an investment!
It doesn't preclude anyone else from keeping to the $22-$24k spending to attain the frugality in order to save for early retirement - like he did successfully for many years.

iowajes

  • Magnum Stache
  • ******
  • Posts: 4911
  • Location: United States
Re: MMM 2016 Budget
« Reply #380 on: September 13, 2017, 01:42:41 PM »


Spending only $30k a year is admirable. Representing it as "we could have just spent $22k" is weird.

If I had the ability to use my own labor to build additions, solar energy to my rooftop, and a highly efficient radiant heating system then I would be willing to spend money on the materials to make that happen. Essentially, he is using his own sweat equity to vastly increase the value of his home. You can't get more mustachian than that. If it meant that the spending was above $22k as a result then what difference does it make?  That extra spend is now an increase in value of the asset of his home, business building, etc. That's what I call an investment!
It doesn't preclude anyone else from keeping to the $22-$24k spending to attain the frugality in order to save for early retirement - like he did successfully for many years.

Other things subtracted were tuition, donations (though not the $100k in donations, as obviously those weren't subtracted from a $33k budget, since I guess that was business donation because it was for the blog), travel, crossfit, and luxury food to show from his $30k to $22k "no frills" budget.

That was entirely different from him not including the $30k renovation at all in his budget, or $14,000 Leaf, or his travel as Mr. Money Mustache (since that was not personal travel). 


When we refloored our house, it was part of our budget. My husband did all the labor, but just because it increased the value of our home, it doesn't mean it wasn't a renovation we spent money for. So it's odd to me he doesn't include the $30k renovation in money spent.  It's AWESOME and admirable he didn't spend way more than that paying for other people, but he still spent money. And he's not even trying to call it a business expense like the leaf.  So even if we call the Leaf and the international trips business expenses, it still seems to me he spent $60k.

And, I don't understand the "no frills" budget as an exercise. I DO believe he could cut back to that if he needed to; but as a learning tool, I think it is dangerous, because the problem is most people can't. So to say "I'm doing ok, but if I needed to, look at all these things I could cut back".   I think just showing the $30k (or $60k because it was an unusually expensive year) budget is enough for most people to be like "wow, I could live pretty well on $30k if I can just get this house paid off."

DavidAnnArbor

  • Handlebar Stache
  • *****
  • Posts: 1133
  • Age: 51
  • Location: Ann Arbor, Michigan
Re: MMM 2016 Budget
« Reply #381 on: September 13, 2017, 02:09:40 PM »

And, I don't understand the "no frills" budget as an exercise. I DO believe he could cut back to that if he needed to; but as a learning tool, I think it is dangerous, because the problem is most people can't. So to say "I'm doing ok, but if I needed to, look at all these things I could cut back".   I think just showing the $30k (or $60k because it was an unusually expensive year) budget is enough for most people to be like "wow, I could live pretty well on $30k if I can just get this house paid off."

Showing the no-frills budget is very important. If one is FIRE, and being a bit spendypants within one's financial ability to be, it's actually very helpful to know that if the stock market took a jolt for the bad, one could survive on a much lower safe withdrawal rate if needed.
His breakdown of his budget illustrates the flexibility available for severe curtailing of spending if there was a financial hurricane going on. 

iowajes

  • Magnum Stache
  • ******
  • Posts: 4911
  • Location: United States
Re: MMM 2016 Budget
« Reply #382 on: September 13, 2017, 02:16:47 PM »
Then what's the point of ever cutting spending? 
Because can't everyone just always say "but I can cut spending later if I need to".

I'm also of the opinion that it is perfectly fine to say "I have millions of dollars, I can spend what I want, and relative to my net worth I spend very little money."

But if you are going to detail every cent, own it. His lifestyle isn't "everyman" achievable when lots of what makes his lifestyle enviable gets written off to business.

I think he has a lot of great things to teach people about financial independence, I'm happy to read his blog- and thrilled he hosts us all here on this forum.
« Last Edit: September 13, 2017, 02:29:45 PM by iowajes »

DavidAnnArbor

  • Handlebar Stache
  • *****
  • Posts: 1133
  • Age: 51
  • Location: Ann Arbor, Michigan
Re: MMM 2016 Budget
« Reply #383 on: September 13, 2017, 02:22:57 PM »
Then what's the point of ever cutting spending? 
Because can't everyone just always say "but I can cut spending later if I need to".

I don't think the point was ever to be frugal for the sake of saying, "I'm frugal."

I think the point was here's a path toward FIRE. This is how it can work.

One has to remain flexible with changing circumstances, not stay stuck in the same way of looking at things. One has to remain open to new ideas and opportunities.

FireLane

  • Stubble
  • **
  • Posts: 197
  • Location: NYC
Re: MMM 2016 Budget
« Reply #384 on: September 14, 2017, 10:25:29 AM »
Quote from: MMM

Few good points but I definitely wouldn't want to invite some of these people for dinner!


Well shoot

Eep. That was my comment he quoted!

Ah well. I meant what I said. And I do like that his recent posts are about the different paths to success that other FIRE people have taken. That's a good direction to take the MMM blog when his own situation is so outside the norm now, in my opinion.

dragoncar

  • Walrus Stache
  • *******
  • Posts: 7249
  • Registered member
Re: MMM 2016 Budget
« Reply #385 on: September 14, 2017, 10:36:41 AM »
Quote from: MMM

Few good points but I definitely wouldn't want to invite some of these people for dinner!


Well shoot

Eep. That was my comment he quoted!

Ah well. I meant what I said. And I do like that his recent posts are about the different paths to success that other FIRE people have taken. That's a good direction to take the MMM blog when his own situation is so outside the norm now, in my opinion.

I thought you said a lot of nice things in that post!  So maybe that was the "good points" portion

AlanStache

  • Handlebar Stache
  • *****
  • Posts: 1579
  • Age: 38
  • Location: South East Virginia
Re: MMM 2016 Budget
« Reply #386 on: September 14, 2017, 10:44:35 AM »
quote for easy refrence

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.

All in all that seems very mellow and thoughtful.  But maybe Pete had some points - I will have to, for the first time, click a twitter link :-(
Be the person Mr. Rogers knows you can be.

dougules

  • Pencil Stache
  • ****
  • Posts: 841
  • Location: AL
Re: MMM 2016 Budget
« Reply #387 on: September 14, 2017, 10:52:29 AM »
I don't understand why everybody seems to think the MMM blog is all about extreme frugality.  Pretty much every post is about how luxurious his life is, and how even his supposedly low spending is still an explosion of luxury.  What I hear is about cutting out ridiculously wasteful spending, but still keeping the luxuries that actually affect happiness.  It's sort of like the concept of the Middle Way in Buddhism.  If he were a super-frugal ascetic he would move to a little shack in Mexico and farm his own food, but he lives in a fancy house in Colorado, owns several nice bicycles, and buys fancy food that he didn't have to grow.

I don't think he is about extreme frugality. But he is showing a line item budget that shows extremely low spending, while talking about a luxury lifestyle. But much of what makes his lifestyle luxury he puts into his business budget, or subtracts from his personal budget to show that low spending number.

The guy is a multi-millionaire and lives a very basic lifestyle for one. It is a lifestyle to aspire to. But he subtracts out all his luxuries to hit a $22k "no frills" number. But ANYONE could show a super no frills budget if they subtract out all those things they don't need. The problem is spending money on things you don't need.

Of course, as a very very rich guy- he can spend tons of money on extras all he wants.

Spending only $30k a year is admirable. Representing it as "we could have just spent $22k" is weird.



And, I don't understand the "no frills" budget as an exercise. I DO believe he could cut back to that if he needed to; but as a learning tool, I think it is dangerous, because the problem is most people can't. So to say "I'm doing ok, but if I needed to, look at all these things I could cut back".   I think just showing the $30k (or $60k because it was an unusually expensive year) budget is enough for most people to be like "wow, I could live pretty well on $30k if I can just get this house paid off."

Showing the no-frills budget is very important. If one is FIRE, and being a bit spendypants within one's financial ability to be, it's actually very helpful to know that if the stock market took a jolt for the bad, one could survive on a much lower safe withdrawal rate if needed.
His breakdown of his budget illustrates the flexibility available for severe curtailing of spending if there was a financial hurricane going on.

He could have just as easily run into the sequence of returns risk, and that's what he would have gone down to if he had.  He's trying to show it's no problem if you are one of the people that does.

I think another point that I see is that if you retire early, there's a decent chance you'll go on to do something else as a hobby and end up very successful.  I'm not sure how true that is, but it's not a bad theory. 

I do think his accounting is a little questionable about what is and isn't a business expense, but the basic point still stands. 

mathlete

  • Bristles
  • ***
  • Posts: 431
Re: MMM 2016 Budget
« Reply #388 on: September 14, 2017, 11:21:26 AM »
I think I understand the frustration here. If you're a dual, high income couple like Pete and his wife, or a lot of people on this forum, a large part of the blog is a success story that is realistic and repeatable. Even if you're not high income, there are great lessons to be learned.

But the economy can only support a relatively small number of celebrity bloggers who make money writing native advertising or passing out referral links. Chances are, you will not be one of them.

As such, Pete's more recent blog posts can seem alienating. And many readers find themselves at a crossroads. It was great in the beginning, watching the dramatic impact on your FIRE date that could be had by cutting out expensive things that, as it turns out, you don't actually value that highly. But eventually, you get to a point at which cutting expenses becomes undesirable. It becomes a bad trade-off. Living a shittier working life so that you can live a shittier retirement a few months sooner.

The MMM blog can't help you here. People write what they know, and what Pete knows, is retiring early by living simply, with a high savings rate (helpful, repeatable), and running a popular blog that brings in income and allows the expensing of an exciting and adventurous lifestyle (less helpful, not repeatable).

If you're saving 50%+ of your income and you're still not on the path that you want to be on, you probably need to make more money. Spending time reading about how to advance your career or start a business is probably more helpful to you than reading MMM at this point. You're just going to find yourself annoyed by naval gazing at MMM's hypothetical expenses and frittering over what should or shouldn't be listed.

This place is (jokingly) referred to as a cult for a reason. I think we could all stand to cool it on worrying about what is or isn't, "Mustachian". You have to set your own metrics for happiness and success. Getting input from the blog, or from others on this forum can be a huge help, but ultimately, you're the only one who matters.
« Last Edit: September 14, 2017, 11:23:12 AM by mathlete »

Roe

  • 5 O'Clock Shadow
  • *
  • Posts: 49
Re: MMM 2016 Budget
« Reply #389 on: September 14, 2017, 11:46:47 AM »
I think I understand the frustration here. If you're a dual, high income couple like Pete and his wife, or a lot of people on this forum, a large part of the blog is a success story that is realistic and repeatable. Even if you're not high income, there are great lessons to be learned.

But the economy can only support a relatively small number of celebrity bloggers who make money writing native advertising or passing out referral links. Chances are, you will not be one of them.

As such, Pete's more recent blog posts can seem alienating. And many readers find themselves at a crossroads. It was great in the beginning, watching the dramatic impact on your FIRE date that could be had by cutting out expensive things that, as it turns out, you don't actually value that highly. But eventually, you get to a point at which cutting expenses becomes undesirable. It becomes a bad trade-off. Living a shittier working life so that you can live a shittier retirement a few months sooner.

The MMM blog can't help you here. People write what they know, and what Pete knows, is retiring early by living simply, with a high savings rate (helpful, repeatable), and running a popular blog that brings in income and allows the expensing of an exciting and adventurous lifestyle (less helpful, not repeatable).

If you're saving 50%+ of your income and you're still not on the path that you want to be on, you probably need to make more money. Spending time reading about how to advance your career or start a business is probably more helpful to you than reading MMM at this point. You're just going to find yourself annoyed by naval gazing at MMM's hypothetical expenses and frittering over what should or shouldn't be listed.

This place is (jokingly) referred to as a cult for a reason. I think we could all stand to cool it on worrying about what is or isn't, "Mustachian". You have to set your own metrics for happiness and success. Getting input from the blog, or from others on this forum can be a huge help, but ultimately, you're the only one who matters.

Well put.

I also think part of the reason the forum tends to dwell on definitions of "Mustachianism", and part of the reason for the culty vibes, is that we are an analytical group. Lots of lawyers and engineers. Can't just throw out a statement about what something is, without properly defining it, assigning it a value.

Still, MMM changed my life. I don't care if Pete decides to rent a yatch and lounge around the tropics while a servant handfeds kobe beef to an army of chihuahua to make them wag their tails enough to create a gentle breeze. My life is still changed, no matter where he budgets the chihuahuas.

moof

  • Bristles
  • ***
  • Posts: 348
  • Location: Beaver Town Orygun
Re: MMM 2016 Budget
« Reply #390 on: September 14, 2017, 02:51:38 PM »
Eep. That was my comment he quoted!

Ah well. I meant what I said. And I do like that his recent posts are about the different paths to success that other FIRE people have taken. That's a good direction to take the MMM blog when his own situation is so outside the norm now, in my opinion.

I thought your comment was on point and matched my own opinion as to where his self-reported lifestyle has gone vs. the frugal eco warrior depicted in the first few years of posts.  I don't fault him for his wealth or subsequent lifestyle, but the 2016 budget post felt very hollow to me as well, full of denial, and a bit of angst.

His bare bones budgets leave out house maintenance and renovations for example, while my planned budget keeps $5k per year to cover roofing, painting, fences, floors, windows, eventual kitchen overhaul, etc.  Basically there were a few too many posts about what he is up to that were grossly absent from the budget, too much for me to continue my willful suspension of disbelief.

I don't fault him for adding a hobby building, buying a business building, or the multitude of other extravagances at a personal level, but it clashes with self-portrait he chooses to continue to paint.  He is rich (good for him!), and if he totaled up all the REAL total spending (no magic asterisks) it would be hard to argue he wasn't a well funded spendy-pants who just bought a brand new car, on credit (subsequently the financing details were removed from the post?), despite railing against such behavior as a central pillar of Mustachianism.  I don't see any of that as a reason to not break bread with him, or even the multitude of others who have very different financial situations and habits than me, but the post came off as disingenuous and counter to the usual up-front blunt style he usually uses, and he apparently took the well founded criticism as as an un-deserved face punch (isn't that what we wer taught to do to spendy-pants'?).

It would have probably been better to just not have posted the 2016 budget at all.  I am still eternally grateful for his early posts, which inspired me to go from a ~20% saver to a ~45% saver within a pretty short span, to re-double my bike commuting efforts from ~50% commuting to 95%, and become much more mindful of my spending in general.
« Last Edit: September 14, 2017, 03:12:04 PM by moof »

Kathryn K.

  • Stubble
  • **
  • Posts: 129
Re: MMM 2016 Budget
« Reply #391 on: September 14, 2017, 05:14:18 PM »
Eep. That was my comment he quoted!

Ah well. I meant what I said. And I do like that his recent posts are about the different paths to success that other FIRE people have taken. That's a good direction to take the MMM blog when his own situation is so outside the norm now, in my opinion.

I thought your comment was on point and matched my own opinion as to where his self-reported lifestyle has gone vs. the frugal eco warrior depicted in the first few years of posts.  I don't fault him for his wealth or subsequent lifestyle, but the 2016 budget post felt very hollow to me as well, full of denial, and a bit of angst.

His bare bones budgets leave out house maintenance and renovations for example, while my planned budget keeps $5k per year to cover roofing, painting, fences, floors, windows, eventual kitchen overhaul, etc.  Basically there were a few too many posts about what he is up to that were grossly absent from the budget, too much for me to continue my willful suspension of disbelief.

I don't fault him for adding a hobby building, buying a business building, or the multitude of other extravagances at a personal level, but it clashes with self-portrait he chooses to continue to paint.  He is rich (good for him!), and if he totaled up all the REAL total spending (no magic asterisks) it would be hard to argue he wasn't a well funded spendy-pants who just bought a brand new car, on credit (subsequently the financing details were removed from the post?), despite railing against such behavior as a central pillar of Mustachianism.  I don't see any of that as a reason to not break bread with him, or even the multitude of others who have very different financial situations and habits than me, but the post came off as disingenuous and counter to the usual up-front blunt style he usually uses, and he apparently took the well founded criticism as as an un-deserved face punch (isn't that what we wer taught to do to spendy-pants'?).

It would have probably been better to just not have posted the 2016 budget at all.  I am still eternally grateful for his early posts, which inspired me to go from a ~20% saver to a ~45% saver within a pretty short span, to re-double my bike commuting efforts from ~50% commuting to 95%, and become much more mindful of my spending in general.

I agree that the post cited in MMM's twitter comment was on point and fair.  For someone who's all about doling out the facepunches, MMM isn't very good at taking criticism himself...

BeanCounter

  • Handlebar Stache
  • *****
  • Posts: 1426
Re: MMM 2016 Budget
« Reply #392 on: September 14, 2017, 07:01:20 PM »
That Twitter post is just pissing me off. He doesn't get it.
I've been critical of his budget posts for several years. It's not because I'm jealous. Or that I'm part of the IRP. It's because I'm very close to FIRE myself. In fact the 'sat he has long since passed the total that MMM retired at. But we have not RE'd yet because I keep looking at the future wondering if we can really retire for >30 years at that spending level. I'm looking to him for an example. So when I see these budget posts that are clearly missing pretty critical things- insurance, home maintenance costs, car replacement, heck even travel, I really question how possible this is.
I think it would be more authentic and helpful if he would just include everything but categorize it by necessity. List all the things that were necessary expenditures against what the 'stache earning were but then just explain that since there was extra money from market earnings of the blog or whatever, we also spent X,Y &Z.

idahofire

  • 5 O'Clock Shadow
  • *
  • Posts: 9
Re: MMM 2016 Budget
« Reply #393 on: September 14, 2017, 07:28:32 PM »
That Twitter post is just pissing me off. He doesn't get it.
I've been critical of his budget posts for several years. It's not because I'm jealous. Or that I'm part of the IRP. It's because I'm very close to FIRE myself. In fact the 'sat he has long since passed the total that MMM retired at. But we have not RE'd yet because I keep looking at the future wondering if we can really retire for >30 years at that spending level. I'm looking to him for an example. So when I see these budget posts that are clearly missing pretty critical things- insurance, home maintenance costs, car replacement, heck even travel, I really question how possible this is.
I think it would be more authentic and helpful if he would just include everything but categorize it by necessity. List all the things that were necessary expenditures against what the 'stache earning were but then just explain that since there was extra money from market earnings of the blog or whatever, we also spent X,Y &Z.

Been reading the blog since 2012. Totally agree. Nowadays I go back once in a while and read some older posts for motivation. Those older posts have inspired me tremendously.

CanuckExpat

  • Handlebar Stache
  • *****
  • Posts: 2314
  • Age: 34
  • Location: Buffalo for the Summer
    • Freedom35
Re: MMM 2016 Budget
« Reply #394 on: September 14, 2017, 09:34:15 PM »
So when I see these budget posts that are clearly missing pretty critical things- insurance, home maintenance costs, car replacement, heck even travel, I really question how possible this is.

I think you need to work on your definition of critical spending a bit more :)
You are welcome to spend on what you want to (within limits) but no one has ever died or suffered an acute crisis from lack of new car, travel, or a lot of what home maintenance can cover, so I'll take you to task on specific wording
Was targetting Freedom35 but ended up retiring a couple years early. Currently Based in Buffalo for the summer.

BeanCounter

  • Handlebar Stache
  • *****
  • Posts: 1426
Re: MMM 2016 Budget
« Reply #395 on: September 15, 2017, 04:14:23 AM »
So when I see these budget posts that are clearly missing pretty critical things- insurance, home maintenance costs, car replacement, heck even travel, I really question how possible this is.

I think you need to work on your definition of critical spending a bit more :)
You are welcome to spend on what you want to (within limits) but no one has ever died or suffered an acute crisis from lack of new car, travel, or a lot of what home maintenance can cover, so I'll take you to task on specific wording
Canuck,
You are exactly right. But that is why I'm here. I'm at the point in my FIRE journey where I'm trying to figure out what things are really critical to me. And that will give me a better idea what my number needs to be. Having a working car and the ability to afford some travel a few times a year are pretty high on the list. Not being able to afford it would not be an acute crisis, but I don't want to get 10-20 years into my retirement and find my returns aren't covering how I want to live.

idahofire

  • 5 O'Clock Shadow
  • *
  • Posts: 9
Re: MMM 2016 Budget
« Reply #396 on: September 15, 2017, 09:04:20 AM »

This is more personal finance than business accounting, and as mentioned above since these aren't assets that will be immediately (if ever) producing income. So okay, cash flow isn't the *only* thing that matters, but it definitely matters. 

It's kind of tough to survive even if you have a fancy house with shed, pergola, or what have you if you don't have enough cash to buy groceries, keep the lights on, and pay taxes.  For example, farmers often are "land rich" (high net worth) but cash poor and that is not a fun way to live.

Cash flow, income, and net worth all matter. I was just trying to say that buying a finished studio is different than consumption. 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. That's all. 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.

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.

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.

But if you run a whole web site predicated on the idea that your life is better if you spend a lot less than you're able, don't be surprised when people bitch if you aren't really honest with how that spending translates to the good life.

EXACTLY!

idahofire

  • 5 O'Clock Shadow
  • *
  • Posts: 9
Re: MMM 2016 Budget
« Reply #397 on: September 15, 2017, 09:47:58 AM »


And I would argue that there is no way a Tesla is a better value because you're paying way more for most of the same practical benefits. The additional pros of the Tesla fall into the luxury category which mustachianism values at 0. And remember the actual price difference is after tax credits so in his case it would be $60,000 vs. $14,000.

Here's my thought on the Leaf, or him buying ANY new car. Based on his budget and blog, he almost NEVER drives. You could make a very solid argument that paying $14,000 for a depreciating asset that you hardly ever use is pretty wasteful and luxurious. I mean I think he buys what 2 or 3 gallons of gas in an entire year he once said? That would mean I walk more in 2 weeks than he drives. (I walk or bike everywhere). In that case, how do you justify the purchase?

To me that's the thing. You can't have it both ways. Yes it's environmental, and yes he's an influencer. I get all of that. But he doesn't NEED it. He almost never drives anywhere. So how is this not wasteful spending?

I mean what if we put his Mustachian math to his numbers? How much money is he paying per mile to drive that thing? (Forget gas!) If he only drives 200 miles in a year and he owns it for 8 years, how much did he REALLY pay to own it per mile of use? That's the part I'm stuck on and no one seems to ever talk about this aspect of it.

moof

  • Bristles
  • ***
  • Posts: 348
  • Location: Beaver Town Orygun
Re: MMM 2016 Budget
« Reply #398 on: September 15, 2017, 11:20:48 AM »
So when I see these budget posts that are clearly missing pretty critical things- insurance, home maintenance costs, car replacement, heck even travel, I really question how possible this is.

I think you need to work on your definition of critical spending a bit more :)
You are welcome to spend on what you want to (within limits) but no one has ever died or suffered an acute crisis from lack of new car, travel, or a lot of what home maintenance can cover, so I'll take you to task on specific wording

Your savings rate or your FIRE spending amount should be based on your ACTUAL spending each year, even if some of it ends up turning into assets.  The theme among a lot of FIRE advocates is to adjust your REAL lifestyle down and save until your Stache is 25 time your actual spending.   Saying I only spend $20k/year is just fraudulent if I happened to factor out dining out because I can always cut back later, or my kitchen remodel because it is an "investment" I'll recoup *later*, my facepunch worthy financed new car because of "research", etc.

Large expenses should get averaged out and budgeted for in a realistic fashion, but I don't say that my saving rate for last year was not 42%, but 60% because the $14k I spent last year on a new roof does not count somehow.  I don't use this years expenses (with no major house work so far) as my typical spending for calculating my *number*, I must reasonably add in my estimated average lumpy expenses.  Claiming a $27k spending rate while ignoring $39k of spending on his hobbies of choice (being an Uber driver and building an out building for fun), and who knows how much on a business location and renovation is just mind blowing.

And now I feel like I am part of the Internet Retirement Police, where I can't see how you can magically ignore buying a business building in your finances as not being spending, but still claim your are retired in any sense of the word.  He is just a few employees away from claiming he is not a boss.  I give huge props for saving a lot, being retired to spend time with his wife and kid for a few years, but it looks more like a pause while doing a career change rather than even the most stretched meaning of "retired" I can come up with.

I feel dirty.  Why am I upset at this stuff?  Argh.

KeithTax

  • 5 O'Clock Shadow
  • *
  • Posts: 18
    • Wealthy Accountant
Re: MMM 2016 Budget
« Reply #399 on: September 15, 2017, 05:28:32 PM »
If MMM truly monetized the blog to its potential based on traffic, then it would look completely different. With his level of traffic, the blog income is relatively small. Very rarely do I feel like he's trying to sell me something other than whatever is going on in his head (the exception being stuff like PeerStreet, Betterment, etc.)


Since you admit that at least in some cases, the blog monetization has compromised his message, why did MMM monetize at all if he would have been truly ok living on $25K with no extras paid for as business expenses?

b/c if you're going to do something why not make some extra cash doing it if its possible.  also MMM didnt FIRE

he left his job to start building houses <-- career change
then the housing market colapsed.  <--- if this doesnt happen we may never know about him.  he may just keep building houses making a killing.
then the markets crashed. <---- butt hole pucker time.

anyone in that situation would likely be looking to bring in extra income if possible so he blogged and monetized it.

I don't disagree with your above sequence of history, but doesn't that also undercut that the message of "the 4% rule will see you through" that is a cornerstone of the MMM philosophy?

When one is basically preaching a philosophical system, not being consistent to it yourself is not the best way to get others to buy into it - especially when the philosophy itself promotes black and white thinking about its key concepts.

i 100% agree thats the side i'm on with the whole thing.  If he really wants to show this works every dime he makes should be given away.  (but who the hell is gonna do that)  the insurance is worth so much just to have that cash there for the healthcare what ifs the end of life what ifs.

it'd be really cool to see some one FIRE and 100% live on the 4% rule with a roth ladder and blog about it ... but when that happens and then it gets popular then it makes money and that money is now a safety net and you're no longer retired.  you see where this is going. its an infinite cycle.

That could be gotten around by a blog owner seeking out those who are FI but don't have a blog themselves (maybe this is already out there somewhere?). Would be more of one-off or occasional check-in but I think it would be extremely valuable to see how how the FIRE concepts play out when there's not a firehose of blog income as a back-up.  Of course there are FIRE'd forum members here but don't know how publicly some of them would want to share all their details.

Why does MMM monetize at all? All I can say is:

https://wealthyaccountant.com/2017/08/09/you-still-get-paid/

or

https://youtu.be/mj5IV23g-fE